newswars--2020-05-01--Three Ways to Speed Recovery from the Economic Crisis

Fostering a speedy recovery from the current economic crisis in Chile depends on freeing up entrepreneurs and others to act freely and create wealth in the marketplace .
This will depend on lessening regulatory burdens , controlling public spending , and lowering taxes .
Understanding the Austrian school view of economic action and entrepreneurship holds the key to understanding the way out of the crisis .
Unlike the Keynesian and Chicago schools , which study economics in mathematical terms as if people were numbers , Austrian school economists focus their research program on the essence of social phenomena : individual @ @ @ @ @ @ @ 2000 ) .
The Austrian school considers economics as part of a general science of human action ( praxeology ) that is understood as the innate creative and entrepreneurial ability of people .
Human action as an entrepreneurial function implies the ability to perceive profit opportunities and the ability and willingness to take advantage of them .
As Mises argued , “ in any real and living economy , every actor is always an entrepreneur ” ( [ 1949 ] 1966 , 253 ) .
Entrepreneurship is the driving force of the dynamic @ @ @ @ @ @ @ characterize life in society .
Kirzner suggests that the scope of entrepreneurial alertness “ refers not to the ability to see what exists , but to the necessarily speculative ability to see the future .
Such metaphorical alertness may consist of the vision of creating something in the future ” ( 1985 , 7 ) .
Alertness involves human action that restructures the entire map of the ends and means of individuals as they act in their respective contexts .
Alertness allows the entrepreneur to notice new profit opportunities to improve his condition @ @ @ @ @ @ @ need prior means .
Entrepreneurship creates knowledge ex nihilo , either new knowledge ( speculation ) or knowledge that existed but has been overlooked until now ( arbitration ) .
Alertness creates an idea in the entrepreneur ’ s mind , but his human action , guided by that idea , requires the use of goods to achieve ends .
The entrepreneur can only speculate ex ante about the effectiveness of his action , but the outcome of his alertness can only be verified ex post .
Alertness also implies serendipity , which @ @ @ @ @ @ @ opportunities that arise by surprise , without being deliberately pursued , and act accordingly .
People learn how to carry out specific actions ( know-how ) and acquire practical behavior patterns ( Huerta de Soto , 1992 ) .
These actions help entrepreneurs articulate their knowledge and improve alertness through a dynamic process of “ learning by seeing ” and “ learning by doing.
” As Mises wrote , “ the market process is the adjustment of the individual actions of the various members of society to the requirements of cooperation ” ( @ @ @ @ @ @ @ .
Market prices communicate information about exchange relations based on the relative scarcity of goods and services subjectively valued by each actor as a seller or consumer , participating in the market or refraining from doing so .
Market prices require the prior existence of private property .
Prices reflect the historical relationships of exchanges that help human minds make a rational economic calculation , that is , the subjective estimate that people in monetary units make about the possible results of their actions .
The economic calculation is reflected in accounting and @ @ @ @ @ @ @ for entrepreneurs on what to produce , how to produce , and in what quantity .
Although the control of production is the task of entrepreneurs , consumers are sovereign and have the power to enrich the poor and impoverish the rich .
Entrepreneurs propose new goods and services on the market , but consumers are free to choose the best or the cheapest .
The prices , the ability , and the will to use this knowledge are essential to saving the available resources .
This fact favors the productivity of resources @ @ @ @ @ @ @ allows the accumulation of additional resources ( Bylund 2016 ) .
The free market tends toward social coordination in the sense that entrepreneurs can only prosper if they adjust their intellect to identify and solve the problems of others .
Therefore , economic progress is the expansion of alternatives open to people ( Bauer and Yamey 1957 ) .
The free exercise of the entrepreneurial function is the basis of economic progress and has no borders ; human creativity has no limits ; in a virtuous process of technological change to solve increasingly @ @ @ @ @ @ @ long-term vision to adopt ideas and take risks ( Foss et al .
2007 ) .
The dynamic process of intertemporal coordination is influenced by the price of time , known as the interest rate .
The interest rate guides entrepreneurs to determine which stages of the production process are relatively more profitable to invest in .
When people increase their savings level , the “ supply of loanable funds ” increases , and the “ interest rate ” decreases .
This makes entrepreneurial projects relatively more profitable in the production stages furthest @ @ @ @ @ @ @ investment in capital goods grows , understood as the goods or services that the actor considers subjectively necessary to produce goods or services closer to final consumption ( Manish and Powell 2014 ) .
The increase in previous voluntary savings fosters economic progress .
because the incentives of entrepreneurs ( investment projects of greater complexity and maturity time ) tend to coordinate with the dispositions of consumers ( consume more in the future ) .
Genuine savings encourage sustainable investment and the creation of more and better goods and services open to people @ @ @ @ @ @ @ goods gives rise to more accessible technologies to meet the requirements of people ( for example , industry , transport , education , health , social security , or the environment ) .
Consider the case of Robinson Crusoe , who has just arrived on an island ( Böhm-Bawerk 1959 , 2 , 102–18 ) .
He is dedicated to the collection of coconuts , as it ’ s the only means of subsistence .
If he does not have capital goods , Crusoe must climb the palm trees to collect the coconuts @ @ @ @ @ @ @ he perceives that a wooden rod could help him hit the coconuts on top of the palm tree to make them fall faster and more safely .
Crusoe saves some coconuts for the full four days that he estimates it will take to create his wooden rod , reducing his consumption below its potential level .
After creating the wooden rod , Crusoe can collect more coconuts in less time and has increased his productivity .
He has more time available for other valuable purposes to him ( for example , building a @ @ @ @ @ @ @ his food and clothing ) .
All savings produce capital goods , although initially they are consumer goods ( such as coconuts ) that remain unconsumed ( or unsold ) .
Capital goods ( such as the coconuts ) are gradually replaced by more advanced ones ( such as the wooden rod ) .
The entrepreneurship and investment in capital goods , financed with genuine savings , are vital to healthy and sustained economic progress .
As Huerta de Soto explained : Alternatively , if Crusoe followed only interventionist recipes of the sort @ @ @ @ @ @ @ , he could only consume coconuts until they were finished ( which produces an inexorable crisis ) .
Furthermore , increased risks of coercion and confiscation ( for example , political instability , lack of public order , coercive institutional arrangements , uncontrolled inflation , risk of default , taxes , and confiscatory regulations ) would make productive entrepreneurship increasingly difficult or even impossible .
If the environment is not favorable to entrepreneurship , the level of saving and investment of local and foreign entrepreneurs will be lower and will focus on short @ @ @ @ @ @ @ .
HOW TO ENSURE A HEALTHY AND SUSTAINED ECONOMIC RECOVERY ?
How do we ensure a healthy and sustained economic and social recovery from our brewing economic crisis ?
Our proposals are consistent with our theory of economic progress and can be reduced to three general guidelines , which must be applied together since they are mutually reinforcing : 1 ) Eliminate legal barriers to entry into entrepreneurship to streamline the allocation of productive factors ( natural resources , labor , capital , and entrepreneurship ) to the activities most required by people @ @ @ @ @ @ @ saving and investment for the identification and solution of human problems .
This aims to respect private property , establish freedom of contract ( a society based on contractual ties ) , limit the interference of politicians in the market process .
2 ) Confiscatory relief for families and enterprises .
This reform implies the elimination of the first and second category taxes on small and medium-sized enterprises ( SMEs ) for the first two years of activity ; the reduction of the business tax from the current 27 percent to 15 percent @ @ @ @ @ @ @ tax rate ) ; and the elimination of the value-added tax ( VAT ) from the basic basket , of inheritance , allowance , and donation taxes , of investment taxes , and of housing taxes ( also called “ contributions ” ) , along with seeking autonomy for the municipalities to set the level of municipal taxes ( i.e.
, land taxes , commercial patents , and the casino tax ) .
Lowering the tax burden on people ensures higher degrees of freedom to dispose of the fruits of their effort , @ @ @ @ @ @ @ saving , investment , and capital formation .
Increasing investment per capita increases people ’ s productivity and real wages .
3 ) Ensure a structural balance and prevent fiscal deficit and indebtedness .
A drastic reduction in public spending is recommended , especially “ political-bureaucratic spending ” ( for example , ministries , secretaries , and other state agencies , the salaries of public officials , state goods and services , arbitrary subsidies to enterprises and pressure groups ) , which represents about half of total spending ( see the Estadísticas Fiscales @ @ @ @ @ @ @ Dirección de Presupuesto ’ s ( Budget Directorate ) webpage ) .
This reform seeks to keep a structural balance between state revenues and expenditures .
Furthermore , it is proposed to modify the structural balance law from requiring a 0 percent surplus to one of 2 percent in order to promote state savings and avoid public debt .
This project conjectures that the more the size of the public sector is reduced , the more scope there will be to reduce taxes and corruption , which is inherent in the existence of @ @ @ @ @ @ @ CRITICISMS Proponents of greater interventionism have articulated numerous justifications for government coercion and the arbitrary confiscation of the efforts of others .
Among them two stand out : 1 ) Politicians often argue that “ public spending can not be touched.
” If public spending is reduced , they claim , the poorest people will be unprotected .
This statement is false .
First , politicians often resort to this argument to hide behind the poor , allowing them to preserve their caste privileges by parasitically living on taxpayer money .
Paradoxically , @ @ @ @ @ @ @ comes from the VAT , which is the most regressive tax .
Therefore , to a large extent politicians ’ salaries come from the money of the humblest people .
Second , our proposal only targets political and bureaucratic spending .
Well-evaluated social programs and aid to education are not considered .
It would be interesting , furthermore , to focus on “ social spending ” in the most productive areas : job training and entrepreneurship .
Third , our proposal benefits people in general , and especially the poorest , with better @ @ @ @ @ @ @ opening a range of alternatives for them to satisfy their requirements more cheaply and efficiently .
2 ) The other argument is that , compared to developed countries , “ taxes , debt , and public spending in Chile are low ” and yet these low levels have had no benefit for most Chileans .
It is therefore suggested that the levels of taxes , debt , and public spending be increased .
However , the most basic empirical evidence reveals that this claim is unfounded .
Although Chile was one of the @ @ @ @ @ @ @ 1970s , the “ lukewarm market-friendly reforms ” of the 1980s have contributed to its current position as the region ’ s leader in human development , economic freedom , doing business , and perception of corruption .
Chile ’ s GDP multiplied 5.5 times between 1990 and 2017 , while North America ’ s only did so 2.5 times , the European Union ’ s 2.8 , Hong Kong ’ s 3.5 , Singapore ’ s 4.2 , Japan ’ s 2.2 , New Zealand ’ s , and Australia ’ s @ @ @ @ @ @ @ social debacle , in fact , was generated precisely by the Keynesian , interventionist , and socialist recipes of the last decade .
The time has come to cast off the interventionist restraints on entrepreneurial innovation .
It is time to change the culture of coercion and arbitrary confiscation for a culture of entrepreneurship , genuine savings , and social cooperation .
Chile has a unique opportunity to be a benchmark of freedom and progress in the world and , once and for all , to eliminate poverty and become a more prosperous @ @ @ @ @ @ @

Fostering a speedy recovery from the current economic crisis in Chile depends on freeing up entrepreneurs and others to act freely and create wealth in the marketplace.
This will depend on lessening regulatory burdens, controlling public spending, and lowering taxes. Understanding the Austrian school view of economic action and entrepreneurship holds the key to understanding the way out of the crisis.
Here’s why:
Unlike the Keynesian and Chicago schools, which study economics in mathematical terms as if people were numbers, Austrian school economists focus their research program on the essence of social phenomena: individual human action (Hülsmann 1999; Backhouse 2000). The Austrian school considers economics as part of a general science of human action (praxeology) that is understood as the innate creative and entrepreneurial ability of people. Human action as an entrepreneurial function implies the ability to perceive profit opportunities and the ability and willingness to take advantage of them. As Mises argued, “in any real and living economy, every actor is always an entrepreneur” ([1949] 1966, 253). Entrepreneurship is the driving force of the dynamic processes of voluntary interactions and exchanges that characterize life in society.
Kirzner suggests that the scope of entrepreneurial alertness “refers not to the ability to see what exists, but to the necessarily speculative ability to see the future. Such metaphorical alertness may consist of the vision of creating something in the future” (1985, 7). Alertness involves human action that restructures the entire map of the ends and means of individuals as they act in their respective contexts. Alertness allows the entrepreneur to notice new profit opportunities to improve his condition, that is, creativity does not need prior means. Entrepreneurship creates knowledge ex nihilo, either new knowledge (speculation) or knowledge that existed but has been overlooked until now (arbitration). Alertness creates an idea in the entrepreneur’s mind, but his human action, guided by that idea, requires the use of goods to achieve ends. The entrepreneur can only speculate ex ante about the effectiveness of his action, but the outcome of his alertness can only be verified ex post. Alertness also implies serendipity, which is the ability to take advantage of opportunities that arise by surprise, without being deliberately pursued, and act accordingly.
People learn how to carry out specific actions (know-how) and acquire practical behavior patterns (Huerta de Soto, 1992). These actions help entrepreneurs articulate their knowledge and improve alertness through a dynamic process of “learning by seeing” and “learning by doing.” As Mises wrote, “the market process is the adjustment of the individual actions of the various members of society to the requirements of cooperation” ([1949] 1966, 259). Market prices communicate information about exchange relations based on the relative scarcity of goods and services subjectively valued by each actor as a seller or consumer, participating in the market or refraining from doing so. Market prices require the prior existence of private property. Prices reflect the historical relationships of exchanges that help human minds make a rational economic calculation, that is, the subjective estimate that people in monetary units make about the possible results of their actions. The economic calculation is reflected in accounting and expectations, which serve as a guide for entrepreneurs on what to produce, how to produce, and in what quantity. Although the control of production is the task of entrepreneurs, consumers are sovereign and have the power to enrich the poor and impoverish the rich. Entrepreneurs propose new goods and services on the market, but consumers are free to choose the best or the cheapest.
The prices, the ability, and the will to use this knowledge are essential to saving the available resources. This fact favors the productivity of resources and the increase in income, which allows the accumulation of additional resources (Bylund 2016). The free market tends toward social coordination in the sense that entrepreneurs can only prosper if they adjust their intellect to identify and solve the problems of others. Therefore, economic progress is the expansion of alternatives open to people (Bauer and Yamey 1957). The free exercise of the entrepreneurial function is the basis of economic progress and has no borders; human creativity has no limits; in a virtuous process of technological change to solve increasingly complex human problems.
Entrepreneurship stimulates a long-term vision to adopt ideas and take risks (Foss et al. 2007). The dynamic process of intertemporal coordination is influenced by the price of time, known as the interest rate. The interest rate guides entrepreneurs to determine which stages of the production process are relatively more profitable to invest in. When people increase their savings level, the “supply of loanable funds” increases, and the “interest rate” decreases. This makes entrepreneurial projects relatively more profitable in the production stages furthest from final consumption. That is, investment in capital goods grows, understood as the goods or services that the actor considers subjectively necessary to produce goods or services closer to final consumption (Manish and Powell 2014). The increase in previous voluntary savings fosters economic progress. because the incentives of entrepreneurs (investment projects of greater complexity and maturity time) tend to coordinate with the dispositions of consumers (consume more in the future). Genuine savings encourage sustainable investment and the creation of more and better goods and services open to people. The more intensive production of capital goods gives rise to more accessible technologies to meet the requirements of people (for example, industry, transport, education, health, social security, or the environment).
Consider the case of Robinson Crusoe, who has just arrived on an island (Böhm-Bawerk 1959, 2, 102–18). He is dedicated to the collection of coconuts, as it’s the only means of subsistence. If he does not have capital goods, Crusoe must climb the palm trees to collect the coconuts directly with his hands. However, he perceives that a wooden rod could help him hit the coconuts on top of the palm tree to make them fall faster and more safely. Crusoe saves some coconuts for the full four days that he estimates it will take to create his wooden rod, reducing his consumption below its potential level. After creating the wooden rod, Crusoe can collect more coconuts in less time and has increased his productivity. He has more time available for other valuable purposes to him (for example, building a more comfortable and safe shelter or changing his food and clothing). All savings produce capital goods, although initially they are consumer goods (such as coconuts) that remain unconsumed (or unsold). Capital goods (such as the coconuts) are gradually replaced by more advanced ones (such as the wooden rod). The entrepreneurship and investment in capital goods, financed with genuine savings, are vital to healthy and sustained economic progress. As Huerta de Soto explained:
Thus, the key importance of not disregarding anyone’s entrepreneurship. Even the humblest people, those of the lowest social status or most lacking in formal knowledge, will exclusively possess at least small bits or pieces of knowledge and information which can be of decisive value in the course of social events. From this standpoint, it is obvious that our concept of entrepreneurship is of an essentially humanistic nature, a concept which makes economics, as it is understood and advanced by members of the Austrian school, the quintessential humanistic science (2008, 25).
Alternatively, if Crusoe followed only interventionist recipes of the sort supported by the Keynesian school and others, he could only consume coconuts until they were finished (which produces an inexorable crisis). Furthermore, increased risks of coercion and confiscation (for example, political instability, lack of public order, coercive institutional arrangements, uncontrolled inflation, risk of default, taxes, and confiscatory regulations) would make productive entrepreneurship increasingly difficult or even impossible. If the environment is not favorable to entrepreneurship, the level of saving and investment of local and foreign entrepreneurs will be lower and will focus on short periods (Bylund and McCaffrey 2017).
HOW TO ENSURE A HEALTHY AND SUSTAINED ECONOMIC RECOVERY?
How do we ensure a healthy and sustained economic and social recovery from our brewing economic crisis? Our proposals are consistent with our theory of economic progress and can be reduced to three general guidelines, which must be applied together since they are mutually reinforcing:
1) Eliminate legal barriers to entry into entrepreneurship to streamline the allocation of productive factors (natural resources, labor, capital, and entrepreneurship) to the activities most required by people, and promote the dynamic process of saving and investment for the identification and solution of human problems. This aims to respect private property, establish freedom of contract (a society based on contractual ties), limit the interference of politicians in the market process.
2) Confiscatory relief for families and enterprises. This reform implies the elimination of the first and second category taxes on small and medium-sized enterprises (SMEs) for the first two years of activity; the reduction of the business tax from the current 27 percent to 15 percent (i.e., reverting to the 2000 tax rate); and the elimination of the value-added tax (VAT) from the basic basket, of inheritance, allowance, and donation taxes, of investment taxes, and of housing taxes (also called “contributions”), along with seeking autonomy for the municipalities to set the level of municipal taxes (i.e., land taxes, commercial patents, and the casino tax). Lowering the tax burden on people ensures higher degrees of freedom to dispose of the fruits of their effort, in addition to facilitating the undertaking of saving, investment, and capital formation. Increasing investment per capita increases people’s productivity and real wages.
3) Ensure a structural balance and prevent fiscal deficit and indebtedness. A drastic reduction in public spending is recommended, especially “political-bureaucratic spending” (for example, ministries, secretaries, and other state agencies, the salaries of public officials, state goods and services, arbitrary subsidies to enterprises and pressure groups), which represents about half of total spending (see the Estadísticas Fiscales (Fiscal Statistics) page on the Dirección de Presupuesto’s (Budget Directorate) webpage). This reform seeks to keep a structural balance between state revenues and expenditures. Furthermore, it is proposed to modify the structural balance law from requiring a 0 percent surplus to one of 2 percent in order to promote state savings and avoid public debt. This project conjectures that the more the size of the public sector is reduced, the more scope there will be to reduce taxes and corruption, which is inherent in the existence of the state.
SOME ANSWERS TO THE CRITICISMS
Proponents of greater interventionism have articulated numerous justifications for government coercion and the arbitrary confiscation of the efforts of others. Among them two stand out:
1) Politicians often argue that “public spending cannot be touched.” If public spending is reduced, they claim, the poorest people will be unprotected. This statement is false. First, politicians often resort to this argument to hide behind the poor, allowing them to preserve their caste privileges by parasitically living on taxpayer money. Paradoxically, 50 percent of taxes collected in Chile comes from the VAT, which is the most regressive tax. Therefore, to a large extent politicians’ salaries come from the money of the humblest people. Second, our proposal only targets political and bureaucratic spending. Well-evaluated social programs and aid to education are not considered. It would be interesting, furthermore, to focus on “social spending” in the most productive areas: job training and entrepreneurship. Third, our proposal benefits people in general, and especially the poorest, with better job opportunities, higher incomes, and opening a range of alternatives for them to satisfy their requirements more cheaply and efficiently.
2) The other argument is that, compared to developed countries, “taxes, debt, and public spending in Chile are low” and yet these low levels have had no benefit for most Chileans. It is therefore suggested that the levels of taxes, debt, and public spending be increased. However, the most basic empirical evidence reveals that this claim is unfounded. Although Chile was one of the poorest countries in Latin America until the 1970s, the “lukewarm market-friendly reforms” of the 1980s have contributed to its current position as the region’s leader in human development, economic freedom, doing business, and perception of corruption. Chile’s GDP multiplied 5.5 times between 1990 and 2017, while North America’s only did so 2.5 times, the European Union’s 2.8, Hong Kong’s 3.5, Singapore’s 4.2, Japan’s 2.2, New Zealand’s, and Australia’s 2.8. Chile’s economic and social debacle, in fact, was generated precisely by the Keynesian, interventionist, and socialist recipes of the last decade.
The time has come to cast off the interventionist restraints on entrepreneurial innovation. It is time to change the culture of coercion and arbitrary confiscation for a culture of entrepreneurship, genuine savings, and social cooperation. Chile has a unique opportunity to be a benchmark of freedom and progress in the world and, once and for all, to eliminate poverty and become a more prosperous, just, and peaceful country.


newswars--2020-05-01--Testing Deregulation Can Help Fight COVID-19

The road to hell is paved with good intentions , says an old adage .
Unfortunately , the saying has come to haunt India ’ s fight against the COVID virus .
The Indian Council of Medical Research ( ICMR ) stringently regulates which private labs can and can not test for the virus .
The ICMR licensing rules are intended to help consumers by protecting them against fraudulent labs .
These regulations have however had quite the opposite effect .
The ICMR regulations trampled private initiatives to test for the virus in the early stages of the pandemic , @ @ @ @ @ @ @ to detect , treat , and quarantine patients .
The fight against COVID-19 would benefit from a comprehensive deregulation of the market for testing .
The ICMR regulations are based on the belief that the market for medical testing would fail in the absence of the quality standards set by the agency .
After all , most consumers know little about medical science .
They are unlikely to be able to tell good tests from impostors .
With the possibility of fooling consumers in sight , phony private labs would mushroom .
These @ @ @ @ @ @ @ labs , as dummy tests cost pennies .
Without government regulation , the story goes , the supply of dummy tests would far outnumber that of true tests .
Given the low likelihood of getting a true test , rational consumers would see no point in paying for tests .
They would no longer demand tests , and as a consequence labs would no longer sell them .
This is the usual story of how markets , riddled with asymmetric information , would fail in the absence of government regulation , first told @ @ @ @ @ @ @ for Lemons : Quality Uncertainty and the Market Mechanism.
” Most regulators are aware of the market failure story in one form or another .
What is less known , however , is the penultimate section of the Akerlof ’ s paper , in which he discusses markets institutions that can counteract the problems created by information asymmetry .
This is critical , because the problem of information asymmetry between producers and consumers is not limited to the market for medical testing .
It is rampant in markets for all goods and services @ @ @ @ @ @ @ is the division of labor .
There is no information asymmetry in a Robinson Crusoe economy , where a single man produces all of what he consumes .
In an economy with division of labor and exchange , most individuals do not produce the goods they consume .
In fact , one of the causes of the increases in productivity that come with division of labor is that individuals develop specialized knowledge about the goods they produce .
The flip side of the coin is that individuals know less and less about the @ @ @ @ @ @ @ not repair the automobiles they drive or program the computers they use , let alone build these goods from scratch .
So how do markets work despite asymmetric information everywhere ?
It depends on what we mean by markets .
If we think of markets as places where people trade goods , one struggles to see why markets wouldn ’ t fail in the absence of government regulation .
But if we think of markets as places where people come together to solve problems associated with production and exchange , a wide variety @ @ @ @ @ @ @ least of which is branding and reputation .
Some private players realize that there are greater profits to be made by being truthful to consumers in the long term rather than cheating them a few times .
After all , consumers can not be cheated forever .
Those who come to know the poor quality of the car they bought or of the imitation medical tests they paid for are unlikely to patronize the seller in the future .
Nor are they likely to recommend the seller to others .
Reputation matters for @ @ @ @ @ @ @ than willing to expose the poor quality of the products sold by competitors .
Not long ago , detergent manufacturers in India would hold free washes to illustrate the performance of their product relative to that of competitors .
Wine festivals and Formula One races are but more organized versions of competition to ascertain quality .
What matters is not that consumers know a great deal about the goods they purchase , but that competing sellers are willing to expose each other ’ s quality .
Rivalry between firms is only one of @ @ @ @ @ @ @ the problem of asymmetric information .
In some markets , specialized firms emerge which rate the quality of products sold by other firms .
In financial markets they are known as rating agencies .
In some markets , the certification takes the form of franchising .
McDonald ’ s , for instance , ensures the prescribed quality standards in all its stores through frequent inspections , coupled with a high cost for violation .
Hospital chains impose quality standards on affiliated physicians .
And finally , there are web portals which maintain and @ @ @ @ @ @ @ methods of ascertaining quality differs in its enforcement mechanism , but they all point to the reality that markets are as much about quality and long-term relationships as they are about prices and quantities .
Not only is the market for medical testing likely to work without ICMR regulations , it is likely to work better .
The COVID case is unfortunately illustrative .
In the early phases of the COVID pandemic , the Indian Council of Medical Research effectively prohibited labs from testing for the disease .
In the absence of these @ @ @ @ @ @ @ opportunity to make profits by expanding testing facilities in the wake of the pandemic .
More recently , the ICMR has allowed a limited number of private players to test for the virus .
Regulations , however , require that the labs use testing kits approved by the US Food and Drug Administration , the European Union , or one of its own centers .
This raises the costs of testing and thereby limits access .
Without the ICMR testing kit regulation , competition among kit makers is likely to drive down costs @ @ @ @ @ @ @ automobile manufactures drove down car prices in the post-Ambassador era .
Regulations keep potential low-cost solutions out of the market for far too long .
Mass testing requires a system capable of mass-producing kits at sufficiently low costs .
Germany ’ s success in testing for the virus is illustrative of some of these mechanisms at work .
Germany has been testing more than one hundred thousand people per week since late February .
By April 20 , it had tested more than twenty-five persons per thousand .
Compare this to India , @ @ @ @ @ @ @ one person per thousand .
One reason for Germany ’ s success is a relatively freer market for medical testing compared to India .
Private companies in Germany were able to mass-produce the test kits early on , as they were less burdened by a central regulatory body like the Indian Council of Medical Research .
The government of India has struggled with the paucity of testing kits and equipment .
But the number of testing kits—not unlike the number of ventilators and hospital beds—is not an immutable given .
Rather testing kits @ @ @ @ @ @ @ institutional arrangements .
Some institutional arrangements incentivize us to strive to serve our fellow human beings , while others generate sloppy and lethargic behavior .
Germany ’ s experience tells us that , in contrast to conventional wisdom , decentralized systems are likely to respond more effectively to pandemics than systems that depend on central directives .
The COVID pandemic illustrates an often underappreciated cost of government regulation : the impeding of rapid market responses to new social needs .
Government regulations often have more to do with the present than the future @ @ @ @ @ @ @ our responses to unforeseen pathogens .
Profit-motivated entrepreneurs , unlike government bureaucrats , have an incentive to predict possible pandemics , much the way hedge funds forecast stock prices and automobile producers forecast the demand for cars .
Such forward-looking behavior is the key to predicting and acting within a reasonable time frame to contain new pathogens .
Regulatory reforms are in order if we are to maximize our chances of successfully fighting pandemics ; the next one might not give us as much time as the present one has .

The road to hell is paved with good intentions, says an old adage.
Unfortunately, the saying has come to haunt India’s fight against the COVID virus. The Indian Council of Medical Research (ICMR) stringently regulates which private labs can and cannot test for the virus. The ICMR licensing rules are intended to help consumers by protecting them against fraudulent labs. These regulations have however had quite the opposite effect. The ICMR regulations trampled private initiatives to test for the virus in the early stages of the pandemic, and they continue to limit our ability to detect, treat, and quarantine patients. The fight against COVID-19 would benefit from a comprehensive deregulation of the market for testing.
The ICMR regulations are based on the belief that the market for medical testing would fail in the absence of the quality standards set by the agency. After all, most consumers know little about medical science. They are unlikely to be able to tell good tests from impostors. With the possibility of fooling consumers in sight, phony private labs would mushroom. These labs would generate greater profits than genuine labs, as dummy tests cost pennies. Without government regulation, the story goes, the supply of dummy tests would far outnumber that of true tests. Given the low likelihood of getting a true test, rational consumers would see no point in paying for tests. They would no longer demand tests, and as a consequence labs would no longer sell them. This is the usual story of how markets, riddled with asymmetric information, would fail in the absence of government regulation, first told by George Akerlof in “The Market for Lemons: Quality Uncertainty and the Market Mechanism.”
Most regulators are aware of the market failure story in one form or another. What is less known, however, is the penultimate section of the Akerlof’s paper, in which he discusses markets institutions that can counteract the problems created by information asymmetry. This is critical, because the problem of information asymmetry between producers and consumers is not limited to the market for medical testing. It is rampant in markets for all goods and services. The root cause of information asymmetry is the division of labor. There is no information asymmetry in a Robinson Crusoe economy, where a single man produces all of what he consumes. In an economy with division of labor and exchange, most individuals do not produce the goods they consume. In fact, one of the causes of the increases in productivity that come with division of labor is that individuals develop specialized knowledge about the goods they produce. The flip side of the coin is that individuals know less and less about the goods they consume. Most people cannot repair the automobiles they drive or program the computers they use, let alone build these goods from scratch.
So how do markets work despite asymmetric information everywhere? It depends on what we mean by markets. If we think of markets as places where people trade goods, one struggles to see why markets wouldn’t fail in the absence of government regulation. But if we think of markets as places where people come together to solve problems associated with production and exchange, a wide variety of solutions opens up, not the least of which is branding and reputation. Some private players realize that there are greater profits to be made by being truthful to consumers in the long term rather than cheating them a few times. After all, consumers cannot be cheated forever. Those who come to know the poor quality of the car they bought or of the imitation medical tests they paid for are unlikely to patronize the seller in the future. Nor are they likely to recommend the seller to others. Reputation matters for profits. And suppliers are often more than willing to expose the poor quality of the products sold by competitors. Not long ago, detergent manufacturers in India would hold free washes to illustrate the performance of their product relative to that of competitors. Wine festivals and Formula One races are but more organized versions of competition to ascertain quality. What matters is not that consumers know a great deal about the goods they purchase, but that competing sellers are willing to expose each other’s quality.
Rivalry between firms is only one of the many ways in which markets resolve the problem of asymmetric information. In some markets, specialized firms emerge which rate the quality of products sold by other firms. In financial markets they are known as rating agencies. In some markets, the certification takes the form of franchising. McDonald’s, for instance, ensures the prescribed quality standards in all its stores through frequent inspections, coupled with a high cost for violation. Hospital chains impose quality standards on affiliated physicians. And finally, there are web portals which maintain and sell customers reviews. Each of these methods of ascertaining quality differs in its enforcement mechanism, but they all point to the reality that markets are as much about quality and long-term relationships as they are about prices and quantities.
Not only is the market for medical testing likely to work without ICMR regulations, it is likely to work better. The COVID case is unfortunately illustrative. In the early phases of the COVID pandemic, the Indian Council of Medical Research effectively prohibited labs from testing for the disease. In the absence of these regulations, entrepreneurs would have seized the opportunity to make profits by expanding testing facilities in the wake of the pandemic. More recently, the ICMR has allowed a limited number of private players to test for the virus. Regulations, however, require that the labs use testing kits approved by the US Food and Drug Administration, the European Union, or one of its own centers. This raises the costs of testing and thereby limits access. Without the ICMR testing kit regulation, competition among kit makers is likely to drive down costs, much the way the competition between automobile manufactures drove down car prices in the post-Ambassador era. Regulations keep potential low-cost solutions out of the market for far too long. Mass testing requires a system capable of mass-producing kits at sufficiently low costs.
Germany’s success in testing for the virus is illustrative of some of these mechanisms at work. Germany has been testing more than one hundred thousand people per week since late February. By April 20, it had tested more than twenty-five persons per thousand. Compare this to India, where the testing rate is less than one person per thousand. One reason for Germany’s success is a relatively freer market for medical testing compared to India. Private companies in Germany were able to mass-produce the test kits early on, as they were less burdened by a central regulatory body like the Indian Council of Medical Research. The government of India has struggled with the paucity of testing kits and equipment. But the number of testing kits—not unlike the number of ventilators and hospital beds—is not an immutable given. Rather testing kits are resources created by people under different institutional arrangements. Some institutional arrangements incentivize us to strive to serve our fellow human beings, while others generate sloppy and lethargic behavior. Germany’s experience tells us that, in contrast to conventional wisdom, decentralized systems are likely to respond more effectively to pandemics than systems that depend on central directives.
The COVID pandemic illustrates an often underappreciated cost of government regulation: the impeding of rapid market responses to new social needs. Government regulations often have more to do with the present than the future. They are not written to tailor our responses to unforeseen pathogens. Profit-motivated entrepreneurs, unlike government bureaucrats, have an incentive to predict possible pandemics, much the way hedge funds forecast stock prices and automobile producers forecast the demand for cars. Such forward-looking behavior is the key to predicting and acting within a reasonable time frame to contain new pathogens. Regulatory reforms are in order if we are to maximize our chances of successfully fighting pandemics; the next one might not give us as much time as the present one has.


newswars--2020-05-01--Keynesian Fallacies Are Not Just Wrong, but Dangerous

As an Austrian economist , I ’ ve known for years that Keynesian economics rests on crude fallacies—indeed , Tom Woods and I have an entire podcast dedicated to the ( usually wrong ) columns of Paul Krugman .
But in the arguments over the coronavirus , we see that the Keynesian commentary isn ’ t just wrong , but dangerous .
Specifically , Neil Irwin , the senior economics correspondent for the New York Times , recently tweeted a link to what he described as , “ The most important thread you will read today , or ever , @ @ @ @ @ @ @ was anxious to experience this life-changing event .
But the link was to a series of tweets from a former New York Fed researcher who was arguing that it was literally impossible for state governments to have saved more in preparation for the current crisis .
This “ insight ” was attributed to Keynes ’ s paradox of thrift , and the analyst further argued that only federal budget deficits—fueled by Federal Reserve monetary inflation—would make it even possible for state governments or private households to collectively save more .
This is obviously @ @ @ @ @ @ @ lower governments can save , regardless of what Uncle Sam does .
But since this fallacy is something that Nobel laureate Krugman kept repeating during the last recession , it ’ s worth taking another post to spell out exactly why it ’ s wrong .
Let me first allow Skanda Amarnath to make his case , in his own tweeted words .
The most important—and dangerous—is Amarnath ’ s claim that “ We can ’ t all save more .
This is ALWAYS true .
We couldn ’ t have prepared for @ @ @ @ @ @ @ saving more ’ .
” As I ’ ll show in the rest of this post , he is simply wrong—both in the big picture and even in a narrow technical sense .
There is nothing in the principles of accounting or economics that would prevent everyone from saving more .
To insist otherwise—and to claim that only if the feds run deficits can everybody else save—is dangerous nonsense .
Reality Check : Of Course State Governments Could Have Prepared for This Crisis First things first .
Before we dive into the bookkeeping @ @ @ @ @ @ @ fact : of course state governments—and private companies and households , for that matter—could have been better prepared for the current crisis , if they had saved more over the years .
( Note that I am a philosophical anarchist , so I don ’ t endorse coercive governments at any level .
I ’ m just making an economic point here . )
For example , suppose that state governments had the same tax policies in place ( so they collected the same revenue ) , but every year for the past @ @ @ @ @ @ @ items—including things such as parades , personnel for state parks and beaches , and hefty sums on famous speakers for state university graduation ceremonies .
Instead , the state governments used that money to begin buying and storing canned goods , bottles of hand sanitizer , and rolls of toilet paper , so that they eventually had enormous stockpiles of these items in warehouses across their jurisdictions .
Does anyone want to deny that the state governments would have been in a better position to help their constituents in mid-March if they had @ @ @ @ @ @ @ that there ’ s nothing in accounting or economics that would have stopped them from doing so : their expenditures in the real world provided income to various people ( such as state employees providing consumption services to citizens and university students ) , while in my alternate timeline their expenditures would have provided income to the merchants selling canned goods , hand sanitizer , and toilet paper .
So “ total income ” would have been the same ; it ’ s just that different people would have received it .
It @ @ @ @ @ @ @ makes a critical mistake : It ’ s true that total income = total expenditure .
But then Amarnath seems to think that if you save more it means that you must be reducing your total expenditures .
Yet that is simply wrong .
For example , suppose you have an income of $ 100,000 and that initially you don ’ t save any of it .
You spend ( say ) $ 40,000 a year on apartment rent payments to your landlord , you spend $ 25,000 a year on lease payments @ @ @ @ @ @ @ $ 20,000 on going out to fancy restaurants and bars , and you spend the remaining $ 15,000 on other living expenses and travel .
An economist looking at your budget would conclude that you spend your entire income on consumption .
Then you decide to become more frugal .
You cut your consumption spending down to $ 90,000 by cutting your food budget in half .
Specifically , instead of going out to restaurants and bars , you save $ 10,000 by eating at home for a year .
Now here ’ @ @ @ @ @ @ @ extra $ 10,000 in your budget , you hire some contractors to install a separate entrance to the spare bedroom in your apartment so that you can take on another tenant to split the rent with you .
( The landlord was happy with your proposal to do this . )
This one-shot investment will effectively reduce your rent by ( say ) $ 5,000 a year , because that ’ s how much you charge the new tenant to use the spare bedroom .
How should we classify this new scenario ?
@ @ @ @ @ @ @ your income this time—you only spent $ 90,000 on consumption , and you spent $ 10,000 on an investment that will yield you a flow of future income .
It ’ s also true that the income of the rest of the community is unchanged .
This is because your total expenditures are still $ 100,000 .
It ’ s just that you redirected some of those expenditures , away from restaurants and bars and toward the building contractors .
As this simple example shows , it ’ s possible for you to @ @ @ @ @ @ @ ” because of course investment spending is still spending .
It ’ s Even Possible for Everyone to Acquire Financial Assets at the Same Time In the previous section , I gave a simple counterexample to show why the truism “ total income = total expenditures ” does not imply that “ we can ’ t all save more , ” contrary to Amarnath , Krugman , and Neil Irwin of the New York Times .
But let ’ s take this further .
I imagine these gentlemen or their defenders would tell @ @ @ @ @ @ @ consists of expenditures on hiring people to build you a physical asset , then maybe you get around the constraint .
But c ’ mon , Nikki Haley and other right-wingers have in mind state governments and households saving by accumulating financial assets rather than hiring people , and that ’ s where the accounting rub kicks in .
Yet even this isn ’ t correct .
Before showing why , let me illustrate where the fallacy comes from .
Then , after we see what could have misled so many smart people @ @ @ @ @ @ @ flaw .
Imagine a community that originally starts out with no debt .
Then Alice decides that she wants to cut her consumption spending by $ 10,000 this year in order to lend it out to Bob .
This way , Alice ends the year with $ 10,000 less in consumption but an IOU from Bob with a face value of $ 10,000 .
Now , if Bob simply increases his own consumption during the year by $ 10,000 , then the total income of the community is unchanged : the people on @ @ @ @ @ @ @ might see their incomes drop , but the people on whom Bob spends the money see their incomes go up by an offsetting amount .
However , notice that in this scenario Alice has only gained a net financial asset of $ 10,000 at the expense of Bob—he is now indebted to the tune of $ 10,000 .
It seems that this kind of reasoning lies behind the ( clearly wrong ) claims that Amarnath made in his tweet thread , or that Krugman made back in 2011 , for that matter .
@ @ @ @ @ @ @ to Raise Funds Yet even though it ’ s true that a debt claim held as an asset by one person in the community must necessarily be a liability to someone else , it doesn ’ t follow that it is impossible for everyone in the community to save and accumulate financial assets more generally .
It just means that people in the community can ’ t on net accumulate debt claims against each other .
This doesn ’ t prevent them from acquiring equity stakes in profitable enterprises .
For example , @ @ @ @ @ @ @ 10,000 financial asset , suppose that instead of lending it to Bob in the form of an IOU , she buys $ 10,000 worth of newly issued stock in Bob ’ s corporation .
Then , instead of Bob spending the $ 10,000 in incoming cash on restaurant meals and booze , he hires workers to install new equipment in his corporation ’ s factory so that it is more profitable in future years .
In this scenario , the community ’ s income is still the same as before ; some of @ @ @ @ @ @ @ been transferred to the workers whom Bob hired to revamp his factory .
Yet notice that Alice ’ s acquisition of $ 10,000 in financial assets—specifically the shares of stock in Bob ’ s corporation—do not correspond to a reduction in Bob ’ s financial wealth .
In a world of perfect foresight ( which we assume just to keep things simple and focus on the accounting ) , the enhanced profitability of Bob ’ s corporation would render the market value of Alice ’ s shares of stock exactly equal to $ @ @ @ @ @ @ @ for them .
The remaining stock shares held by Bob would have the same market value as before he issued the extra shares and made the new capital expenditure for the firm .
And there you have it : I just walked through a simple example showing how it is possible to reconcile accounting tautologies with the members of a community saving and accumulating financial assets , even on net .
There is no need for an outside entity such as the federal government to run massive budget deficits .
( See this @ @ @ @ @ @ @ claim made by the MMT ( modern monetary theory ) crowd . )
As the federal government embarks on racking up an estimated $ 3.7 trillion in extra debt this fiscal year alone , it ’ s critical for the public to understand just how destructive such action will be .
It isn ’ t just wrong , but dangerous when Keynesian analysts come along and assure everyone that private spending is literally impossible without such federal profligacy .

As an Austrian economist, I’ve known for years that Keynesian economics rests on crude fallacies—indeed, Tom Woods and I have an entire podcast dedicated to the (usually wrong) columns of Paul Krugman. But in the arguments over the coronavirus, we see that the Keynesian commentary isn’t just wrong, but dangerous.
Specifically, Neil Irwin, the senior economics correspondent for the New York Times, recently tweeted a link to what he described as, “The most important thread you will read today, or ever, to understand macroeconomics.” Naturally, I was anxious to experience this life-changing event. But the link was to a series of tweets from a former New York Fed researcher who was arguing that it was literally impossible for state governments to have saved more in preparation for the current crisis. This “insight” was attributed to Keynes’s paradox of thrift, and the analyst further argued that only federal budget deficits—fueled by Federal Reserve monetary inflation—would make it even possible for state governments or private households to collectively save more.
This is obviously dangerous nonsense; of course individuals and lower governments can save, regardless of what Uncle Sam does. But since this fallacy is something that Nobel laureate Krugman kept repeating during the last recession, it’s worth taking another post to spell out exactly why it’s wrong.
The Keynesian Fallacy from a True Believer
Let me first allow Skanda Amarnath to make his case, in his own tweeted words.
The most important—and dangerous—is Amarnath’s claim that “We can’t all save more. This is ALWAYS true. We couldn’t have prepared for this shock by ‘all of us saving more’.”
As I’ll show in the rest of this post, he is simply wrong—both in the big picture and even in a narrow technical sense. There is nothing in the principles of accounting or economics that would prevent everyone from saving more. To insist otherwise—and to claim that only if the feds run deficits can everybody else save—is dangerous nonsense.
Reality Check: Of Course State Governments Could Have Prepared for This Crisis
First things first. Before we dive into the bookkeeping, let’s state the obvious fact: of course state governments—and private companies and households, for that matter—could have been better prepared for the current crisis, if they had saved more over the years. (Note that I am a philosophical anarchist, so I don’t endorse coercive governments at any level. I’m just making an economic point here.)
For example, suppose that state governments had the same tax policies in place (so they collected the same revenue), but every year for the past decade they had spent less on consumption items—including things such as parades, personnel for state parks and beaches, and hefty sums on famous speakers for state university graduation ceremonies. Instead, the state governments used that money to begin buying and storing canned goods, bottles of hand sanitizer, and rolls of toilet paper, so that they eventually had enormous stockpiles of these items in warehouses across their jurisdictions.
Does anyone want to deny that the state governments would have been in a better position to help their constituents in mid-March if they had pursued this alternative strategy? Also notice that there’s nothing in accounting or economics that would have stopped them from doing so: their expenditures in the real world provided income to various people (such as state employees providing consumption services to citizens and university students), while in my alternate timeline their expenditures would have provided income to the merchants selling canned goods, hand sanitizer, and toilet paper. So “total income” would have been the same; it’s just that different people would have received it.
The Specific Mistake
It is in the following tweet that Amarnath makes a critical mistake:
Total income = total expenditure. If you want to earn more than you spend, you need someone else in the economy to correspondingly spend more than it earns. Every dollar of surplus must find its source from a dollar of deficit (and vice versa) — Skanda Amarnath (Neoliberal Sellout) (@IrvingSwisher) April 23, 2020
It’s true that total income = total expenditure. But then Amarnath seems to think that if you save more it means that you must be reducing your total expenditures. Yet that is simply wrong.
For example, suppose you have an income of $100,000 and that initially you don’t save any of it. You spend (say) $40,000 a year on apartment rent payments to your landlord, you spend $25,000 a year on lease payments for your fancy car, you spend $20,000 on going out to fancy restaurants and bars, and you spend the remaining $15,000 on other living expenses and travel. An economist looking at your budget would conclude that you spend your entire income on consumption.
Then you decide to become more frugal. You cut your consumption spending down to $90,000 by cutting your food budget in half. Specifically, instead of going out to restaurants and bars, you save $10,000 by eating at home for a year.
Now here’s the important thing: with the extra $10,000 in your budget, you hire some contractors to install a separate entrance to the spare bedroom in your apartment so that you can take on another tenant to split the rent with you. (The landlord was happy with your proposal to do this.) This one-shot investment will effectively reduce your rent by (say) $5,000 a year, because that’s how much you charge the new tenant to use the spare bedroom.
How should we classify this new scenario? Clearly, you saved 10 percent of your income this time—you only spent $90,000 on consumption, and you spent $10,000 on an investment that will yield you a flow of future income.
It’s also true that the income of the rest of the community is unchanged. This is because your total expenditures are still $100,000. It’s just that you redirected some of those expenditures, away from restaurants and bars and toward the building contractors.
As this simple example shows, it’s possible for you to save more without “spending less,” because of course investment spending is still spending.
It’s Even Possible for Everyone to Acquire Financial Assets at the Same Time
In the previous section, I gave a simple counterexample to show why the truism “total income = total expenditures” does not imply that “we can’t all save more,” contrary to Amarnath, Krugman, and Neil Irwin of the New York Times.
But let’s take this further. I imagine these gentlemen or their defenders would tell me, Sure, if your saving consists of expenditures on hiring people to build you a physical asset, then maybe you get around the constraint. But c’mon, Nikki Haley and other right-wingers have in mind state governments and households saving by accumulating financial assets rather than hiring people, and that’s where the accounting rub kicks in.
Yet even this isn’t correct. Before showing why, let me illustrate where the fallacy comes from. Then, after we see what could have misled so many smart people, I’ll point out the flaw.
Imagine a community that originally starts out with no debt. Then Alice decides that she wants to cut her consumption spending by $10,000 this year in order to lend it out to Bob. This way, Alice ends the year with $10,000 less in consumption but an IOU from Bob with a face value of $10,000.
Now, if Bob simply increases his own consumption during the year by $10,000, then the total income of the community is unchanged: the people on whom Alice used to spend that money might see their incomes drop, but the people on whom Bob spends the money see their incomes go up by an offsetting amount.
However, notice that in this scenario Alice has only gained a net financial asset of $10,000 at the expense of Bob—he is now indebted to the tune of $10,000.
It seems that this kind of reasoning lies behind the (clearly wrong) claims that Amarnath made in his tweet thread, or that Krugman made back in 2011, for that matter.
A Business Can Issue Debt or Equity to Raise Funds
Yet even though it’s true that a debt claim held as an asset by one person in the community must necessarily be a liability to someone else, it doesn’t follow that it is impossible for everyone in the community to save and accumulate financial assets more generally. It just means that people in the community can’t on net accumulate debt claims against each other. This doesn’t prevent them from acquiring equity stakes in profitable enterprises.
For example, when Alice wants to acquire a $10,000 financial asset, suppose that instead of lending it to Bob in the form of an IOU, she buys $10,000 worth of newly issued stock in Bob’s corporation. Then, instead of Bob spending the $10,000 in incoming cash on restaurant meals and booze, he hires workers to install new equipment in his corporation’s factory so that it is more profitable in future years.
In this scenario, the community’s income is still the same as before; some of Alice’s consumption spending has ultimately been transferred to the workers whom Bob hired to revamp his factory.
Yet notice that Alice’s acquisition of $10,000 in financial assets—specifically the shares of stock in Bob’s corporation—do not correspond to a reduction in Bob’s financial wealth. In a world of perfect foresight (which we assume just to keep things simple and focus on the accounting), the enhanced profitability of Bob’s corporation would render the market value of Alice’s shares of stock exactly equal to $10,000, which is what she paid for them. The remaining stock shares held by Bob would have the same market value as before he issued the extra shares and made the new capital expenditure for the firm.
Conclusion
And there you have it: I just walked through a simple example showing how it is possible to reconcile accounting tautologies with the members of a community saving and accumulating financial assets, even on net. There is no need for an outside entity such as the federal government to run massive budget deficits. (See this article for my refutation of a similar claim made by the MMT (modern monetary theory) crowd.)
As the federal government embarks on racking up an estimated $3.7 trillion in extra debt this fiscal year alone, it’s critical for the public to understand just how destructive such action will be. It isn’t just wrong, but dangerous when Keynesian analysts come along and assure everyone that private spending is literally impossible without such federal profligacy.


newswars--2020-05-01--Austria: Police May Intervene if They See People Kissing

Despite being one of the first countries to begin relaxing its lockdown laws , authorities in Austria have said that police may intervene if they see people kissing .
From May 15th onwards , Austrians will once again be permitted to visit re-opened bars and restaurants .
As of today , they are already allowed to visit friends .
Fearing that this will incentivize a rash of dating , which in turn will lead to couples being very physically affectionate , Austria ’ s Health Minister Rudolf Anschober warned that the love police will be watching .
In an interview @ @ @ @ @ @ @ kissing is prohibited for couples who don ’ t live together .
Not only is kissing in public prohibited , Anschober even said that a kiss between lovers who don ’ t live together indoors is also a violation of the law .
“ Existing rules do not override this either , ” remarked Anschober .
“ Kissing is therefore also prohibited in your own four walls , ” reports UnserTirol .
My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever .
It is CRUCIAL that @ @ @ @ @ @ @ for the free newsletter here .
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Despite being one of the first countries to begin relaxing its lockdown laws, authorities in Austria have said that police may intervene if they see people kissing.
Yes, really.
From May 15th onwards, Austrians will once again be permitted to visit re-opened bars and restaurants. As of today, they are already allowed to visit friends.
Fearing that this will incentivize a rash of dating, which in turn will lead to couples being very physically affectionate, Austria’s Health Minister Rudolf Anschober warned that the love police will be watching.
In an interview with Ö3, Anschober made clear that kissing is prohibited for couples who don’t live together.
Not only is kissing in public prohibited, Anschober even said that a kiss between lovers who don’t live together indoors is also a violation of the law.
“Existing rules do not override this either,” remarked Anschober.
“Kissing is therefore also prohibited in your own four walls,” reports UnserTirol.
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newswars--2020-05-01--Deregulation Is the Path to Increasing the Supply of Medical Services

Many entrepreneurs and policymakers have embraced the expansion of capacity at hospitals and medical facilities as an answer to the spread of the COVID-19 virus .
This effort has been characterized by an overwhelming shift in commercial productivity towards medical equipment ( ventilators ) and personal protective equipment ( PPE ) .
Along the way , however , businesses and medical professionals have endured significant regulatory hurdles .
Surprisingly , governments in some cases have acted to remove these bureaucratic hurdles to allow more expedient action by market actors .
For defenders of market freedom this has become an opportunity @ @ @ @ @ @ @ has accumulated around the price sector .
Our goal now should be to ensure that these bureaucratic hurdles are permanently lifted since this crisis has proven , in some fashion , that these hurdles are counter to the interests of individuals .
Reforms in the United States of America Despite regulatory reform being a stated goal of the Trump administration , nearly all of the federal administrative state remains intact .
The administration ’ s reforms have left many state regulatory bureaucracies untouched .
However , this global health crisis has exposed some @ @ @ @ @ @ @ which has been built over a century .
Despite partisan bickering , it is the creation of numerous federal and state administrations of both parties , past and present .
These regulatory institutions grew over time in both structure and scope .
Each new societal issue becomes fertile ground for a new agency or rule .
This ever growing bureaucratic presence becomes problematic in times of crisis , as crises require swift action and flexibility .
During times of peace and prosperity , governments “ stress test ” so-called critical infrastructure to ensure @ @ @ @ @ @ @ .
As Andreesen Horowitz writes , “ Every Western institution was unprepared for the coronavirus pandemic , despite many prior warnings .
This monumental failure of institutional effectiveness will reverberate for the rest of the decade , but it ’ s not too early to ask why , and what we need to do about it.
” The United States fortunately acted swiftly to curb travel between China and the United States , but by the time travel was prohibited , the novel coronavirus had already come to the United States via patient @ @ @ @ @ @ @ about the speed of governments ’ reactions , the fact remains that the complex web of governmental red tape made it incredibly difficult for the private sector to respond on its own .
James Ketler writes that the Food and Drug Administration granted only the Centers for Disease Control and Prevention emergency use authorization and prohibited other labs from using their own tests .
The problem ?
Many of these CDC tests were ineffective .
This blunder led to a delay in testing .
Even when testing began , it was revealed that @ @ @ @ @ @ @ the beginning of February was nowhere near enough to confront the hordes of patients requiring testing by the end of the month .
Without sufficient ability to diagnose patients over the course of the month , the crisis quietly intensified.
” Fortunately , the FDA approved many more private sector tests in mid-March .
By then the virus had been spreading for weeks .
In response to the increasing prevalence of the virus , state and federal regulators have gutted some regulations that posed an undue burden to the practice of medicine and @ @ @ @ @ @ @ The following are some examples : ● The Centers for Medicare and Medicaid Services in mid-March effectively waived restrictions on telehealth .
The White House announced that it would also stop “ enforcing numerous elements of HIPAA , the health privacy law that , until now , heavily regulated providers seeking to deliver care remotely , ” writes Stat .
● The United States secretary of health and human services paved the way for medical occupational licensing reform by waiving several rules , one of which “ allowed compensation by federally funded programs @ @ @ @ @ @ @ they ‘ hold licenses in the State in which they provide services.
’ Now , providers must only ‘ have an equivalent license from another State.
’ ” ● The governor of Massachusetts issued a series of executive orders that allow nurses and some medical professionals who are licensed and qualified in other states to be licensed in Massachusetts within one day .
● According to the Washington Times , thirteen states have issued temporary suspensions or reforms to their certificate of need ( CON ) laws .
CON laws “ require healthcare @ @ @ @ @ @ @ or expanding their services , ” according to the Mises Wire .
● The governor of Texas waived state laws that prohibited alcohol delivery trucks from delivering grocery store supplies .
● Some states have loosened restrictions on the delivery of alcohol , as alcohol revenue is “ responsible for 20 to 30 percent of restaurant sales across the country , ” according to Eater .
Brazil has been addressing the pandemic in some similar ways .
For example , it has implemented a provisional act that for thirty days permits medical assistance @ @ @ @ @ @ @ is not a permanent decision , this effort provides an opening for advocates of online medical services to demonstrate their effectiveness , especially for those who live far from hospitals or other medical care providers .
Meanwhile , although in 2016 the World Economic Forum ’ s ranked Brazil among the ten countries that most penalize producers and consumers via tariffs , during this global health crisis the Brazilian government has reduced this burden .
It has issued decrees that cut the rates to zero for industrialized products , pharmacy and laboratory items @ @ @ @ @ @ @ .
Needless to say , this reduction in tariff barriers will provide Brazilians with cheaper goods and services , and will be instrumental in saving lives .
Even as Brazil experiences some success in removing barriers to innovation and access to goods and services , calls for entitlement programs continue to expand .
Advocates of a universal basic income and socialized healthcare have been growing in popularity .
Elected officials throughout Brazil , including governors and mayors , have authorized the payment of vouchers and nutrition assistance to informal workers , students , @ @ @ @ @ @ @ As lovers of liberty , we must be vigilant to ensure that the recent gains in economic productivity and growth are not eroded during the crisis .
Seemingly beneficial programs implemented during this period can not become long term .
As this virus has percolated , for example , there have been instances of Brazilian state agents confiscating factories and other private property under the guise of “ preventing owners from being greedy.
” As famed economist Thomas Sowell once said , “ I have never understood why it is ‘ greed ’ @ @ @ @ @ @ @ have earned but not greed to want to take somebody else ’ s money.
” Brazilians and Americans alike must utilize this opportunity to learn that complex rules and barriers hinder our efforts to act in times of crisis .
The fewer impediments , taxes , and bureaucratic hurdles , the quicker we , as societies , will be able to respond to future crises .

Many entrepreneurs and policymakers have embraced the expansion of capacity at hospitals and medical facilities as an answer to the spread of the COVID-19 virus.
This effort has been characterized by an overwhelming shift in commercial productivity towards medical equipment (ventilators) and personal protective equipment (PPE). Along the way, however, businesses and medical professionals have endured significant regulatory hurdles.
Surprisingly, governments in some cases have acted to remove these bureaucratic hurdles to allow more expedient action by market actors. For defenders of market freedom this has become an opportunity to expose the relatively unnecessary bureaucracy that has accumulated around the price sector. Our goal now should be to ensure that these bureaucratic hurdles are permanently lifted since this crisis has proven, in some fashion, that these hurdles are counter to the interests of individuals.
Reforms in the United States of America
Despite regulatory reform being a stated goal of the Trump administration, nearly all of the federal administrative state remains intact. The administration’s reforms have left many state regulatory bureaucracies untouched.
However, this global health crisis has exposed some of the flaws in this system, which has been built over a century. Despite partisan bickering, it is the creation of numerous federal and state administrations of both parties, past and present.
These regulatory institutions grew over time in both structure and scope. Each new societal issue becomes fertile ground for a new agency or rule. This ever growing bureaucratic presence becomes problematic in times of crisis, as crises require swift action and flexibility.
During times of peace and prosperity, governments “stress test” so-called critical infrastructure to ensure that systems are prepared for different scenarios. As Andreesen Horowitz writes, “Every Western institution was unprepared for the coronavirus pandemic, despite many prior warnings. This monumental failure of institutional effectiveness will reverberate for the rest of the decade, but it’s not too early to ask why, and what we need to do about it.” The United States fortunately acted swiftly to curb travel between China and the United States, but by the time travel was prohibited, the novel coronavirus had already come to the United States via patient zero.
Regardless of how we feel about the speed of governments’ reactions, the fact remains that the complex web of governmental red tape made it incredibly difficult for the private sector to respond on its own.
James Ketler writes that the Food and Drug Administration granted only the Centers for Disease Control and Prevention emergency use authorization and prohibited other labs from using their own tests. The problem? Many of these CDC tests were ineffective. This blunder led to a delay in testing.
Even when testing began, it was revealed that “the amount of kits distributed at the beginning of February was nowhere near enough to confront the hordes of patients requiring testing by the end of the month. Without sufficient ability to diagnose patients over the course of the month, the crisis quietly intensified.” Fortunately, the FDA approved many more private sector tests in mid-March. By then the virus had been spreading for weeks.
In response to the increasing prevalence of the virus, state and federal regulators have gutted some regulations that posed an undue burden to the practice of medicine and to the operations of some businesses. The following are some examples:
● The Centers for Medicare and Medicaid Services in mid-March effectively waived restrictions on telehealth. The White House announced that it would also stop “enforcing numerous elements of HIPAA, the health privacy law that, until now, heavily regulated providers seeking to deliver care remotely,” writes Stat.
● The United States secretary of health and human services paved the way for medical occupational licensing reform by waiving several rules, one of which “allowed compensation by federally funded programs of physicians and other providers only if they ‘hold licenses in the State in which they provide services.’ Now, providers must only ‘have an equivalent license from another State.’”
● The governor of Massachusetts issued a series of executive orders that allow nurses and some medical professionals who are licensed and qualified in other states to be licensed in Massachusetts within one day.
● According to the Washington Times, thirteen states have issued temporary suspensions or reforms to their certificate of need (CON) laws. CON laws “require healthcare facilities to receive government approval before establishing or expanding their services,” according to the Mises Wire.
● The governor of Texas waived state laws that prohibited alcohol delivery trucks from delivering grocery store supplies.
● Some states have loosened restrictions on the delivery of alcohol, as alcohol revenue is “responsible for 20 to 30 percent of restaurant sales across the country,” according to Eater.
Reforms in Brazil
Brazil has been addressing the pandemic in some similar ways. For example, it has implemented a provisional act that for thirty days permits medical assistance to be conducted online. Although it is not a permanent decision, this effort provides an opening for advocates of online medical services to demonstrate their effectiveness, especially for those who live far from hospitals or other medical care providers.
Meanwhile, although in 2016 the World Economic Forum’s ranked Brazil among the ten countries that most penalize producers and consumers via tariffs, during this global health crisis the Brazilian government has reduced this burden. It has issued decrees that cut the rates to zero for industrialized products, pharmacy and laboratory items, clinical thermometers, and medical gloves. Needless to say, this reduction in tariff barriers will provide Brazilians with cheaper goods and services, and will be instrumental in saving lives.
The Leviathan Still Haunts
Even as Brazil experiences some success in removing barriers to innovation and access to goods and services, calls for entitlement programs continue to expand. Advocates of a universal basic income and socialized healthcare have been growing in popularity. Elected officials throughout Brazil, including governors and mayors, have authorized the payment of vouchers and nutrition assistance to informal workers, students, the unemployed, and other groups.
As lovers of liberty, we must be vigilant to ensure that the recent gains in economic productivity and growth are not eroded during the crisis. Seemingly beneficial programs implemented during this period cannot become long term. As this virus has percolated, for example, there have been instances of Brazilian state agents confiscating factories and other private property under the guise of “preventing owners from being greedy.” As famed economist Thomas Sowell once said, “I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else’s money.”
Brazilians and Americans alike must utilize this opportunity to learn that complex rules and barriers hinder our efforts to act in times of crisis. The fewer impediments, taxes, and bureaucratic hurdles, the quicker we, as societies, will be able to respond to future crises.


newswars--2020-05-01--Biden Says He’s Just a ‘Transition Candidate’ to Put ‘Mayor Petes of the World’ Into Office

Presumptive Democratic presidential nominee Joe Biden said he will serve as a “ transition candidate ” in the 2020 race , arguing his primary role is to funnel new voices and ideas into government – rather than govern himself .
“ I view myself as a transition candidate , ” Biden said during a virtual fundraising event on Thursday , adding : “ My job… is to bring the Mayor Petes of the world into this administration… and even when they don ’ t come in , their ideas come into this administration.
” Jumping far ahead of the election @ @ @ @ @ @ @ Democratic nominating convention , Biden described his hopes for when he “ leave [ s ] office , ” saying he would handle “ big issues ” and garner attention for talented staffers who “ haven ’ t been in the national spotlight enough.
” The former VP ’ s latest slogan – effectively labeling a future Biden administration a placeholder before the more able “ Mayor Petes of the world ” can take over – did not inspire much confidence among netizens .
Pete Buttigieg – the former mayor of South Bend @ @ @ @ @ @ @ “ Mayor Pete ” – ended his presidential campaign in March , just in time for Super Tuesday , helping to push moderate Democratic voters to Biden .
Critics have speculated that the mayor and other “ centrist ” candidates , such as Minnesota Senator Amy Klobuchar , dropped out in coordination with the Biden campaign to ensure his victory over Sanders on Super Tuesday .
Supporters of Vermont Senator Bernie Sanders , who dropped out of the race and endorsed Biden in early April , shredded the statement , arguing Democrats had @ @ @ @ @ @ @ a mere “ transitional ” one .

Presumptive Democratic presidential nominee Joe Biden said he will serve as a “transition candidate” in the 2020 race, arguing his primary role is to funnel new voices and ideas into government – rather than govern himself.
“I view myself as a transition candidate,” Biden said during a virtual fundraising event on Thursday, adding: “My job… is to bring the Mayor Petes of the world into this administration… and even when they don’t come in, their ideas come into this administration.”
Jumping far ahead of the election in November, as well as the Democratic nominating convention, Biden described his hopes for when he “leave[s] office,” saying he would handle “big issues” and garner attention for talented staffers who “haven’t been in the national spotlight enough.”
The former VP’s latest slogan – effectively labeling a future Biden administration a placeholder before the more able “Mayor Petes of the world” can take over – did not inspire much confidence among netizens.
Biden 2020: “I View Myself as a Transition Candidate” — truly a slogan to inspire the masses https://t.co/FiccSWQT5N — Jenny from the Vox (@jenn_ruth) May 1, 2020
Pete Buttigieg – the former mayor of South Bend, Indiana, perhaps known better as “Mayor Pete” – ended his presidential campaign in March, just in time for Super Tuesday, helping to push moderate Democratic voters to Biden.
Critics have speculated that the mayor and other “centrist” candidates, such as Minnesota Senator Amy Klobuchar, dropped out in coordination with the Biden campaign to ensure his victory over Sanders on Super Tuesday.
If Biden views himself as a transition candidate, why shouldn’t the voters cut out the middleman? https://t.co/lbsQNEtNC6 — Bill Zeiser (@BillZeiser) May 1, 2020
Supporters of Vermont Senator Bernie Sanders, who dropped out of the race and endorsed Biden in early April, shredded the statement, arguing Democrats had traded a “transformational” candidate for a mere “transitional” one.
Federal agencies confirm Chinese and CDC test kits were contaminated.


newswars--2020-05-01--Prominent Scientists Warned In 2013 Of Chinese Labs ‘Appalling Irresponsibility’ With Viruses

A number of leading western scientists issued a stark warning in 2013 that Chinese researchers in virology labs were playing with fire by mixing animal viruses with human pathogens , and that the new strains could leak into the world , causing a killer pandemic .
The Independent published a piece covering the scientists ’ concerns on Thursday 2 May 2013 .
Senior scientists have criticised the “ appalling irresponsibility ” of researchers in China who have deliberately created new strains of influenza virus in a veterinary laboratory .
They warned there is a danger that the new viral strains @ @ @ @ @ @ @ influenza could escape from the laboratory to cause a global pandemic killing millions of people .
The piece concentrates on experiments with bird flu , but it is a known fact that scientists in China were also experimenting with bat borne coronavirus at this time .
The research was condemned by former UK government chief scientist Lord May of Oxford , who warned it was dangerous and was doing nothing to further the understanding and prevention of flu pandemics .
“ They claim they are doing this to help develop vaccines and such @ @ @ @ @ @ @ is that they are driven by blind ambition with no common sense whatsoever , ” Lord May told The Independent at the time .
“ The record of containment in labs like this is not reassuring .
They are taking it upon themselves to create human-to-human transmission of very dangerous viruses .
It ’ s appallingly irresponsible , ” he said .
Another scientist , Professor Simon Wain-Hobson , an eminent virologist at the Pasteur Institute in Paris said at the time that “ It ’ s a fabulous piece of virology by @ @ @ @ @ @ @ very impressive , but they haven ’ t been thinking clearly about what they are doing .
It ’ s very worrying.
” “ The virological basis of this work is not strong .
It is of no use for vaccine development and the benefit in terms of surveillance for new flu viruses is oversold , ” he added .
Coincidentally , Lord May died this week at the age of 84 .
The Scientist notes that “ May ’ s modeling legacy extends to the current outbreak of COVID-19.
” “ The @ @ @ @ @ @ @ of the coronavirus pandemic all have their genesis in the seminal work Lord Robert May undertook 40 years ago with Sir Roy Anderson , ” the piece notes .
The warnings were there , and this article from seven years ago shows that investigating the bio-labs in Wuhan and the rest of China should indeed be the number one priority of every government in the world right now .
As we have exhaustively covered , several experts are on record as saying that the coronavirus pandemic could have leaked from the Wuhan Institute @ @ @ @ @ @ @ Chinese government knew its labs were a ticking time bomb , and were aware safety measures needed improving .

A number of leading western scientists issued a stark warning in 2013 that Chinese researchers in virology labs were playing with fire by mixing animal viruses with human pathogens, and that the new strains could leak into the world, causing a killer pandemic.
The Independent published a piece covering the scientists’ concerns on Thursday 2 May 2013.
The article states:
Senior scientists have criticised the “appalling irresponsibility” of researchers in China who have deliberately created new strains of influenza virus in a veterinary laboratory. They warned there is a danger that the new viral strains created by mixing bird-flu virus with human influenza could escape from the laboratory to cause a global pandemic killing millions of people.
The piece concentrates on experiments with bird flu, but it is a known fact that scientists in China were also experimenting with bat borne coronavirus at this time.
The research was condemned by former UK government chief scientist Lord May of Oxford, who warned it was dangerous and was doing nothing to further the understanding and prevention of flu pandemics.
“They claim they are doing this to help develop vaccines and such like. In fact the real reason is that they are driven by blind ambition with no common sense whatsoever,” Lord May told The Independent at the time.
“The record of containment in labs like this is not reassuring. They are taking it upon themselves to create human-to-human transmission of very dangerous viruses. It’s appallingly irresponsible,” he said.
Another scientist, Professor Simon Wain-Hobson, an eminent virologist at the Pasteur Institute in Paris said at the time that “It’s a fabulous piece of virology by the Chinese group and it’s very impressive, but they haven’t been thinking clearly about what they are doing. It’s very worrying.”
“The virological basis of this work is not strong. It is of no use for vaccine development and the benefit in terms of surveillance for new flu viruses is oversold,” he added.
Coincidentally, Lord May died this week at the age of 84. The Scientist notes that “May’s modeling legacy extends to the current outbreak of COVID-19.”
“The models being used to guide the management of the coronavirus pandemic all have their genesis in the seminal work Lord Robert May undertook 40 years ago with Sir Roy Anderson,” the piece notes.
The warnings were there, and this article from seven years ago shows that investigating the bio-labs in Wuhan and the rest of China should indeed be the number one priority of every government in the world right now.
As we have exhaustively covered, several experts are on record as saying that the coronavirus pandemic could have leaked from the Wuhan Institute of Virology. In addition, the Chinese government knew its labs were a ticking time bomb, and were aware safety measures needed improving.