This Cardinal Is In Serious Error

A few weeks ago, I welcomed Pope Benedict's call, delivered at the German parliament, for a public debate on positivism. 


Well, today, it seems that the first shot has been fired from within the Vatican itself, with Cardinal Turkson, President of the Pontifical Council for Justice and Peace releasing a document titled “Towards reforming the international financial and monetary systems in the context of the global public authority." This document - which is not a "papal document" - opposes a priorism in Economics, espouses empiricism and positivism, and since these are both "intellectual covers for socialism" - as Hans-Hermann Hoppe has written - the document ends up with all the grave errors of socialism, to the extent of calling for a global central bank.


But the Cardinal begins with some half-truths - half-truths that have prompted one commentator to call this document "Right diagnosis, deadly cure." After the diagnosis, the Cardinal asks the question:

What has driven the world in such a problematic direction for its economy and also for peace?

And his first answer is this:

First and foremost, an economic liberalism that spurns rules and controls. Economic liberalism is a theoretical system of thought, a form of “economic apriorism” that purports to derive laws for how markets function from theory, these being laws of capitalistic development, while exaggerating certain aspects of markets. An economic system of thought that sets down a priori the laws of market functioning and economic development, without measuring them against reality, runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage. 

This is an issue concerning epistemology. The question is: Does Economics have to follow the method of physics - which is measurement, after which theories are arrived at a posteriori. Or are the Laws of Economics arrived at a priori, by deduction, and are established by logic, just like the propositions of mathematics or geometry, such that they do not need measurement and observation to validate them?


Let us take an example:


The Law of Exchange - which says that when a good is traded voluntarily, both parties gain by the trade; that their individual valuations of that good are unequal. Obviously, if I prefer beer over money, the barowner prefers money over beer. How does such a law require "measurement" or "observation" to validate it? Obviously, this law is NOT going to be established a posteriori. It is true a priori. 


In fact, "value" cannot be measured, for it lies within the valuing mind. "Value is subjective." All that can be measured are prices and quantities - and the price at which exchange transpires will show agreement, not unequal valuation. The "demand-and-supply curves" type of education teaches nonsense - and these curves can only be produced by "measurement." The curves are actually "statistics."  They are thus History - they are not Theory, which in Economics must be true a priori.


Hence, the methods of physics are NOT applicable to the Science of Economics. Positivism and empiricism are the intellectual covers for socialism and interventionism, since they deny the MIND of the acting individual, and they create the false impression of a "national economy" - with its "national income" and its "growth rate" - which must be managed by a super-human mind: that of the central planner; that of the Great Leader. 


Thus, Hans-Hermann Hoppe concludes his brief essay against empiricism with these words:

If we want to attack socialism, we must also attack the absurd intellectual error of empiricism. And if we want to defeat socialism, we must make a principled Misesian case based on the logic of human action and the irrefutable laws of economics.

Since Cardinal Turkson, President of the Pontifical Council for Justice and Peace,  espouses empiricism and disavows a priorism, he is led deep into socialism, statism, and even the "primacy of politics."


Here are some quotes from the rest of the document:

...the world’s peoples ought to adopt an ethic of solidarity as the animating core of their action... [But we are all individuals, and we buy and sell in markets full of strangers. See my article on "catallaxy."]

the risk of an “idolatry of the market..." [The real risk is idolatry of the State and political authority. See also Tom Woods' rejoinder here.]

global social justice seem most urgent... for achieving... a fair distribution of world wealth... [The "mirage of social justice" gone global!]

one can see an emerging requirement for a body that will carry out the functions of a kind of “central world bank” [Horrors!]

strengthening the existing institutions, such as the European Central Bank [Here is a report that Germany will ditch the Euro if the ECB starts printing more of them.]

In this process, the primacy of the spiritual and of ethics needs to be restored and, with them, the primacy of politics – which is responsible for the common good – over the economy and finance. [Read Anthony de Jasay's Before Resorting to Politics.]

forms of recapitalization of banks with public funds making the support conditional on “virtuous” behaviours aimed at developing the “real economy” [Moral hazard.]

At this point, I would like to remind the Cardinal of his views on the Principle of Subsidiarity, which he upholds, and defines as follows:

According to the logic of subsidiarity, the higher Authority offers its subsidium, that is, its aid, only when individual, social or financial actors are intrinsically deficient in capacity, or cannot manage by themselves to do what is required of them.

Now, money has ALWAYS been "private money": GOLD. Accordingly, we human beings, in freedom, without the aid of any political authority, can manage to produce our own money. Free banking can be conducted under traditional commercial law - as Jesus Huerta de Soto has shown. Thus, according to a Principle upheld by the Church, and also by Cardinal Turkson, there is NO NEED for ANY POLITICAL AUTHORITY over money and banking, and certainly not at the global level.


This is NOT new - not "neo-liberalism." This is "classical liberalism." Adam Smith's "Three Duties of the Sovereign" did NOT include anything to do with money. I have recounted these three duties here.


Mises put it best, in Human Action, when he wrote:

The use of money in a market economy is a praxeologically necessary fact. That gold, and not something else, is used as money is merely a historical fact and as such cannot be conceived by catallactics.

Thus, we Hindus are currently celebrating Diwali - when we traditionally buy gold. It is a "custom" - from History. This has NOTHING to do with "theory."

As far as "world order" is concerned, Mises also put it best when he wrote, in Nation, State, and Economy:

Liberalism, which demands full freedom of the economy, seeks to dissolve the difficulties that the diversity of political arrangements pits against the development of trade by separating the economy from the state. It strives for the greatest possible unification of law, in the last analysis for world unity of law. But it does not believe that to reach this goal, great empires or even a world empire must be created.

I also recommend to my reader this Islamic Judgment on Paper Money - which shows very clear reasoning.

But recall where I began unraveling this litany of errors - with Cardinal Turkson's empiricism, his antipathy to a priorism, and his love for "measurement" in Economics. On the subject of epistemology, I earnestly recommend Hans-Hermann Hoppe's Economic Science and the Austrian Method, which you can find here.


Professor Hoppe's article "Why the State demands Control of Money" is also a very useful read in today's times.

It's The Wrong Index, Stupid!

In yesterday's post, I heaped well-deserved abuse on the editors of the Indian Express for the propaganda, lies and deceit emanating form their lead editorial of the day. Later, in a footnote, I wrote about a Times of India editorial of the same day - but the electricity failed (for the nth time) - so, today, I would like to focus on this particular ToI editorial titled "Cause for Cheer" on the latest Human Development Index Report, in which India's position has supposedly improved. 


So what? Read this report from the same newspaper that says India leads the world in diarrhoea deaths.


And, anyway, the "education" we receive from our The State is all-balls. Even the IITs and IIMs suck. What to speak of the Delhi School of (Mathematical & Keynesian) Economics. What do kids learn but State Worship. They study "Indian Economics."


The editorial is "pro-reform." Good. But what is reform but LIBERTY? India has progressed somewhat in the past decade because State Obstruction to economic activity in some sectors has been withdrawn. However, much obstructionism and interventionism remains. This especially impacts the poor. Just try and open a simple beer bar in Nude Elly - and you will land up in jail!


Why don't the editors use the sweet word LIBERTY instead of that stupid word REFORM?


One reason: They have never heard of the Economic Freedom Index. There are now two or three of them - and these have been around for more than ten years. There is one from the Heritage Foundation - and it finds India ranked at 124 out of 179 nations, in the category "mostly unfree." There is another from the Fraser Institute and here India once again fares poorly. These reports show that less freedom means more poverty, more corruption, and lower economic as well as human development. The editors of the ToI are advised to check out these freedom indices, so as not to be misled by the statist Human Development Index, a UN/World Bank publication.


The Human Development Index makes its victim believe that there is a POSITIVE ROLE for the State in poor countries - to educate the people, etc. It makes the victim feel that, for human development, the State must do MORE.


The Economic Freedom Index does the very opposite. It proves that the State should be CUT DOWN if poor nations and people are to develop.


Since the ToI is "pro-reform," it should focus attention on the correct index.


In any case, all this is statistical jugglery - the output of "positive economics," which is Empiricism. This is the "intellectual cover for socialism." This is particularly true of the Human Development Index.


But, for whatever it is worth, whatever the "measurement of freedom" can yield, the Economic Freedom Index persuades in a different direction. It may not be "science" - but it is not evil.


Lastly, there is NO CAUSE FOR CHEER. 


We are not a free people. 


Tyranny rules. 


And the economy is NOT doing well. 


Do read this brief column by Niranjan Rajadhyaksha of Mint, that warns of approaching STAGFLATION.

It's Not Democracy, Dudes - This is LAPUTA!

Now that Team Anna has lost its sheen, and their India Against Corruption Movement has come apart at the seams, what do our mainstream editors have to placate the enraged public with but tired phrases extolling the virtues of "liberal democracy" in a SOCIALIST country with a SOCIALIST Constitution. The following is from a lead editorial in the Indian Express of today:

The rupturing of Team Anna’s superficial solidarities is also a reminder of the significance of much that they run down about representative democracy and the thoughtful, liberal institutions that undergird it. For all their contempt for Parliament, it is the one arena where an entire range of beliefs is accommodated and the friction of ideas is productive, where the desires of one ideological constituency are tempered by the encounter with another. The rise and ebb of India Against Corruption has only showed up, in greater relief, the rock-solid foundations of our democratic institutions.

How glibly they use the word "liberal" - which has its root in the word "liberty" - just as socialists in the USSA do, too. Which is why people like us call ourselves "libertarian." The word "liberal" has been corrupted. And as for the word "democracy"...

In the meanwhile, the Central State Police Minister called for new legislation to control all these "socialist political parties" - which would be better called "robber gangs." Of course, he wrote this when out of office!

And the Opposition leader, LK Advani of the BJP, has raised the cry that the Centre is "undermining the federal structure of the Constitution." Actually, this is a "quasi-unitary State."

Below the level of the quasi-federal State government, nothing exists!

No municipality works.

There are no Mayors.

Every city and every town is a shambles.

And we vote for a Parliament in Dilli Door Ast (Delhi is far away).

Or for an MLA in a quasi-federal State parliament.

We do NOT vote for Mayors.

And none of the parliaments we have actually work.

There is never any meaningful debate in any parliament.

And our prime minister chacha manmohan s gandhi has never been elected!


Bureaucrats of the IAS run cities and towns - DDA, CMDA, BDA etc. These are all CORRUPT.

Call this anything, you fucked-up editors of the Express, but do NOT call this "liberal democracy." Do NOT say that all ideologies are accommodated within this system - when liberals are debarred by the Representation of People Act. Do NOT fool your readers, who are voters, and who do NOT need your propaganda.

What is this, then?

We,, this is LAPUTA - the one travel of Gulliver that children are never allowed to read. Here, the rulers live on an island that floats above the population. Rebellions are literally "crushed" with the island landing atop the rebels! 


Like sonia gandhi landing at some village in her helicopter.


Of course, in the end, the evil rulers of Laputa are overthrown.

Read all about Laputa in this wiki.

Buy the book here.

Read the chapter on Laputa - and pass it down to your children.


PS: Read this ToI edit "Cause for Cheer" on the Human Development Index. These guys have never heard of the Economic Freedom Index. We are "mostly unfree" - and this State is called LIBERAL?

Why I Despise Central Banking, Keynes, And Keynesians Like Paul Krugman

Western Europe, and, in particular, England, developed ahead of the rest of the world only because here the people managed to contain their rulers. Kings, and their royal servants, had to "obey the law" no less than the people. Property and contracts were thus secure from State predation. Economic development naturally followed. In England, the beginning was in 1215 AD - the signing of the Magna Carta. With this, there was "due process," habeas corpus, and much more. After this, the people said, of their rulers:

The King is UNDER God and the Law

and

There is no King where Will rules and not the Law

Such events never happened in nations like ours. Our rulers were always arbitrary.


With the coming of written constitutions, a new concept emerged alongside that of the Rule of Law - and that is "limited government": the purpose of constitutions was to limit the powers and scope of the State. There are two effective means of limiting this power: one, by constitutional law; and the second, by the Budget.


Both these limits to government have been overthrown in modern times by the Keynesians, what with central banking and fiat paper money. These have been weapons in the hands of rulers to buy up support and to finance anything and everything to their own glory, from wars to welfare to space exploration. Entire parliaments can be bought. This is particularly true of India.


The whole world has been inflated. Money is no longer something "hard." It is just government paper. 


Yet, this government paper still has a "promise to pay" inscribed upon it, signed by the central banker. This promise - which makes the note a solemn contract - is meaningless today. The note is actually a Property Title. Today, there is no property backing this title. This is the problem the whole world is facing.


These central banksters practice "fractional reserve banking" with private bankers who are members of their paper money cartel. They say they are "lenders of last resort." Money as well as banking become corrupt under such a system. 


We need gold as money - and free private banking under ordinary commercial law. The writings of Jesus Huerta de Soto are vital in this context. And there is an essay on their import in my Natural Order: Essays Exploring Civil Government & the Rule of Law, which you can read online here. This version is dated 2007 - and I am hoping to have a new edition out next year.


The Keynesians have a very different view of money and banking - one based on "immorality." Keynes claimed to be an "amoralist" - but that was just his homosexuality. As an economist of money and banking, he was a pucca immoralist. Read about Keynes and the "ruling class" who adopted his ideas wholesale in this brief article by Garet Garret. Also, do read the article "Why the State demands control of money" by Hans-Hermann Hoppe.


Today, the most prominent Keynesian in the world is the Nobel laureate Paul Krugman. On the crisis in the Eurozone, Krugman writes that the best way out is to resort to "the power of the printing press" - and let the European Central Bank do the needful, even if current rules do not permit it. 


Really! If printing money could produce wealth, Indians would have been rich long, long ago.


Indeed, even producing more gold and silver does NOT create wealth, as the history of Spain and Portugal testify. The silver mines of Potosi and all the gold looted from South America did not make these nations rich. 


Britain got rich when gold was exported by the East India Company in exchange for spices - much to the displeasure of the mercantilists. What constitutes the "wealth of nations"? Adam Smith answered that in 1776 - and the plain answer was that it was NOT the hoard of bullion. If so, what can more irredeemable paper notes accomplish?


But Keynesian errors are not new. Ludwig von Mises, in his Notes & Recollections, writes of Carl Menger that his essay on "Geld" (money) which he contributed to the German-language Encyclopaedia of the Social Sciences was brilliant. A few pages later, Mises writes:

For obvious reasons I frequently discussed G. F. Knapp's Staatliche Theorie des Geldes (State Theory of Money) with Menger. His answer was, "It is the logical development of Prussian police science. What are we to think of a nation whose whose elite, after two hundred years of Economics, admire such nonsense, which is not even new, as highest revelation? What can we still expect of such a nation?"

Menger, Mises writes, foresaw the destruction of Old Europe. He foresaw the wars that engulfed the whole world. All these wars were financed by "funny money." And these wars will forever continue until the State is once again "limited" by the Budget. And money is gold. Money is private.


Mises once wrote that these "intellectual battles" of our time are something everyone must plunge into - if civilisation is to be saved. These are not difficult issues to understand: what is money? what is banking? etc. I see people crack their brains on crossword puzzles, computer games and Sudoku every day. Yet, these are just pleasurable pastimes, meant to banish boredom.


Surely people can crack their brains at the vital issues of our age - money and banking? The future of our kids - and theirs - depend on it. If Krugman-types win the day, all will be lost.


Paul Krugman also wants to "protect" corrupt banking practices. He wants the power of the printing press to wipe out banking sector losses - irrespective of how much inflation will surely follow, and how much capital loss ordinary people will have to suffer. At least we in India ought to know better than to endure continued inflationism to fund welfare.


In the USSA, there is only one presidential candidate who knows money and banking well - and that is Ron Paul. His photograph graces this post. He wants to "end the Fed." He wants to end war too. He stands for Gold, Freedom, and Peace. 


I wish Ron Paul would add PROPERTY to this list. Without property, there can be no freedom; there can be no "limited government"; there can be no "rule of law": rechtstaat.


Ron Paul will succeed - and civilisation will be saved - only if all you people out there STUDY money and banking and arrive at your own decisions as to what is truth and what is falsehood; what is good, and what is evil.


So, don't "agitate" at political rallies before agitating your brains first.


This is my sincere advice to you all. 

Let Us Glorify The Honest Civic Corporation

Tamil Nady chief minister's complaint that the Centre is "reducing State governments to glorified municipal corporations" is laughable. In reality, every State capital - including Chennai - is a shambles. It is the State governments that have destroyed municipal administration in India - while tom-tomming panchayati raj (village government). Thus, every city and every town throughout India has been destroyed.


Yesterday, I advocated Free Cities. These free cities will require honest civic corporations to run them - garbage, sewage, roads, footpaths, street-lighting, and so on. They will need Mayors - not chief ministers, who can take a walk along with the entire edifice of our The State from Nude Elly. The "model" from History is that of the Olde City of London - and you can find an essay on that in my Natural Order: Essays Exploring Civil Government & the Rule of Law available online here.


If I may add, all these activities of the civic corporation can be honestly "contracted-out" to competing private firms. There need not be any "bureaucracy." There need not be any "departments." The City can be "free." That is, the citizens can be free. The City can have a Basic Law proclaiming the Inviolability of Private Property - and the rest can take care of itself. Instead of "crimes" there can be "torts" - which are all "crimes against the individual" - and, if convicted, the tortfeasor will have to financially compensate his "victim." There need not be any jails.


In such an administrative and legal framework, taxes will be low, and all voluntary trades will be free.


If such an honest civic corporation can be set up anywhere in India, would you not "glorify" it?


And as for the State Governments - the bhateejas of chacha in Nude Elly - this report says they are all heavily in debt! They are part and parcel of the "fiscal deficit" being financed by Nude Elly through printing money and borrowings. The report says that electricity losses alone are over 70,000 crore rupees. And we do NOT have reliable supply. Wanna glorify these morons?

Cities Must Secede - One By One

I found Obama's comment that "Gadhafi's death is a warning to iron-fist rulers" a BIG JOKE. The USSA is in Big Trouble - internally and externally - and they are essentially Hard-Fisted Rulers everywhere, internally as well as externally.


Here is a chilling account of a Police SWAT Team "drug raid" on a Mayor's house, and the article is titled "The War on Drugs has become a War on the American People." Of course - and this is an American War being fought against people all over the world, from South America, to the Caribbean, to Afghanistan and Burma, and even India. There are iron-fisted rulers everywhere - but the good thing is that people are wising up.


Lew Rockwell's column today is well worth reading. He points to the "evil 1%" - who are the personnel of The State. They are NOT the Rich Capitalists - and do also read the great George Reisman's article "In Praise of the Capitalist 1 Percent."

The real Evil 1% is The State.

In our own country, this is becoming increasingly obvious. The CONgress, the BJP, the DMK - the whole system stinks of corruption and sleaze. And as for the Anna Hazare Movement - this editorial from the Express on Kiran Bedi's "corruption" says it all. 


So where do we go to from here?


I suggest Free Cities. Let Indian cities secede from our The State one by one - and engage in trade with the world in freedom. 


Karnataka, whose BJP chief minister has just been arrested for corruption, has two cities that can easily compete with Singapore and Hong Kong if they are free: Mangalore and Karwar. Both have deep water ports. And as for Karwar, it is such a beautiful place, gifted by nature, that it could easily become one of the world's greatest cities. Of course, it won't happen overnight. Rome was not built in a day. 


But there are riots in Rome these days.


Riots in London - and do read this blog post on inflation in the UK. This paragraph is telling:

Since 1998, Britain has lost 40% of its manufacturing jobs and added 35% to its roster of public sector workers, increasing the ratio between these two classes of tax-payers and tax-eaters from 60 drones per 100 bees to 160! And now, despite the highest level of joblessness since 1994, we have the highest gain in the Retail Price Index in 20 years, with the Bank of England actually easing as it rises!

The word "easing" means QUANTITATIVE EASING - better known as PRINTING PAPER POUNDS.

Just as the "hard-fisted" Obama is printing paper dollars.

And chacha manmohan is printing paper rupees - his "inflationary finance" of welfare, and idea he got from the UK and the USSA.

And there are riots in Athens - where "democracy" began.

Yes, let Indian cities secede from our The State - one by one.

Mangalore, Karwar, Pondicherry - and finally, Srinagar, Kashmir.

Secede from the Indian Rupee too - and embrace gold: Honest Sunnah Money.

And let the rest of the world learn.

Incidentally, rahul gandhi is pointing the other way. He gave a speech opposing globalisation. He says "it excludes more than it includes." 


Well, were the ports of Karwar and Mangalore and even Goa "included" in globalisation? Or were they just exporting iron ore of low grade? 


Do we want free trade? 


Or do we want CORRUPTION? 


Some politicians get rich (in Goa it is the CONgress chief minister who is deep into mining iron ore) while those of us who could gain from foreign trade are "excluded" by the guns of the Customs Department sent there by the "iron-fisted rulers" from Nude Elly?


You decide - and act!


I am just your friend, philosopher, and guide.

Your Crisis, My Opportunity

Pratap Bhanu Mehta, the State-owned intellectual, has concluded his latest column, titled "This moment of crisis," on the Occupy Wall Street movement, with these words:

The terms of the social contract have to be rewritten. Capitalism has to justify itself in terms of social gains, and democracy in terms of empowerment. But at the moment no one quite understands what all of this might mean.

First, there is NOTHING called a "social contract" - because contracts are private law. Individuals sign contracts with each other - like rentals or labour. I did not sign any contract with any MP to outlaw ganja. And anyway, these guys had MGNREGA right to work, right to education and right to food - and this "social contract" - which I did not sign up for - did not work, did it? Note - no right to property!


Second, only the Market can deliver private gains - out of which taxes can be paid for security and roads. Government does not produce "social gains." Government is a cost. The Science of Economics is best defined as the study of market transactions based on money. Government is something else - to do with Law, with Politics, with Public Administration. Since Economics has nothing to do with government, laissez faire is best. Private gains are what we all need, without any State interference. Money must also be private - GOLD.


Third, democracy has NOTHING to do with "empowerment." Democracy means nothing but more and more legislation - which empowers bureaus and bureaucrats. Democracy gives them fat budgets and draconian powers. The voters get screwed. India is very low on "economic freedom." What empowers the voter is LIBERTY. This requires the Inviolability of Property. Put that in a New Constitution, Professor Mehta, and all will be well.