Lesson 85 Assignment – Are voters informed? If not, why not? According to Professor Caplan, is the problem ignorance or irrationality?

In my opinion, voters can be informed of the current political candidate’s stance on certain issues and what they think is the ideal way to fix it. The problem is that these candidates use the promise of more government or government intervention as a means to an end, and more often than not end up putting the nation as a whole into debt and even more problems. He can do this because he is only in office for a limited period of time, and would not be held accountable later on, but rather the next candidate would have to fix these problems, and so forth. Most people don’t really vote rationally, and rather do so based on emotions. Studying a political candidate, his past, experience, and ideas require a substantial investment of one’s personal time. It is much to ask for some people, thus they resort to listening to whatever media outlet they watch and coming to their own conclusions from there, which is a severe oversimplification. Why do you think politicians love talking about how they’re going to help the poor, build bridges, schools, hospitals, etc? It’s to make you feel good, to make you believe he is a good person. It’s better to sugar coat everything instead of offering real solutions to problems such as the debt, illegal immigration, trade deficits, unfunded liabilities, and so on that will affect our children and their children as well. What’s the point of having all these institutions built and funded by taxpayers when most Americans don’t even have a thousand dollars in their bank account? When they have to work a substantial amount of time, sacrificing time with their families and other luxuries because they have to pay for other people’s sustenance and that of a system that coerces individuals at home and abroad? The solution isn’t the government, it’s not political candidates nor is it an approach to the system that put us in this position in the first place. The key is to become as independent as possible and to oppose the system at all costs, which in turn will lead to greater liberty and the pursuit of happiness as our founding fathers intended.

Lesson 80 Assignment – How was the standard of living affected by the Industrial Revolution?

If it were not for the Industrial Revolution, we would not have many of the things we have today. The working class became a thing during this time, and allowed people who had no skills or trades to offer the market labor in exchange for money. Jobs were widely available, not in the best condition, but the best it could be at the time. Certainly, no one nowadays would dare to work such jobs because even the lowest among us in terms of socio-economic standards have preferences and choices. Back then, people one way or another just had to work jobs like these to sustain themselves and their families. Think about it this way, the fact that people would choose to work these jobs regardless of the poor working conditions and seemingly low pay tells you that there were not many options for needy people back then. Nowadays we have a vast array of welfare programs, job choices, regulations for job safety and security, etc. Back then we did not, but if it were not for those jobs they had then who knows what they would’ve been doing. Child labor was also prevalent during the beginning, as they had to work because they could use the extra income or simply because they relied on themselves or their families relied on them for money. This started disappearing though, as wages got higher and hours worked lessened over time. People could actually afford to send their kids to school, they could afford a living space, food and maybe some luxuries. We have to put ourselves in their shoes and see it in their perspective, as our standards are very high especially in the modern West. We’ve accumulated so much wealth and as a result become spoiled. We’ve forgotten that only through hard work, struggle and sacrifice is how we’ve become prosperous, not through handouts and government policies.

Lesson 70 Assignment – What are some of Marx’s criticisms of capitalism?

Karl Marx had many criticisms of capitalism, as he believed it stifled human potential and made them slaves in a system where they were not given equal rights and good working conditions. He believed that the labor of the workers was being exploited when it was put forth toward production and embodied in goods, exploitation then occurs when someone purchases a good, with their revenue or wages, for an amount unequal to the total labor he or she has put forth. Another belief of his was that capitalism limited human potential, as people were too busy trying to pursue a career or trade that would give us more money.

“in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.”

He believed in something called historical materialism, which theorizes that great works and progress in the world isn’t achieved through human will and capacity, but rather through the ability to have tools that will allow them to produce at their highest capacity. In short, people don’t make things happen, the tools you have to do something make it happen. This is why a lot of people consider Marxism/communism a materialistic ideology. Marx saw money as more than just a medium of exchange. He purported that it is a commodity within itself, with the value to the holder being the power of the separation of time and space of a transaction. Such a property was thought to give money a constant excess demand. Due to money fostering separation of buyer and seller in time and space, it cultivates undesirable situations in which the ‘proletariat’ is at the mercy of producers who are pessimistic and unwilling to invest, because their preferences are slanted towards prolonging that separation.

Lesson 65 Assignment – Fascism & The Swedish Economic model

What were the primary values of fascism?

The word Fascism derives from the Italian word Fascio, which means bundle, sheaf or a league. The core ideas of fascism are that individuals are meant to serve the state, and there is nothing greater than the state, and everything is for the benefit of the state. This is because the concept of the state is equal to the nation,  according to them, without the state there is no nation. This ideology is highly collectivist and is deemed a third-alternative between communism and Capitalism. Its main focus isn’t to abolish private property completely, but rather to subjugate it through government powers so that it may serve the state which in turn will benefit the individual because the state is concerned with the well being of the individual (?). It sounds strange, but these are the main principles. Economically speaking, it is very controlling, and it does expropriate businesses, set tariffs, impose regulations and control the flow of raw materials and resources going in and out of the country. Societally, it wants the people to be strong and live in accordance with marshall values and unified under ultra-nationalism. It supports a strong military and holds the ideas that only the strong deserve to survive. Classes are not abolished in a fascist society, but rather “cooperate” between each-other for the greater good of the collective, although there is a strong emphasis on workers. It is very much bureaucratic, as the government is practically involved in every aspect of peoples lives. It believes in a strong and charismatic leader who will lead the nation and would be elected through merit. This leader will have a monopoly on all decrees, laws, and system as a whole.

The standard claim about Sweden is that it shows that society can prosper without such a free market and with extensive government intervention. Based on the lesson and on your reading, what would be a good response to this claim?

Sweden is, without a doubt, one of the most prosperous nations in the world. In fact, all of the Scandinavian countries fit into that category, where people live happy lives as they go to college for free and enjoy a wide variety of benefits offered to them by the government. It’s popular belief that these are all the result of socialist policies, and to a certain extent they are, but the financing for these programs doesn’t just come out of nowhere. Sweden has one of the freest economies in the world, with an average per capita GDP of $37,691 compared to the bottom quartile nations which have $5,188. That was only in 2010, today it is ranked at 51,599.87 USD per capita in terms of GDP. What happens is that they have a high-tax system that subsidizes a large number of social programs, but the money for these taxes are produced is a direct result of capitalist policies.

In response to the 2007 recession, Sweden actually cut taxes across the board. Significant cuts in income, corporate, and property taxes help spurred Europe’s fastest recovery. A couple of years before the recession, the government also entirely abolished the wealth and inheritance taxes, laying the ground work for an economy based on an incentive to work. n 1993, Sweden’s debt was running at 111% to GDP and by 2008 they had cut it to 38% to GDP. In 1994 the government also began cutting government spending by an average of 3% per year for the next 10 years. These cuts were aimed primarily at healthcare, alongside simplifying taxes.

Some further interesting facts are that despite this shift to the free market in the past 20 years, poverty rates in Sweden are still the lowest in Europe. Sweden also accomplishes this without a state implemented minimum wage. Minimum hourly rates are determined by collective bargaining agreements from industry to industry, requiring little to no involvement from the government. Also, from 2008 to 2016, average hourly wages have gone up 20%.

What is nullification? Discuss one example from U.S. history in which the a state or group of states acted in the spirit of the Virginia and Kentucky Resolutions of 1798.

Nullification is the power and duty of the state to refuse the enforcement of unconstitutional federal laws. This is based on the compact theory, that states are sovereign from the federal government as autonomous entities, and are not subject to it and its laws if they do not accord to the constitution. This prevents the federal government to exercise total power over the states and its decision making, which could not possibly be as beneficial as decisions taken by the local populace on issues regarding their own community.

The Virginia and Kentucky Resolutions of 1789, also known as the principles of ’89, were resolutions that affirmed the states’ right to resist federal encroachments on their powers. If the federal government has the exclusive right to judge the extent of its own powers, warned the resolutions’ authors (James Madison and Thomas Jefferson, respectively), it will continue to grow — regardless of elections, the separation of powers, and other much-touted limits on government power. People would like to say that this was not wise, as states would just use this for their own selfish interests, without regarding other states inside the union or as means to encroach the rights of individuals. Quite the contrary happened, as these resolutions were actually used to curve the federal government’s persecution of runaway slaves, without giving them proper trials or even the right to testify in their own defense. Several Northern states simply refused to comply. Especially interesting is this 1859 statement of the Wisconsin Supreme Court — taken, in parts word for word, from the Kentucky Resolutions of 1798.

The United States of America ARE a conglomerate of states, with its origin in the individual colonies of North America who were recognized even by the British government, as separate entities under their rule. Even now, states have their own traditions, their own problems, ways of thinking, etc. We are bound by a union, but that does not exclude us from being sovereign in our own God-given rights and the constitutional freedoms given to us by the founding fathers. States should have, in my opinion, the right to decide within their own communities whatever the people agree upon. This also includes the ability to reject federal laws and to negate any interpretation of the constitution that is not in compliance whatsoever to the written texts of the same.

Lesson 55 Assignment – What are the compact and nationalist theories of the Union?

The Compact Theory was basically the idea that the states were free and independent entities that composed the whole of the union. They were not controlled by a centralized government, rather the centralized government was chosen and directed by them. In this system, the states have a higher standing than the central government, being able to overrule impositions made by it. They also have the choice to leave the union whenever they want or for whatever reasons, this is because the states compose the government and are willingly unified under the union rather than forced to by a centralized political structure.

The nationalist theory, on the other hand, is the complete opposite, as it stands on the grounds that the states compose the nation, and at the head of the nation is the centralized government. The same can apply federal laws and establish national armies that are at the service not of each state, but the centralized government.

Lesson 50 Assignment – What is the origin of money? (In other words, how does money first arise?

Before the establishment of a centralized production of fiat currency by the government, people used to barter. Bartering is the act of exchanging one good or service for the other, but as society developed this turned into an inconvenient way of getting what we wanted. This is because you’d have to find the exact person that offered what you wanted and was willing to exchange it for the service or product you offered. Individuals then turned to gold, as they put value in it for being a beautiful, moldable material that was rare to find and was sought after by people. People then resorted to gold as a means of exchange, but banknotes were created, (IOUs) which were paper notes that allowed individuals to give it to any bank and exchange it for gold. In the US, we used to be able to exchange dollars for gold or silver at the bank, this was known as the gold standard but was removed in 1971. Governments can’t create money out of thin air, in the sense that they cannot establish a value that everyone will abide by. If individuals have no use for the piece of paper, then it simply becomes useless regardless of the official value set by the government. The government simply intervenes, this has been the case throughout history. First, they centralized the production of gold and silver, and made it illegal for anyone outside of it to mint or mold it into coins. The government then hoards all the gold & silver, cancels the gold standard, and eventually leaves everyone with useless paper money. The reason the dollar or any other paper currency has value nowadays is that of the global circulation and its use in trade, transactions, assets of the country, etc.

Lesson 45 Assignment – In practice, what have been some of the outcomes — intended or unintended — of anti-poverty programs?

I’m going to assume that what the question means by anti-poverty programs are financial welfare programs led by the government. Welfare programs aren’t bad, they can help someone who is in need of financial assistance because he’s been having a hard time getting back on his/her feet. The problem arises when these programs create a permanent class of welfare leeches and abusers of the system who are incentivized to remain on welfare forever. Nowadays, it is really difficult to hold government accountable, as we have a coercive tax system where the government can take the money directly from us with no questions asked, and spend it on whatever a small group of people inside it see fit. This leads to unaccountability and even lack of care for who are receiving the benefits, as they don’t care to see who is purposefully abusing the system and who is not, they only see if the annual income is inside the bracket that would make them eligible for these benefits. Our government programs focus too much on consumption, what I mean by this is that they’d rather give you a hefty amount of money to spend every month than to train you on investment or job skills. It’s easier to give a man a fish than to teach him how to fish, and this is the great flaw with government financial aid programs. In FY 2017 total US government spending on welfare — federal, state, and local — was “guesstimated” to be $1,098 billion, including $643 billion for Medicaid, and $455 billion in other welfare. We are running this all on a deficit, and we are largely in debt. There will come a point where we won’t be able to pay for all of this, and we have to act now to prepare people and to make them break the chains of government dependence.

Lesson 40 Assignment – Explain the basics of the Austrian theory of the business cycle. What is the difference, in terms of consequences, between lower interest rates that result from the saving choices of individuals, and lower interest rates that are achieved artificially, by a government-established central bank

The Austrian theory of the business cycle claims that the communication between the consumer and the producer is done through interest rates. If interest rates are not artificially tampered with, it will mean that they can clearly read the demands of the consumer and meet their needs accordingly. When a central bank intervenes, it means that the communication between the producer and consumer is no longer clear, and lack of economic coordination means that resources will be misallocated, leading to recessions and poor working conditions in certain sectors. The key point of the Austrian business cycle theory is that interventions in the monetary system, and there is some debate over what form those interventions must take to set in motion the boom-bust process—create a mismatch between consumer time preferences and entrepreneurial judgments regarding those time preferences. The problem when intervention is that it creates a false sense of demand. This is because Money is property, and under a monetary system which makes it appear that more property exists for production than actually exist, it will inevitably lead to failure in achieving greater results in terms of standard of living for peoples.

Lesson 30 Assignment – Evaluate this statement: “All workers have benefited from the existence of labor unions.”

When we think of Unions, we think of something positive that will benefit the working conditions, increase wages and set standards that will prove positive for working peoples. This is what I also used to think before delving a little deeper into the subject matter. The crucial point is that unions insist on a minimum wage rate higher than what would be achieved for the given labor factor without the union. By doing so, they necessarily cut the number of men whom the employee can hire. Add to this the fact that a lot of times these unions ask for benefits such as paid vacations, full healthcare coverage, etc. They claim to be fighting for the little people, yet don’t think about the harm they’ll be doing to those who have no jobs or want to get a job in a certain industry but can’t because they’re not hiring as much as they would be if it weren’t for the unions. Sure, if you look up how much a weekly income of a union worker is, you’ll find that it can range from $700-$900, but this is possible by cutting the number of people they’d be hiring. The reality is, unions don’t care about anyone but themselves, and always has been.

Better working conditions, the reduction of hours worked per week, and the decimation of child labor is all thanks to the free market. As capital investment caused the marginal productivity of labor to increase over time, less labor was required to produce the same levels of output. As competition became more intense, many employers competed for the best employees by offering both better pay and shorter hours.  Young people originally left the farms to work in harsh factory conditions because it was a matter of survival for them and their families.  But as workers became better paid—thanks to capital investment and subsequent productivity improvements—more and more people could afford to keep their children at home and in school. Union involvement started only after it was already starting to decline, and if you a little research yourself, wages were getting higher without having to cut jobs before unions even got involved.