Con el tiempo que pasa


Cuando estaba en la universidad decidí que no me iba a involucrar en política. En parte porque no me gustaba la política que se hacía por esos rumbos, a pequeña escala en la universidad y a gran escala en mi país, en el mundo; tampoco conocía (no quería conocer) alternativas. Yo me dedicaba a asuntos culturales, quería cambiar al mundo por medio de la poesía.  Prefería no opinar sobre las ideas políticas de Jorge Luis Borges o Ezra Pound y prefería hablar de las de García Márquez. Con el paso del tiempo no sólo he comprendido que si bien la ideología de un autor se ve reflejada en su obra, ésta no la hace mejor o peor. También comprendí que es importante tener una opinión, ideas claras, incluídas las políticas. Porque si uno sólo se deja llevar por la marea puede terminar en un lugar donde no quiere estar, puede terminar viviendo en su peor pesadilla y no ser consciente de qué está mal.

Hace un tiempo vi este video: Cuba: The times are changing – People & Power – Al Jazeera English. El documental contiene opiniones de cubanos a los que se les ha permitido tener un negocio propio, como un experimento capitalista. Una de las cosas que más me impresionó es que ellos están muy contentos con la oportunidad de tener algo propio, de trabajar para sí mismos pero cuando el entrevistador les pregunta sobre las medidas que han permitido el fenómeno, ellos dicen que eso ya es política y prefieren no hablar de ello. Ellos no quieren tener una opinión política. Esta postura resulta natural si consideramos los años de censura y el control, comunes en cualquier dictadura. Para mí, ello también es un signo de advertencia, un recordatorio que necesitamos para defender nuestras ideas, para no abandonarnos en la comodidad de una opinión “segura” y que va con la corriente. El capitalismo sigue siendo un ideal desconocido, muchos lo rechazan sin tener idea de cuáles son los valores fundamentales sobre los que se sustenta. Creo que ahora no sólo me llegó el tiempo de expresar mis ideas, también de cuestionarlas, discutirlas, defenderlas.

¿Quién debe controlar la economía?


El hombre que está parado en la escalera, a punto de bajar a tierra por primera vez en su vida, es un pianista que nació en ese barco. Mira la ciudad y regresa al barco. Mucho tiempo después su amigo le pregunta por qué no bajó  y ésta es su respuesta: “No fue lo que vi lo que me detuvo. Fue lo que no vi. ¿Puedes comprenderlo?, fue lo que no vi. Lo busqué, pero no existía, en toda aquella inmensa ciudad había de todo excepto un final. Lo que no vi es dónde terminaba todo aquello. El final del mundo. Imagínate un piano. Las Teclas inician, las teclas acaban. Tú sabes que hay ochenta y ocho, sobre eso nadie puede engañarte. No son infinitas. Tú eres infinito. Eso me gusta, es fácil vivir con eso. Pero si yo subo a esa escalerilla y frente a mí se extiende un teclado con millones de teclas, millones, trillones de teclas que nunca se terminan, y ese teclado es infinito. En ese teclado no hay música que puedas tocar.“ (adaptado de Novecento, de Alessandro Baricco)

El pianista sabe que puede controlar una cantidad limitada de teclas y con ellas puede crear infinitas combinaciones. De esta forma, las personas cuentan con un número limitado de datos para tomar decisiones y actuar; por extensión, no hay gobierno alguno que pueda conocer todas las variables, todos los datos, todos los contextos, los gobernantes cuentan con una pequeña parte de la información del mercado, por ejemplo. En el momento en que el gobierno interviene en la economía, es como si dejáramos al pianista creer que será capaz de crear una melodía con un piano de teclas infinitas. No importa si el equipo que conforma el gobierno es el mejor o el peor, lo que importa es saber que hay infinidad de posibilidades que no conoce y no puede controlar, hay miles de decisiones que no puede tomar porque no sabe qué es bueno para cada quien y por qué.

En cada proceso de mercado, en el intercambio hay individuos que están directamente relacionados, otros que reciben las externalidades y otros que ni se enteran. Mientras más grande es la transacción es probable que involucre a más individuos. Si dejamos que el gobierno subcidie ciertos negocios, si dejamos que el gobierno otorgue privilegios, si estamos de acuerdo con la idea de que puede controlar el mercado, hacemos que evite el libre desarrollo del mercado. Evitamos que los individuos actuén con libertad y responsabilidad. Cuando las personas hacen negocios pueden ganar o perder, el gobierno no debería “salvar” a unos o “sacrificar” a otros, debería dejar que cada quien asuma sus riesgos, pierda o gane con libertad.

The faces of inflation


Today, The Federal Reserve Open Market Committee announced that the key fed funds rate will remain unchanged at 0-0.25 percent and stated that it will continue its plan to stimulate the economy with low interest rates and will continue to buy up to $600 billion in U.S. Treasury bonds through the end of June.

This was the face of a trader works in the S&P 500 options pit at the Chicago Board Options Exchange on April 27, 2011 in Chicago. Speechless I am.  As Joe Keckeissen, our admired professor of Austrian Economy, used to say: “The government must stop creating inflation!

Photo via: Andrew Sullivan. Picture By Brian Kersey/Getty Images.

The economics of disaster after devastation in Japan


“Japan will be poorer, for this disaster,” said Peter Morici, a business professor at the University of Maryland.

Toyota Motor Corp., the world’s biggest automaker, tumbled 7.9 percent after saying it would suspend manufacturing at its domestic plants through Wednesday — a production loss of 40,000 cars. Other manufacturers forced to halt production, such as Sony Corp. and Honda Motor Co., also slumped.

Much has been said in the aftermath of the earthquakes (the biggest with an intensity of 8.9 in the Richter Scale) and tsunami (with waves >10 meter high) that hit Japan last Friday.  First, the headcount of deaths has already reached 10K people and thousands more are still missing.  The first estimates on the economic impact stroked world’s stock markets and the price of petroleum fell in estimations of Japan’s industrial paralysis.

However, some economists would argue that the destruction caused by these natural disasters had something positive at the end of the day. Such is what had previously said Lawrence Summers, president emeritus of Harvard University that “It may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength” Many other economist believe the same as Mr. Summers and the reason is that an enormous influx of liquidity is to enter Japan’s long stagnant economy.  Already, Japan’s central bank pumped a record $184 billion into money markets and took other measures to protect a teetering economy today, as the Tokyo stock market nose-dived followed the devastating earthquakes and tsunami.  Afterward, large scale reconstruction plans are to start and billions of dollars would be pumped to reconstruct the country.  Overall, this huge reconstruction investments could trigger the recovery of Japan’s economy.

So, is everything going to be better?

Japanese culture and attitudes toward disasters has always been identified with the adjectives “pro activity, benevolence, cooperation and honesty”.  As such, looting has not occurred and reconstruction has started after only 3 days of the disasters.   However, the economy is not going to recover positively from this disasters no matter how much money is pumped into the economy to reconstruct by private companies or public investment.

Why is that the economy will continue suffering?

The destruction of business and public services had been working efficiently under market laws. This means that there is no relation to “creative destruction” and destruction occurred because of natural disasters.  Creative destruction applies only to businesses that were not competitive and as such, disappeared to open new investment in new industries and technologies.  A good example of creative destruction was how American Car Industry should have disappeared after the 2008 financial crisis to allow for more competitive companies (bailouts avoided it causing long term inefficiencies and economic loses to the US).

The reconstruction of Japan will require billions and this would surely ignite the tentacles of governmental interventionists agencies under the fallacy that the earthquake and tsunami were good things for Japan.  Government interventionism always deems disaster good to the system since it allows them pump more taxes and extort more money from private businesses.

Rebuilding Japan will be a hard and difficult work and estimates of the are at up to 15 trillion yen ($183 billion) — about 3 percent of gross domestic product.  Credit Suisse’s Shirakawa said in a report the direct economic losses such as property destruction could total 6 trillion yen ($73 billion) to 7 trillion yen. Indirect losses such as lost production will probably be higher.  The costs of reconstruction are at a high loss for the Japanese people and the rest of humanity.  This historical moment will again open the doors for collectivist ideologies that consider the sacrifice of individual rights to benefit the public good.

Evidence and history has shown that reconstruction and investment is more quickly, effective and has better long term effects if kept private and in respect of individual’s rights.  Lord Acton’s essay “The fallacy of the broken window” is a great example of how destruction is not always positive and of how reconstruction should be organized by a government that respects an individual’s right to his rights and property.  It is now our obligation to remind this to leaders of world governments.

Here’s a great video explaining it,

Video: The broken window fallacy

Visions of History: Ways of Seeing the Past by Stephen Davies


I listened for the first time a lecture by Dr. Davies in 2005.  Since then I’ve been an admirer of his work and his eloquence for teaching and sharing his ideas on history, entrepreneurship and liberty.

Here’s a great dissertation by Dr. Davies that is worth watching,

Dr. Steve Davies presents:

The way we think about and understand the past shapes the way we view both the present and the future – Orwell’s famous slogan from 1984 captures this. Most of us without realizing it have a unique vision of the past, a way of thinking about it that predisposes us to look at current events in a particular way. In general, we focus on power and its workings while overlooking other aspects of human existence such as voluntary exchange, cooperative interaction, innovation, and discovery. When these are brought to the foreground, a different kind of historical narrative emerges and transforms our ideas of important dates and significant figures in history.

Prices, who “sets” them?


If is often that we hear that a company “set” the price for some products, or that Steve Jobs, “set” the price of the iPad pretty good.  However, we usually forget that it is the job of entreprenuers to pronosticating what they expect would occur in the future in regard of the pricing process they follow.  Their job is to effectively understand their consumers’ (an specif consumer target of men determined by sociological and economical data) message and propose a price that will be of interest to marginal buyers.

However, it is consumers-an infinite list of individuals making valuations- who set the price of all products.  Here’s what Ludwig von Mises has to say in that regard,

“They are determined between extremely narrow margins: the valuations on the one hand of the marginal buyer and those of the marginal offerer who abstains from selling, and the valuations on the other hand of the marginal seller and those of the marginal potential buyer who abstains from buying.”  Ludwig von Mises.  Abstract from the Chapter XVI.  Prices: The Pricing Process.  Human Action. A Treatise on Economics

As such, in regard to the price setting of the iPad it was the result of individuals that demanded this product from the first time it was announced a couple months ago.  It was the job of the guys in Apple (entrepreneurs) to speculate on the closest price in which consumers were going to buy their product ie. the Ipad.  Prices cannot be effectively determined by any single men.  Surely, we will see the price of the iPad fluctuate in the near future.  Just as it happened with the Kindle and just as it happens with all products that are sold in the world.

PS: for more info on The Pricing process I recommend you to check the chapter XVI of Mises’ Treatise which can be found free online at the website of the Mises Institute.