People who dismiss the unemployed and dependent as “parasites” fail to understand economics and parasitism. A successful parasite is one that is not recognized by its host, one that can make its host work for it without appearing as a burden. Such is the ruling class in a capitalist society. – Jason Read

Associate Professor Read’s catchy word-bite is making the rounds of gullible Facebookers. Read’s quote and blog seem to advocate for the intersection of modern Communization and the anarchistic breakdown of traditional culture; in short he is an ivory tower Occupier. As with Jeffrey Clements’s middling book Corporations Are Not People, a little thought reveals that corporations and capitalism reflect the highest ambitions of, and are the only mechanism that allows for, the wealth they take for granted.

So, what is a corporation? A corporation is a voluntary agreement between different sorts of people so that they may work together. A single family might be able to build a log cabin, raise some livestock, and spin wool to make clothes, but that is the limit. Civilization, a concept not especially well received by the Occupiers, requires the specialization of skills, which requires trade between those specialists. Today, it is commonly assumed that everyone is a specialist (e.g. plumber, lawyer, engineer), but for the vast majority of human existence, nearly everybody shared the same skills with his neighbors.

Specialization leads to the need for a corporation. Truly huge endeavors require more than specialized laborers, they require capital and management (i.e. ideas). For example, a jet airplane certainly requires a variety of specialists such as metalworkers and electricians to construct, but its design and planning also require the equivalent of thousands of lifetimes of labor before the first spar is set. How can those who would realize their idea for a new jet marshal the massive resources required just to get to the start of construction? Capital formation.

Contrary to Mr. Read’s sophistry, capital is always formed by a combination of someone working harder and spending less than his neighbors. He might then give it to his children, or it might be taken by thieves and taxes, but it started with work and savings. His savings, which came through sacrifice, are precious to him, so he wants to protect them. The capitalist would never simply give his money to any person with an idea for a new jet; indeed hardly any one person has enough capital to fund such a project.

The corporation is a means by which a large number of capitalists, or savers, can join together with labor specialists and a manger with an idea to create something none of these groups could on its own. The capitalist (saver) is protected from the errors of the manager beyond his investment. The manger is protected from liability should the venture fail. The laborers are largely protected from the responsibility for what they have built and can receive compensation now rather than years in the future. Without such an arrangement, established by law, truly big and beneficial ventures would be impossible. Corporations are a voluntary pact between managers with an idea, labor with specialized skills, and capitalists with savings to invest. And, absent government action such as bailouts, nobody outside of the corporation is at risk to lose his money. By the way, Mr. Clements, these are all people.

The absence of this voluntary pact is the communism that Mr. Read seems to embrace. Communist systems replace the capitalist and manager with parasite politicians. Politicians decide where to allocate labor, while savings and investment are outlawed. The result is proven and predictable – stagnation and eventual collapse. Most disheartening is the academics such as Mr. Read who should know the sickening track record of communism.

The corporation is the intersection of savers looking for the best place to employ their capital, managers seeking to profit from ideas and innovation, and laborers looking for the highest pay in exchange for their skills. The corporation is for people and by people, and it is the ultimate expression of the potential of capitalism. It is voluntary and there are no parasites. One only need visit communist China to see the parasites – party members with soft hands perpetually taking bribes. To the extent that US capitalism and corporations are corrupt, look to government graft and coercion. GE, GM, and Solyndra are not voluntary capitalism, they are government sponsored corruption. Comparatively free corporations like Microsoft, Facebook, or the humble local florist create the wealth that feeds their critics like Mr. Read and Mr. Clements.

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Last week Hamza Kashgari, a Saudi writer was arrested for Tweeting his opinion that he and the Islamic prophet Mohammad were essentially equals; he faces execution. For Christians that have endured Piss Christ, and The Holy Virgin Mary, such comments seem fairly innocuous, but Ismah, the doctrine of Muhammad’s infallibility says otherwise. Still, execution remains a stretch. Kashgari fled for his life to Malasia, which does not execute blasphemers, but he was extradited to Saudi Arabia in violation of his right to a hearing. Worse, Interpol, a US sponsored agency, facilitated this arrest and violation of his human rights.

As offensive as Kashgari’s treatment sounds, the blame really lies with Tyrants like King Abdullah, not with Islam. Jakarta alone contains more Muslims than all of Saudi Arabia, yet Indonesian women vote, drive, and make careers for themselves. Apart from some very isolated islands, the Christian minority is not persecuted. Indonesia is majority Shafi’i, a stricter interpretation of Shariah than the Saudi Hanafi, so why is Saudi Arabia a pariah to modern sensibilities?

The difference is Indonesia’s constitutional republic versus Saudi Arabia’s absolute monarchy. Amnesty International (founded by a communist) likes to focus on the abuses of free nations like the US, but in a constitutional republic (i.e. democracy (sic)) human rights abuses are few and fleeting. The concept of individual worth and absolute individual rights is solely Christian, but even when it is applied in an Islamic setting, it yields similar results. Despite widespread corruption, and recent failed Presidencies, Indonesia’s economy is on a tear as it is pulling itself out of poverty and developing a stable middle class. Its sovereign credit rating was raised by Moody’s last year to investment grade. By comparison, Saudi Arabia is oil rich, but little else. Its economy is growing at half the rate of Indonesia, despite windfall oil profits. This is not an isolated case; wherever the individual is respected and his rights protected, there is prosperity.

From the Pharos through ancient Rome, to the Kings of England and France, dictators have always claimed to be gods or at least divinely ordained. Dictators enjoy the veneer of religious authority because the dark reality of their power is thuggery, violence, and repression. Mr. Kashgari wielded only the power of his words, posing no real threat to Islam and its 1.6 billion Muslims. However, free speech is a threat to King Abdullah, hence the persecution. The death penalty for impolitic speech is only found in a tyranny.

As the myth of Damocles illustrates, a tyrant’s power is as fragile as a sword hanging from a single hair. Dictators like Abdullah are rightly afraid that their unjust reigns can end quickly, and violently. With the fall of dictators in all directions of Riyadh, Abdullah cannot afford to be less than paranoid. The repression of Mr. Kashgari is no sales pitch for Islam, but it is really a lesson in the value of constitutional rights.

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Washington is a criminal enterprise, which is not news. Politicians regularly dole favors to their donors in the form of grants and loan guarantees (Solyndra), theft of private assets for bailouts (Chrysler), and mandates for the use of worthless commodities (corn ethanol). The corruption is endless and goes back to Byzantium; governments are always corrupt because men are corruptible. Due to its size, however, Washington is the greatest criminal enterprise ever assembled. Still, what manner of thief has Washington become? The worst kind.

Popular culture lionizes certain classes of criminals, such as jewel thieves and bank heist masterminds, while it demonizes dirty crimes like armed robberies. Why the difference? Isn’t a thief a thief? Not entirely, and for good reasons. A jewel thief takes from the rich, who by popular belief can afford a loss. He sneaks into a mansion, barely breaking a single window, removes the jewels, and disappears. Nobody is injured, nothing much is damaged, and the jewels go on to flatter another wealthy owner; at least in the movies. Economically, this theft is highly efficient. Wealth is transferred from one person to another with little collateral impact. It is as if the rich victim just handed a stack of cash to the thief.

Dirty crimes involve a high degree of collateral damage as a part of the transfer of wealth. When an armed robber steals a few hundred dollars from a convenience store, the collateral damage is tremendous. People are often murdered, and customers lose faith in the store’s safety, so they shop elsewhere. The damage caused by dirty and unpopular crimes greatly exceeds the value to the thief; people instinctively say “what a waste” when they hear of these crimes.

A particularly wasteful crime trend is copper thieves. Copper thieves steal from construction sites by cutting down installed copper wires and pipes in order to sell the valuable metal as scrap. In doing so, they destroy the value of the labor that installed the copper as well as the finished value of the wire and pipe. Stealing copper whose scrap value may be a few hundred dollars can cause hundreds of thousands of dollars in collateral damage. Economically, copper thieves are among the worst criminals because they cause so much harm for a relatively small personal gain.

So, is Washington’s culture of corruption more like a jewel thief or a copper thief? Washington causes incalculable collateral damage while directing wealth to its friends. As Peter Schweizer’s Throw Them All Out documented, a few hundred thousand dollars thrown at a politician results in tens of millions in graft in return. From the investor’s (i.e. donor’s) point of view, political gamesmanship is the best investment of all. From the taxpayer’s perspective, Washington corruption is nearly a crime against humanity.

Consider corn ethanol. Because each State is equal in the Senate, a swath of low population states that grow corn wield extreme power over Congress’s appropriations. These corn states have forced politicians to mandate ever more corn ethanol in gasoline because it drives up prices and demand for corn. Congress has outlawed the importation of Brazilian sugar and ethanol because it is too competitive. If the goal were to reduce CO2 emissions, Brazilian sugar and ethanol would be the choice, but the goal is to benefit comparatively rich plain state farmers. The result is world hyperinflation in food prices. Corn prices rose from under $2.50 per bushel to $6 thanks to Washington mandates. Since cattle feed on corn, steak prices are rising at 10 times the rate of general inflation. Worldwide prices of substitute staples like rice also rose, causing a food crisis where most people spend most of their income on food. Just like copper thieves, Washington politicians, largely Republican in this case, do not care how many people they hurt to get a few thousand campaign dollars.

On the Democrat side, consider Pres. Obama’s harassment of Chrysler bondholders. In order to bail out his UAW base, Obama stole from the bondholders whose rights were senior to those of the labor union. Obama called on the bondholders to “sacrifice” to benefit the greater good, but his version of the greater good was the UAW, which represents a tiny wealthy sliver the US’s workforce. The greater cost for Obama’s theft is hidden in the revelation that politics trumps property rights. The Chrysler bondholders were prepared to sue the Government, but they were convinced by Obama’s operatives that they would be beaten down long before prevailing in court. Until this moment, an investor felt he knew his rights, but now any investment can be taken without cause or compensation if the President so wishes. In order to transfer a few million dollars to his cronies, Obama permanently damaged an $8 trillion engine for capital formation and economic growth.

If only Washington acted as the gentlemanly jewel thief, simply giving its stolen cash to its friends. Instead, Washington is like the copper thief, callous to the incidental damage its thievery causes. The next time someone exposes the latest episode of Washington corruption, remember to scale-up the reported graft to include the collateral damage.

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Today Reuters reported on the EU’s attempt to create a “permanent bailout fund.” The US’s Dodd Frank law includes a $50 bln permanent bailout fund, but the Old Time Media’ facile coverage credulously quoted Pres. Obama’s State of The Union speech saying “No more bailouts.” Why does the OTM cover for Obama’s lies, but has no problem with straight reporting concerning Europe?

The €500 bln bailout fund would be available to prop up future Greek tragedies, so the effort clearly implies the EU expects more sovereign failures. Therefore, It is entirely accurate and succinct to call it a permanent bailout fund. Fiscal conservatives may oppose such a fund, but at least in Europe there is a straight debate. In the US, the OTM refuses to admit that Obama has simply accelerated Pres. Bush’s bailout policies. Obama’s bailouts for auto unions, teacher unions, police unions, big banks, Fannie Mae, insurance companies, and major donors eclipse his fitfully attempts to help average homeowners. Obama has perfected the permanent insider bailout culture, but the OTM accepts this corruption. Why?

The OTM’s European coverage is not afraid of the ‘socialism’ tag. Greek politicians proudly declare their socialist allegiances, and the press accurately reports it. By contrast, Vermont’s Sen. Sanders is a self-identifying socialist, yet the OTM refuses to say so. Obama is, beyond any reasonable doubt, a socialist from the European mold, but, when asked, even the Wall Street Journal editorial board demurred on the inflammatory characterization. At worst, the OTM calls Obama’s redistributionist speeches ‘populist.’ Why?

In Athens, Madrid, Marseille, and London, the OTM has no problem reporting the anti-austerity protests as violent riots. The pictures of US Occupy and G-8 protests are very similar, but the OTM refuses to characterize the clashes that have resulted in hundreds of violence related arrests as riots. These are the same people using the same tactics, yet the OTM goes out of its way to say the US riots ‘began peacefully.’ Why?

The OTM accurately describes Greece’s troubles as the result of lavish government pensions and tenure rules. The Greeks are lazy and retire too young; they are over-entitled. In the US, people similarly thought they could live beyond their means, and the government threw cheap money at them ending in disaster. Here, the OTM’s narrative is that big bad banks are to blame for forcing loans onto helpless people who could not possibly understand that loans must be paid back. The US’s entitlement policies are close enough to Greece to ensure the same fate, yet the OTM characterizes the matter entirely differently. Why?

The answers are all the same and quite obvious. The OTM is biased toward transforming the US into a socialist-light nation. The debate long ago shifted from whether the OTM was biased to whether it was intentionally biased. Scandals such as JournoList clearly support the notion that the OTM is working for the progressive cause, but the OTM’s European coverage shows that the effort is selective and therefore intentional. So, when the OTM provides straight news on Europe but sugar coats socialisms similar failures in the US, smart readers know when to be skeptical.

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Rep. Ron Paul is running stronger than any other libertarian GOP candidate ever, including his own several bids. Still, everyone, even he, knows that Paul will not become President. Paul’s various stump and post-election speeches never allude to his governance, only the message he and his liberty minded supporters are sending to the Washington establishment. Campaigning is hard work for a 76-year-old, so why does Paul do it? Paul wants a seat at the RNC table, maybe a prime time slot for his son, and if they know what is good for them, they should oblige.

If Paul continues to fight and win about 11-15% of the popular vote, Shout Bits estimates that he will win a maximum of 100 delegates from a system rigged to favor the front-runner. Even if Gingrich and Romney split their delegates, Paul would be an unlikely king maker due to the 165 unbound RNC delegates. The RNC fat-cats would use their muscle to overcome any Paul action it finds impolitic (which essentially means Gingrich or Santorum must beat Romney by several hundred delegates to actually win the nomination). So, Paul can’t use his clout to buy a cabinet seat veto, let alone an appointment for himself or his son.

Paul knows he will never wield any heavy power in Washington. He knows that the RNC barely tolerates his daily attacks on their big-government-equals-big-donations money machine. The GOP establishment is openly hostile to his no-interventionist foreign policy and personal-liberty-trumps-all drug policy. Still, polls show that for every Paul vote, another voter supports him but tactically chooses to support a more electable candidate. Indeed, one poll shows that in a two man general matchup, Paul is within a few points of Pres. Obama, despite the huge recognition gap.

One in five Republicans identify with a liberty first message. Just as important, Paul has a passionate youth base that the GOP must maintain to avoid slipping into irrelevancy. Paul’s message also resonates with independents who see Washington and its twin parties as corrupt. If the RNC ignores Paul’s delegates, they will shout his name at the convention to stop the show on live TV.

If the RNC wants to satisfy a substantial part of its base, attract independents, and get some of the youth vote, it must deal with Paul by giving him a prime-time slot at the RNC. Still, Paul is a lightning rod, and the Old Time Media will have a field day with his newsletters from 35 years ago. Paul would be wise to give his son Sen. Rand Paul the microphone. Sen. Paul carries almost no baggage, yet he has the respect of his father’s followers. If the liberty movement is to gain mainstream power within the GOP, Sen. Paul is the best bet.

Look for Ron Paul to fight for delegates through Super Tuesday. He was in office during Gingrich’s collapse, so he knows the Speaker’s personal failings well. Look for Paul to barter a Romney endorsement for an off-hour speech for himself and a prime-time slot for his son. Anything less by the RNC is dismissing a large and highly motivated segment of the GOP base. If the GOP is to avoid the fate of the Whigs, it needs the liberty movement and the Pauls.

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Last week Pres. Obama asked Congress to combine six federal agencies into a single cabinet level agency to oversee Commerce. His nominal reason is to bolster the economy by making it easier to do business in the US and making the Federal Government better able to promote business. Given Obama’s outright hate for business and free markets, a skeptic might wonder why. The answer is that Obama is using the time honored playbook of defending bureaucratic failure – when government fails, put a new coat of paint on the old jalopy.

Pres. Carter inherited and oversaw an energy policy failure in the 1970′s. The US’s gasoline supply was disrupted by OPEC and also government mandates as to the delivery of product across state lines. Some states had plenty of gas, while others rationed it. Carter demanded that people ‘drive 55′ to save fuel and wear sweaters inside. It was a colossal failure, largely at the hands of bureaucrats who thought regulation was the answer. Carter’s response in 1977 was to create the Department of Energy, an umbrella of existing agencies. By lumping the failed Federal Energy Administration with the more successful Atomic Energy Commission, Carter saved his bureaucrats from embarrassment. Fast forward to 2009, and the DOE remained alive and well, doling out billions in grants and loan guarantees to Obama supporters.

In the early months of Pres. Bush’s presidency, Saudi terrorists attacked the Pentagon and the World Trade Center, killing 2,977 innocents. Despite pouring nearly $30 bln each year into the NSA, the intelligence community failed to notice 20 young Arabs who had radical ties, some of whom had trained to fly but not land a plane, and all of whom had bought plane tickets for the same day. 9/11 was a colossal failure of the Federal Government’s obligation to keep citizens safe from foreign attack. Bush’s response was to create the Department of Homeland Security by combining such notable failures as the INS, the ATF, and of course the airport security that allowed 19 young foreign Arab men armed with box cutters onto the airplanes. Fast forward ten years, and TSA employees are being tested for radiation exposure from the same machines they force children to walk through.

Recessions come and go, but 2008 was particularly bad. Government policy had inflated the access to cheap capital for a decade, and the housing bubble burst, bringing down every industry dependent on debt. While it was always ridiculous to presume that the DOC and FTC could somehow guide the US economy toward making the right decisions, the ‘great recession’ proved that these agencies were at best worthless. As with his big government predecessors, Obama is seeking damage control by combining several worthless agencies into one agency too big to eliminate.

Neither Carter nor Bush’s uber-agency strategy saved money, cut government payrolls, or made government more effective. Why would Obama assume otherwise for his adventure? Perhaps he doesn’t care about performance so much as the appearance of action. Agencies like the DOC and the SBA do more harm than good to the US, so the right move would be to eliminate them, but Obama is on the side of government, not commerce. He just wants to rearrange the deck chairs, add a layer of management, and credulously claim that bigger is better when it comes to government bureaucracies.

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The Obama of 2008 is long gone. Pres. Obama is taking a page from FDR’s 1936 business bashing, class warfare reelection campaign, and getting rough. Obama has abandoned every appeal to independents and moderates in favor of shoring up his left-wing base. Clearly Obama is a professional politician, but the numbers just don’t seem to add up to a 2012 victory.

Obama has provided worthwhile paybacks to his base. The environmental left can look to his shutting down older coal mines along with EPA plans to effectively outlaw all new coal plants. The Keystone XL pipeline will not break ground this year, regardless of Congress’s recent efforts to break the Obama logjam. The DOE has wasted billions of dollars in loan guarantees and grants on ‘green’ energy projects, most of which happened to go to Obama donors.

Big labor may not approve of the environmental left’s opposition to Keystone, but Obama has delivered to this base too. The NLRB has accomplished much of Card Check’s objectives by arbitrarily changing unionizing rules to favor big labor. His recent, perhaps illegal, appointment of three labor lawyers to the NLRB cements the board’s power to force unionization. The NLRB v. Boeing SC factory lawsuit turned out to be nothing more than a strong-arm tactic to force Boeing into a favorable union contract unrelated to the 787.

The trial lawyers can also thank Obama. The Dodd-Frank law is ripe ground for suing when anybody is either denied a credit card or is granted one and then cannot pay. Obamacare does absolutely nothing to stop the gravy train of suing whenever a doctor delivers less than a miracle. The trial lawyers would be fools not to support Obama.

African Americans can look to AG Holder’s hyper-divisive racial rhetoric. Blacks are the Dems’ most reliable base, yet Obama is placating them with words and gestures. Calling the GOP racist over voter ID laws costs nothing, and benefits nobody, yet it is red meat to the base. In exchange for over 95% voter compliance blacks should ask for something more concrete, but Obama knows their vote is secure anyway.

Of course Obama’s class warfare is on display to rally the social justice crowd. These unconscious Marxists love it when Obama pretends that taxing ‘the rich’ is the solution to $1.5 trillion deficits. Hollywood and media types are the Dem PR base, and Obama’s demagoguery is sweet nectar for the jealous / guilt ridden crowd.

The one group Obama no longer speaks to is independents. Most independents want economic opportunity and an answer to how the US government will pay its bills. Moderate voters want small steps, not radicalism. As Reason’s Nick Gillespie and Matt Welch argue, voters have distanced themselves from party affiliation. GOP registration has always lagged the Dems, but the gap has narrowed due to more independents dumping the Dem label than the GOP. In 2008, Obama won the independent vote by 8 points, but that margin may reverse in 2012.

Obama has all but abandoned the independent vote. His anti-business, anti-rich rhetoric may be shoring up his base, but at the expense of alienating independents. A Presidential candidate cannot win solely with his base; independents are too many to ignore. Perhaps Obama will eventually tack center, but most likely Obama is a hardened ideologue who will pursue European socialism because he truly believes it is what Americans want. Unless Obama softens, the key to his reelection is best gauged not by overall approval, but by where he stands with independents, and that is looking doubtful.

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Tomorrow, the Iowa GOP caucuses will yield their punditry fodder. Despite Iowa’s hostility toward Gov. Romney’s East Coast big government, pro-abortion, and socialized medicine record, he may win narrowly. Combined with a decisive victory in New Hampshire, many analysts think an Iowa victory could lock in Romney for the nomination. Tactically, an early Romney lock makes sense – less wasted resources in primary battles, a seasoned politician who does not make mistakes, the fact that good looks matter against all reason. Still, why does the GOP eternally embrace the Democrat agenda in a dilute form? Why does the GOP simply want to slow the march to national destruction?

All the GOP candidates have rightly criticized Pres. Obama for his wild socialism. Through aggressive regulation, shameless union biases, and of course Obamacare, he has thrown a series of socialist hand grenades into the private sector. Jobs are created when investors see a reasonable certainty of profit, and the reams of legislation and regulation foisted by Obama have yet to allow clarity as to where the next jobs will be found.

By contrast, Pres. Bush was a big government failure that took a steady course. Bush socialized prescription medicine, but its impact was reasonably predictable. Bush over regulated corporate finance through Sarbanes Oxley, but it did not reach down to the products and prices people pay for everyday financial transactions. Obama’s big government socialism is like a street drug, while Bush was like a pharmacy pill; both are addictive and dangerous, but one is easier to predict and contain.

Can anyone reasonably claim that a Pres. Romney would be less of a socialist than Bush? Bush had better governor credentials from Texas than Romney has from Massachusetts. Gov. Bush never socialized all of medical care. Gov. Bush never conscripted every citizen into buying health insurance against his will. Even Romney’s excellent hair and winning smile cannot cover his big government instincts, and how often do politicians exceed their expectations?

Romney offers competence and stability; he has the ability to stay on message (i.e. tell the people the lies they want to hear until they believe them). Romney may be able to beat Obama in November, but is a victory for the GOP a victory for the people? Is getting rid of the worst, most socialistic President since FDR enough? Not nearly so.

Wild man Rep. Paul has been sounding the alarm for decades – the US is in desperate trouble. The US does not have nearly the resources to pay for its immense promises such as Social Security, Medicare, Medicaid, and a $700 bln military. These are unpopular facts, but the longer they are ignored, the worse the consequences when Athens comes to Washington. Everyone agrees that Paul cannot become President; unfortunately, he is tied to fairly racist newsletters and laughable extremists like the Truthers (although nobody criticizes Obama that many of his Hollywood backers are similarly deranged). Paul is unlikeable and has no political fineness. Still, Shout Bits calls on Iowa to vote for Paul or stay home.

Paul is a messenger, not a candidate. His Iowa support reflects an instinctive sense that the US cannot carry on with the status quo. Romney and Gingrich are the status quo pleading to give big government another chance – this time big government will be better and really solve the nation’s problems. If the GOP continues to embrace this lie, the GOP must be destroyed, and a sharp rebuke of big government is the start. So, Iowa, vote for Paul, and let the other states sort out who really should be President. At this early stage, it is more important to send a message to the GOP establishment than to worry which watered down version of Obama will carry on a slow march to Hell.

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The world has been spared another day’s company with North Korean dictator Kim Jong Il. Even among his evil peers, Mr. Kim’s atrocities stand out. His despotism starved millions of Koreans to death while he developed a reputation as an epicurean. He literally stole Korean and Japanese babies from their parents to train them as spy moles for the communist regime. He sold nuclear weapons technology to state terrorists that are sworn enemies of the US and Israel. He committed various capricious acts of war, including shelling defenseless civilian island homes. As with other evil men, like Mao, Pol Pot, and Ho Chi Minh, people who live free from tyranny are tempted to assume the evil men do is because of bad luck in allowing an evil leader to take control. The ugly reality is that anybody can become a Kim, given the opportunity, and assuming the US is immune is dangerous.

The story of North Korea is another confirmation of Hayek’s The Road to Serfdom, in which he argued that whenever a people cease defending their basic natural rights, a dictator will step in and impose tyranny. Capitalism is an expression of individual rights, and prosperity is the byproduct of capitalism. The purpose of individual rights is to allow people to live as they wish, and prosperity is only a happy byproduct, however this night photo of North Korea is telling:

Where collectivism is permitted, all economic progress is halted. North Korea suffers under a standard of living the rest of the world exceeded several generations ago. Consider North Korea, East Germany, Cuba, and Eastern Europe. Wherever collectivism exists, people suffer. The only path to prosperity is when individuals jealously defend their natural rights.

The US is anything but immune from collectivism and tyranny. The US has forcefully dislocated Georgian property owners based their race (the Trail of Tears). The US has interred Citizens in both WWI and WWII because they shared an ancestry with the enemy. Even the greatest, most free, strongest force for world good has made terrible mistakes. The US has plenty of would-be despots like Mr. Kim waiting for their chance.

When the government dictates to Americans the quantity and variety of health services they must consume, or it abolishes habeas corpus on US soil, the US opens the door a little more to North Korea. Every time individuals cede even a small personal liberty or responsibility to the collective, the chance of an evil tyranny increases. The only defense is to keep government so small that, even when mismanaged, it is powerless to truly ruin anybody’s life.

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It is shopping season, and some do-gooders want to tell you how and where to spend your money. Go to a local coffee shop or book store and you might see a sign promoting ‘buy local first.’ The logic is simple – buy locally manufactured and sold products and more wealth will remain in your home town. Better, keep the money even closer – in your neighborhood. The theory goes that big stores like Wal-Mart undercut independent local businesses and ruin neighborhoods. Of course nothing could be further from the truth. Buying from the most competitive provider, is the best way to promote your hometown, even your neighborhood’s prosperity.

First off, the irony of a book store or a coffee shop bashing long distance trade is too delicious to pass by. Unless you live on Hawaii’s Big Island, it is more or less impossible for an American to buy local coffee. Coffee is an international commodity that is historically the one of the pillars of international shipping and trade. Books are an even purer form of long distance trade. Unless you live in Oxford MS, you probably don’t want to only read locally written books. The whole point of writing is to allow ideas to travel beyond a local audience. These hotbeds of ‘buy local’ activism are among the most obvious beneficiaries of long distance trade.

Confronted with the obvious paradox of simultaneously marketing international products and promoting ‘local first,’ these shop owners would probably say that the real enemy is large corporations like Starbucks or Amazon driving down margins and siphoning profits to out of town headquarters. No surprise there, businesspeople don’t like competition. Likewise, local politicians support ‘local first.’ After all, the local shop owner is much more likely to contribute to a local mayor than is Starbucks’s Howard Schultz. Everybody wins except for the neighborhood.

Economists like Bastiat and Hazlitt long ago debunked the ‘local first’ notion. Their core point is that while it is easy to see how the local shop keep benefits, it is harder to see how this harms a disparate and unidentified community denied free trade. Of course ‘local first’ trade means paying more; if a local business offered a better value, there were would be no need to cajole people into shopping there. Alternately, even nice businesses charge as much as they can for their products, so increased ‘local first’ business enables favored local businesses to keep prices somewhat higher than if they had to compete with national chains.

So ‘local first’ means paying more. Doesn’t that contribute to the neighborhood? Not really. Every extra dollar spent on ‘local first’ is a dollar a neighbor cannot spend on painting his house, or enjoying a steak meal. By concentrating money on less efficient ‘local’ providers, money that could buy even more things is lost. Every time a consumer bases his decisions on altruism rather than self-interest, potential wealth is lost, and the neighborhood’s standard of living is reduced.

The whole point of trade is to allow people to do whatever they do best, thereby ensuring that overall, more people have more wealth. An extreme example of ‘local first’ is Thomas Thwaites’s The Toaster Project. Rather than just buy a $12 toaster, Thwaites decided to build one himself; ‘local first.’ Naturally, without the benefits of long distance trade, his toaster cost 100 times more, not counting the value of his time and effort. The book purports to comment on the evils of consumerism, but it unintentionally demonstrates the immeasurable benefits of long distance trade and specialization.

Another tragic example of the ‘local first’ fallacy is the ‘green energy’ movement. Among the arguments for wind and solar power is that they keep money ‘local.’ Setting aside the fact that these technologies don’t actually work when the wind is still and the sun has set, they still harm their communities. The ‘local energy’ argument suggests that most of an energy bill goes to pay for far away coal mines, and that is bad. The alternative is to pay 4 to 10 times more for ‘local’ energy. Paying more for the exact same service prevents spending money that could better create local wealth. Not choosing the rational lowest cost provider of electricity is literally destroying wealth, causing unemployment, and reducing the local standard of living.

This Christmas, don’t sign up for the guilt trip that is ‘local first.’ It may be hard to believe, but by allocating your shopping budget to the vendors that give you the best value, you will be creating the most wealth, employment, and local benefit.

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