Remember awhile back I posted an article predicting how the liars attempting to perpetuate the Global Warming Hoax would break down?

Stage 2 has begun:

“This was an outpouring of angry frustration on the part of normally very staid scientists who said, ‘God, can’t we have a civil dialogue here and discuss the truth without spinning everything,’” said Stephen H. Schneider, a Stanford professor and senior fellow at the Woods Institute for the Environment who was part of the e-mail discussion but wants the scientists to take a slightly different approach.

Heres the full article.  We’ll see how long it takes them to get to Stage 3.

I was tipped off to this little phenomena over at Hot Air.  Its kind of hard to say anything about these guys, mainly because they really don’t have anything to say themselves to comment on.

They claim that our governmental process has broken down, and that is the main reason for their existance.  As with most left-wing things, their understanding of our government, its Constitution and how it works is errant.

Our government is working better than it has ever worked since the 1930’s.  It should be difficult to pass legislation.

They claim that they are frustrated by obstructionism and extreme political tactics in government and that they want dialogue between opposing parties, and that politicians doing so are using it to their own political gain.  If that was true, then they would have formed during the Bush years when the Democrats attempted to obstruct every appointee to the court President Bush nominated, decried social security reform, lambasted oversight of sub prime mortgages and obstructed support for the War on Terror.

Question: Obstruction is obstruction… or is it only obstruction when it is standing in the way of something YOU want?

They claim to represent most of America.  This is false.  Why?  Because most of America doesn’t look to the government to solve their problems and be involved with every aspect of their lives.  If that were so, this country would have gone social a long time ago.  Our government is not an expression of the collective will. The Federal government is Constituted for specific reasons defined in the Constitution and implementing mob rule (ie the collective) is something expressly guarded against.

So, other than these few false claims about the government being broken, frustration with obstructionism begin fear based (no example given by the speaker), claiming Republicans are resorting to deliberate disinformation (I guess reading directly from the bill proposed is disinformation) and calling yourself a coffee party so you don’t get mistaken for a evil tea party member, I guess these guys are just democrats who are frustrated that the Republicans and the constituencies they represent are pushing back against unwanted legislation.

They are upset that Americans are exercising their rights.  Well… switch to decaff darlin’.  It’s too bad to, she is kinda cute.

This is another wonderful blog entry from the Daily Mises, courtesy of the Ludvig von Mises Institute.  We all have friends who continue to believe in the starry eyed promises of Socialism.  We may have even had discussions with them and found our attempts a shining light on its fallacy lacking.  This article by Robert LeFevre has wonderful examples of how to shine the light on the lie of Socialism.

This Bread Is Mine
by Robert LeFevre on February 23, 2010

We must return to Adam Smith.

This great economist and father of the modern theory of free markets propounded an error which has haunted us ever since.

Smith’s “labor theory of value” was mistaken. However, David Ricardo accepted it and elaborated it. As elaborated by Ricardo, the labor theory of value was still further developed by Karl Marx. Thus, we have a socialist theory of economic value resultant from a doubly compounded error. This error has become the moral fulcrum on which the political socialist lever rests.

What Smith was getting at, and what most individualists would agree with, is the moral certainty that the laborer is entitled to the full product of his own labor. Indeed, earlier in this essay that has been listed as a basic right of every human being.

Getting All That You Earn

The “surplus value” theory of Marx is derived from the “labor theory of value” of Smith and Ricardo. Briefly, the theory can be explained thusly: It is evident that natural resources do not prepare themselves for the use of man. Human energy and tools must be applied to the resources before they can be converted into usable form and transported to places where a demand for them exists.

One does not pay money to natural resources. Nor does one pay money to tools. It may be an essential to pay the person who owns the resources or the tools. But essentially, all money passes from one human hand into another human hand. And the passage relates to the amount of labor performed by the human energy supplied in each case.

Thus, one does not buy logs or lumber for building; one purchases the labor that has gone into the felling of the trees, the milling of the lumber. What are the logs worth while they are still trees? Fundamentally, they are worth whatever it costs to convert them. And here is Marx: If more than that basic cost of labor is included in the purchase price, the element of profit or “surplus value” appears. If you must pay a lumberman five dollars to fell a tree, trim it, saw it into usable lengths and thicknesses, and then deliver it, the tree is worth five dollars, no more, no less.

Superficially, this is reasonable enough — reasonable, that is, if this were a world in which hand tools were all that could ever be employed, land could never be privately owned, and our wants were such simple things as log houses. We are far from such a world. Such a world is contrary to the nature of man’s basic rights; there is no desire for such a world. The “labor theory of value” is fallacious and the notion of “surplus value” based upon it is equally in error.

What Smith, Ricardo, and Marx have done, and what the followers of the latter two continue to do, is to confuse the meanings of two important words: cost and value. While it may be true in the above instance that it might cost five dollars to produce the lumber from a given tree, the value of the lumber from that tree has no immediate relationship to cost.

Value, as Eugen Ritter von Böhm-Bawerk, Ludwig von Mises, and others demonstrate is inevitably the result of a subjective judgment. Lumber may cost $5, but the intensity with which you, as a purchaser, desire the lumber determine whether it is worth $1 or $20 to you. If it is worth only $1 to you, you will not purchase it if it is priced above that sum, regardless of the cost expended in producing it. Similarly, if you would be glad to pay as much as $20 for it, you will consider it a bargain if it is priced at $10, even though the cost of producing the lumber was $5 and the other $5 represents a profit to the producer.

In short, as a purchaser, you do not consider either cost or profit to others. You concern yourself with value, which relates to your own desire and your own ability to pay. It is in this area that Smith, et al., come to grief. They conclude that cost and value are the same thing.

Two Kinds of Pies

Perhaps an illustration will best provide the demonstration. We are indebted to Leonard E. Read of the Foundation of Economic Education for the illustration. Let us suppose that “A” has a bakery. He hires a number of workers, buys the best raw materials, and produces the finest mince pies in town. His costs, including the interest on the money he has borrowed, the rent of the land he uses, and all of the other factors that enter into the equation, make it possible for him to produce these pies and deliver them to your door for 40¢. He charges 50¢.

Marx would insist that he should sell at a figure which excludes interest. But he may pay himself a salary for his pains. Marx in “Das Kapital” recognizes the validity of managerial work, contrary to popular belief, and wishes it to be paid for at a modicum. Marx will not recognize a profit as a legitimate part of the economic cycle.

So in the above case, he would hold that the man who has run the risk, borrowed the money, bears the responsibility, manages the enterprise and owns the tools, should receive only a salary and no more. We will deal with this idea in a moment. Let us concentrate on the 50¢ mince pie. At this price, the owner and manager can pay himself a salary and in addition can accrue a profit if business is brisk.

Now, let us consider “B.” “B” also has a bakery. He hires the same number of workers as “A,” buys the best raw materials, and produces the finest mud pies in town. His costs, the interest on the money he has borrowed, the rent of the land he uses, and all of the other factors that enter into the equation make it possible for him to produce these mud pies and deliver them to your door for exactly the same price as the mince pies of his competitor, “A.” Now whether “B” insists on a profit or not, the fact of the matter is that it is almost inconceivable to imagine a going business in mud pies.

But, if Smith, Ricardo, and Marx are correct, then the product of “A’s” factory, which costs 40¢ to produce, must be valued at precisely the value of the product of “B’s” factory, since this product, also, costs just 40¢ to produce. If value is determined by cost, the mud pies and mince pies are of equal value if the sum expended to produce is equal.

Certainly, this is ridiculous. But this is the labor theory of value, to wit: The cost of the human energy expended in the production of any commodity is the value of the commodity.

One has only to imagine a situation such as this: Some enterprising genius discovers a way to manufacture yachts by an extrusion process which makes the cost of a yacht so small that it can be purchased in quantity lots for as little as $100 each. A second individual discovers a way to make elaborate igloos of ice and snow, completely equipped with air conditioning, which cost $1,000 each because of all the hand labor which must be utilized in the construction. In the Marxian catalogue, the igloo would be worth ten times what the yacht would be worth, regardless of the fact that many people would like to buy the yacht and there are virtually no takers for the igloos.

But, under Marxian or Fabian socialism, both industries would be owned and operated by the government; the taxpayers would underwrite the costs of both, and thus all persons would help to pay for igloos, of which few, if any, are wanted.

It is inconceivable that rational human beings could endorse such stupidity, but so cleverly have the results of socialist fallacy been hidden from them, and so thoroughly are they imbued with the holy grail of equality, that they shut their eyes to the certain results and blindly support the doctrine.

Question of Profit

Now let us examine more closely the “surplus value” concept, since the “labor theory of value” has been revealed for what it is. What Marx and other socialists envisage is the elimination of all profits, interest, and rent. What we must immediately do is to examine the nature of enterprise to discover, if we can, if enterprise can exist without the so-called element of surplus value, or profit.

Here the socialists contribute to their own downfall. For virtually, without exception, the socialist wishes to see all costs of production paid. What he is getting at, he says, is not the cheating of any human being, but rather the elimination of cheating. He wants the laborer to be paid what he is worth and not one cent less.

Very well, what are the costs of doing business? Again, we are indebted to the American Economic Foundation. There are only five costs. Whatever business you wish to select as an illustration, five costs will cover all expenses in connection with its operation. These five costs are:

1. Goods and Services Furnished by Others

The socialist will have no objection to meeting this payment. He expects those who furnish services and goods to be reimbursed. He just wants to make certain that profits are eliminated. But he has no objection to a person paying for the goods or services he hires. In fact, the socialist would insist that these things be paid for.

2. Human Energy

Here the socialist will wax eloquent. This is precisely the point, he will tell you. He wants the human energy paid for at full cost value. So he certainly has no objection to item two.

3. Taxes

Here again you will find no objection from the dyed-in-the-wool wealth-sharer. Since he is probably privy to the fact that the socialist movement is in the process of transferring all goods and all wealth out of private hands and into the hands of the state, the socialist will strongly support taxes, even high taxes, which others must pay.

4. Maintaining Tools

This one will cause the socialist to review his position slightly. But if one presents his facts carefully, one can usually convince the collectivist that machines do wear out and must be replaced. Further, machines can be improved upon and such improvements or replacements cost money.

After careful review, the socialist will concede, though begrudgingly, for he rarely thinks about such mundane things as repairs, research, and maintenance, that item four is an essential. If tools aren’t replaced, they are broken or worn out and there will be no more work. There is no job in existence which does not require a certain amount of tooling, from the steel man with his enormous blast furnaces, to the door-to-door salesman selling brushes.

5. Using the Tools

Again we remind the socialist that tools do not grow on trees, nor do they protrude from the wrist of homo sapiens. Tools have to be made. Also, they have to be paid for. And somewhere the money has to be found to provide the tools of production.

If you can convey the idea of paying for the use of tools, as well as the purchase of goods and services, the socialist is defeated. This is the most difficult point to get across. But non-socialists will ultimately see that the man who owns the tools will not permit others to use them unless he is paid for so doing. Why should he? Why should anyone share what he has with someone else unless he gets something in return?

So the tool owner wants to be paid for his goods and services, just as the shopkeeper wishes to be paid for his goods and the worker wishes to be paid for his labor. If you will not pay for the goods, you are not entitled to them. If you will not pay for the labor, you are not entitled to it. If you will not pay for the use of the tools, you are not entitled to use them.

If this is finally granted, behold, we have covered the item of profit. Profit is the payment to the owner of the tool for its use. The owner of the tool can be anyone. Tools can be owned by individuals, partnerships, or corporations. In the latter case, and especially when large and expensive tools are required, stockholders are the true owners. But whether the owner uses the tool himself or permits others to use it, a payment for that use is both essential and honest.

We have by no means exhausted this subject. But if a little time is spent on this formula of the five costs of production, it is simple to establish that there is no such thing as “surplus value,” and that the “labor theory of value” is an oversimplification.

This article first appeared in the Daily Mises, courtesy the Ludvig von Mises Institute.  I found it too insightful to simply leave in my inbox and felt the need to share it.  My thanks to Mr. Casey for his research and insight.

The State Grants No Quarter to Freedom
by Chris Casey on February 25, 2010

To promote his own divinity, the Roman emperor Commodus issued coins with his image in the lion-skin headdress of Hercules on one side, and the bow, club, and quiver of Hercules on the reverse. So that the message would not be lost on anyone, an inscription on the reverse dedicated the coin “to the August Roman Hercules.”[1]

History has a proxy in coinage, whether it’s deliberately conveying the fantasies of rulers or subtly reflecting the prevailing sentiments of a people. If symbolism, inscriptions, and metallurgical content convey meanings, what story is told by an examination of the United States’ coinage?

Symbolism

Portraits are obvious symbols. Today, former presidents adorn almost all US coins, but this is a relatively new phenomenon. As the accompanying table illustrates, not until 1909 was a president (Lincoln) displayed. Interestingly, 23 years passed before another president was so anointed. From then the trend accelerated. By 1948, all coinage displayed a former president or other statesman (Benjamin Franklin). The dollar coin did not then exist. It was reintroduced in 1971 — and was promptly assigned to President Eisenhower.

Prior to the imperial trend of glorifying former heads of state, the obverse of coins portrayed the imagery of liberty and the likenesses of Native Americans. This contrasted starkly with European coinage featuring princes and potentates. US coinage was graced by the beautiful (Saint Gaudens double eagles) and the austere (buffalo nickels); and each conveyed the ideas of peace, earned pride, and adventure. The uniqueness of US coins matched the distinctiveness of its people and their freedom. Idolatry remained a foreign concept.

A related trend may be developing on the reverse sides of coins. Historically, this domain was claimed by images of eagles. The nickel and the penny, in 1938 and 1959, respectively, forsook such images. Each now displayed a building: Monticello on the nickel and the Lincoln Memorial on the penny.[2] Never before had a building been displayed on a US coin. These images reinforce the power and mythology of the obverse-sided presidents, Jefferson and Lincoln.[3] This trend may continue and accelerate in the future.

Inscriptions

Inscriptions reveal a similar insidious trend. With free-market coinage, inscriptions may exist to distinguish the issuer and value (a product of fineness and overall weight). However, state-issued money also requires denomination (due to its value being determined by tale, or count, instead of metallurgical content) and generally includes a mint date. In addition to these functional inscriptions, US coinage has also frequently included the following words:

• “Liberty”
• “E Pluribus Unum”[4]
• “In God We Trust”

Although these inscriptions are now ubiquitous on US coinage, this has not been the case throughout US history. The following graph displays the frequency of the inscriptions “Liberty” and “E Pluribus Unum”.[5] [6]

After originally appearing on all US coinage, the frequency of “Liberty” fell off dramatically in 1808. The inscription appeared on 50–70% of US coinage until 1914, when its frequency reached 80%. A few years later, its appearance reached 100% of US coinage, where it remains to this day.

Why did “Liberty” seemingly fall out of favor, or at least lose its overwhelming popularity, until 1913? The reduction in frequency of appearance may have mirrored a change in the primary interpretation of its definition. Upon the immediate secession from England, “liberty” conveyed both individualistic as well as nationalistic meanings. That is, “liberty” meant an individual’s freedom from an oppressive government as well as the new American government’s freedom from England. However, by 1809, “liberty” lost the immediate urgency of its nationalistic meaning.

If individual liberty was then the primary definition of the word, why the resurgence of the inscription by 1913, just when the liberties of Americans began the their steep decline? The resurgence of terms extolling and immortalizing liberty can be best explained by Murray Rothbard in Anatomy of the State:

Through the centuries men have formed concepts designed to check and limit the exercise of State rule; and, one after another, the State, using its intellectual allies, has been able to transform these concepts into intellectual rubber stamps of legitimacy and virtue to attach to its decrees and actions. Originally, in Western Europe, the concept of divine sovereignty held that the kings may rule only according to divine law; the kings turned the concept into a rubber stamp of divine approval for any of the kings’ actions.… Similarly with more specific doctrines: the “natural rights” of the individual enshrined in John Locke and the Bill of Rights, became a statist “right to a job”; utilitarianism turned from arguments for liberty to arguments against resisting the State’s invasions of liberty, etc.[7]

And form followed substance. Just as checks and limits became rubber stamps, so terms and phrases were usurped to cloak state actions. Notable examples within American history include the labels “federalist” and “liberal.”

“E Pluribus Unum” originally appeared in 1796. In 1807 it jumped to 43%. But this trend reversed as the inscription fell from 50% in 1837 to just 11% a year later. By 1839, no US coinage contained the inscription until 1872.

Why the sharp reduction in frequency? With tariff controversies fueling nullification theory and talk of secession, the motto “from many, one” would have been a contentious statement. And even after force ended nullification theory in the War of Southern Secession, the wounds were too fresh for the federal government to coin the motto.[8]

By the time of President Theodore Roosevelt’s reign, the supremacy of the federal government was undisputed and far less offensive. As such, “E Pluribus Unum” steadily increased in frequency from 30% in 1906 to 70% by 1909. By 1934, all US coinage contained the motto.

In contrast to “Liberty” and “E Pluribus Unum,” the frequency of appearance for the inscription “In God We Trust” displayed no volatility and followed a consistent increase that tracked the American people’s degradation in liberty. First appearing in 1864 as a result of that year’s Coinage Act, its appearance reached 100% of all US coins by 1938. Presidents Lincoln and Roosevelt held office during those key years. They oversaw the modern claim to the divine right of kings.

Metallurgical Content

To avoid abrasion, coins typically consist of an alloy with the precious-metal component constituting approximately 90% of the coin’s overall weight. Any decrease in this percentage represents monetary inflation (as measured by tale), or stated alternatively, a shift of wealth to the mint (the state) and the early users of the recently debased coins.

Historically, whenever a state controls the money supply, the debasement of coinage forces nondebased coins out of the system. This phenomena is commonly stated as Gresham’s law, “bad money drives out good money.”

In truth, Gresham’s law is merely a simple application of the principle of arbitrage. Murray Rothbard succinctly exposed the true nature of Gresham’s law in The Case for a 100 Percent Gold Dollar:

The standard argument against private coinage is that the minting business operates by a mysterious law of its own — Gresham’s Law — where “bad money drives out good,” in contrast to other areas of competition, where the good product drives out the bad. But Mises has brilliantly shown that this formulation of Gresham’s Law is a misinterpretation, and that the Law is a subdivision of the usual effects of price control by government: in this case, the government’s artificial fixing of an exchange rate between two or more moneys creates a shortage of the artificially under-valued money and a surplus of the over-valued money. Gresham’s Law is therefore a law of government intervention rather than one of the free market.[9]

An understanding of Gresham’s law leads to at least two conclusions. First, to avoid or minimize the market’s response to debasement, the state must debase (inflate) all or nearly all coinage. Second, debasing the highest-value coins produces the largest windfall for the state.

Historically, the quarter, half, single and double eagles represented the highest values of US coinage (equivalent in nominal terms to $2.50, $5, $10, and $20). Debasing these coins, but not the lower denominations (the large cent, or penny, through the dollar coin), creates an arbitrage opportunity as the eagles would be exchanged for lower denominations. That is, the overall metallic value of eagles would be exchanged for the higher overall metallic value of lower-denominated coins.

Faced with such obstacles, the US Mint pursued a different tactic: in April 1933, Presidential Executive Order 6102 effectively eliminated the entire class of eagles. Rather than circumventing or solving the dilemma, the state simply abolished it. Subsequently, the US Mint was free to debase lower-value coinage en masse.

And so it began. Like all effective state intervention, the origins of debasement were at first mild and seemingly innocuous. Given the nickel’s relatively large mass but low value (in tale), initial debasement targeted this coin. In 1866, nickels were debased from 90% silver to a mix of 75% copper and 25% nickel. All other coins retained their relatively standard 90% silver component.[10]

En masse debasement occurred with the Coinage Act of 1965, which eliminated silver from the circulating dimes and quarter dollars and diminished the silver content of the half dollar from 90% to 40%. From then on, all dimes and quarters consisted of 75% copper and 25% nickel.[11]

Consider this example of how little the value of the new metallurgical content compared with the stated denomination of the coin: After 1965, both the nickel and the dime consisted of the same relative proportion of base metals. As the dime’s mass is exactly one half that of the nickel, despite having twice the stated value, the underlying value of its base metals cannot exceed 25% of a its stated value of 10 cents. Otherwise, an arbitrage opportunity would develop leading to the disappearance of nickels.[12] Simply put, US coinage was debased by over 75%. Rulers from antiquity, laboring to achieve debasement by clipping coins, would be envious.

Conclusion

The story told by the debasement, degradation in symbolism, and changes in the inscriptions of US coinage is one of decline in prestige, prosperity, and purpose. US coinage mutated from being a beautiful and sound medium of exchange into the state’s cheap change. In many ways, the story is a remake of the decline of the Roman Empire. The United States of America is simply newer to the scene. The lessons provided by the story of US coinage apply to all state-issued money.

Thomas Paine’s eloquent and insightful comment on monarchy is equally apt for state-issued money: “‘Tis a form … which the word of God bears testimony against, and blood will attend it” (the “blood” in the case of state-issued money having been provided wholesale via business cycles, inflation, and their geopolitical ramifications).[13] [14] [15]

A remarkable footnote in Anatomy of the State asserts:

The State always makes sure that it seizes and retains certain crucial “command posts” of the economy and society.… In the modern economy, money is the critical command post.[16]

State-issued money, as the “critical command post,” serves to subtly reinforce the authority of the state, insidiously plunder the savings and purchasing power of its subjects, and massively manipulate the economy.

No current US coin conveys the ideas of peace, earned pride, and adventure — or freedom. As it treats its subjects, so it mints its money: the state grants no quarter to freedom.

“A ruling intelligentsia, whether in Europe, Asia or Africa, treats the masses as raw material to be experimented on, processed, and wasted at will.”

–Eric Hoffer

No quote has more empirical evidence to support it from history than this one.  The intellectuals among us have often thought it their right to tamper with the social order of the time in an effort to ply theories concocted inside class, conference or dining rooms.

Let’s consider some of the experiments the world has suffered at the hands of the progressive intellectuals:

Eugenics

Eugenics was the attempt by intellectual elitist to create a superior genetic human through selective breeding.  Those who were deemed to have inferior genetic makeup (mexican, asian, black, poor whites and native american) were subjected to forced sterilization and denied the rights to marry.  Contrary to popular belief, the practice of genetic engineering originated with the intellectual elite here in America in the 1920’s.  These practices were what led to its adoption in the 1930’s & 1940’s by the Third Reich.  Edwin Black details these events in his book War Against the Weak.  Mr. Black speaks about his book on youtube.  Today it is known as Human Genetics.

Hitler’s Final Solution

The mad idea of eugenics gone horrifically insane.  Hitler thought he had a Jewish Problem.  His Final Solution: American born eugenics.  This resulted in the atrocity we now know as the Holocaust and the systematic extermination of and experimentation on millions of Jews and Gypsies by Hitler’s Third Reich.

‘Universal Healthcare’

Since the 1940’s Universal Healthcare has been the progressive dream here in America.  The experiment of central planning of healthcare by Governments is already underway, to devastating effect on the populace in Europe in terms of economic opportunity, prosperity and individual liberty.  The central planning of Healthcare has resulted in extended wait periods for needed surgeries and outright denial of needed care.  The attempt to sustain universal healthcare in Europe has resulted in crushing taxation of European individuals, an economy suffering from perpetual stagnation and unsustainable Governmental spending.  And lastly, central planners of healthcare disrupt the very necessary, patient/doctor relationship, essential for effective medicine.

These are just the poster children for experiments perpetrated on the world’s populations by the progressive intellectual.