To Hate or Not to Speak?

I just read in the New York Times this very thoughtful Op-ed by Nicholas Kristof. He is, in effect, condemning the ease, by which we attribute collective responsibility either to Muslims or to Christians for despicable deeds done in the name of the respective religion. He is also pointing out instances of generous and praiseworthy deeds done in the name of religions.

Although he does make a convincing case against this collective blame-game, he does allow the reader to infer that some forms of islamic culture do, indeed, call for women to be elevated to second-class status, leading them out of elementary education and, in many instances, even subjecting them to circumcision; not to mention fatwās issued against those who are deemed to have blasphemed against the Prophet. One could, indeed, note that some forms of Islam are in direct contravention to the very core of our western values, including some fundamental human rights. This discussion is ever more relevant to our societies, where many people of Muslim faith form their own communities and might, indeed, practice some of their worst breaches of human rights within the borders of our country. If we wish to protect the values that we have elected to codify into law and into human rights, it is obvious that we have to criticize such practices.

However, any such criticism might be out of bounds, if political correctness has its way in Greece. It is already a crime to express ideas that might potentially incite hatred towards a group of people based on their ethnicity, their ancestry, their religion. This law is, actually, in compliance with international conventions, which Greece has signed and ratified, allegedly for combatting discrimination in all its forms. What's more, similar legislation in other European countries has been held, directly or indirectly, to be consistent with the freedom of expression provisions of the European Treaty for the Protection of Human Rights and Fundamental Freedoms. Unfortunately, nothing like the First Amendment to the U.S. Constitution can guarantee actual free speech for us Europeans. 

It seems that political correctness is about to stifle it even more, as new legislation is currently being prepared, that will be even more protective of the alleged collective rights of religious or ethnic groups. That the individual rights of members of those groups can best be protected by the flow of free speech seems almost irrelevant; and that free speech, particularly that which might be repugnant or offensive to a majority at first, is what makes the exchange of ideas, necessary for a democracy to function, possible.

Reading Kristof's article once more, I believe that a Greek Prosecutor could make, even under the current statute, a case against him for potentially inciting hatred based on religion (after all, he did mention instances of people following the perceived tenets of their religion and violating the human rights of others). I hope that my linking to it will not be considered a felony as well.

When Did Deficit Spending Ever Lead to Actual Growth?

Paul Krugman once again defends an instance of deficit spending with the same excuse: it could have been worse. That's the same excuse used for FDR's policies, which failed to curb unemployment during the Great Depression - this time, it's Japan: almost twenty years of deficit spending have yet to produce any tangible results. But, then, it could have been worse, writes Krugman.

There is a reason deficit spending (which is not the same as a deficit produced solely by cutting taxes), combined with government intervention, does not work. In its extreme, socialism, a price system, as a mechanism for communicating information, does not exist, as Ludwig von Mises famously stated. Underlying this statement is the empirical observation that men (or women) manifest their wishes, needs, and priorities, through voluntary exchange. Centralized bureaucracies cannot substitute this information, much less the individuals' own prioritization of their desires. Stimulus spending, which supposedly covers needs that a market will not recognize, is bogus. Taxation (or borrowing, which will inevitably lead to taxation in the long run) drains the market of its resources and redistributes them against the wishes of the citizenry. This means that any initial appearance of growth cannot last, since the government-mandated products or services prove undesirable, cost-ineffective, and, eventually, unsustainable - and the business that produces these products or provides these services will have to fold, leaving its employees unemployed, its providers unable to recover their money, etc. In the meanwhile, many entitlements may have been established, burdening government finances for years to come. How can, then, sustainable growth come out of a planned (more or less) economy?

The Country Cannot Afford $700 Billion in Tax Breaks ...

... that benefit "millionaires and billionaires" - so said President Obama, as reported in a New York Times article. This statement somehow implies that the reason America is facing deficits is that the wealthiest among its citizens somehow have it easier than the rest of them; or, that, in the natural state of things, a large chunk of their earnings belongs ipso jure to the government - for how else can one understand that a decision not to tax part of their income in the first place should be considered a tax "break"? Of course, the Bush tax cuts are considered just that. Slashing the top tax rates was, at the time, politically expedient only when labeled a "break" and only because it was not permanent. Remember how the conversation went: making these changes permanent was not called amending the tax code or rewriting it, but making the tax "breaks" permanent.

Anyway, this statement of the President is called "sharply populist" in the story. Bordering on demagoguery would be a more accurate description, since it is pandering to a majority not as wealthy as the "beneficiaries" of the "tax breaks". The statement of the President to the voters reads, in essence, something like this: "You are the majority. Vote for my party this November and we will tax you less and tax the minority more. You deserve to benefit from the $700 million of the minority's money, so vote to get it". Or, more bluntly: "A Democrat-controlled Congress and I are here to see to it that you benefit from other people's earnings, as you deserve, on account of being more than them".

And let us not even get started with the President's "fear vs. hope" rhetoric: "Do not fear, because I am here to tax the rich and give you hope". The President invoked the surpluses of the Clinton years, compared them with the deficits of the Bush administration and went on to attribute the change to President Bush's tax breaks for the wealthy. Of course, the President distorted the picture (never mind that he failed to account how actual growth and prosperity were compatible with surpluses -Clinton years- and not with deficits - Bush years- despite his own position in favor of deficit spending), because he failed to put into the picture the horrendous government expenditures and the protectionist policies of the Bush years. This was, of course, no accident: downsizing the government or doing away with stimulus spending, in order to decrease spending, is out of the question, because it would lose the votes of those who get money to perform unnecessary tasks and it would decrease the government's ability to buy votes with the taxpayers' money, so he will not criticize his predecessor on the increased spending so easily.

I'll just take the opportunity to once again present two of this blog's major mottos, both of which apply in the context of opposing the President's economic policy:

1. Money is better spent by those who earn it. This means that the "natural state" of earnings is to remain in their proprietors' pockets and not go to the government.

2. Giving false hopes is almost criminal: The more the government taxes, the less there will be to tax next time. Therefore, if some form of prosperity is built around government spending, which is in its turn funded by deficits or taxation, such prosperity is of its very nature temporary, a bubble; and, when the time for the bubble to burst comes, people dependent on the government (and I am not referring to welfare recipients, but to people doing government or government-mandated work, which the market would reject as useless) will lose their jobs and have no training for the vocations which a market might require; plus, the government will no longer have the resources to provide these people with any sort of financial relief.

P.S. On a theme this blog has not touched yet, but is of some relevance in the present post, check in this post by Daniel Mitchell of the Cato Institute a chart by the New York Post on what kind of redistribution actually takes place through the stimulus program.

A Case for More Stimulus Spending. Again. Wrong. Again.

Once again, Nobel laureate Paul Krugman, in a New York Times Op-ed, makes the case for more stimulus spending and tries to draw historic analogies with the FDR administration and World War II. His case, in a nutshell:

Premise: 5 years of deficit spending (1933-1938) did not produce growth. Conclusion: 5 years of deficit spending is not enough and can show only few results; the government must borrow and spend even more.

Premise: World War II necessitated a very large amount of borrowing and, following its conclusion, the U.S. economy boomed. Conclusion: deficit spending of an enormous scale leads to prosperity.

That he fails to point out any causal connection between what he wants us to understand as cause and effect should be an initial indication that, perhaps, something is amiss in Krugman's reasoning. If what he proposes is correct and can be generalized, then it would apply equally to other economies - so, why don't we see the course of the economy of another victorious power of the Second World War, which also had to resort to massive borrowing to sustain the war effort: Great Britain.

1939-1945: great deficit spending to fund the war effort

1945-1950: post-war consensus, nationalizations, National Health Service

1954: end of all food rationing

1950s-1960s: growth rate smaller than that of most Western European countries; large debts still looming

1967: devaluation of the pound sterling

1976: $4 billion loan from the International Monetary Fund

1978-1979: Winter of Discontent

This period ends with the election, in 1979, of the Conservatives under Margaret Thatcher, who completely reversed the policies followed up until then and turned the United Kingdom from the sick man of Europe to the strongest European economy. If Krugman's reasoning were correct, Great Britain would not have had to face such financial difficulties; all the more so, since the post-war consensus was very close the economic policies Krugman supports. Instead, it is the very debts Britain inherited from the war that proved to be a constant burden on its development. This means that either there was some other factor disqualifying deficit-spending Britain from growth (which I cannot imagine), or that it was not deficit spending (or, at least, not deficit spending per se) that led to the expansion of the U.S. economy following the war; and that Krugman's reasoning is flawed.

Let me finish by copying a quote by Ludwig von Mises from my friend, and excellent essayist, Tilemachos Chormovitis - according to von Mises, "War prosperity is like the prosperity that an earthquake or a plague brings. The earthquake means good business for construction workers, and cholera improves the business of physicians, pharmacists, and undertakers; but no one has for that reason yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest."

To that, let me add that a disease does not mean good business for a physician, if it is he or she who has it; the destruction of one's home by earthquake does not mean that that person will thrive, even if he or she is in the construction business. This is a hint as to the explanation I will try to offer for America's post-World War II economic boom in a subsequent post.

Illegal Immigration: Let's Face It, It Is a Serious Problem

A New York Times Op-ed once again provides the impetus for a discussion on an issue which, strangely enough, is a problem the United States and Greece share - illegal immigration. The op-ed is more focused on the gubernatorial elections in Arizona, but it does highlight the position taken on immigration by the incumbent Governor and deplores what the columnist sees as fear-mongering used to promote a strong policy against illegal immigrants. 

Greece has seen an influx of immigrants over the past two decades, initially from Albania (just out of a strict stalinist regime; Albania shares a lengthy land border with Greece and has a sizable Greek minority of its own), the former Soviet Union, and, as of late, from many Asian and African countries; most illegal immigrants come through Turkey, but many manage to cross the land borders of Greece and its northern neighbors. Following a number of mass legitimization of immigrants (mostly in the late '90s), there exists now a significant number of legal immigrants (many of them on their way to citizenship, after a recent law) alongside the illegal immigrants. Immigrants typically live either in the country, where they perform agrarian labor, or in the poorer neighborhoods of large cities.

The questions in the public discussion of immigration are the same in the States and in Greece: Do immigrants steal jobs from natives? Are they responsible for a rise in crime? Should we enforce more stringent border controls? Should we just kick them out of our country?

Well, you already know that conservatives usually answer "yes" to all these questions, while liberals say "no". Public order carries the day in the conservative camp; compassion and solidarity in the liberal camp. Unfortunately, usually neither side takes the time to seriously tackle these questions and to dispel their apparent simplicity. So, here's my take, based on the Greek experience:

Question 1. Do immigrants steal jobs from natives?

Immigrants, in Greece at least, typically are unskilled workers who, at the beginning at least, do not speak Greek. They can only provide manual labor in labor-intensive sectors of the economy, usually agriculture, construction, and light manufacture. There was shortage of hands in these industries, because Greeks themselves were avoiding them; most unemployed Greeks are secondary- or tertiary-education graduates who find it beneath them to perform manual labor. So, essentially, no competition exists between Greeks and foreigners for jobs. In fact, many proponents of a pay-as-you-go social security system (as is the case in Greece) welcome immigrants and push for their legalization, so that the social security system can benefit from the corresponding contributions, in order to better provide pensions for those already retired. I think conservatives in Greece are wrong on this one and that liberals are right.

Question 2. Do immigrants contribute to a rise in crime?

Definitely so. Illegal immigrants, that is. This is not because they carry "crime" genes in their DNA, but because their illegal entry into Greece (and, I guess, other countries) is facilitated by a criminal organization. This means that their first contacts, when coming to Greece, are the mafiosi who managed to get them here. And, of course, known criminals from abroad can be found only among illegal immigrants; they would be denied entry, if they sought to enter the country through the legal channels. But the single most important factor in their criminal activity is their illegal status. They have to live and work under the radar, for fear of deportation. This means that they work illegally (undeclared and not subject to social security contributions and benefits and, of course, taxation) and that they cannot resort to the state's authorities. Any disputes can only be dealt with extra-judicially, amongst themselves, because if they show up in a police department, they will be arrested and deported. This leads to the formation of gangs of illegal immigrants (often connected to the criminal organizations bringing them to the country in the first place). And, of course, this means that many illegal immigrants are denied their fundamental human rights, mostly women, and are treated as slaves within their own community, not having recourse to any authority to escape their situation. What's more, there is no reassurance that religious extremism is not practiced in these communities. I can't even bear to think that female circumcision might be practiced in the capital city of my own country. So, the conservatives seem to be right on this one, but they have to acknowledge the underlying causes of the surge in crime.


Question 3. Should we enforce more stringent border controls?
Absolutely. This is totally different than deciding on whether to accept immigrants or refugees and on what grounds. The law should always be observed and enforced. Failure to do so only reinforces our country's image as one of lawlessness. This attracts not only persons willing to work for a new beginning in their life (who, by and large, prove beneficial to the societies accepting them), but persons who want to establish criminal enterprises here. The signal such failure sends is that Greece is not serious about enforcing its own laws and that its security forces are lacking. This is not to say that excessive force should be used or that ships carrying immigrants should be sunk or that their lives should be endangered. I think that conservatives are more on the correct side of this one.


Question 4. What should we do with illegal immigrants?
Goodness. This is a very difficult and complicated question (and leads to other questions, e.g. should we allow access of illegal immigrants to public services - schools - hospitals?). I have yet to come up with a definitive answer. Should illegality be rewarded? Absolutely not. But should we close our eyes to people being mistreated, because they are afraid to so much as talk to a police officer? If we legalize everyone who is currently living in Greece illegally, then we will surely provoke an even larger wave of illegal immigration. If, on the other hand, we turn a blind eye to the situation within the immigrant communities, we do not have enough police power to prevent abuses and the rise in crime. And, of course, we cannot ensure that those we deport will not come back, particularly since we are not doing a good job of guarding our borders in the first place.


So, the final question remains open. Probably a mix of legalizing some immigrants and deporting others would be necessary - but, then, how do we choose whom to deport and whom to legalize; and what do we do in between? I guess this is a conversation I'll have to continue in subsequent posts.