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POLITICS

Virtue Signaling Isn’t Virtuous—and Actually Makes Political Tribalism Worse

September 4, 2022 by Staff Reporter

In a speech on July 23, 2022, before the Conservative Political Action Committee, or CPAC, Sen. Ted Cruz introduced himself to the audience with the words, “My name is Ted Cruz and my pronoun is kiss my *ss.”

In 2019, the Vermont College of Fine Arts appealed to a different group. They replaced the term alumni – which is derived from the Latin masculine plural but traditionally used to refer to all graduates of the school – with alumnx. In its statement, the college said that dropping the traditional term “alumni” was “a clear step toward exercising more intentional language, which we strive to implement in all aspects of college life.”

These statements are very different, of course. One is explicitly inclusive, designed to demonstrate that everyone who graduated from the school, irrespective of their gender, is included and respected. The other crudely denigrates the very attitudes expressed in the second example.

But for all their differences, both are examples of what has come to be called “virtue signaling” – an act that implicitly claims that the speaker has made a determination about some important moral question and wants to signal to others where they come down.

Even though some might call the use of the phrase “kiss my *ss” far from any notion of virtue, and more correctly understood as “vice signaling,” as a scholar of ethics and politics I argue that both of these statements operate in precisely the same way – and that is the problem.

Why Virtue Signaling Alone Is Insufficient

Virtues are really just agreements among the members of any group about what is important, valuable and what group members can expect from each other. This is as true for motorcycle gangs as it is for monasteries. And the only way to establish and maintain, let alone modify or improve, any such agreement is by talking about it.

That’s what virtue signaling does. It helps any group recall and reflect on what it is that gives the group its identity. Thus, while the term virtue signaling may be relatively new, the practice is as old as morality itself.

But useful though it may be, virtue signaling is far less demanding, and far less constructive, than virtue itself. Unless the former is matched with the latter – that is, unless words are matched with actions – mere signaling is insufficient.

The ancient Greek philosopher Aristotle is widely regarded as one of the first, and still one of the most important, virtue theorists. He argued that becoming a virtuous person is a worthy but arduous process, requiring maturity, discipline and constant repetition.

“Men become builders by building houses, and harpists by playing the harp. Similarly, we become just by the practice of just actions, self-controlled by exercising self-control, and courageous by performing acts of courage,” he wrote.

Virtue signalers are often inclined to pat themselves on the back for their moral insight and courage. Aristotle saw the very same thing. He observed that many think that “by taking refuge in argument” they can become ethical. But Aristotle knew that this refuge doesn’t work: talking about virtue is useful – after all, this discussion comes from Aristotle’s book on ethics – but real virtue requires work. It is far more demanding and thus far harder to fake.

Who Is Being Signaled?

But there is another question that speaks to the problem with virtue signaling right now: Who is being signaled to?

Consider again the two examples above. Cruz got a standing ovation immediately after these words. That is not at all surprising, for there was hardly anyone who did not agree with his signal and who did not already understand themselves to be the more moral group of Americans. What’s more, Cruz’s words were designed to alienate the other side of the partisan division, to belittle and reject them as part of the conversation.

The language of the Vermont College of Fine Arts is not nearly as inflammatory, but that statement, as well, could be viewed as dismissive by anyone who might insist that alumni has been a benign word for millennia, or that it is already a gender neutral term, or who believes that making up new words is as ineffectual as it is exasperating.

These two examples show what is frequently the case: The “signal” in virtue signaling is designed to communicate specifically to one partisan tribe and to affirm that group’s moral superiority. That outcome is particularly unwelcome, for the U.S. is divided enough already.

A June 2022 poll found that a majority of Americans – 55% of Democrats and 53% of Republicans – believed it was “likely” that the United States would “cease to be a democracy in the future.” Another survey conducted around the same time by the UC Davis Violence Prevention Research Program found that half of all Americans agreed that “in the next few years, there will be civil war in the United States.”

Virtue signals to one partisan tribe do nothing to diminish this division and likely exacerbate it. As researchers Scott Hill and Renaud-Philippe Garner conclude in their 2021 paper, “Human societies require people who disagree to cooperate and trust each other. They must also allow for disagreement and productive discussion of competing views. Yet, virtue signaling undermines all of this.”

Lincoln’s call for virtue

Those concerned about the deep divide in American society would be wise to recall Abraham Lincoln’s second inaugural address. Given shortly before the end of the American Civil War – perhaps the one time when American society was more polarized than it is now – Lincoln insisted that Americans strive for a very democratic understanding of the virtue of charity.

Lincoln called Americans to take up the difficult task of reuniting their riven society “with malice toward none, with charity for all.”

With the end of the war, charity meant caring for the widow and orphan, the disabled veteran and the worker whose business was destroyed.

But Lincoln went further: Charity was “for all.” In a democracy, that means adopting the posture that like me, my opponent is a person of goodwill and worthy of my benefit of the doubt. And by extending that charity to all, charity reinforces democratic equality: All citizens should both give and expect to receive this benefit.

Since virtue signaling so often only serves one partisan tribe, it spurns any such idea. Certainly there is nothing remotely charitable about Ted Cruz’s statement. And even the ostensibly inclusive statement by the Vermont College of Fine Arts makes it all too easy to malign those who aren’t enlightened enough to go along.

Lincoln called for charity between two sides who had been killing each other for four long years. He well understood the difficulty associated with such a task, but he saw the value, as well. That same understanding would be valuable to American society today, as well.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Filed Under: BUSINESS, POLITICS

What Caused Japan’s Post-War Economic Miracle?

August 27, 2022 by Staff Reporter

For a century after his death in 1856, statues of the philosopher and economist Kinjiro Ninomiya adorned public places, especially schools, all over his native Japan. Most of them depicted him as a boy reading a book while walking with a load of firewood strapped on his back. Though he is credited with introducing the concept of compound interest to the peasantry, the statues pay tribute to a broader counsel he championed in Japanese culture: read, study and work hard as if your life depended on it, because it often does. He also urged his countrymen to “Save, waste not; otherwise, Heaven will punish you.” 

Ninomiya’s sage and timeless advice surely helped Japan recover from the ravages of World War II. For a full explanation of the remarkable pace and magnitude of the recovery, however, we must identify other factors. How did a nation which had sunk so low undergo such a stupendous economic rebound?

From the Doolittle Raid on Tokyo in April 1942 to the atomic bombs dropped in August 1945, nearly four years of American bombing wiped out a huge swath of Japan’s industrial capacity. In his book, Ashes to Awesome: Japan’s 6,000-Day Economic Miracle, Yoshikawa Hiroshi tells us that 93 percent of Japan’s steel production was obliterated. The country’s GNP in 1946 stood at just under half its peak before the war. Astronomical hyperinflation nearly destroyed the currency. Living conditions were “wretched” and the caloric intake of the average person was just two-thirds of its pre-war level.

Note from Bank of Japan in 1946, a year after the war ended and the country was gripped with hyperinflation.

Japan at war’s end was a nation defeated, demoralized, devastated, and, until 1952, occupied by almost a million American soldiers. Its major cities, including Tokyo (and of course, Hiroshima and Nagasaki), lay in ashes.

Thirty years later, the Japanese economy ranked second in the world, behind only the United States. From 1950 to 1973, it grew at twice the rate of Western Europe’s and more than two and a half times faster than that of the US. During the 1960s, it doubled in size in only seven years. In barely more than one generation, Japan transformed itself from a poor country to a rich one—a feat widely seen as “miraculous.” How does such a historically rare development occur?

Did Japan decide to adopt a socialist path to recovery? Silly question. Nobody outside of academia or who understands either economics or history would ever prescribe compulsory wealth redistribution, central planning, massive tax hikes or burdensome bureaucracy as a cure for anything, let alone a half-dead economy. That would simply kill the remaining half. The fact is that Japan’s post-war progress owes more to the ideas of Adam Smith and Milton Friedman than to those of John Kenneth Galbraith or Paul Krugman.

The Japanese Economic Miracle is explained by six major factors. Here they are:

1. The Korean War

From 1950 to 1953, the US and allied nations fought the North Koreans and Chinese to a standstill. America bought huge quantities of food and war materials from nearby Japan. This represented a sizable transfer of wealth from American taxpayers to the Japanese economy. This “procurement boom,” along with other American aid after 1945, helps explain some Japanese growth early in the country’s recovery, but those transfers mostly evaporated when the Korean War ended.

2. Punishment to Growth

US policy in the early months of the Occupation of Japan tended to be punitive, designed to keep the country down and out. But in 1947, as the Cold War with the Soviet Union and Red China worsened, the Truman administration decided that a stronger, freer Japan would help stave off communist advances in Asia and the Pacific.

Among the harsh measures imposed on Japan, based largely on advice from left-wing academics, were monstrously high personal income tax rates that ranged to a high of 86 percent. Alan Reynolds of the Cato Institute writes,

This was a central part of a severe austerity program, not a plan to promote economic growth. As Edwin Reischauer pointed out at the time, “Steeply graduated income taxes and inheritance taxes have been adopted to prevent in the future the accumulation of … concentrations of wealth.” But taxes designed to punish additions to income must also punish additions to output—economic growth.

Sky-high taxes kicked in at relatively low-income levels and exemptions were few. Corporate income and “excess profits” were likewise confiscated at high rates. A vast expansion (and higher rates) of excise taxes and a hike in already-high inheritance taxes punished Japanese citizens at all income levels. “Brutal” describes the punitive tax regime imposed on Japan by Americans in the immediate aftermath of the war.

Before economic growth could take off, Japan had to stop punishing its wealth-creating entrepreneurs. As General Douglas MacArthur steered American Occupation toward leniency, that’s exactly what Japan did (as you’ll read in a moment).

Japan seemed destined to pay heavy reparations to the nations it damaged in the war until America in the late ‘40s pressed those other nations to back off. Unlike the massive payments the Versailles Treaty obligated Germany to fork over after World War I, and which contributed greatly to another war 20 years later, what Japan was required to pay proved minimal in the end.

By 1949, America was actively encouraging the integration of a depressed and insular Japanese economy into world commerce. Markets opened for the country’s exports, which in turn spurred its purchase of imports. In 1955, Japan became a member of the tariff-cutting General Agreement on Trade and Tariffs (GATT).

3. Tax Cuts

Fortunately, the heyday of the left-wing American academics in Japan was short-lived. The changing perspective in Washington from punishment to growth opened the door for tax cuts. To quote Reynolds again,

In late 1950, following a similar policy coup in Germany, Japan’s highest individual income tax rate was slashed to 55% from 86%. From 1950 to 1974, Japan cut taxes every year (except 1960) often by greatly increasing the income thresholds at which the higher tax rates applied, or by enlarging deductions and exemptions. The taxable income needed to fall into a 60% tax bracket was raised to 3 million yen by 1953, for example, compared with only 300,000 in 1949. The Shoup Commission’s net worth tax was also abolished in 1953. The sting of high tax rates was further neutralized by exemptions for interest income and capital gains, deductions from corporate and individual taxes on dividends, a deduction for earnings, and various other holes in the tax base, legitimate and otherwise.

Some deductions were far from neutral, and therefore less desirable than lower tax rates would have been. Yet the continual tax reductions from 1950 to 1974 accomplished two things. First, they greatly reduced effective marginal tax rates. Second, they moved the system a long way toward what is sometimes called a “consumed income tax” or “expenditure tax”—that is, a system that taxes income only once, regardless of whether the income is saved or devoted to immediate consumption.

Tax cuts accelerated after the end of American Occupation in 1952. Reductions in levies on savings and investment were especially stimulative. With the baleful influence of left-wing American academics gone, public policy focused on boosting production instead of leveling and equalizing incomes. Success in the marketplace became a virtue instead of a vice. To his credit, Carl Shoup of Columbia University helped immensely to simplify the tax code so that Japanese people could see it as fair and understandable.

Japan also steadily reduced its tariffs (taxes on the purchase of foreign goods). For example: By 1975, Reynolds notes, “the effective tariff on autos fell from 40% to 10%, and the tariff on televisions from 30% to 5%.”

4. Economic Freedom

Japan’s tax reductions were an important element of a broader liberalization of its economy. Even the World Bank, in a comprehensive 1993 study of the Japanese Economic Miracle, admitted that liberalization was an indispensable factor. It concluded that “the rapid growth was primarily due to the application of a set of common, market-friendly economic policies, leading to both higher accumulation and better allocation of resources.”

In explaining the Japanese Economic Miracle, some people suggest that government “industrial policy” agencies such as the Ministry of International Trade and Industry (MITI) were its main architects. But that is belied by the fact that MITI’s interventions were neither huge nor effective. They produced more than a few failures. The World Bank’s 1993 report dismissed its “contributions” as one of many attempts around the world “to guide resource allocation with nonmarket mechanisms [that] have generally failed to improve economic performance.”

At a time when much of the Western world embraced Keynesian economics of higher taxes, spending, budget deficits and debt, Japan’s recovery was fueled by lower taxes, less spending, more saving, increasingly secure property rights and conservative fiscal policies. Education, always highly prized in Japan, was kept local with an emphasis on high-quality K-12. Even today, most Japanese people will tell you they studied harder in grade schools than in universities. The result was an explosion in both human and physical capital.

Toshio Murata, a long-time friend of the Foundation for Economic Education (FEE) in America, was a Japanese economist of the “Austrian School.” He translated Human Action by Ludwig von Mises into Japanese. In 2017, FEE bestowed its “Blinking Lights Award” upon him before his death in 2021 at the age of 97. In an article for FEE in 1994, he explained why the World Bank was correct in its assessment, noting that the favorable tax treatment of savings played a key role in generating a robust capital market for business start-ups and investment:

The true explanation of Japan’s successful post-war economic development rests…on good old-fashioned virtues—saving, hard work, reduced government spending, and innovative entrepreneurship—combined with ingenious marketing techniques and relatively free world trade. On the basis of 1971-1991 figures, the average gross saving rate in Japan was twice that in the United States; the saving rate per household in Japan was 2.7 times that in the States.

Industries that had been run or heavily regulated by the old imperial government or by American occupiers were set free. Many of the monopolies (“zaibatsu”) that held sway for generations in Japan, thanks usually to government-granted privileges, were broken up, sold off or deregulated to compete on a more level playing field.

Considerable credit for the advance of economic freedom in Japan goes to Shigeru Yoshida, who served as Prime Minister for most of the period from 1946 to 1954. He spearheaded economic liberalization and, at the same time, successfully resisted American pressure for Japan to spend heavily on the military. At the San Francisco Peace Conference in 1951, he pronounced the treaty formally ending the war as “fair and generous” and “not a treaty of vengeance but an instrument of reconciliation.” The following year, Japan once again became an independent nation.

During the four years of Prime Minister Hiyato Ikeda (1960-1964), economic growth and the entrepreneurs who generated it were embraced as keystones of a new and optimistic Japan. Even Ikeda’s modest welfare state measures couldn’t slow things down (that would happen later as the bills came due).

The spirit of liberalization continued into the 1980s. Under Prime Minister Yasuhiro Nakasone, Japan’s national government privatized telecommunications and railways and diminished the influence of MITI in the economy. When the country turned toward bigger government in the 1990s, the growth momentum stopped, as partially explained by economist Hiroshi Yoshida in this recent article for FEE.

Japan never became the libertarian paradise that was Hong Kong (before recent subjugation by Beijing), but it did become far freer economically during the decades of economic liberalization than it perhaps had ever been before. Today, it still ranks an impressive 35th in economic freedom among the world’s nearly 200 nations, according to the Heritage Foundation’s Index of Economic Freedom

5. Dodge and Deming

While it was fashionable for many governments around the world in the 1940s and 1950s to seek advice from “whiz kids” and “planner” types in the ivory tower, Japan to its credit didn’t pay them much attention when they were free to look elsewhere. In fact, by taking advice from two notable men from the entrepreneurial private sector, Japan avoided the stagnation that left-wing academicians usually produced. Their names were Joseph Dodge and W. Edwards Deming.

President Harry Truman dispatched Joe Dodge to Japan from his perch as Chairman of Detroit Bank in 1949. He was to be financial advisor to the Supreme Commander, General Douglas MacArthur, and help the nation emerge from the economic doldrums.

What became known as “The Dodge Line” did the trick. By implementing a balanced national budget and shutting down the printing presses, it ended hyperinflation. It stabilized the exchange rate between the yen and the dollar. It drastically reduced government economic intervention across the board. Dodge’s intention was not to “plan” the Japanese economy but rather, to finally leave it alone. He killed every subsidy and price control he could get his hands on, and MacArthur cheered him as he did it. (Truman would later make Dodge his Director of the Budget and in barely a year, he cut the US federal deficit in half.)

W. Edwards Deming was another private sector genius with both feet planted firmly on solid ground. He was an engineer, statistician, and management consultant who introduced quality control techniques to Japanese manufacturing—techniques that achieved previously unheard-of levels of productivity. Toshio Murata writes,

Japanese exports in prewar days were regarded as “cheap, but of poor quality.” W. E. Deming, a U.S. professor, played a major role in improving the quality of Japanese goods. A prize established in his honor is awarded to individuals and companies making important contributions to quality control. Today, thanks no doubt to lessons learned from Professor Deming and from taking consumer wishes to heart, Japanese appliances and automobiles are rated among the best in the world.

The Japanese owe these two men a great debt for their important contributions. If the country had followed the prevailing wisdom of left-leaning academics at the time, recovery would likely have been stalled or reversed.

(If my remarks strike you as uncharitable toward leftist academia, please allow me to cite two illuminating comments from economist Thomas Sowell, himself an academic: In 1997 he wrote, “The most fundamental fact about the ideas of the political left is that they do not work. Therefore, we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive.” In 2011, Sowell opined, “Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.”)

6. General MacArthur’s Constitution

The sixth factor in Japan’s Economic Miracle was by no means the least important. Without the vision and personality of Douglas MacArthur, it’s difficult to imagine that either an economic recovery or Japanese-American relations would have emerged as robust.

MacArthur worked so amiably with Japanese leaders, including Emperor Hirohito, that most people in Japan mourned his departure in 1951 as American Occupation neared its end. He personally supervised the writing of a new Constitution that included provisions to ensure a limited, representative government, free and fair elections, private property, and individual liberties. It took effect in May 1947. For seven and a half decades, that Constitution has governed Japan, as one commentator put it, “without the change of a comma.”

In April 1951, the general who proved as indispensable to the new, peaceful Japan as he was to winning the war in the Pacific, was able to tell Congress, in person, this good news:

The Japanese people since the war have undergone the greatest reformation recorded in modern history. With a commendable will, eagerness to learn, and marked capacity to understand, they have from the ashes left in war’s wake erected in Japan an edifice dedicated to the supremacy of individual liberty and personal dignity, and in the ensuing process there has been created a truly representative government committed to the advance of political morality, freedom of economic enterprise, and social justice.

In 1960, Japan honored General MacArthur with its highest honor, the Grand Cordon of the Order of the Rising Sun. You can see a short video of the official presentation here.

Fortunately for Germany, a similar economic miracle took shape at the same time as Japan’s. There, as I’ve written before, it was largely due to similar free market policies of economist and statesman Ludwig Erhard. Ironic, isn’t it, that two of the nations most responsible for World War II emerged from it as economic miracles because of freedom and free markets. Kinjiro Ninomiya would be most proud.

Freedom works. It’s a lesson that needs to be told, re-told, and told again.

(Editor’s Note: A condensed version of this essay was published by El American.com).

For Additional Information, See:

The East Asian Miracle by the World Bank

How Japan Realized Her Impossible Dream by Toshio Murata

Ashes to Awesome: Japan’s 6,000-Day Economic Miracle by Yoshikawa Hiroshi

The Japanese Post-War Tax Culture Shock Caused by the Extraordinary Tax Program by Birger Nerré

Toward Meaningful Tax Reform in Japan by Alan Reynolds

America and the Japanese Miracle: The Cold-War Context of Japan’s Economic Revival by Aaron Forsberg

Occupation of Japan and the New Constitution (by PBS’s “American Experiment”)

Reinventing Japan (video)

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Originally Appeared Here

Filed Under: BUSINESS, POLITICS

Biden’s Student Loan Bailout Is a Textbook Example of ‘Legal Plunder’

August 26, 2022 by Staff Reporter

There’s an apocryphal quote often misattributed to Ben Franklin that goes something like this: “When the people find that they can vote themselves money, that will herald the end of the republic.” While we’re not quite nearing the collapse of our republic, we are actively witnessing the corrosive effect it has when the political power of redistributionism is abused. 

President Biden is “canceling” (transferring) student debt for millions of Americans and forcing the rest of us to pay for it. His plan “cancels” $10,000 for borrowers who earn less than $125,000 individually or $250,000 for their household. It also includes two other forgiveness plans that bring the total cost to taxpayers up to $500 billion, a whopping $3,500 per federal taxpayer. 

Simply put, we’re all going to have to pay more in taxes so that a relatively affluent slice of society doesn’t have to repay their investment on college degrees that will, on average, earn them $1 million more over a lifetime. 

People are pissed off. And for good reason, as the manifest unfairness of punishing those who scrimped and saved to bail out those who didn’t is obvious and maddening. But there’s an even deeper injustice to this: President Biden is trying to, legally, buy votes and reward his party’s voter base. 

Think about the simple facts.

Student debt “cancellation,” by definition, only financially rewards those who attended college. College graduates are a voting block that voted for President Biden overwhelmingly. So, too, this bailout disproportionately aids those living in major cities and those living in the Midwest and Northeast, where student debt is geographically concentrated. These just so happen to be places that voted for Biden as well.

Image Credit: Urban Institute

You get the point.

President Biden’s student loan bailout is perfectly calibrated to benefit a slice of society that voted for him, and, more importantly, a voting block that is key to the Democratic Party’s success this November. Through it, he is attempting to use public policy to reward his voters at the public’s expense.

This is precisely what French economist Frédéric Bastiat once dubbed “legal plunder.” He famously noted that, “Government is that great fiction by which everyone tries to live at the expense of everyone else.”

To this end, Bastiat explained, “Sometimes the law defends plunder and participates in it. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”

To be clear, something being “legal” plunder doesn’t always mean it is actually legal. In this case, Biden’s attempt to unilaterally cancel student debt is highly suspect both constitutionally and legally. It’s legal plunder nonetheless, however, because it attempts to pervert the law and use it for naked clientelism. 

That might win the president some votes. But it’s exactly the kind of partisan plunder that corrodes a republic. 

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Originally Appeared Here

Filed Under: BUSINESS, MONEY, POLITICS

Rents for One-Bedroom Apartments in Manhattan Hit a Record High of $5,100 in July. Here’s Why

August 17, 2022 by Staff Reporter

Think your rent is too damn high? Well, taking a look at the latest figures out of Manhattan might make you feel better by comparison. 

In July, the average rent for a one-bedroom in Manhattan rose to $5,113, CBS News reports. That’s an astounding $1,000 more than a year ago and a new record high. These levels of rent are astronomical and impossible for all but the most affluent New Yorkers to afford. 

But before you blame capitalism or greedy developers, let’s take a deeper look at how rents in New York City got so out of control.

The Basics of Rental Markets and Supply & Demand

How are rental prices determined in the first place? Well, in a free market, supply and demand interact to reach a price. If there’s far more demand for housing than there is supply in a given area, rents will be high, at first. But those high rents will encourage more developers to come in and build housing, increasing supply and ultimately bringing the price down. 

Yet in places like New York City, local governments have made that adjustment impossible through restrictions on supply. The result of artificially-constrained housing supply in a high-demand area is as predictable as it is perilous: high prices and a housing crisis. 

How Has NYC Restricted Supply?

There’s a long and complicated history of government meddling in New York City’s rental market. But here are a few of the biggest ways local officials have hindered the market’s ability to provide affordable housing.

1. Single-Family Zoning & Height Limits

Through zoning, the local government has declared that large swaths of the city’s property may only host single-family residences. This doesn’t make much sense in a city with millions of people.

According to the advocacy group Open New York, “Roughly 15% of New York City’s land area is still zoned as single-family-only land, banning apartments or multiple-unit dwellings of any size, including those with only two units.” These restrictions are highly inefficient and prevent the development of large-scale housing, like apartments, that could greatly increase the supply compared to a single home. 

So, too, arbitrary restrictions on height limits remain in place on many NYC properties. These force landlords to provide fewer apartments per lot than they’d otherwise be able to, fueling the affordability crisis and pricing New Yorkers out of homes, often in the name of scenic beauty or protecting special interests.

2. Highly Restrictive Permitting Process

New York City’s government has made it very hard to get approval to build new housing. 

“New York City housing permitting has cratered to lows not seen since the Great Recession, and it’s not for lack of demand,” housing policy expert Nolan Gray told me. “NYC [has] had some of the strictest zoning rules in the country, making it hard to legally build much of anything.”

Look, for example, at the below graph showing how much housing (relative to population) various cities have permitted in recent years. You’ll see New York City at the very bottom. 

Image Credit: housingdata.app

This Was Perfectly Predictable

With the supply of new housing so blatantly throttled, it’s no surprise that rents have skyrocketed. It’s exactly what the laws of economics predicted, given the myriad government restrictions on NYC’s housing market. 

But, unfortunately, many unknowing onlookers may look at the egregious $5,000+ rent rates popping up in Manhattan and blame the market, when, in fact, it is the government’s constraints on the free market that are to blame. They might even respond to the manifest injustice of this affordability crisis by supporting more of the nice-sounding, big-government policies that got us into this mess. 

Yet, hopefully, people can look deeper and see the real root causes at play here. Because New Yorkers will continue to suffer until policymakers wake up—and finally free the rental market once and for all.

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Originally Appeared Here

Filed Under: BUSINESS, POLITICS

Mega-Corporations Are Not Your Enemy

August 16, 2022 by Staff Reporter

In modern political discourse, “corporation” is almost a slur.

In 2021 Vermont US Sen. Bernie Sanders, responding to criticisms of his tax proposal, released a video titled “Yeah, we’re going to TAX BILLIONAIRES & CORPORATIONS” in which he assures us that the new taxes would be taken exclusively from large corporations and their wealthy owners, as though (even if true) that would automatically make it okay. It seems to imply that corporate income is so obviously unjustified that we needn’t have any qualms with just taking it.

On the other side, in opposition to a different tax hike proposal, Sen. Rand Paul was quick to point out that it would hurt small businesses. Why small business, specifically? Aren’t large corporations also entitled to keep what they’ve earned?

Perhaps Paul is just focusing on victims that people have sympathy for, but either way, both he and Sanders (and most other politicians) arrange their rhetoric around the broadly-held view that large corporations are fundamentally corrupt organizations, flooded with riches they neither earned nor deserve to keep.

This view is unwarranted, however. Far from being hoarders of ill-gotten gains, successful corporations are an incalculable boon for humanity.

The Simple Economic Argument

From a basic economics standpoint, the utility of large corporations is obvious: trade is mutually beneficial, and large corporations engage in a lot of trade.

When you buy a burger from McDonald’s, you must value the burger more than the money, or you wouldn’t have bought it. The owners and employees of McDonald’s must value the money more than the burger, or they wouldn’t have sold it. You all value what you have after the exchange more than what you had before, so total wealth has increased.

But couldn’t the employees produce the same goods without the giant corporate structure?

Simply put, no.

If the inexperienced young employees that McDonald’s tends to hire to cook their burgers started a burger joint on their own, you probably wouldn’t go there. Corporations become successful by providing both capital and a management structure that allows products to be produced at a price, quality, and consistency that more than makes up for the cost of running that structure.

The employees, just like the consumers, must be getting more by engaging with the corporation than they could get elsewhere, otherwise they would not engage in the exchange. Again, after the exchange, total wealth has increased.

Essentially, the wealthier a corporation is, the more wealth it must have created for others in return. This argument, while sound, will probably not convince a skeptic. Critics of large corporations have objections which they believe rebut or outweigh our simple economic argument.

The Subsidy Objection

Perhaps our simple economic argument doesn’t apply to large corporations because often their wealth comes not from voluntary exchange, but from government handouts. Conservatives, progressives and libertarians all love to rail against corporate welfare, and not without justification.

Corporations really do receive subsidies, and subsidy income really cannot be justified by our simple economic argument. After all, taxing someone and giving that money to a corporation is not voluntary exchange.

Empirically however, the vast majority of corporate wealth does not come from subsidies.

The five largest US corporations by market cap are Apple, Microsoft, Google, Amazon and Tesla. Last year, Apple’s revenue was $366 billion, Microsoft’s was $168 billion, Google’s was $258 Billion, Amazon’s was $470 billion and Tesla’s was $54 billion.

The obvious way to get an idea of how much of that revenue is due to government handouts would be to compare their 2021 revenue to their 2021 subsidies. However, according to the subsidy tracker on goodjobsfirst.org, not all of these corporations received subsidies in 2021, so we will need to take a longer view.

Totaling the disclosed subsidies for 2011-2021, Apple got $1,414,030,662, Microsoft got $670,043,203, Google got $404,558,866, Amazon got $3,571,589,999 and Tesla got $3,586,599,901. Simple division reveals that for most of these corporations, an entire decade’s worth of subsidies still amounts to less than a few days’ revenue. Even the relatively well-subsidized Tesla earns more every few weeks by selling cars than it received in subsidies in those ten years combined.

In fact, this still massively overstates corporate subsidization. Why? Because most of those “subsidies” are tax-breaks. An actual subsidy is a source of income which doesn’t require the company to provide anything to anyone. A tax-break is when the government takes less of the very profits which incentivize production in the first place.

To be clear, if we care about free markets, every government subsidy is worth opposing. But empirically, the income that large corporations receive from subsidies—even dubiously including tax-breaks—is negligible compared to the income they receive from providing goods and services for people to enjoy.

The ‘Fair Share’ Objection

Another common refrain is that corporations don’t pay “their fair share” of taxes. Pew Research found that 81 percent of Americans are bothered at least “some” by their perception that “some corporations don’t pay their fair share.”

Looking at the numbers, this might initially seem valid. Last year, corporate income tax accounted for 9 percent of all federal tax revenue, as opposed to 51 percent from individual income tax. However, there are two issues with this picture.

First, corporations are made up of people who already pay taxes. Everyone from the entry-level employees to the board of directors pays taxes on the income they receive from the corporation. “Corporate taxes” are really paid by everyone involved with a corporation, on top of their normal income tax.

Some argue that the wealthy owners of corporations avoid taxes themselves, but this is simply false. A Heritage Foundation investigation found that the U.S. tax system is already highly progressive, with the top 5 percent paying 60 percent of the taxes despite earning only 37 percent of the income.

The other issue is that it’s unclear how corporations paying taxes is even a good thing. Corporations survive on their ability to allocate resources better than competitors. Governments have no such requirement.

Take schools, for example. If a private school doesn’t provide a good service, I can send my child elsewhere, and they won’t get my money. If a government school doesn’t provide a good service, they’ll still get my money through taxes—even if I send my child to another school.

The same logic applies to all government services. Corporate taxation is the transfer of resources from an organization with good incentive to use them wisely to one with poor incentive to do so.

Stop The Hate

Corporations are easy political targets. They are organizations of people, rather than individuals, so they are easy to dehumanize. The largest of them are, by definition, wealthy, so they’re hard to feel sorry for.

But upon reflection, it’s hard to find a more socially beneficial class of organizations anywhere. Rather than being seen as acceptable targets of hatred and sources of guilt-free plunder, large corporations should be seen as inspiring achievements for human welfare, and their creators should be admired as the heroes of civilization that they are.

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The Marquis de Lafayette: Remembering France’s Greatest Champion of Liberty, a ‘Hero of Two Worlds’

August 15, 2022 by Staff Reporter

On this date in 1824—August 15—a great man arrived in New York at the start of a “Grand Tour” of America. Though his plan called for a four-month visit to the 13 states that comprised the original colonies, he ultimately stayed four times as long and met cheering throngs in all 24 states that comprised the Union at that time.

President James Monroe had extended the invitation to this beloved gentleman as part of the forthcoming celebration of America’s 50th birthday in 1826. It was the perfect choice. This man, the esteemed Marquis de Lafayette, came to America from his native France as a teenager to help the country secure its liberty and independence.

Lafayette laid his life on the line “for the cause” and never took a penny for his efforts. He joined the staff of General George Washington (who came to love him as a son), endured a serious leg wound at the Battle of Brandywine, suffered with the troops in the awful winter at Valley Forge, helped Benjamin Franklin secure French support of the war effort, and played pivotal roles as a commander in battle after battle, including the deciding finale at Yorktown in 1781. In his 20s, he achieved the rank of Major General in the Continental Army.

That would be an impressive record if Lafayette had done nothing more, but it barely scratches the surface of the man’s greatness. It is sufficient, however, to explain why his 16-month Grand Tour remains the biggest and longest celebration Americans ever showered upon a foreigner.

Nearly 90 percent of the people of New York City turned out to welcome him as he disembarked from his ship. Massive, adoring crowds enveloped him in Boston, Philadelphia, Charleston, St. Louis—indeed, everywhere he went. He was 67 years of age. Few Americans had seen or spoken to this living legend in half a century. Yet everyone not only knew who he was, they loved him immensely. Historian Shannon Selin writes,

Lafayette travelled over 6,000 miles, visiting all 24 states, some more than once. He was greeted with enthusiastic cheers, receptions, parades, processions, parties, banquets, concerts and balls. Locals decorated his route and erected ceremonial arches for him and his entourage to pass through. Church bells rang out in his honor. Cannons were fired in salutes. People praised him in toasts, speeches, poems and songs. He reviewed militias. He spoke with veterans and visited battlefields, including the site of the Battle of Brandywine, where he was wounded in the leg in 1777. He laid cornerstones and dedicated monuments. He toured mills, canals, farms and factories. He blessed children. He met Native Americans. A souvenir industry sprang up, producing dishes, ribbons, pins, badges, medallions, fans, quilts and clothing emblazoned with Lafayette’s name and/or image. Lithographs and paintings depicted scenes from the Revolution and his visit. New biographies of him were issued. Buildings, streets and towns were named for him, as were many children. His progress was breathlessly chronicled by the newspapers.

In a sense, Americans are still celebrating him today. No fewer than 36 American cities and towns are named for him, such as Fayetteville, North Carolina and Lafayette, Louisiana.

Born Marie-Joseph Paul Yves Roch Gilbert du Motier, Marquis de La Fayette in 1757, this man deserves high ranking among the pantheon of liberty’s champions. Consider these additional facts from his remarkable life:

  • We have Lafayette to thank for the preservation of Independence Hall in Philadelphia. The building was falling into disrepair when city officials decided to spruce it up for the visit of the Marquis. At age 19 in 1777, Lafayette had politely knocked on its door to ask Congress to let him join the fight against George III. When the war ended, he famously opined, “Humanity has won its battle. Liberty now has a country.”
  • A life-long abolitionist, he was ahead of his time on the matter of slavery. He enjoyed many close friendships with blacks in America and frequently urged “freedom for all mankind.”
  • When the French Revolution broke out in 1789, it was Lafayette (as an elected member of the Estates General) who penned the initial draft of the Declaration of the Rights of Man and Citizen. Being thus a critical figure in the birth of both the American and French republics, he earned the lasting sobriquet, “Hero of Two Worlds.” His Declaration contained this superb, concise definition of his most cherished goal: “Liberty consists in the freedom to do everything which injures no one else; hence the exercise of the natural rights of each man has no limits except those which assure to the other members of the society the enjoyment of the same rights.”
  • As the French Revolution took a tyrannical, anti-liberty turn, he fell out of favor with the radicals in power (such as the butcher Maximilien Robespierre). He was stripped of his French citizenship.
  • When Revolutionary France went to war with the rest of Europe, Lafayette was captured and imprisoned by the Austrians for two years. It might have saved him from the radicals and their bloody guillotine.
  • Napoleon Bonaparte came to power in 1799, restored Lafayette’s citizenship and offered to make him France’s ambassador to America. Lafayette declined because his affinity for America was so strong, he said, that he couldn’t imagine himself on the other side of a table from his friends. Though he was grateful for Napoleon’s treatment of him, he strongly opposed the French leader’s move to declare himself emperor-for-life. Lafayette even publicly turned down Napoleon’s repeated offers of political appointments, saying he would only consider such positions if they came from a government answerable to a free people.
  • After Napoleon’s abdication and the restoration of France’s Bourbon monarchy in 1815, Lafayette refused to lend any moral authority to King Louis XVIII. As a result, he was shut out of the government. Only his international fame saved him from a worse fate. When President Monroe’s invitation to visit America arrived on his desk in 1824, he was more than ready for the warm welcome from the country whose independence he had fought for.

FEE’s Lawrence Reed in Paris visiting Lafayette’s grave at Picpus Cemetery,. (Photo taken by George Harbison)

Late in life (he died in May 1834 at the age of 76), Lafayette could reflect on a life full of adventure, danger, and achievement. It did not escape him that millions on both sides of the Atlantic revered him for all that he did for the liberty of others. These words, among the last he ever wrote, bear witness to his deep affection for his “adopted” nation:

I have always loved liberty with the enthusiasm which actuates the religious man with the passion of a lover, and with the conviction of a geometrician. On leaving college, where nothing had displeased me more than a state of dependance, I viewed the greatness and the littleness of the court with contempt, the frivolities of society with pity, the minute pedantry of the army with disgust, and oppression of every sort with indignation. The attraction of the American revolution transported me suddenly to my place. I felt myself tranquil only when sailing between the continent whose powers I had braved, and that where, although our arrival and our ultimate success were problematical, I could, at the age of nineteen, take refuge in the alternative of conquering or perishing in the cause to which I had devoted myself.

If you visit Paris, be sure to pay your respects at Picpus Cemetery, the largest private cemetery in the city. An American flag flies there above Lafayette’s body. He is buried beneath American soil because the site was sprinkled with earth that he himself brought in a trunk when he visited Bunker Hill in Boston years before. During World War I, American troops frequently stopped at the great man’s grave, where they cried, “Lafayette, We Are Here!”

Never forget the Marquis de Lafayette. He remains one of the best friends liberty ever had. May his Grand Tour for Liberty never end.

For Additional Information, See:

Marquis de Lafayette: Hero of Two Worlds (Simon Whistler Biographics video)

Hero of Two Worlds: The Marquis de Lafayette and the Age of Revolution by Mike Duncan

Lafayette in the Somewhat United States by Sarah Vowell

Lafayette by Harlow Giles Unger

Lafayette: The Lost Hero (video)

Historian Mike Duncan interviewed on CBS This Morning (video)

Lafayette’s Visit to America in 1824-25 by Shannon Selin

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How Sri Lanka’s Attempt at Modern Monetary Theory Went Horribly Sideways

August 11, 2022 by Staff Reporter

Developments over the past few months in the small island nation of Sri Lanka have captured the attention, and concern, of many around the globe. Footage has gone viral on social media of protestors storming the President’s House and occupying the streets of the capital city of Colombo, prompting the nation’s government to declare a state of emergency.

The upheaval in Sri Lanka is largely the product of an economic crisis that’s seen a chronic shortage of key goods such as food, fuel, and medicine, leaving in its wake an inflation rate upwards of 70 percent. Mainstream economists’ fingers have pointed to a variety of explanations for these numbers, ranging from a declining tourism industry to the country’s ban of chemical fertilizer to the Russia-Ukraine conflict.

While these factors have each undoubtedly contributed to the economic crisis, there remains a key component almost conveniently overlooked by many economists: the monetization of Sri Lanka’s debt, an economic policy heavily favored by advocates of Modern Monetary Theory (MMT).

MMT argues that the federal government can spend as much money as necessary to achieve full employment without being constrained by tax revenue or debt issuance. Rather, the government can finance such spending by borrowing money from the central bank, essentially printing new money into existence in the process known as debt monetization.

Advocates of MMT argue that as long as the economy is below full employment, this tactic of debt monetization will not trigger inflation. Sri Lanka, however, serves to disprove this rather empty belief. Despite its economic crisis being defined by a critical deficiency of basic needs, such a catastrophe can be traced back to years of inflation under MMT-guided policies.

Particularly, the adoption of MMT in Sri Lanka triggered rampant inflation which, in turn, triggered a currency crisis that prevented the developing economy from importing its most crucial necessities. It’s important, however, to see this process play out over time.

Sri Lanka and the Attempt at MMT

On the eve of December 2019, Sri Lankan President Gotabaya Rajapaksa introduced an unprecedented series of tax cuts that saw a 33.5 percent decline in registered taxpayers, not only vastly reducing government revenue but downgrading the country’s credit rating in its ability to pay off outstanding debt.

As a result, the central bank under Governor W.D. Lakshman embarked on a campaign to increase the proportion of domestic debt through the central bank’s takeover of much of the debt’s financing, arguing that, “domestic currency debt… in a country with sovereign powers of money printing, as the modern monetary theorists would argue, is not a huge problem.” Economist Mihir Sharma in writing for Bloomberg identifies that with this statement, “Sri Lanka is the first country in the world to reference MMT officially as a justification for money printing.”

With MMT as official policy, Sharma finds a 42 percent increase in Sri Lanka’s money supply between December 2019 and August 2021. This reflects the findings of Prof. Sirimevan Colombage of the Open University of Sri Lanka, who observed a 156 percent increase in Bond Currency Derivatives (the Sri Lankan equivalent of Treasury Securities) bought by the central bank in 2021 alone, equivalent to $6.5 billion.

Contrary to MMT advocates’ predictions, however, high money supply growth brought with it a high rate of inflation. Whereas 2019 saw a rate of 3.5 percent, inflation immediately jumped to 5.7 percent in January 2020 then to an unprecedented 17.5 percent in February 2022.

It’s important to recall that this rise in inflation was not in itself the defining issue of Sri Lanka’s economic crisis, but rather a catalyst of it. Nonetheless, the fivefold increase in inflation over a roughly three-year span meant a spiraling cost of living while economic growth stagnated from the erosion of price signals.

Inflation and the Currency Crisis

MMT and its corollary of inflation still spell out a much worse scenario for developing countries that rely on imports for much of their economic activity, like Sri Lanka. The small island nation, like many other developing economies, runs a sizable trade deficit, heavily relying on the importation of everything from food and medicine to oil and machinery.

This matters because most countries finance their imports with a global reserve currency such as the US Dollar, meaning that in order to sustain its imports Sri Lanka has to first swap its own currency, the Rupee, for other currencies like the dollar. Yet as the rupee has encountered serious inflation through years of MMT policy, it’s steadily depreciated relative to the dollar before crashing in March.

Since December 2019, the cost of a US Dollar, in terms of Sri Lankan Rupees, has nearly doubled. And since imports to Sri Lanka have to be financed with a global reserve currency like the dollar, this means that imports have essentially become almost twice as expensive. Meanwhile, the collapsing rupee has made it far more expensive to buy or borrow dollars on the foreign exchange market, while the country’s trade deficit means that Sri Lanka can’t generate enough funds through exports.

The result is a dire situation of economic and social collapse in the nation. Drivers have had to wait in line for days for rationed gas. The supply of life-saving medicine has become incredibly scarce, and for some drugs, completely depleted. At the same time, chronic shortages have left millions in a state of food insecurity.

A Lesson to be Learned

Although a somber tale that will continue to take a toll on the country for months to come, the economic crisis in Sri Lanka should serve as a lesson for all other countries contemplating the lure of Modern Monetary Theory. Not only does debt monetization and seemingly limitless spending bring with it drastic inflation, but potentially economic collapse when a country can no longer afford to import the goods it’s reliant upon.

Rather, it goes back to the old adage that if something seems too good to be true, it probably is. MMT, with its promise of reaching full employment through merely printing money, has proved itself to be nothing short of a failure in its first application in Sri Lanka. Whether other countries can understand this in light of the ideology’s seductive appeal remains to be seen.

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Why the Student Loan Repayments Remain Frozen—With No End in Sight

August 3, 2022 by Staff Reporter

A few months ago, I suggested that we had entered a state of federal student loan permafrost, a tenuous but seemingly endless halt on repayment coupled with ongoing, targeted batches of loan forgiveness. That condition shows new signs of remaining, with the Wall Street Journal reporting last week that the U.S. Department of Education told loan servicers not to start sending billing statements to borrowers, indicating repayments will not resume after August 31, the day the Biden administration had chosen for the end of the current freeze extension.

This has become an almost comical state of affairs, except that the freeze is not really a freeze, which would have had repayments pick back up as if nothing had happened when the freeze ended. No, during this “freeze” interest payments have been set at zero, not simply held in stasis to be paid when the freeze ends. Also, the frozen months count toward various types of time‐​based loan forgiveness. That’s why the freeze has so far cost taxpayers well beyond $100 billion.

Of course, this might just be the student loan sideshow if the Biden administration declares some level of blanket forgiveness. Some senators have called for cancelation of up to $50,000 per borrower, but the Biden administration, according to reports, is looking at $10,000, maybe with income limits.

Setting aside the huge constitutional problem with such cancelation – the Constitution gives the president no authority to forgive hundreds‐​of‐​billions in debt – it would be very poorly targeted to those in need. Keep in mind that people with college degrees tended to weather the COVID economy much better than those without; less than 38 percent of American adults have bachelor’s degrees; student loans are disproportionately used by people to attend graduate school; and that higher ed confers big earnings premiums.

To spell it out a bit more, using various data sources I have estimated distribution of cancelation based on income and race, both of which have been pointed to as reasons for forgiveness. As shown below, with $10,000 canceled, 21 percent would go to the top quintile (divided into the top two deciles) of households by income, and only 13 percent to the lowest quintile. The top two quintiles would receive nearly half of all cancelation. $50,000 cancelation would be even more skewed, with the top quintile getting 24 percent of the total and the bottom only 8 percent. That’s because wealthier people tend to consume more – and more expensive – education.

The race‐​based argument for mass cancelation is that African‐​American students tend to take on more debt for college than white students. That is accurate, but mass cancelation would still be poorly targeted because there are so many more non‐​black students. With $10,000, African Americans would get 20 percent of total canceled debt and white borrowers 61 percent. Only 6 percent would go to Hispanic households, which tend to consume less higher education, and 13 percent to “other,” including Asians who tend to consume more higher education than other groups. At $50,000, the white share drops to 60 percent and African‐​American to 22 percent, while the Hispanic share drops 1 percentage point, and other stays the same.

One final argument is that debt cancelation would disproportionately help people with low wealth, and when one looks at current wealth it appears to do that. But as Adam Looney of the Brookings Institution explains, once the value of the education is accounted for, cancelation skews toward the wealthy. And you must consider that value: As Looney notes, assessing student debt without considering the value of the education is like looking at a mortgage without considering the value of the house.

No matter where one stands on cancelation, it is hard to believe that anyone is satisfied with the current can‐​kicking. There is simply no rational excuse for extending the freeze again. But there is also no justification for mass cancelation. Which might be why we are stuck in permafrost: Telling borrowers it is time give taxpayers their money back is hard politically. But it is the right thing to do.

This Cato Institute article was republished with permission.

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UK Man Arrested For ‘Malicious Communications’ After Posting Meme Mocking the Transgender Flag

August 2, 2022 by Staff Reporter

Hardly a day goes by without some viral international incident reminding us why we’re so lucky to have the First Amendment. The latest such lunacy comes courtesy of the United Kingdom, where police just arrested a man for posting an allegedly offensive tweet.

Yes, seriously.

As shown in a viral video, Hampshire officers on Thursday confronted and arrested a UK man. One of the officers says, “Someone has been caused anxiety based on your social media post. And that is why you’re being arrested.”

I checked and this is not a hoax, the Hampshire (UK) Police indeed arrested a guy because he posted a meme of a trans ‘flag’ shaped like a swastika. And then arrested another guy for filming the first arrest.

If your reaction is “but that speech is noxious!” then you failed. https://t.co/FE6yOkg4fe

— Jeff B. is *BOX OFFICE POISON* (@EsotericCD) July 31, 2022

The post at question was reportedly an image mocking the many evolutions of the LGBT/transgender pride flag by reshaping it into a swastika. 

If you saw this video go viral, the details are even more insane.

British police arrested a guy for posting this meme on social media of the trans flag shaped like a swastika.

They also arrested the guy who filmed the video for good measure. pic.twitter.com/1nnUxZR0jU

— Greg Price (@greg_price11) July 31, 2022

According to the BBC, the man was arrested for “malicious communications,” while another man who recorded the incident was arrested for supposedly “obstructing an arrest.”

This rather alarming graphic from the Hampshire government attempts to explain what “malicious communication” is. The graphic notes that malicious communication “relates to the sending of indecent, offensive or threatening letters, electronic communication or articles with the intent to cause the recipient distress or anxiety” and that it “is a criminal offense, which could result in prosecution and a criminal record.”

The backlash to this act of censorship has been swift and severe. 

Hampshire Police & Crime Commissioner Donna Jones has condemned her own officers’ actions. 

“I am concerned about both the proportionality and necessity of the police’s response to this incident,” she said. “When incidents on social media receive . . . two visits from police officers but burglaries and non-domestic break-ins don’t always get a police response, something is wrong.”

Hopefully, the man in question will not ultimately face any criminal consequences given the intense public scrutiny of the police’s actions in this case. But the fact that this arrest even occurred in the first place reminds us why the First Amendment is so important.

The UK laws about “malicious communication” are clear infringements on free speech that would never for a moment stand in a country with free speech protections, like the United States where the First Amendment provides broad speech protections from government. The UK’s laws set the stage for this arrest and certainly have a chilling effect on free expression.

After all, who knows what someone else might find offensive or what might make someone else anxious?

As John Locke explained, individuals have rights to their persons and property, including the right to use one’s person and property for communication. But, nobody has a right to any particular emotional state. To enforce such a false “right” for some means violating the true rights of others: including the freedom of speech. 

It doesn’t really matter whether you think the UK man’s post was just poking fun or was hateful and offensive. We should all support his right to speak freely, and even say things that others find hateful or distressing without being persecuted or arrested by the government.

Those criteria are fundamentally subjective—as the “malicious communications” graphic puts it, the criminality depends on the “potential impact” and “how the other party might interpret your behavior.” Such broad and subjective criteria can be used to shut down any unpopular idea and stifle any debate, no matter how crucial. 

If we’re not free to speak, then we’re really not even free to think. It’s a dark day indeed when an advanced, Western nation, let alone the UK, once home to free speech champions like Locke, arrests someone for merely speaking in a way that offended someone online.  

Don’t take the freedom of speech we enjoy in the United States for granted. Or one day, we might see videos of dystopian incidents like this—of police arresting people over politically incorrect tweets—occur in “the land of the free.”


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Sri Lanka Crisis Reveals the Dangers of Green Utopianism

July 20, 2022 by Staff Reporter

Last week, a group of Sri Lankan protestors took a refreshing dip in President Gotabaya Rajapaksa’s pool. It was probably a welcome respite from the steamy eighty-degree day in Colombo, as well from the unprecedented economic crisis currently devastating the country. Over the last year, Sri Lanka has experienced an annual inflation rate of more than 50 percent, with food prices rising 80 percent and transport costs a staggering 128 percent. Faced with fierce protests, the Sri Lankan government declared a state of emergency and deployed troops around the country to maintain order.

On Thursday morning, the New York Times published an episode of The Daily podcast discussing some of the forces behind the collapse. They outlined how years of irresponsible borrowing by the Rajapaksa political dynasty, combined with the damage caused by Covid lockdowns to Sri Lanka’s tourism industry, drained the country’s foreign exchange reserves. Soon, the country was unable to make payments on its debt or import essential goods like food and gasoline. Strangely, the hosts of the podcast, which reaches over 20 million monthly listeners, didn’t mention President Rajapaksa’s infamous fertilizer ban once during the thirty-minute episode.

The fertilizer ban was, in fact, a major factor in the unrest. Agriculture is an essential economic sector in Sri Lanka. Around 10 percent of the population works on farms, and 70 percent of Sri Lankans are directly or indirectly dependent on agriculture. Tea production is especially important, consistently responsible for over ten percent of Sri Lanka’s export revenue. To support that vital industry, the country spent hundreds of millions of dollars a year importing synthetic fertilizers.

During his election campaign in 2019, Rajapaksa promised to wean the country off these fertilizers with a ten-year transition to organic farming. He expedited his plan in April 2021 with a sudden ban on synthetic fertilizers and pesticides. He was so confident in his policies that he declared in a (since stealthily deleted and memory-holed) article for the World Economic Forum in 2018, “This is how I will make my country rich again by 2025.” As the ecomodernist author Michael Shellenberger writes, the results of the experiment with primitive agricultural techniques were “shocking:”

Over 90 percent of Sri Lanka’s farmers had used chemical fertilizers before they were banned. After they were banned, an astonishing 85 percent experienced crop losses. Rice production fell 20 percent and prices skyrocketed 50 percent in just six months. Sri Lanka had to import $450 million worth of rice despite having been self-sufficient just months earlier. The price of carrots and tomatoes rose fivefold. … [Tea exports crashed] 18 percent between November 2021 and February 2022 — reaching their lowest level in more than two decades.

Of course, Rajapaksa’s foolish policy wasn’t revealed to him in a dream. As Shellenberger points out, the ban was inspired by an increasingly Malthusian environmentalism led by figures like the Indian activist Vandana Shiva, who cheered the ban last summer. Foreign investors beholden to the same ideology also praised and rewarded Sri Lanka for “taking up sustainability and ESG (environmental, social and corporate governance) issues on its top priority.” ESG represents a trend (or lasting shift, depending on who you ask) in some investors’ priorities. Put simply, it is an attempt to move capital toward organizations that further a set of amorphous environmental and social justice goals instead of toward the enterprises most likely to succeed and turn a profit.

Proponents of ESG have been pushing for government mandates requiring enterprises to disclose detailed information related to environmentalism and other social goals. That distorts and harms the smooth functioning of the capital markets that keep modern economies running and, in some cases, incentivizes nice-sounding but economically inefficient projects, like a return to primitive agriculture. “The nation of Sri Lanka has an almost perfect ESG rating of 98.1 on a scale of 100,” notes David Blackmon in Forbes, and “the government which had forced the nation to achieve that virtue-signaling target in recent years [has as a result] collapsed.” Sri Lanka, in other words, offers a grim preview of what can result from distorting markets in the name of utopian priorities.

Consider a long-run perspective. Throughout most of human history, farmers produced only organic food—and food was so scarce that, despite the much lower population in the past, malnutrition was widespread. The long-term, global decline in undernourishment is one of humanity’s proudest achievements. Lacking a sense of history and taking abundant food for granted, some environmentalists want to transform the global food system into an organic model. They see modern agriculture as environmentally harmful and would like to see a transition to natural fertilizers that would be familiar to our distant ancestors, such as compost and manure.

However, conventional farming is not only necessary to produce a sufficient amount of food to feed humanity (a point that cannot be emphasized enough—as the writer Alfred Henry Lewis once observed, “There are only nine meals between mankind and anarchy”) but it is in many ways better for the environment. According to a massive meta-analysis by the ecologists Michael Clark and David Tilman, the natural fertilizers used in organic agriculture actually lead to more pollution than conventional synthetic products. Fertilizers and pesticides also allow us to farm land more intensively, leading to ever-higher crop yields, which allow us to grow more food on less land. According to HumanProgress board member Matt Ridley, if we tried to feed the world with the organic yields of 1960, we would have to farm twice as much land as we do today. 

Global agricultural use has peaked and is now in decline. So long as crop yields continue to increase, more and more land can be returned to natural ecosystems, which are far more biodiverse than any farm. Smart agriculture allows nature to rebound.

In wealthy countries, conventional farming is becoming ever-more efficient, using fewer inputs to grow more food. In the United States, despite a 44 percent increase in food production since 1981, fertilizer use barely increased, and pesticide use fell by 18 percent. As the esteemed Rockefeller University environmental scientist Jesse Ausubel noted, if farmers everywhere adopted the modern and efficient techniques of U.S. farmers, “an area the size of India or the USA east of the Mississippi could be released globally from agriculture.”

Most importantly, it must be restated, conventional agriculture feeds the world. Since the Green Revolution of the 1950s and 60s, world agricultural production has exploded, causing the global food supply to reach nearly 3000 kcal per day in 2017, up from just over 2,000 in 1961. While hunger is now making a comeback, that is due to war, export restrictions, and the misguided policies of leaders like Rajapaksa, not a lack of the ability to produce enough food.

The fertilizer ban was not the only factor behind Sri Lanka’s economic crash. Much of the damage was also caused by the hastiness of the ban and the difficulty of obtaining enough organic alternatives. However, the idea that organic farming can produce enough food for the world is an unreachable fantasy based on the naturalistic fallacy — the baseless notion that anything modern, such as agriculture incorporating non-natural components produced by the ingenuity of man, must be inferior to the all-natural precursor. 

As Ted Nordhaus and Saloni Shah from the Breakthrough Institute point out, “there is literally no example of a major agriculture-producing nation successfully transitioning to fully organic or agroecological production.” We must never take the relative rarity of starvation in modern times as a given nor romanticize and seek to return to farming’s all-organic past. Unfortunately, the delusion seems to be spreading, helped along by the global shift toward ESG. Last Sunday, Narendra Modi, the prime minister of India, praised “natural farming” during a speech in Gujarat, calling it a way to “serve mother earth” and promising that India will “move forward on the path of natural farming.” Let’s hope not.

This Human Progress article was republished with permission.

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