Yemeni Civil War

Yemeni Civil War

By

Martin Cowen

            A war is raging in the Middle East of which most Americans are unaware. The war is co-sponsored by America with Saudi Arabia taking point in the killing. Yemen is the theater of this war. According to a story by the Associated Press in November 2017, over 50,000 Yemeni children died of starvation or disease in 2017 as a result of this war, to say nothing of those blown up by air strikes. Martin Cowen, Libertarian candidate for U.S. House of Representatives, GA District 13, opposes America’s undeclared war in Yemen (and all undeclared wars on principle).

            Here is Yemen’s story.

            Most Americans have never heard of Yemen. Most Americans do not know where Yemen is. Yemen is on the Arabian Peninsula south of Saudi Arabia and west of Oman. Yemen is bounded in the west by the Red Sea and on the south by the Gulf of Aden. There is a 20-mile-wide strait on the southwest corner of Yemen separating Yemen from Africa. The nearby African countries include Somalia and Ethiopia.

            Some older Americans might remember the U.S.S. Cole incident in which the American ship was suicide bombed while dockside in the Port of Aden, Yemen, on October 12, 2000, killing 17 American sailors and injuring 39 others.

            The Cole Incident provides insight into why Yemen is strategically important. The west coast and the south coast of Yemen are bounded respectively by the Red Sea and the Gulf of Aden. The north end of the Red Sea is the Gulf of Suez and the Suez Canal providing shipping access between the Mediterranean Sea and the Indian Ocean. All shipping must pass by Yemen’s west coast at the southern end of the Red Sea and pass through the Bab el Mandeb, the Gate of Tears, which is the 20-mile-wide strait at the southern end of the Red Sea. Also, at the north end of the Red Sea is the Gulf of Aqaba that borders Israel at the port of Eilat. The Gulf of Aqaba is also a border of Egypt, Saudi Arabia, and Jordan. Between the Gulf of Suez and the Gulf of Aqaba is the Sinai Peninsula, captured by Israel during the Six-Day War, June 5-10, 1967, and returned to Egypt by 1982 following the Camp David Accords in 1978.

            Yemen has always been an important trade route between Africa and the rest of the world.

            Yemen is number 171 (very poor) on the 2017 CIA list (of 198 countries from wealthiest to poorest) of the poorest countries in the world. Yemen is the poorest country in the Middle East. Saudi Arabia (Yemen’s northern neighbor) is, by contrast, 14 on the list (i.e. very rich) and Oman (Yemen’s eastern border) is 27. Qatar, another Middle Eastern country is 2, the next to the wealthiest country.

            Yemen is poor because it does not have a tradition of property rights and the rule of law. The Yemeni regimes have been referred to as kleptocracies. The area is one of the oldest civilizations because of its strategic importance for trade. Many groups have battled for dominance over the centuries. The Queen of Sheba, of Biblical fame, who visited King Solomon (970-931 BCE), once ruled Yemen. (See 1 Kings 10:2).

            Let us skip forward three millennia of warring to the near present.

            In late 2014 to early 2015, a rebel group called the Houthis captured the capital of Yemen, Sana’a. President Hadi escaped to his home town of Aden on February 21, 2015. On March 19, 2015, major fighting broke out in Aden. With Houthis moving in on Aden on March 25, President Hadi left Yemen and escaped to the capital city of Saudi Arabia, Riyadh, on March 26, 2015.

            Saudi Arabia began launching airstrikes in Yemen on March 25, 2015. America is providing aircraft refueling, intelligence and logistical support.

            The extent of America’s involvement is difficult to determine because America wants no attention paid to this killing. The New York Times reported on May 3, 2018, in a piece entitled “Army Special Forces Secretly Help Saudis Combat Threat From Yemen Rebels”, that in 2017, the United States launched more than 130 airstrikes in Yemen, compared with 38 in 2016. The 2015 “Rice Memo” (named after National Security Advisor Susan E. Rice) declared that United Arab Emirates, Jordan, and Egypt support the Saudis in their war in Yemen.

            The extent of the dead in the Yemeni War is likewise difficult to determine. An Associated Press story dated November 16, 2017, reports that 50,000 Yemeni children died of starvation and disease in 2017. The story goes on to report that 10,000 people have been killed and 3 million displaced. Quoting from the story: “The U.N. officials said more than 20 million people, including 11 million children, are in need of urgent assistance, with 7 million totally dependent on food assistance. The U.N. has called it the ‘worst humanitarian crisis in the world.’"

            The rationales for the war (not true in my estimate) include these: (1) a part of the War on Terror; (2) a proxy war between Israel/US and Iran; and (3) a religious war between Sunnis (Saudi Arabia) and Shias (Iran). The reason for the war (true in my estimate) is the strategic importance of Yemen, including the Port of Aden, for world commerce. A lot of shipping transits the strait every day. If the Suez Canal is a measure, about 50 ships per day transit the Red Sea and the Bab el Mandeb.

            In my opinion, in the absence of a Declaration of War by Congress pursuant to Article I, Section 8, America ought not to be killing 50,000 children per year in Yemen, even if the killing is by proxy. Were Martin Cowen in Congress, Martin Cowen would not declare war on Yemen.

            Please note the important fact that your present Congressman has not shared this information with you.

On Robots

On Robots

by

Martin Cowen

From time to time we come back to robots during FORum talks. Last month we heard again of the Luddites in a talk by Ron Menich. As readers will recall, the Luddites were a group of economic terrorists who in 1813 England destroyed textile machines and killed factory owners and others because they believed that high paid, high skilled textile factory jobs would be lost to low paid, low skilled operators of new and improved textile machines. The disruption lasted for a few years. Of course, today, textiles are in abundance and everyone is satisfactorily clothed. Everybody can buy a nice business suit on Amazon for $90 (12 minimum wage hours, 1½ days of work). Many of us even deliver $1,000 of used clothes to Goodwill every year. Overall our standard of living in 2017 America is exponentially improved over that of 1813 England thanks to technological improvements.

Nonetheless, the Luddite fallacy lives on and the new target (no longer textile machines) is robots. “Robots will steal our jobs” is the new refrain. People forget the Luddite fallacy. People forget that automobiles replaced the horse and buggy to the great benefit of humanity. People forget that digital photography has replaced film photography for most of us. People forget that once we needed libraries and now we all carry around the Library of Congress and the Western Canon in our cell phones. Thousands of great new products have replaced thousands of now obsolete products to humanity’s great benefit.

So why do people still worry about technological progress? The simplest explanation is that we lack sufficient imagination. We cannot imagine what is to come when things change. We can see the loss of a job to a robot. We cannot foresee what the liberation of resources caused by improved technology will bring. So here we ponder the Luddite Fallacy one more time.

First, consider a not-so-hypothetical case of a worker being displaced by a robot.

Hypothetical Purchase of Burger Flipping Machine

Miso Robotics and CaliBurger have invented a burger flipping machine to replace a “hot and greasy job” according to a March 7, 2017 report. The creators have a product installation in Pasadena, CA where the minimum wage will be $13.25 in 2018, by city ordinance. At that minimum wage the Relative Value Pay Rate (RVPR) is about $31,500 per year. The RVPR is that value a worker must return to the business in order to make it worthwhile to employ her. The RVPR takes in to consideration mandated taxes and benefits that increase the cost of employment above the base wage. The value a Pasadena employee brings to the enterprise must therefore exceed $31,500 in order for employment of the worker to make economic sense. Of course, this fact is completely uninteresting to most government policy makers who are interested in re-election and not business viability, unemployment or the long-term viability of government programs.

We do not know the actual purchase price of the burger flipping machine, but assume that the purchase price is $31,500, the same as the employee’s annual RVPR. Assume that the machine has an 11 year life. The business owner can fire her employee and buy a burger flipping machine, paying for the new machine in one year. In the 10 years after the first year, amortizing the purchase price of a new machine on an annual basis ($3,150 per year), the machine will increase the profit of the business owner by $28,350 ($31,500 - $3,150 = $28,350) per year.

The minimum wage employee will have lost her burger flipping job. The entrepreneur will have gained $28,350 extra profit for years 2 through 11 after her purchase of the burger flipping machine.

What happens to the extra $28,350?

As a result of the purchase the burger output of the burger store will stay the same or increase and there will be $28,350 per year extra profit in the business woman’s pocket. Over 10 years, she will have an extra $283,500 profit. The entrepreneur can spend, save or invest her profit. If spent, the money increases general demand in the economy. If saved, the money is stored for future spending or investment. If invested, additional capital (e.g. another machine) comes into existence.

There are other possible (and more likely) economic outcomes. For instance, the higher profit earned by the entrepreneur might lure other investors into the hamburger business resulting in more competition and lower prices for the consumers. But for the sake of simplicity, let us retain our first assumption which is that the entrepreneur’s profit simply increases by $28,350 per year.

What happens to the fired employee?

Total wealth in the world increases upon the firing of the employee after the purchase of the machine. After being fired the employee still has her 2,000 hours (40 hours per week times 50 weeks per year) per year of labor available for use. She can use her 2,000 hours herself or she can exchange her hours for wages. The burger store output stays the same or increases, plus an additional $28,350 per year not spent on a human burger flipper in the entrepreneur’s pocket. From the stand point of society three values now exist: (1) an extra $28,350 per year in profits for the entrepreneur, (2) two thousand hours per year of unused labor capacity, and (3) the burgers produced by the business. Before the purchase of the burger flipping machine there was only one value, the burgers produced.

The employee had been exchanging her labor for wages. The fired employee is no longer trading her labor for wages and she therefore has unused capacity, her capacity to work 2,000 hours per year. She can find another job or not. If not, she can use her 2,000 hours per year for herself. She can do things other not-employed-people do enjoying their free time: learn a new skill, raise children, look after aging parents, volunteer, learn a new language, read a book, travel, ad infinitum. If she needs to work, she can find a new job exchanging her 2,000 hours per year labor for wages or she can become an entrepreneur herself.

Note that the fired employee and the entrepreneur need not be different people in kind. In fact, they could be the same kind of person separated only by 20 years of life and experience. Assume that the fired employee is 18 years old and that she will be a successful entrepreneur in 20 years. Also assume that the entrepreneur was herself once an 18-year-old looking for a minimum wage job.

The Role of Government

Obviously, the fired burger-flipping employee was priced out of her employment by the minimum wage and a too high RVPR (which mostly contains government mandates). I say “obviously” though I failed to think about the role of government until day seven of the writing of this essay.

If wages are allowed to fluctuate according to market forces as opposed to government mandates then there is no systemic unemployment. The most well-known economic equation—supply equals demand at the market price—predicts this conclusion. If people are allowed to move to find new work and if employers are allowed to employ people on terms that are agreed to by the employer and the employee, then there is no systemic unemployment only frictional unemployment (temporary unemployment while transitioning between jobs).

The role of government is important because government price controls are the true source of the fear that there will be no more jobs at all. So, rather than “robots will steal our jobs”, the truth is that “government forbids free market employment”. The choices for those who must work in order to survive under government mandated minimum wages are minimum wage employment, welfare/charity or starvation. The government avoids negative publicity if and when the blame for systemic unemployment is shifted from government mandates (where it belongs) to robots.

Many current news stories about robots contain gloating references to the minimum wage. Memes along this line appear: “See what you get (robots) when you hike the minimum wage to $15 per hour? Ha!” Billionaire Bill Gates suggested in a recent interview that robots should be taxed. Obviously, increasing the price of a robot by taxing it only postpones unemployment or drives the burger entrepreneur out of business by making it economically impossible to flip hamburgers at all. Recall that the entrepreneur fired her employee because the employee was not worth her wages. If the entrepreneur cannot replace the human burger flipper with a lower cost robot, the job cannot be economically done at all. The business will close.

It is difficult to see a non-existent job, but there are hundreds of thousands on non-existent jobs in America today. Think, as one example, of the number of people who would be employed in homes as maids, butlers, drivers, gardeners, au pairs and adult care workers in the absence of employment regulations including the minimum wage. The government forbids free market employment.

Even in the absence of government interference in the economy, there will be technological advances. So some people may still complain that “robots will steal our jobs”.

Curing Cancer

Technological advances are almost always good. One might struggle to think of an example of a bad technological advance. Forced to do so, I might say that the replacement of libraries containing real books with libraries containing computer monitors is a bad technological advance. I recognized that reasonable persons will push back heartily on my claim accusing me of being an old fuddy-duddy.

On the other hand, some technological advances are spectacularly good. Imagine that a philanthropist discovers the cure for cancer, not just one particular cancer, but all cancers. Imagine that the cure is a simple mixture of easily obtained ingredients and that the philanthropist publishes the recipe on the Internet for everyone to see, mix at home, and self-administer for free. For those beyond the Internet, the philanthropist manufactures billions of doses and distributes the doses to the entire human population for their consumption.

The scientific achievement is fantastic, of course, but the political achievement might be even more fantastic. Venal politicians—those oppose Uber, the riding sharing company, and Airbnb, the home sharing company, in order to protect their moneyed constituencies—would be out in force opposing a total cancer cure. But let us momentarily suspend disbelief in science fiction and political fiction and assume that cancer is totally cured for all human beings on earth. (As a side note, the only disease ever to have been completely eradicated is smallpox in 1979.)

According to Internet sources, in 2015 healthcare was about 18% ($3.2 trillion) of the Gross Domestic Product. Research investigating the etiology of cancer, investigating new and improved cancer treatment drugs, and investigating new techniques and surgeries to treat cancer are a major industry today. Many doctors, nurses, technicians, pharmacists, and researchers spend their entire lives working to defeat cancer. Hospitals (there are about 5,627 total hospitals in the US), outpatient centers, research centers, universities, offices complexes, and other facilities are dedicated to the treatment and cure of cancer. Insurance companies and financial companies are invested in financing the treatment of cancer. The federal government spends twenty-five percent of its budget on healthcare generally.

In a flash all of these cancer-related services would be rendered economically obsolete. Just as the automobile put the horse and buggy industry out of business, so too a total cure for cancer would put millions of people out of work and render useless trillions of dollars of capital resources, land and equipment. Yet, only a small percentage of people—venal politicians and their sociopathic moneyed constituencies—would lament this outcome. Does any reader suspect that these now unemployed economic resources and workers would find no employment in the future? Of course, not. The healthcare industry would immediately retool and refocus their efforts on other diseases within weeks.

The purpose of this example is to illustrate that technological advances eliminate human obstacles, like burger flipping or cancer. In the case of cancer it is very easy to see that a total cure for cancer is an unmitigated good. After the invention of the burger flipping machine, no human is needed to flipper burgers. After the cure for cancer, an entire industry (the cancer treatment industry) is eliminated. Both of these events are good and humankind will be free to do other wonderful things. We simply lack sufficient imagination to predict them.

The Robot Problem Restated

People who anguish about robots generalize from a single instance (the example above) to a societal circumstance in which all jobs are taken by robots. There is a logical fallacy in this angst which it is the goal of this essay to root out.

Science fictional imaginings about robots vary. In Passengers, the 2016 film with Chris Pratt and Jennifer Lawrence, the robots are hardworking, nearly perfect friends of humanity. In The Terminator, the 1984 film starring Arnold Schwarzenegger, the robots are mortal enemies of humanity warring to destroy us. In the new HBO series WestWorld the robots are thinly veiled metaphors for human slaves who are tortured, raped, and murdered by “vile” Western consumers. We have identified three robot types: helpers, mortal enemies, and slaves.

In Passengers (the film with helper robots) Chris Pratt’s character, a mechanic/handyman, says that his reason for joining the colony spaceship is that on earth people do not repair things, they replace them. On the new planet his mechanic/handyman skills will allow him to be productive. This problem is related to our present discussion. The mortal enemy robots are not different from science fiction stories that imagine aliens bent on destroying humanity. We will just have to defend ourselves against such entities—not our present subject. The victim robots are uninteresting for our purposes. The victim robots are a thinly veiled “I-hate-Capitalism” or “I-hate-Humanity” political metaphor not to my taste.

None of these robots—helpers, mortal enemies, slaves—seems to be the type of robot about which this essay is concerned. Our robots are more like kudzu, an invasive, noxious weed.

Escaping to Eden

Human beings not only desire survival, they desire meaning. We have survival needs and meaning needs. The combination of survival and meaning is called flourishing.

Christ Pratt’s character in Passengers is going to a new planet because he anticipates that his particular skills as a mechanic/handyman will be needed there. He will be needed and productive. He will flourish.

Christ Pratt’s character’s back-to-nature strategy is among the answers to our “robots will steal our jobs” problem. In a future world in which the problem of survival has been solved by technology, meaning might be achieved by removing oneself from the “safe” world. Star Trek is all about this answer to the problem of technology. Even in our present world, the Amish shun technology and live relatively isolated lives on their farms in various communities in Ohio, Indiana, and Pennsylvania. Roughing it” has always been and will continue to be in demand.

Still, the core of the angst is not addressed by this solution. This solution assumes that people will have sufficient assets to buy passage to a new space colony or to set up independent farming communities on earth. The real worriers anticipate that “robots will steal our jobs” and leave us destitute.

Prices Fall

When was the last time you purchased a pen? When was the last time you purchased a coffee cup? Every pen in my house, save the red ones which I use to grade papers and have to buy, is a gift from some marketer. The same is true of most of my coffee cups. Most Internet content is a gift from some marketer. Broadcast television has always been a gift from some marketer. Most of us will never have to buy another pen or coffee cup in our lifetimes. Many household capital items, like cutlery, dishes, pots and pans, and kitchen tools, can be purchased once for less than $100 and used for decades. Household appliances are so cheap that once broken after years of service, they are cheaply replaced. (Walmart sells a toaster for $7.44). Access to the Library of Congress and the Western Canon is free online. A university education is free online. Dozens of foreign languages can be learned for free online. One can change one’s own car brake pads for the cost of the parts by watching a YouTube video. For $50 per month we have access to instantaneous worldwide communication, unlimited free entertainment and enormous computing power.

Technology brings price reductions. Like the price of pens, the marginal cost (the cost to produce one more instances of the item) of everything approaches zero. Rather than worrying about a world in which robots do many jobs, imagine a world in which everything we want is a gift from some marketer.

Every productive person on earth is constantly striving to lower costs and increase output. The goal of this human activity is to make everyone rich beyond our wildest dreams. That dream is coming truth.

Unlimited Demand

Everyone has a long list of things to do. The list is prioritized and we work on high priority items in the present. There are some items, called the bucket list, that are known, but not being addressed in the present. There are other items, yet unknown, that have not been formulated. A person who wins the lottery may find many new items, previously unknown, to put on his list. Sometimes we forget this fact because we are totally occupied working on our current list.

Psychologist Abraham Maslow (1908-1970) identified a list of human needs in a famous paper entitled A Theory of Human Motivation (Psychological Review 1943). Maslow proposed a hierarchy of needs. The most basic needs are physiological needs: air, water, food, clothing, shelter and sex. Next up are safety needs: personal security, financial security and health. Third highest are the need to belong: friendship, romance and family. The penultimate set of needs pertain to self-esteem. Maslow’s ultimate need is self-actualization, the desire to be all that one can be. Maslow asserts that people move up the list from most urgent (e.g. air, water, food) to less urgent (e.g. self-actualization).

We all can make a list of things to do that goes beyond the things we are working on presently.

For example, the writer currently spends much of his time performing maintenance tasks for his disabled son. If robots existed to change diapers, to prepare daily meals, to clean up food debris after eating, to wash his soiled clothing, to monitor his safety 24/7, then our family might enjoy more of the following activities: read more, teach more, nurture the Fellowship of Reason more, go to the gym, jog more regularly, attend the opera, the symphony, the theatre, travel, hike the Appalachian Trail. We might learn ancient Greek and Latin. We might read the Western Canon. We might create a free college using retired professors to teach the Great Books to a new generation of freedom loving young people.

The point is that everyone has a long list of things to do beyond her active list. If one or more of our current needs is fulfilled we can go down the list and begin working on another item.

Interesting factoid: in 1870 50% of the U.S. population was engaged in agriculture. In 2008, less than 2% of the U.S. population is engaged in agriculture. This improvement is entirely related to technology. Furthermore, U.S. population was 38.6 million in 1870. World population was 1.3 billion. Today, U.S. population is 326.5 million. World population is 7.5 billion.

Factors of Production

Human beings produce things because the means of our survival is not given to us by nature. We must work in order to live. The four factors of production are labor, capital, land, and entrepreneurship. Labor earns wages. Capital earns interest. Land earns rent. Entrepreneurs earn profits. A man (consumer) needs food. He locates (entrepreneurship) a good hunting ground (land). He takes his bow and arrow (capital). He hunts (labor). He eats (consumer).

In economic terms, the worriers worry that capital will eliminate the entrepreneur’s demand for labor.

Can capital eliminate the demand for labor? In a particular case, yes. The Pasadena, CA hamburger store no longer needs a burger flipper, having replaced that human job with a robot. Can capital replace all demand for labor?

Remember that people produce (labor) for two reasons: (1) survival, and (2) meaning. Survival needs can be met without labor for a subset of people. Many people survive without labor, for example: retired people, independently wealthy people, people on welfare, children and disabled adults being supported by family. Meaning needs however cannot be met without productive work. In the absence of meaning, people cannot flourish. The consequence of lack of meaning is unhappiness. Unhappiness can lead to substance abuse, criminal behavior, or suicide. The absence of work for immigrants into Europe is an important cause of societal dysfunction there. All people surviving without labor must still produce in order to flourish.

Capital, therefore, cannot eliminate the human need for productive work as the need for labor (to supply meaning) is part of human nature. Still, the worry that “robots will steal our jobs” is not solved. Simply because people must produce in order to have meaning, to flourish, and to be happy, does not necessarily imply that survival needs will be met by personal savings or the generosity of others. It is still possible to imagine a world without opportunities to make a living. Look at Venezuela today where people are rooting through garbage to find food to eat. Of course, Venezuelans’ problem is their socialist government, not an overabundance of technology.

Perpetual Motion and The Matrix

Can capital completely replace labor? How much like the chimerical perpetual motion machine is the technology worrier’s worry? Perpetual motion machines are believed to be impossible.

The 1999 film The Matrix postulates that human beings are the slaves of robots who use humans, held within bio-support pods supplying all survival needs, as an energy source. The consciousness of all human beings exists within a computer-generated reality called The Matrix so long as the individual is connected to his bio-support pod. The computer-generated reality provides individuals with “meaning”. These robots are related to the “mortal enemies” robots identified above. However, these robots have a use for humankind. Human body heat is the robots’ power source. The pure “mortal enemies” robots have no use for human beings and war (in science fiction) against them unto death.

In diametric contrast to The Matrix and the human slave holding robots, I am reminded of the original Star Trek TV series episode The Menagerie, a two-parter first broadcast on November 17 and 24, 1966. The story concludes with Captain Christopher Pike, totally disabled and wheel-chair bound, being taken in by benevolent aliens who provide him an imaginary mental existence with beautiful young woman named Vina, who is real, but also damaged. Pike’s survival needs are met by his life-supporting wheel-chair. His meaning needs are supplied by the aliens in his imagination. Captain Pike “flourishes”.

The worriers worry about a kudzu-like robot population that completely overtakes all opportunities for human labor. The worriers would go even further. The worriers anticipate Artificial Intelligence (AI) that will take over even the role of the human entrepreneur. At this point, the kudzu-like robot population looks very much like the “mortal enemies” robots.

In these conditions, one might imagine a complete split between the kudzu robots and humankind. Unless forced to live with kudzu robots as in The Matrix, why would not humankind simply ignore them or move away. In the language of The Matrix, many would simply take “the red pill”. No doubt many more would choose to remain in The Matrix.

Who will buy the Product?

So, can capital replace the demand for labor? Remember, there are four factors of production: labor, capital, land, and entrepreneurship. The entrepreneur is the person who organizes labor, capital, and land in order to produce products or services. She does so in order to trade with others to meet the entrepreneur’s own needs. The entrepreneur wants products and services for herself. She is a consumer, too. In order to obtain products and services for herself she utilizes her entrepreneurial skills (plus labor, capital, and land) to make a product or service that she can trade for other products and services that she wants. The entrepreneur therefore needs other productive people, either entrepreneurs or laborers, with whom to trade.

The entrepreneur’s SuperPower, if you will, is the ability to see economic opportunities. She can detect that if she takes such-and-such steps that the cost of her product or service will be less than the selling price. She foresees that she will make a profit by arranging labor, capital, and land in such-and-such ways. She acts. She produces. She sells. She profits. She succeeds.

If the entrepreneur fails, she will lose her investment. If she fails enough, she will be bankrupt and no longer an economic factor, i.e. an entrepreneur. She may be demoted to laborer, retiree, or welfare/charity recipient.

Generally speaking an entrepreneur seeks a larger market. She seeks to sell to more people. Part of the entrepreneur’s SuperPower is intimate knowledge of her market. If she sees that a particular population will be unable to buy her produce, she will not produce for that market.

Stolen Concept

Using a concept while denying the validity of early concepts upon which the concept logically depends. Production assumes consumption. One only produces for consumption either now or in the future.

The purpose of technology in general and robots in particular is to increase production. Increased production always means lower prices for consumers and a better standard of living. An entrepreneur makes an improvement precisely because she anticipates that her costumers will like the improvement.

Conclusion

(1) This essay has restated the Luddite Fallacy, the fear that technology will take all of our jobs. (2) We have given a real-life example of a burger flipping machine replacing a human burger flipper in California. We have argued that upon the replacement of the minimum wage employee with the machine, three values now exist in the world—extra profit, additional labor, and burgers—where before only one existed, burgers. (3) We have asserted that government interference in free market employment is the cause of the job loss. (4) We have shown, using the example of a complete cure for cancer, that technological improvement is an unmitigated good and that the assets once used to fight cancer will be immediately redeployed to other productive uses. (5) We have restated the robot problem by identifying three types of robots: helpers, enemies, and slaves. Our “problem” robot though is more like the invasive plant kudzu. (6) We have shown that human beings have survival needs and meaning needs. Survival and meaning together are human flourishing. We have shown that human beings have always imagined escaping from the “safe” world to Eden. (7) We have shown that technological improvements result in price reductions toward zero, giving the example of the gift of pens by marketers. (8) We have shown that demand is unlimited and that as human problems are solved, more tasks will present themselves for solving ad infinitum. (9) We have identified the four factors of production: labor, capital, land, entrepreneurship. We have shown that capital cannot completely replace labor.

Perhaps now some worriers will stop worrying that “robots will steal our jobs”. For those readers who are not yet persuaded, perhaps you will agree that the burden of proof has shifted to you. Please present your arguments in a future edition of this newsletter.

Updated with Historical Theory and Facts -- How to Create a Terrorist: The Welfare State

By

Martin Cowen

        Since I first wrote this essay I have discovered something Ludwig von Mises wrote in Socialism: An Economic and Sociological Analysis:

       "Unemployment in the capitalist countries is due to the fact that the policy both of the governments and of the trade unions aims at maintaining a level of wages which is out of harmony with existing productivity of labour. ... Permanent mass unemployment destroys the moral foundations of the social order. The young people who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited."

          Mises's statements are the exact point of my essay.

          Also, we have learned that "some of those involved in Paris and Brussels attacks were collecting unemployment in Belgium." The Wall Street Journal, August 4, 2016.

           The conclusions of my essay, following, are supported by economic theory almost 100 years old (Socialism was published in 1922) and by the actual facts of the particular case cited.

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           All civilized people are alarmed by acts of terrorism, the most recent being the coordinated bombings on March 22, 2016, at the airport and a subway station in Brussels, Belgium, killing 35 people and injuring more than 300. We ask ourselves, “How could apparently healthy and able-bodied young men and women commit such atrocities against innocent men, women, and children? In this short essay we propose a new and unique answer.

            Let it first be said that these terrorists are despicable criminals who deserve, if they survive their attacks, to be prosecuted and punished to the fullest extent of the law. No sociological babbling, such as herein follows, can excuse their crimes. We are not determinists and we believe in free will. Criminals should be punished no matter what their unfortunate circumstances. That said; let us proceed with the theory.

         Modern progressives are Materialists. According to modern Welfare Statists, if people have their “fair share” of stuff, then they will be content. “A chicken in every pot and car in every garage” is the modern Progressive mantra. Perhaps we should update this 1928 saying as follows: “A cell phone with a good data plan and free healthcare for all.”

            Most Westerners believe the Materialists’ claim, because most Westerners are thoroughgoing Materialists, too. Thus, Westerners are baffled when middle class and wealthy people (like Osama bin Laden) become terrorists. These criminals have a lot of “stuff”!

            Welfare Statists, though, are wrong in their Materialism. The meaning of life is not to be found in a “fair share” of stuff. The meaning of life is to be found in personal pride in one’s own productivity. Each individual is unique. Each individual has her own genetic makeup, her own upbringing, her own special talents and skills, her own wants and desires, her own unique education, and her own unique knowledge of her social environment. From the individual’s unique perspective and circumstances, the individual can choose a number of appropriate actions. The exercise of the individual’s powers within the individual’s sphere of power and the related feeling following success are the meaning of life.

            A great flaw of Welfare Statist theory is the belief that the government can intervene in the individual’s life and choose well for the individual. The interference of the Welfare State in the life of the individual completely undermines the great pleasure we all find in exercising what we will henceforth call our Super Powers.

            In America, people need not have a government job in order to flourish, or even a usual private employment. We have in our lives individual entrepreneurs who clean carpets, clean houses, detail cars, do yard work, teach piano, and provide massages. Each of these people is a sole proprietor. Only our car detailer always has help and his helpers are family members. While these entrepreneurs may have local business licenses, further government regulation is absent. None of them has government mandated professional licensing and none is required. Their only report to the government is through their annual tax return. As entrepreneurs none of them is entitled to a “minimum wage” or even a “fair wage”. Instead, these entrepreneurs negotiate with their customers, usually friends with years of good history, for a price for the job: twenty-five dollars for a piano lesson, thirty-five dollars per hour to clean the house, sixty-five dollars to do the yard, sixty dollars to wash the car at 6 a.m. at the home of the car owner, eighty-five dollars for the massage, and one hundred and forty-five dollars to clean all the carpets in the house. The business relationship between entrepreneur and customer lasts as long as both entrepreneur and customer agree, with no government interference, no severance pay, and no apologies.

            In America, the land of the mostly free, people can be self-employed entrepreneurs, mostly free from government interference.

            Not so in Europe. The major countries of Western Europe are Totalitarian Democracies. Government, though allegedly benevolent, has no limits, since, supposedly, the People are the government. European Socialist Governments can and do regulate everything.

            Belgium is a typical Totalitarian Democracy and a Welfare State. The result is that anybody living legally in Belgium receives welfare and some classes of people are forbidden to work all together. Readers will readily understand that “anybody living legally in Belgium gets welfare”. Welfare is expected by Westerners. On the whole and for the most part, nobody starves in Belgium or goes homeless. (There will be objections to this claim. The population of Brussels is about 1.2 million. One estimate is that there are at least 150 “rough sleepers”, that is people actually sleeping on the street. While these 150 people certainly suffer greatly, the homeless population is .0125 percent of the total. Homelessness is not a problem among potential terrorists, who are our subject.)

            Typical Western readers will not understand that “some classes of people are forbidden to work all together”. A Totalitarian Democrat thinks that it is entirely appropriate for the Government to intervene in private contracts between a customer and a service provider. In the case of regular employment the rules, regulations, and laws governing in Belgium are grossly repressive. Belgium’s unemployment rate is over 20 percent. For young Muslims, the unemployment rate is over 40%. Of course, no government or government bureaucrat will take blame for this travesty, but the blame for unemployment rests solely with the government. We talk in America about a minimum wage and, of course, Belgium has a minimum wage, It is about 1,500 euros per month, or about 1,700 US dollars per month, or about 23,664 dollars per year. But the minimum wage is just the beginning. Ignoring paperwork, which is certainly voluminous, the extras add thousands to the cost of employment. For example, workers are paid for 13.92 months per year. (You figure it out!) Overtime must be paid for working over 39 hours per week. Who in America works less? There are family benefits that must be paid for: unemployment insurance, work accident insurance, health care, old age and disability pensions, and long-term care insurance. The benefits are extended to family members, including the au pair. The employee’s salary is docked by 13.07 percent and the employer chips in 33 percent, plus a 3 percent “crisis surcharge”. A full time employee gets 20 days of annual paid leave and 10 public holidays. There is no maximum for sick days with a doctor’s note! Parental leave is six weeks before delivery, plus fifteen weeks after delivery. Dads get ten days off at 82% salary.

            While Welfare Statists will salivate at these facts, employers simply avoid employing people.

            All of this means that the cost of employment in Belgium is at least $38,000 per employee per year. Any person whose labor is not worth at least $38,000 per year will not be employed. That person will instead receive welfare.

            As for entrepreneurs in Belgium, one imagines that the bureaucratic meddling is equally as repressive as for typical employers. A September 2015 story reports that a Belgian court has banned the ride-sharing UberPOP app. Independent contractor drivers are forbidden from driving willing customers with the iPhone app around Belgium.

            All of this means that young people in Belgium are often unemployed and on welfare, directly or indirectly. Indirect welfare would include living in a household supported by the government check of another.

            Europeans and most Americans are perfectly content with this travesty: increase the cost of labor to the point that 20% or more are unemployable and put the unemployed on welfare. The Democratic Totalitarian Welfare State can do no wrong.

            What we have left is healthy and able-bodied young men and women who are unable to exercise their Super Powers.

            Welfare Statists lack imagination. Welfare Statist cannot envision a free market, a world in which the government allows everyone to make private contracts for services without hundreds of pages of rules and regulations. In the absence of the Welfare State and the freedom corroding Democratic Totalitarianisms of Western Europe, there would be no unemployment in Europe. The healthy and able-bodied young men and women would be busily exercising their Super Powers making a place for themselves, with pride, in our world. Instead, we have healthy and able-bodied young men and women who have no meaning in their lives (living on a welfare check does not provide meaning) and who are easy prey to any terrorist leader ready and willing to make them feel wanted and special and to give them a purpose, on their account, a Glorious Purpose: Jihad!

            So, while navel-gazing about the cause of terrorism against the West, at least give a passing thought to the consequences of your, supposedly well-intentioned, Welfare State, and your rights-violating Democratic Totalitarianism.

Updated with Historical Theory and Facts--How to Create a Terrorist: The Welfare State

Updated with Historical Theory and Facts -- How to Create a Terrorist: The Welfare State

By:

Martin Cowen

            Since I first wrote this essay I have discovered something Ludwig von Mises wrote in Socialism: An Economic and Sociological Analysis:

          "Unemployment in the capitalist countries is due to the fact that the policy both of the governments and of the trade unions aims at maintaining a level of wages which is out of harmony with existing productivity of labour. ... Permanent mass unemployment destroys the moral foundations of the social order. The young people who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited."

          Mises's statements are the exact point of my essay.

          Also, we have learned that "some of those involved in Paris and Brussels attacks were collecting unemployment in Belgium." The Wall Street Journal, August 4, 2016.

           The conclusions of my essay, following, are supported by economic theory almost 100 years old (Socialism was published in 1922) and by the actual facts of the particular case cited.

-------------------------------------------------------------------------------------------------------

           All civilized people are alarmed by acts of terrorism, the most recent being the coordinated bombings on March 22, 2016, at the airport and a subway station in Brussels, Belgium, killing 35 people and injuring more than 300. We ask ourselves, “How could apparently healthy and able-bodied young men and women commit such atrocities against innocent men, women, and children? In this short essay we propose a new and unique answer.

            Let it first be said that these terrorists are despicable criminals who deserve, if they survive their attacks, to be prosecuted and punished to the fullest extent of the law. No sociological babbling, such as herein follows, can excuse their crimes. We are not determinists and we believe in free will. Criminals should be punished no matter what their unfortunate circumstances. That said; let us proceed with the theory.

         Modern progressives are Materialists. According to modern Welfare Statists, if people have their “fair share” of stuff, then they will be content. “A chicken in every pot and car in every garage” is the modern Progressive mantra. Perhaps we should update this 1928 saying as follows: “A cell phone with a good data plan and free healthcare for all.”

            Most Westerners believe the Materialists’ claim, because most Westerners are thoroughgoing Materialists, too. Thus, Westerners are baffled when middle class and wealthy people (like Osama bin Laden) become terrorists. These criminals have a lot of “stuff”!

            Welfare Statists, though, are wrong in their Materialism. The meaning of life is not to be found in a “fair share” of stuff. The meaning of life is to be found in personal pride in one’s own productivity. Each individual is unique. Each individual has her own genetic makeup, her own upbringing, her own special talents and skills, her own wants and desires, her own unique education, and her own unique knowledge of her social environment. From the individual’s unique perspective and circumstances, the individual can choose a number of appropriate actions. The exercise of the individual’s powers within the individual’s sphere of power and the related feeling following success are the meaning of life.

            A great flaw of Welfare Statist theory is the belief that the government can intervene in the individual’s life and choose well for the individual. The interference of the Welfare State in the life of the individual completely undermines the great pleasure we all find in exercising what we will henceforth call our Super Powers.

            In America, people need not have a government job in order to flourish, or even a usual private employment. We have in our lives individual entrepreneurs who clean carpets, clean houses, detail cars, do yard work, teach piano, and provide massages. Each of these people is a sole proprietor. Only our car detailer always has help and his helpers are family members. While these entrepreneurs may have local business licenses, further government regulation is absent. None of them has government mandated professional licensing and none is required. Their only report to the government is through their annual tax return. As entrepreneurs none of them is entitled to a “minimum wage” or even a “fair wage”. Instead, these entrepreneurs negotiate with their customers, usually friends with years of good history, for a price for the job: twenty-five dollars for a piano lesson, thirty-five dollars per hour to clean the house, sixty-five dollars to do the yard, sixty dollars to wash the car at 6 a.m. at the home of the car owner, eighty-five dollars for the massage, and one hundred and forty-five dollars to clean all the carpets in the house. The business relationship between entrepreneur and customer lasts as long as both entrepreneur and customer agree, with no government interference, no severance pay, and no apologies.

            In America, the land of the mostly free, people can be self-employed entrepreneurs, mostly free from government interference.

            Not so in Europe. The major countries of Western Europe are Totalitarian Democracies. Government, though allegedly benevolent, has no limits, since, supposedly, the People are the government. European Socialist Governments can and do regulate everything.

            Belgium is a typical Totalitarian Democracy and a Welfare State. The result is that anybody living legally in Belgium receives welfare and some classes of people are forbidden to work all together. Readers will readily understand that “anybody living legally in Belgium gets welfare”. Welfare is expected by Westerners. On the whole and for the most part, nobody starves in Belgium or goes homeless. (There will be objections to this claim. The population of Brussels is about 1.2 million. One estimate is that there are at least 150 “rough sleepers”, that is people actually sleeping on the street. While these 150 people certainly suffer greatly, the homeless population is .0125 percent of the total. Homelessness is not a problem among potential terrorists, who are our subject.)

            Typical Western readers will not understand that “some classes of people are forbidden to work all together”. A Totalitarian Democrat thinks that it is entirely appropriate for the Government to intervene in private contracts between a customer and a service provider. In the case of regular employment the rules, regulations, and laws governing in Belgium are grossly repressive. Belgium’s unemployment rate is over 20 percent. For young Muslims, the unemployment rate is over 40%. Of course, no government or government bureaucrat will take blame for this travesty, but the blame for unemployment rests solely with the government. We talk in America about a minimum wage and, of course, Belgium has a minimum wage, It is about 1,500 euros per month, or about 1,700 US dollars per month, or about 23,664 dollars per year. But the minimum wage is just the beginning. Ignoring paperwork, which is certainly voluminous, the extras add thousands to the cost of employment. For example, workers are paid for 13.92 months per year. (You figure it out!) Overtime must be paid for working over 39 hours per week. Who in America works less? There are family benefits that must be paid for: unemployment insurance, work accident insurance, health care, old age and disability pensions, and long-term care insurance. The benefits are extended to family members, including the au pair. The employee’s salary is docked by 13.07 percent and the employer chips in 33 percent, plus a 3 percent “crisis surcharge”. A full time employee gets 20 days of annual paid leave and 10 public holidays. There is no maximum for sick days with a doctor’s note! Parental leave is six weeks before delivery, plus fifteen weeks after delivery. Dads get ten days off at 82% salary.

            While Welfare Statists will salivate at these facts, employers simply avoid employing people.

            All of this means that the cost of employment in Belgium is at least $38,000 per employee per year. Any person whose labor is not worth at least $38,000 per year will not be employed. That person will instead receive welfare.

            As for entrepreneurs in Belgium, one imagines that the bureaucratic meddling is equally as repressive as for typical employers. A September 2015 story reports that a Belgian court has banned the ride-sharing UberPOP app. Independent contractor drivers are forbidden from driving willing customers with the iPhone app around Belgium.

            All of this means that young people in Belgium are often unemployed and on welfare, directly or indirectly. Indirect welfare would include living in a household supported by the government check of another.

            Europeans and most Americans are perfectly content with this travesty: increase the cost of labor to the point that 20% or more are unemployable and put the unemployed on welfare. The Democratic Totalitarian Welfare State can do no wrong.

            What we have left is healthy and able-bodied young men and women who are unable to exercise their Super Powers.

            Welfare Statists lack imagination. Welfare Statist cannot envision a free market, a world in which the government allows everyone to make private contracts for services without hundreds of pages of rules and regulations. In the absence of the Welfare State and the freedom corroding Democratic Totalitarianisms of Western Europe, there would be no unemployment in Europe. The healthy and able-bodied young men and women would be busily exercising their Super Powers making a place for themselves, with pride, in our world. Instead, we have healthy and able-bodied young men and women who have no meaning in their lives (living on a welfare check does not provide meaning) and who are easy prey to any terrorist leader ready and willing to make them feel wanted and special and to give them a purpose, on their account, a Glorious Purpose: Jihad!

            So, while navel-gazing about the cause of terrorism against the West, at least give a passing thought to the consequences of your, supposedly well-intentioned, Welfare State, and your rights-violating Democratic Totalitarianism.

Indentured Servants: Student Loans Defraud Millenials

Indentured Servants: Student Loans Defraud Millennials

By

Martin Cowen

                        No one reading this essay can obtain a signature loan for $100,000 on the free market. Yet over one million people are burdened with student loans in excess of this amount. The only reason that people, who are financially unqualified to receive free market signature loans, get student loans anyway is government interference in the free market.

                        The specific statute that is the core of the interference is Federal bankruptcy law that forbids discharge of student loan debt, 11 U.S.C. § 523 (a)(8):

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for

(A) (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

     (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

                        Why on earth should one be able to bankrupt medical bills and credit card debt and not student loan debt?

                        Government programs have a reason and a rationale. The reason for the program is the truth. The rationale for the program is a lie. We are only told the rationale for government programs. In the case of student loans, the rationale (the lie) is to help young people obtain higher education and thus be able to earn more during their working lives. The reason (the truth) is to benefit moneyed constituencies, in this case by subsidizing student loan lenders, colleges, universities, other “schools,” administrators, professors, teacher assistants, researchers, and unions working for these institutions (hereafter called “Leviathan Education”). The government subsidy supports these preferred groups by turning our young people into indentured servants. An online definition of indentured servant is: “A person under contract to work for another person for a definite period of time, usually without pay but in exchange for free passage to a new country.” Studenloanhero.com reveals that about 43.3 million Americans hold student loans. The total student loan debt is about $1.26 trillion. The delinquency rate is 11.6%.

                        Some people believe that people ought to pay their debts. (The author is a lawyer who has never practiced bankruptcy law for this very reason.) But when a person is defrauded, the legal system ought to provide a remedy to the victim.

                        Our young people are being defrauded by the Federal student loan subsidy program. The subsidy is designed solely to benefit Leviathan Education and to turn the poor, gullible students into indentured servants. Here is the fraud: The young people are led to believe that if they will agree a decade or more of indentured servitude, then, after 4 years of higher education, they will get a well-paying job and easily pay their student loan debt. A $100,000 10-year fixed loan at 5% interest requires monthly payments of $1,060.66. A mature, financially astute Libertarian can see through this fraud immediately. Trained from youth to trust her government, the state-educated teenager is not so insightful. She signs her young life away to a bank on the fraudulent representations of her greedy, lying government-paid advisors.

                        Any truthful person within the bowels of a university will have many anecdotes about the negative effects of government education subsidies. One common theme is the employment of people who are biased in favor of the Socialist policies of our government. One source claims that Liberal (i.e. Socialist) professors outnumber Conservative (i.e. liberty leaning) professors 5 to 1. There are hundreds of thousands of highly educated people who will argue in favor of government subsidies for Leviathan Education precisely because they are paid from those subsidies.

                        A few of the systemic horrors of government subsidized higher education are these: the pervasive political correctness movement, the presence among the faculty of teachers like the raging, red-faced University of Missouri professor who called for “muscle” to remove a journalist on a public sidewalk photo-documenting an incident, and the uproar on the Emory University campus when someone wrote “Trump2016” in chalk on a sidewalk prompting Emory’s President James W. Wagner to vow to review security camera footage and prosecute those responsible for the chalking! The Emory incident resulted in the invention of the appellation “snowflakes” for the students “traumatized” by such scribblings. One can imagine the enthusiasm of business people when considering Emory snowflakes for employment.

                        One hopes that many taxpayers would resent subsidizing higher education in its present state, if not under any circumstances as a matter of laissez faire principles.

                        One might ask—other than raising the salaries of the academic shills who argue in favor of government subsidies for Leviathan Education—what are we getting by subsidizing Leviathan Education and thus, as a matter of economic law, raising the tuition. The University of Alabama has aquatic facilities that include multiple swimming, a water slide, and a lazy river. Louisiana State University (LSU), Notre Dame, and Rutgers have climbing walls. High Point University as a first-run movie theater with free popcorn, drinks, and snacks. The University of Maryland has a recreation center with two large gyms, an indoor track, a ropes course, and a beach volleyball court.

                        No one reading this essay dislikes luxury facilities. Few reading this essay can afford luxury facilities on demand. No one should mortgage the rest of her life in order to enjoy luxury facilities for the four years immediately following high school (or ever for that matter). Those of us who very occasionally enjoy luxury facilities save for decades to do so. The enjoyment of luxury facilities should be the result of years of an individual’s work, planning, and savings, not the result of a government fraud perpetrated upon trusting, naïve teenagers.

                        The simplest solution to the student loan crises would be to repeal the Federal law disallowing the bankruptcy of student loan debt. There is no difference in principle between a debt for consumer goods, medical care, and education. With student loan debt bankruptable, lenders would be more careful in their lending practices and victims of the current student loan fraud could escape from their unfair burdens.

                       What about higher education? A lazy river, a climbing wall, and free snacks at the movie theater having nothing to do with higher education. Socialist professors indoctrinating teenagers in the ways of Marx have nothing to do with higher education. Emory snowflakes are not educational ideals at which to aim.

                       A classical education in the Great Books is the core of higher education. For those who insist upon STEM (science, technology, engineering, math), a free market in higher education would have thousands of options for everyone. In the absence of government interference, a higher education could be had by all for less than $5,000 per year. (The actual in-state tuition at public universities is $9,410 in 2016.) Thirty students paying $5,000 per year is $150,000 which would be more than enough to employ and house a professor. A college with 300 students would have 10 professors with a student/teacher ratio of 30 to 1.

                        The simple free market principle that should not be forgotten is that subsidies increase the price of the good subsidized whether the good is corn, sugar, consumer goods generally, healthcare, or education. Government subsidies are always bad, morally and practically. They are bad morally because government takes money by force from people and gives it, against the will of the consumers who are spending their money otherwise, to a favored constituency for political reasons (power and more power). They are bad practically because they do not achieve the end sought. For example, in the case of education, the stated goal (the stated rationale is always a lie) is to help high school students achieve a higher education, yet the result has been to create a large number of unemployed and underemployed indentured servants.

                        The Federal Government should get out of the business of subsidizing higher education and stick to its only proper business which is national defense. (According to Libertarian theory the three functions of government are national defense, the police, and the courts. State and local governments can provide all the police and courts that we need. National defense is the sole proper function of the Federal Government.)