Entrepreneurial video of the week – Peter Boettke and Chris Coyne

Last week we were visited by two leaders of Free Markets and Capitalism. Peter Boettke and Chris Coyne are Mercatus Scholars and GMU Economics Professors that gave a series of lectures on Austrian Economics, Public Policy, Entrepreneurship and Economic Development.

In the following links, you will be able to watch two interviews they gave at UFM,

Christopher Coyne
June 13, 2011

More Resources:

Entrepreneurial video of the week

TitleEntrepreneurship and the Capitalist Society: Inteview with Peter G. Klein

About: In this video, Peter G. Klein, analyze the fundamentals of  market process theory.  Klein explains which is the role of an entrepreneur in such a society, and how is it different from the role of a capitalist (investor and risk taker). Klein further explains the role of the “discovery process” in Austrian Economics.

Peter G. Klein is an American Austrian economist who studies managerial and organizational issues. Klein is Associate Professor in the Division of Applied Social Sciences at the University of Missouri and Associate Director of the Contracting and Organizations Research Institute (CORI).[1] He is also an adjunct professor at the Norwegian School of Economics and Business Administration, Senior Fellow at the Ludwig von Mises Institute,[2] and a Faculty Research Fellow at the McQuinn Center for Entrepreneurial Leadership.

Reason.tv: Universidad Francisco Marroquin (aka University of Free Marketeers)

I am a proud member of the faculty and an alumni of Universidad Francisco Marroquin and I was very happy to watch the latest video of Reason.tv.  The video was filmed a couple weeks ago at UFM campus by the team of Paul Feine & Alex Manning who did a wonderful job.

Video: Reason.tv – Universidad Francisco Marroquín

As their website reads,

Guatemala’s Universidad Francisco Marroquín, which economist Walter Williams described as an island of economic sanity in a sea of socialism, is a truly unique place.

Founded by “Muso” Manuel Ayau in 1971, the mission of Universidad Francisco Marroquín is to teach and disseminate the ethical, legal and economic principles of a society of free and responsible persons. In other words, the people at UFM want the people of Guatemala to be free. This is, of course, no small task in a country that has been plagued by political corruption and socialist policies for so long.

However, as UFM graduate Alfredo Guzmán told us, “sometimes thoughts become things.” And Guzmán knows what he’s talking about. In the late 90s, Guzmán and other UFM graduates successfully privatized Guatemala’s state-run telecommunications monopoly and opened up the market to competition. How did that free market experiment work out? In 1995, there were only 300,000 phones in Guatemala; today, 13 million Guatemaltecos own more than 18 million phones.

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

Arizona’s Immigration panic. A reality.

On April 23, 2010, Gov. Jan Brewer of Arizona signed the toughest bill on illegal immigration in American history. The intention of the bill is to identify and prosecute undocumented immigrants that live in the state. Opponents of the law consider it to be racist, as well as a violation of the equality of all people, as guaranteed by the Constitution. Legislation to identify and prosecute undocumented immigrants has been previously enacted by the federal government. However, this is the first time that a state law will make it a crime to fail to carry immigration document. In addition, the law gives the police broad powers to detain anyone suspected of being in the country without proper documentation. The root problem that Americans must confront is who will fall into a subjective criteria that some consider to be funded on a violation of the equality of all people.

Currently, people are evaluated as individuals, not as members of a group or class. To accept this law, which is based on racial stereotypes, will only open the doors for the exploitation of one person against others, as was written by the famous economist F. Bastiat in The Law. Once the exploitation of one group of people is supported by others who benefit, eventually a new group of privileged people use the same strategy to exploit the previous oppressors, creating an infinite cycle. The passing of the law in Arizona is a historical event compared only to the Prewar period in which Nazi Germany became an anti-Semitic country.

The criteria to be used by officers to identify potential undocumented immigrants are considered by some to be based upon skin color, verbal accent or social status , which may be a form of discrimination among people. The law also makes it a crime to not carry immigration papers. Similar laws has proved to only amplify the spectrum of intolerance and discrimination. A new period of discrimination has been ignited and it must to be stopped. If this law becomes the basis for future laws, discrimination based on skin color, accent or social status should be considered a violation of a person’s rights to life and pursuit of happiness.

But the past is never really past, racism and racists have survived in the United States since before it was an independent country. Different racial groups have been discriminated and among them were Irish-Americans, Jewish Americans, African-Americans, Asian-Americans, Native Americans, and Latino Americans. As of July, 2007 , Latinos are expected to be to more than 15.1% of the population in the country. Still a minority, Latin Americans are now confronting the historical results of a different paradigm after the civil-rights movements of 1960s. This new paradigm is race-based affirmative action. As Haney Lopez, a John H. Boalt Professor of Law at the University of California, Berkeley, explained, “the end of explicit race-based subordination did not eradicate stubborn racial inequalities, progressives increasingly recognized the need for state and private actors to intervene along racial lines.” As such, the law signed by Gov. Brewer is the result of decades of progressive recognition of racial stereotypes that have violated the Constitution’s colorblindness. This law provide the impetus for future violations of the rights of all Americans, based upon the racist belief that that societies aren’t composed by unique individuals but by stereotyped collectives.

In defense of this law, the Governor acknowledged in her remarks that “We must react calmly. We must enforce the law evenly, and without regard to skin color, accent or social status. We must prove the alarmists and the cynics wrong.” However, how could the Governor expect that a law that considers people not equal to be enforced justly? By which standards of current affirmative action will will police officers base their decisions of whom to stop and detain? Who is to determine the criteria and characteristics of potential undocumented immigrants?

Historical precedent provides a useful guide to understanding what will happen after similar laws were passed. In prewar Nazi Germany, from 1933 to 1939, more than four hundred decrees and regulations were passed restricting all aspects of the public and private lives of Jewish citizens. Jews were required to carry their passports; in addition, they were required to have visible insignia that helped police officials identify them. Meanwhile, Jews were forced to look like Jews with regard of the criteria and characteristics decided by the Nazi Government. No corner of German society was left untouched. Jews disappeared from the social order in a mere six years.

In 1933, the German public advocated for the Nazi government to start planning the oppression of Jews. By not fighting to protect their rights under the law, as well as promoting outright subjugation, the Germans opened the doors to death, war and discrimination. Luckily, the United States Constitution is color-blind; and it should no more be violated to attempt segregation than to preserve integration. “In the eyes of government, we are just one race here,” Justice Antonin Scalia intoned in 1995. “It is American.” The law passed in Arizona doesn’t comply to this right of colorblindness. For Arizonians, they no longer are just one race.

Lo dijo Mike Wallace hace medio siglo

Los puntos de vista de Ayn Rand son aún relativamente poco conocidos en Estados Unidos.  Pero si alguna vez llegaran a prevaler, revolucionarían nuestras vidas.

La anterior es la opinión del famoso periodista y entrevistador estadounidense Mike Wallace que de esta manera hizo la presentación de Ayn Rand y sus ideas en el programa que grabó en el año 1959.  Han pasado 51 años desde que esta grabación se hizo popular y solamente en el año 2009 se vendió más de 1 millón de obras de sus obras en Estados Unidos.  Sus estudios en filosofía, política y economía son más relevantes que nunca.  Los invito a escuchar esta entrevista dividida en tres partes para conocer su visión de un mundo posible, un mundo en el que los hombres podríamos buscar la felicidad y en el que no habría incentivos para delinquir o violar los derechos de los demás.

¿Y cuál es esa filosofía?

En la filosofía de vida que reconoce que,

  • la realidad existe como absoluta y objetiva,
  • que la mente del hombre utiliza la razón para percibir lo que existe,
  • que la moral es racional y objetiva, y puede explicarse por medio de la lógica.  Es una moralidad que no se basa en la fe, en caprichos arbitrarios o en emociones irracionales,
  • la moral se basa en la vida del hombre como el estándar de valor para tomar decisiones,
  • la razón es absoluta y es la única guía de acción,
  • el hombre debe seguir los juicios independientes de su propia mente,
  • que el logro más importante para el hombre es conseguir su propia felicidad,
  • que el hombre debe respetar a otras personas y no forzarlas a hacer nada, tal y como, esa persona no debe aceptar ser forzada por nadie a actuar contra su voluntad,
  • que cada hombre debe vivir como un fin en sí mismo y perseguir su propio interés racional,

Parte 1

Parte 2

Parte 3

Was it “Give me privacy, or give me death!”?

If you are aware of the philosophy behind the famous The Twilight Zone anthology series created by Rod Serling in the 1960s and then revived in the 1980s you can see what a terrible world we could actually live in.  If you don’t remember this show, I will tell you a little bit about it in order for you to grasp my analogy with the title of this post.

The Twilight Zone is a story in which men live in a sort of gray area in which almost everything (real or fantastic) can occur.  It a mixture of fantasy, science fiction, suspense, and horror that often concluded with a macabre or unexpected twist.  This idea caught my attention when I read the New York Times last weekend.  The title of the article read: “When American and European Ideas of Privacy Collide” and it explored the worth of the ideas of Liberty and Privacy, and of how both terms had a different worth in the codes of values of Americans and Europeans.  As the article read, European courts believed and interpreted customs by acknowledging that the right of an individual to privacy was above the right of any individual to freedom of speech.  As such, the framework in Europe is that of “privacy as a human-dignity right,” while in the U.S. it is only enforced as a  “consumer-protection right.”

It seems that the reason why privacy has such an important stand in European legislation goes back to Nazi Germany.  Fred H. Cate, a law professor at Indiana University explains that “The privacy protections we see reflected in modern European law are a response to the Gestapo and the Stasi” and in the way they kept under surveillance their citizens during the hardest times of the national-socialist government.

While there are historical precedents for this change of perspective, its justification is philosophical.  European Constitutional law regards in the Article 8 of the European Convention on Human Rights that, “Everyone has the right to respect for his private and family life, his home and his correspondence.”  This means that an individual in Europe can be free only if he doesn’t violate whatever is to considered private by someone.

It is in that article of the European Convention of Human Rights that the philosophical dilemma exists.  Who’s to determine what privacy, and a violation of it, actually is will depend on the case by case evaluation of evidence regarding a demand.  As such, in Europe men are free only if they do not violate what a privileged group will consider to be private or not.

The First Amendment to the United States Constitution on the other hand, regards freedom of speech as one of the most important rights of men.  As such, It considers it is considered by American framework that an individual’s right to free speech is necessary for him to claim that his rights to privacy have been violated.  The article reads,

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

To consider of privacy as a right above an individuals’ right to speech will take us into a horrendous time travel fantasy of sorts in which men will not be free at all to speak their minds.  It will only allow for a -Twilight Zone- world in which the interests of a small group of privileged men, corporations and corrupts will be protected and enforced by government.  Government will then be able of practicing censorship to those individuals that they consider to have violated someone’s privacy.  It will open the doors to a fantasy world in which a men would have never been able of screaming like Patrick Henry did in March 23, 1775, at St. John’s Church in Richmond, Virginia,

Give me Liberty, or give me Death!