Thoughts on economics and liberty

Tag: Government failure

Severe government failure in USA: The criminal suppression – by regulators – of a genuine cure for cancer

About a year ago I wrote about the Vikram Buddhi case where an Indian who is almost certainly innocent has been jailed in the USA. Vikram was released on 6 May 6, 2011 but picked up again by immigration authorities possibly for deportation. Somnath Bharati of FTI is working to support Vikram. I urge you, if you are in USA, to get in touch with Somnath to find out how you can support Vikram. Vikram's appeal is at a crucial stage because even his brief has not been filed yet in absence of a proper legal assistance. The appeal court has admitted his motion and given him time till August 8, 2011.

There is thus a lot of evidence that the concept of justice no longer exists in the USA – at least in the manner intended by its founders.

But wait, there is equally shocking evidence about the collapse of other US systems – in medicine. The following video (thanks to the tip-off by Raj) is a MUST-WATCH. It is long, 108 minutes. So get yourself a coffee and prepare to listen to a full documentary. 

The video shows how key regulatory bodies in USA have been captured by industry.

Adam Smith was not a fan of big business, and I'm not a great fan of big business either. Except for JRD Tata, I've ONLY seen big business support corruption (e.g. see my blog post on Narayana Murthy). NO BIG BUSINESS IN INDIA IS KNOWN TO SUPPORT LIBERTY. Thus, the capitalist that I am, I do not trust "capitalists" (those with capital). And so we need powerful regulators to ensure that businesses do not engage in unethical conduct. But the problem arises when regulators are themselves captured by industry. Then what can be done?

In the case of USA, regulatory capture is almost total.

This documentary, below, raises many issues – issues that are broader than the issue of cancer. These issues include the need for a first principles review of the FDA, a reconsideration of the way research is funded by government in USA (it should not be funded!), and how the citizens of USA are being treated as cattle, as a commodity whose life is expendable in the interest of businesses with big money.

The citizen of USA is NOT free to get his own body treated the way he wants. Government has become Big Brother. Gangrene; cancer; has set into the vitals of the US government. 

This documentary also shows why I don't support euthanasia without very severe checks and balances. I know that entire government systems can be easily bought out. I am sure that one will be able to buy certificates to kill one's enemies under an ordinary euthanasia regime. Much better, should such a stage arrive when euthanasia becomes necessary, to just commit suicide. I hate the idea of giving the government the official power to kill us. I greatly fear government power, having seen its misuse throughout my life. Even in the West, I have seen (and continue to see) rampant cheating of the people by governments.

In real life, if someone saves just one life, he becomes a hero. But in this case, Burzynski has saved HUNDREDS OF LIVES, yet US government agencies have been hounding him, since if he succeeds, hundreds of billions of dollars in revenues from chemotherapy and radiation therapy will be WIPED OUT.

Fortunately, Ron Paul has found time to support Burzynski's work. I hope Ron Paul becomes US president.

I know that chemotherapy is a disaster. My father had colon cancer a few years ago. He has been very lucky to survive despite REPEATED wrong diagnoses by doctors in Australia and India. He took chemotherapy after his surgery, but had to give it up because of the horrible effects on his body. 

Chemotherapy is an unbelievable mess. How wonderful would it be if cancer patients had the option of using the infinitely more mild chemicals that Burzyksi has discovered – chemicals that actually work.

Burzynski: Cancer Is Serious Business from BurzynskiMovie on Vimeo.


For more information:

Go here to get the DVD:​index.php?option=com_content&view=article&id=107&Itemid=88

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Tony Burke admits human fallibility. Now will “climate change” policies be reviewed, please?

I came across this interesting short paragraph in today's Australian.

Mr Burke said Treasury's report had not been a helpful contribution. "There is very limited utility in 40-year projections," he said. "Let's face it, if you went back five years people didn't know the global financial crisis was coming. They didn't know about the mining boom mark II. Once you're offering projections . . . of more than five years they're not offering a whole lot of assistance in what you should be doing right now in public policy."

It is extremely rare (and therefore refreshing) to hear a politician express common sense. (Note that this doesn't mean one can't predict long-term trends – but a trend is not the same as a precise projection. I might add that population being my area of 'expertise', I have not yet seen one population forecast that has held up to the test of time. That is why I don't care much about the debates occurring on Becker-Posner blog  about the population projection of 10 billion issued recently by idle UN bureaucrats.)

But Tony Burke's statement has implications. The fact that projections of more than five years don't offer "a whole lot of assistance in what you should be doing right now in public policy" is true for many more things. 

In particular, Burke's Government can now review its "climate change" policies which are based on projections 100 years into the future. If forecasts for 2050 are questionable (and they are), then what kind of credibility do forecasts for 2100 have? 

As expected, most, if not all, of IPCC's short term (10-15 year) forecasts have been PROVEN false. In addition, a good number of studies have questioned IPCC's long-term projections. Consider this study on the sea level: 

[T]he estimate of over 1m and higher rise in sea level by 2100 (in next 90 years) seems unrealistic, when analyzed in the context of present sea level rise which is just about 1.5mm to 2.0 mm per year with almost NO component of acceleration. For the global sea level to rise by over 1m in the next 90 years would require acceleration (in sea level rise) of up to 0.28mm/yr2, which is almost two orders of magnitude larger than present. This seems highly unlikely at present given the fact that the earth’s climate has not warmed in the last ten years and further that the earth’s mean temperature seems to be declining at present.

If nothing else, this kind of study shows that there are at least two well-informed views on the future of the sea level. With  "climate science" not yet out of its infancy, why not let more research be conducted before slugging the Australian economy – which is already suffering from many Keynesian follies – with another huge hit? 

Let the link between CO2 and acceleration in temperature be established conclusively before considering interventionist policies. 

[See also my comment on Garnaut, and my posts on the sea level here and here]

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Mr George Soros, please go back to the drawing board

On 28 April 2011 George Soros wrote an article entitled, "Why I agree with (some of) Friedrich Hayek". Only problem, he just doesn't understand Hayek. He starts his essay by saying:

Friedrich Hayek is generally regarded as the apostle of a brand of economics which holds that the market will assure the optimal allocation of resources — as long as the government doesn’t interfere. It is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations. 

This is usually called the Chicago School, and it dominates the teaching of economics in the United States. I call it market fundamentalism.

But neither did Hayek EVER claim that there was no role for the government (quite to the contrary: he was a classical liberal in every sense of the word) nor did he formalise his model (although a mathematical proof has indeed been produced recently: here).

Far from being a 'market fundamentalist' he wrote in The Road to Serfdom:

Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez faire.

If Mr Soros pays serious attention to (and understands!) Hayek's work, the world could become a better place as Soros would then presumably spend his money to propagate sensible ideas.

Instead, Soros has 'invented' a theory of "reflexivity" to explain booms and busts, which he is propagating at great expense. The problem with his theory is that, like Na ssim Nicholas Taleb's Black Swan theory, it displays little or no understanding of the most important driver of booms and busts – namely, bad government regulation and improper intervention including in the monetary system. For instance, Hayek advocated private money. That would eliminate 80% of the world's macro-economic problems (assuming it was regulated for prudence). 

Further, his concept of "reflexivity" is nothing but a glorified version of tâtonnement that is the natural process of 'over-shooting' of prices before the 'true' price is found (which is momentary, anyway). Since prices are constantly changing in the free market to reflect changing demand and supply, the idea of a 'true' price is meaningless. This kind of so-called 'overshooting', incidental to the natural market process, is not a worry so long as it is determined by private market participants who are genuinely trying to apply their mind to advance their self interest, taking account of their own unique and specific local circumstances.

The problem only arises when the government steps in to distort and amplify these market explorations. Governments frequently interfere with free choice or hide vital information so as to deliberately mislead the market (such as by creating a Fannie May that sells bonds which are falsely perceived by the market to be of greater value than they are. Such fraudulent behaviour of governments – WHICH IS VERY COMMON! – is far more problematic than potential confusion in the minds of some market participants; confusion that balances out in most cases and is entirely harmless to the society). Similarly, the over-investment in capital assets promoted by central banks that keep interest rates artificially low is another typical cause of booms and busts.

Thus, government failure is the PRIMARY cause of booms and busts. Let Mr Soros consider this basic truth deeply.

Mr Soros is, as yet, a novice economist. He should go back to the drawing board and ask a lot of questions. That he has at least heard about Hayek is a promising start. Now he should start opening Hayek's books and look around.

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Bad policy has real consequences

Bad policy, of the sort promoted by Keynesians including Alan Greenspan (whom we better know as a turncoat – a one time votary of free banking but who, on gaining the power over billions of people through his role as Chairman of the US Federal Reserve, lowered interest rates in USA to allow a splurge in bad borrowing to occur), has real consequences.

As I outlined clearly in my posts/articles on this subject, the housing bubble was ACTIVELY PROMOTED by bad policy that has a long history in USA (e.g. see this + many other posts here).

The consequences are now clear, as this article from The Economist illustrates. There is NO FREE LUNCH. All bad policy amounts to stealing money from someone and giving to another. That destroys the entire economic system.

Alan Greenspan can take credit for having chaired the collapse of America.


TO THE many dubious distinctions of Las Vegas, add one more: foreclosure capital of America. People who have managed to hold onto their homes are far from lucky: property prices are around 60% below the peak they reached in 2006, leaving 70% of homeowners in the area owing more on their mortgage than their property is worth. (Nationally, the proportion of homes that are “under water” is a still-awful 23%.)

All this makes Las Vegas the most extreme example of the many cities in America’s sunbelt that grew rapidly thanks to the cheap and abundant credit of recent decades, only to suffer fearsome property crashes during the subprime crisis and the ensuing recession.

The signs of the crash are everywhere in Las Vegas. The city’s outer suburbs are eerily quiet, thanks to the preponderance of unsold and foreclosed homes. There are few lights in any windows, and few cars on the roads. Banners and boards advertising hugely discounted housing flap and rattle mournfully in the desert wind. In North Las Vegas every second house on some streets carries a “For Rent” sign, offering rates of as little as $150 a month. One or two houses on each street have been boarded up and abandoned. 

the value of homes near foreclosed properties falls faster than the market as a whole.

– dire effect on local governments, which tend to rely on property taxes for much of their revenue. Clark County, which includes Las Vegas, expects its take from property taxes will fall by over a fifth this year. The problem is all the more severe since demand for the services the county provides has risen amid the downturn. Local authorities also end up picking up the pieces when developers go bust or homes are abandoned, leaving fees unpaid, infrastructure to be completed and property to maintain.

All of this ripples through the local economy. The construction business, once a mainstay, has withered. Local governments are trimming their staff.

– high levels of foreclosure tended to drag down not just investment in property but also car sales.

– Moving house can cut people off from their friends, churches, schools and community groups.

– Many have lost their homes because they have lost their jobs. All this leaves them isolated and depressed. And that can lead to drug and alcohol abuse, domestic violence, juvenile delinquency and so on.

– A 2009 survey of Latino families around the country whose homes had been foreclosed had similar findings: amid the stress, marriages broke down; family members fell out; children’s academic performance suffered.

God bless America and its mad Keynesians. I can't see anyone out there who knows how to save America.

I'm sure those who have lost their jobs, houses, spouses, and are into drugs and alcohol are thanking Greenspan.

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