ALOD Policy

The Power of Making Friends with Ideological Enemies

“How can people hate me, when they don’t even know me?”

This is the question that drives the subject of a fantastic new documentary on Netflix called “Accidental Courtesy: Daryl Davis, Race, and America,” directed by Matt Ornstein.

For the past 30 years, soul musician Daryl Davis has been traveling the country in search of an answer in the most dangerous way possible for a black man in America: by directly engaging with members the Ku Klux Klan.

He’s invited KKK members into his home, he’s had countless conversations, and as unlikely as it seems, now considers a number of them to be his friends.

Daryl might say that he’s not really even doing anything special besides treating his enemies with respect and kindness in the hopes of actually dissuading them from their hateful views.

Some people now take this approach for even trivial and academic disagreements.

Yet, that’s something almost no one else has the courage to do, even when the risks are considerably lower.

Disagreements are stressful and difficult, and the more horrifying someone else’s viewpoint is, the easier it is to dismiss the people who hold those beliefs as inhuman garbage who simply can’t be reasoned with. Social media has also made dehumanizing people considerably easier, as we all get to interact with people from around the world without ever seeing their faces or considering their feelings.

As a result, we live in an increasingly polarized time when a lot of people are saying that the only answer to hate and awful ideas is to meet them with even more hate, more anger, outrage, and even violence.

And it’s not just a problem when dealing with the worst ideas in human history like racial supremacy and fascism. Some people now take this approach for even trivial and academic disagreements.

Don’t like a speaker coming to campus? Silence them and prevent them from getting into the auditorium.

Don’t like what a Facebook friend has to say? Block them.

And of course, if you think someone you meet is a white supremacist or a neo-Nazi, the only thing left to do is punch them in the face.  

Punching Doesn’t Work

But consider that most of human history is filled with people allowing their disagreements to turn into bloody, horrific warfare; it’s only our commitment to dealing with our adversaries peacefully through speech and conversation that has allowed us to become more civilized. So escalating conflicts into violence should be seen as the worst kind of social failure.  

And besides, punching people who disagree with you doesn’t actually change their minds or anyone else’s, so we’re still left with the same deceptively difficult question before and after:

When people believe in wrongheaded or terrible things, how do we actually persuade them to stop believing the bad ideas, and get them to start believing in good ones instead?

Judging by social media, most people seem to believe that it’s possible to yell at people or insult and ridicule them until they change their minds. Unfortunately, as cathartic as it feels to let out your anger against awful people, this just isn’t an effective strategy to reduce the amount of people who hold awful ideas.

People’s amygdalas can actually bypass their rational minds and create a fight-or-flight response when they feel attacked.

In fact, if you do this, your opponents (and even more people who are somewhat sympathetic to their views, or just see themselves as part of the same social group) might actually walk away even more strongly committed to their bad ideas than they were before.

The evidence from psychology is pretty clear on this.

We know from studies conducted by neuroscientists like Joseph LeDoux that people’s amygdalas — the part of the brain that processes raw emotions — can actually bypass their rational minds and create a fight-or-flight response when they feel threatened or attacked. Psychologist Daniel Goleman called this an “Amygdala Hijack,” and it doesn’t just apply to physical threats.

The existing research strongly supports Daryl Davis’ approach.

People’s entire personal identity is often wrapped up in their political or philosophical beliefs, and a strong verbal attack against those beliefs actually creates a response in the brain of the target similar to a menacing lunge.

Even presenting facts or arguments that directly conflict with people’s core beliefs or identities can actually cause people to cling to those beliefs more tightly after they’ve been presented with contrary evidence. Political scientists like Brendan Nyhan and Jason Reifler have been studying this phenomenon for over 10 years and call it the “Backfire Effect“.

And when the people whose minds we desperately need to change are racists and fascists (or socialists and communists, for that matter), a strategy that actually backfiresand pushes more people towards those beliefs is the last thing we need.

Principles of Persuasion

The good news is that in addition to knowing what doesn’t work, we also know a lot about how to talk to people in ways that are actually persuasive — and the existing research strongly supports Daryl Davis’ approach.

In the psychologist Robert Cialdini’s book, Influence, he describes what he calls the “Principles of Persuasion.”

One of these principles is called “reciprocity”, and it’s based on the idea that people feel obliged to treat you the way you treat them. So, if you treat them with kindness and humility, most people will offer you the same courtesy. On the other hand, if you treat them with contempt, well…..

Another principle Cialdini describes is the idea of “liking”.

It’s almost too obvious, but it turns out that if someone likes you personally and believes that you like them, it’s easier to convince them that your way of thinking is worth considering.  One easy step towards being liked is to listen to others and find common ground through shared interests. This can be a bridge — or a shortcut — to getting other people to see you as a friend or part of their tribe.

Many of those robes now hang in Daryl’s closet.

You might think somebody like Daryl Davis would have nothing in common with a KKK member, but according to Daryl, if you “spend 5 minutes talking to someone and you’ll find something in common,” and if you “spend 10 minutes, and you’ll find something else in common.”

In the film, he connects with several people about music, and you can see these connections paying off — breaking down barriers and providing many Klan members with a rare (and in some cases only) opportunity to interact with a black man as a human being worth respecting instead of an enemy.

Even better, over time, forming these relationships has had an interesting side-effect.

In the last couple decades alone, over 200 of America’s most ardent white supremacists have left the Ku Klux Klan and hung up their robes and hoods for good.

Many of those robes now hang in Daryl’s closet.

And in a lot of cases, these individual conversions have much bigger consequences and end multi-generational cycles of bigotry. When a mother or a father leaves the darkness of the Klan, they’re also bringing their kids into the light with them. A few of these cases are profiled in “Accidental Courtesy”, and they’re indescribably moving.

Daryl Davis can be a model for how to change people’s minds and with everything that’s going on in the world today, we need successful models now more than ever.

Making Friends From Enemies

There’s another point to all of this that I think often goes unsaid.

The way to deal with wrong or evil ideas isn’t shouting them down or starting a fight.

Unlike Daryl, most of us aren’t actually interacting with KKK members or trying to change people’s minds away from truly evil ideologies, and yet we all fall to the temptation of yelling and name-calling, and using all those techniques of influence that have the opposite of our intended or desired effect.

It’s easy to allow outrage and emotion carry us off into treating other people as inhuman enemies to be crushed rather than human beings to be persuaded.

But if Daryl’s techniques can work to convince die-hard white supremacists that a black man — and perhaps eventually all black people — are worthy of respect, imagine how effective they can be when disagreements crop up with your friends, neighbors, and co-workers who don’t actually hate you or the things you stand for.

Who knows, if you have more genuine conversations with people outside your bubble, you might even find yourself changing a little bit for the better as well.

“Accidental Courtesy” teaches us that the way to deal with wrong or evil ideas isn’t shouting them down or starting a fight; it’s having the courage to do what Daryl did and making a friend out of an enemy.

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How Prices Promote Peace

By Matthew McCaffrey

Donald Trump’s plan to escalate the war in Afghanistan makes it necessary to once again stress the value of peace and the importance of rejecting US militarism and imperialism. Yet it also provides an opportunity to think about the foundations of a truly peaceful society, and to reaffirm a basic social truth: no institutions more effectively promote peace than the institutions of the market economy.

Cooperating not Expropriating

Peace begins at home, or rather, it begins wherever you and I decide it does: at any time and place we realize that the best way to improve our lives is to cooperate rather than to brutalize each other.

Trade allows us to benefit from our different values, while hurting no one.

As economists like Ludwig von Mises point out, this realization is actually the foundation of human social relations. It also explains why we establish social bonds through trade: we recognize, first, that we each possess resources and skills that are less valuable to us than others that we hope to acquire, and second, that other people value things in just the opposite way. Trade then allows us to benefit from our different values, while hurting no one. It is an act of peace, one reason why it’s no surprise that Mises refers to the moment after exchange as a “state of rest” – including an absence of conflict.

Voluntary exchange is thus a rebuke to violence and war-making: it reveals to each of us, in a personal way, that increasing our own welfare means cooperating, not expropriating.

Prices are a social recognition of this deeper fact. They tacitly acknowledge that many individuals have foregone violence and realized the benefits of cooperation and trade, so much so that they can establish between them an objective estimate of the social worth of the things we hold dear: a price.

Eventually, a vast network of individual exchanges creates the price system, a gigantic engine for improving the welfare of all members of society. This engine works 24 hours a day to overcome the greatest cause of conflict among human beings: scarcity.

The Struggle over Scarce Resources

Property, exchange, and the price system enable us to put aside our conflicts.

Scarcity presents seemingly intractable problems: how can we thrive in a world where human wants outstrip the resources available to satisfy them? How can we ensure that the goods and services we produce will get to the people who need them most?

Prices are the answer, and the price system works from moment to moment to appraise and allocate countless scarce resources over which we no longer have to fight.

Property, exchange, and the price system enable us to put aside our conflicts. In fact, when prices can’t be established because property rights are unclear – as in the tragedy of the commons – the result is a desperate conflict over scarce resources as each person tries to exploit a “free” good.

Similarly, price controls prohibit buyers and sellers from agreeing on a way to mutually benefit. Inevitably, someone leaves the market unsatisfied. In fact, price floors and ceilings cause conflict by eliminating exchange and replacing it with rationing. Without prices, producers and consumers arbitrarily discriminate, thereby creating special privileges for certain individuals and groups.

For example, landlords of rent-controlled apartments might choose tenants based on their racial characteristics rather than those who need housing the most. Similarly, faced with increasing minimum wage rates, fast food restaurants hire college students instead of workers from less wealthy or educated backgrounds who more urgently need a job. Inevitably, the non-privileged groups start to resent the beneficiaries of discrimination, and social conflict is the result.

Non-Market Goods

The lack of prices for such “goods” reveals that they’re nothing of the sort.

Importantly, this effect works across borders as well, as domestic producers and unions reap the benefits of trade barriers and immigration controls at the expense of foreign workers. This kind of exploitation sows the seeds of economic and, eventually, military conflict. Allowing prices to exist for foreign goods and labor is, therefore, a vital step toward achieving global peace.

For that reason, we should also be deeply skeptical about the production of any weapons or military technologies that have no market applications – and no prices – in a free economy. The reason is simple: the lack of prices for such “goods” reveals that they’re nothing of the sort. Their purpose is to destroy life, not improve it.

Seeing prices emerge and change in the marketplace should be a cause for celebration just as much as the sight of a soldier laying down his weapons. Both are victories for humanity, but prices especially reflect a deep commitment on the part of many people to choose cooperation over conflict. In that sense, it’s not much of an exaggeration to declare: Blessed are the price-makers.

Republished from FEE.org

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Nigeria Needs More Entrepreneurship And Government Has A Role

By Gbadegesin Tosin 

Entrepreneurship is an important factor in the development of any nation. Entrepreneurs are responsible for taking calculated risks that open up doors to progressively higher levels of economic growth. If it were not for them, the world would never have known such marvels as the wheel, electricity or the Internet, to name just a few.

Entrepreneurs are the veritable backbone on which the world and modern ideas continue to develop. The magnitude and reach of their contributions, however, extend much beyond the world of business and economy, and to them goes irrefutable credit for the growth and evolution of societies at large. Developed nations across the world owe their current prosperity to the collective effort of intrepid entrepreneurs, on whose innovation also rests the future prosperity of much of the developing world.

The role of government in entrepreneurship development in Nigeria became significant after the Nigeria civil war (1967-70). Since then, there has been increased commitment of government to entrepreneurship development especially after the introduction of the Structural Adjustment (economic) Program (SAP) in 1986 and establishment of agencies such as National Directorate of Employment (NDE), National Open Apprenticeship Scheme (NOAS), Small and Medium Enterprise Development Association of Nigeria (SMEDAN) etc.

In early 2000s, entrepreneurship studies were introduced into the Nigerian educational system, especially at higher institutions as a mandatory course. The Centre for Entrepreneurship Development (CED), which has the objective of teaching and motivating students of higher institutions (especially in science, engineering and technological (SET)) to acquire entrepreneurial, innovative, and management skills, was established. This was done to make Nigerian graduates self-employed, create job opportunities for others and generates wealth in the process.

The scope of financial freedom and flexibility that entrepreneurialism allows is a means to simultaneous individual and national prosperity. If this holds true for economies around the world, it has especially. Traditional Nigerian entrepreneurship began in a climate of economic stagnation and as a purely survivalist endeavor. Dismal human development indices, unemployment and infrastructure deficits resulted in the evolution of a massive informal economy that depended almost exclusively on personal initiative and hazardous risk-taking capacity.

The return of democracy in 1999 ushered in a period of economic reforms and a renewed focus on enterprise development as viable means to sustainable growth. Nigerian leaders initiated a massive program of disinvestment and financial deregulation aimed at boosting business development across the Micro, Small and Medium Enterprise (MSME) space.

One of the principal problems is the fact that Nigeria is not perceived as a promising business destination. The high cost of doing business, corruption and systemic flaws in the country’s economic policies have cumulatively succeeded in keeping off potential investors. Massive infrastructural deficits, particularly with regards to roads and electricity, are further turn-offs. The most significant aspect of the problem, however, is Nigeria’s nascent and shaky polity, constantly under threat from civil intolerance and rising religious extremism.

Social problems, growing out of deplorable human development indicators in the absence of inclusive growth, form the second significant obstacle for Nigeria in utilizing the benefit entrepreneurship brings. The status of women and their traditionally limited involvement in entrepreneurial activities is a significant drawback from the perspective of rapid social and economic growth. The issue is further compounded by a catastrophic divide in the condition of rural and urban populations. People exposed to entrepreneurship frequently express that they have more opportunity to exercise creative freedoms, higher self-esteem, and an overall greater sense of control over their own lives.

Entrepreneurship promotes liberty and increase economic growth by:

  1. Producing and distributing goods and services to satisfy certain public needs. To fulfill this task, businesses developed flexibility and constantly researched on consumer demands.
  2. Creating job opportunities; More than that, most jobs created are productive jobs.
  3. Providing income sources: income that business provides is by no means restricted to the profit its owners get. It pays salaries and wages to its employees, and this way, makes the whole business world go round: they spend the money they earn buying all kinds of goods and favour further development of business ventures.
  4. Contributing to national well-being: by means of taxes businesses pay to government (though, grudgingly as its management is hardly ever justified), it is possible for the government to maintain all kinds of public and social institutions and services;
  5. Helping to enlighten and educate people, thereby encouraging their further personal growth.

Entrepreneurship is the foundation of any developed nation. For Nigeria to reap the full benefits of a dynamic and evolving economy however require the overcoming of entrenched social, financial and political hurdles. The government must increasingly work to improve the ease of doing business by developing and implementing more pro-market policies and making the entire business environment more attractive to investors. Also, improvements and reforms in education and international participation are crucial for Nigeria to shake off its third world heritage and achieve the full breadth of its economic potential.

 

Republished from AfricanLiberty.org

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Twelve Economic Concepts Everyone Should Know

By Richard N. Lorenc


When I tell people that I work at the Foundation for Economic Education, they sometimes ask: “What economic ideas should people understand?”

We at FEE have thought about this quite a lot for our articles, courses, seminars, and videos. We have distilled “economic thinking” into 12 key concepts. The following list has guided us internally for a few years, and I figure it’s now time to share it with the world.

1. Gains from trade: In any economic exchange, freely chosen, both parties benefit–at least in their own minds.

2. Subjective value: The value of any good or service is determined by the individual human mind.

3. Opportunity cost: Nothing is free, and the cost of anything is what you give up to get it.

4. Spontaneous order: Society emerges not from top-down intention or planning but from individuals’ actions that result in unplanned outcomes for the whole.

5. Incentives: Individuals act to maximize their own reward.

6. Comparative advantage: Cooperation between individuals creates value when a seller can produce a given item or service at a lower cost than the buyer would spend to produce it himself.

7. Knowledge problem: No one person or group knows enough to plan (and force) social outcomes, because information necessary for social order is distributed among its members and revealed only in human choice.

8. Seen and Unseen: In addition to the tangible and quantifiable effects, there are quite often invisible costs and unmet opportunities to any action or policy.

9. Rules matter: Institutions influence the decisions individuals make. For example, property rights extend from the reality of scarcity which demands that ownership must be vested in individuals and not a collective.

10. Action is purposeful: Each person makes choices with the intention of improving his or her condition.

11. Civil society: Voluntary association permits people of all backgrounds to interact peaceably, create value, cultivate personal character, and build mutual trust.

12. Entrepreneurship: Acting on an opportunity to gather underused, misused, or undiscovered resources and ideas to create value for others.

You might think about all the ways and places these principles appear–as you shop, socialize, and plan your future. As we like to say, economics is everywhere!

Republished from FEE.org

Richard N. Lorenc

Richard N. Lorenc is the Chief Operating Officer of FEE and serves as managing director of FEE’s Youth Education & Audience Research (“YEAR”) project to develop and promote new content and distribution techniques for free-market ideas.

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2017 ALOD Essay Contest: The Top 20

           

  Position                 Name    School  
1 Ota A. Chinonso      University of Nigeria  
2 Esther O. Tunde   Sa’adatu Rimi College Of Education  
3 Maduka E. Chibuenyim   Federal University of Tech, Minna,  
4 Ijuo I. Odeh   Obafemi Awolowo University  
5 Balogun Ismail   Obafemi Awolowo University  
6 Adeleke A.David   Babcock University  
7 Elom S. Njoku              University Of Nigeria  
8 Bakare A. Gbolahan   University of Lagos  
9 Enwereakuh A. Ugonna   University of Nigeria  
10 Ukeje C. Chukwunenye   Federal University of Tech, Akure  
11 Nwachukwu Deborah   University of Port Harcourt  
12 Orkuma Martha   National Open University  
13 Amede F. Ebuka   Delta State University  
14 Tanguhwara A. Lewis   University of Agriculture, Makurdi  
15 Oyesomi W. Adetope   Ekiti State University  
16 Akinsanya O. Deborah   University of Ibadan  
17 James O. Adakole   University of Nigeria  
18 Omotosho Oluwadamilola   University of Ibadan  
19 Sylver Vitalis    undisclosed   
20 Oluwafemi Boluwatife   University of Ibadan  

 

Top 3 entries would be published on our blog in the coming days.

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New South African Airways bailout package shows government is not committed to transformation

By Martin Van Staden

With low economic growth prospects, ever-increasing unemployment and destitution, government appears to be more concerned with the useless prestige and status that comes with our national airline, than the wellbeing of the South African people.

In mid-July, EWN reported finance minister Malusi Gigaba saying that “too much money has been invested in cash-strapped South African Airways (SAA) in the form of guarantees and bailouts” and that government was going to seriously try to waste no more resources on “inefficient state-owned entities”. In an about-face, Gigaba now says that Treasury is considering a R13 billion bailout for the national carrier.

Proposing such a bailout in the midst of a tax shortfall is evidence of government’s deep-seated contempt for the people of South Africa and a preoccupation with satisfying its short-term and short-sighted ambitions. Its intention to introduce more and more taxes to finance programmes like the National Health Insurance (NHI) is mindboggling, let alone the proposal made earlier this year that, in addition to television licences, it would consider requiring licenses for other devices to boost revenue for the national broadcaster. The Davis Tax Committee too is considering increasing wealth taxes.

These desperate attempts to get its hands on more revenue are unnecessary in the face of the most obvious solution – significant tax transformation – and dangerous, in that it is unlikely that businesses, especially small ones, can survive for much longer in such an environment. Companies like General Motors and AngloAmerican already have either left our shores or are in the process of reducing their investments.

ANC MP Pinky Kekana proposes that, to help our national carrier, government intervene and give to SAA air routes currently operated by other, profitable airlines. For her, this would be radical economic transformation. By what logic could forcing the productive and efficient private sector, which creates unquantifiable wealth for millions of people every minute of every day, to yield to the ineffective and bloated dinosaurs of the public sector radically transform anything? South Africans already find more affordable and higher-quality travelling products with foreign airlines. Even domestically, it is estimated that SAA contributes less than a quarter of commercial air travel.

If government wants more money, it should look to decreasing taxes and repealing regulations across the board to allow significant economic growth to occur. In turn, more South Africans will become taxpayers and contribute to the national purse. But, even if this should happen, the national purse should not be an ATM for state companies that have proven time and time again that they are unable to stand on their own two feet in the market. Both SAA and Eskom have been given repeated opportunities to become profitable, but each ‘second chance’ ends with yet another ‘turnaround’ strategy. These companies are lost causes which South African taxpayers are propping up with no benefit to themselves, and certainly none to the poor.

Radical economic transformation would be to get rid of wealth sucking, economy strangling state-owned enterprises that are firmly rooted in the social engineering logic of the apartheid regime to fulfil, as the first apartheid labour minister Ben Schoeman explained, “State control on a large scale” that replaces personal responsibility with a “system of State responsibility.”

There will be no radical economic transformation while government and state-owned enterprises get first dibs on the hard-earned produce of the people. The people have a natural right to keep what they earn, and government is under an obligation to spend what it takes from the people wisely. What we are seeing now, however, is a commitment by government to itself, and not to the people.

 

Republished from AfricanLiberty.org

Martin van Staden is Legal Researcher at the Free Market Foundation and Academic Programs Director of Students For Liberty in Southern Africa.

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Money Is the Real Social Contract

By Baudoin Collard

Despite major inconsistencies, the social contract theory remains one of the most prominent founding myths of our societies. Is it possible to revisit this dogma to correct its deficiencies?

The social contract theory finds its origins during the Enlightenment era in the 18th century. In the context of challenging royal institutions, philosophers like Rousseau and Hobbes sought to answer the following questions: How are societies born? Why do humans decide to live together? Where do governments derive their legitimacy?

According to Rousseau, an implicit contract binds men together to form a society. Through this contract, men relinquish some of their freedom to the state. In return, the state provides justice and security. This way, the general welfare is protected from special interests through the legislature, elected by the people.

The social contract theory has had a major influence on Western philosophy. As attractive as it is, the theory suffers from fundamental flaws.

First, no one has ever signed such a contract. One can argue that elections represent a tacit renewal of the contract. But in this case, abstention should be considered. And what about countries like Belgium where voting is compulsory?

Second, history teaches us that human societies emerged well before the institutions that govern them. It is the society that begets the institutions and not the reverse. Moreover,  these institutions have been set up in bloody wars and revolutions.

Lastly, according to Rousseau, since the parliament represents the people, the minority must accept any decisions taken by the majority in the name of a nebulous “general interest.” In the 19th century, Alexis de Tocqueville had already mentioned the risk associated with this belief. Such a system drifts into a tyranny of the majority.

If we looked closer, we would see an institution inseparable from the human society that could perfectly fulfill this role of the social contract: money.

Is Money a Social Contract?

Money is proper to man. Historically, no society could develop without the support of some form of money. Conversely, the concept of money is meaningless when taken out of its social context. It is from its acceptance by users that money derives its legitimacy and value. Men voluntarily adopt money because they benefit from it.

By facilitating exchanges, money allows specialization — the source of new technological developments. As a store of value, it allows users to save, which is the source of investment and protection against the hazards of life. Investment and technological progress both generate growth. This is the fundamental reason why men unite: in order to draw greater benefit from each other’s labor.

Currency Manipulation

If money is the cement that binds society together, what happens when this cement disintegrates? The German hyperinflationbetween 1921 and 1924 is certainly one of the most tragic examples of monetary collapse, but it is far from an isolated case.

Given its critical role, it may be tempting for a minority to manipulate the currency to its advantage. If the phenomenon is not new, it has also become more complex over time.

An early example occurred with the use of minted coins.

Originally, coins ensured the weight and quality of the currency. But gradually, the right to mint coins has become a state monopoly. This has allowed governments to control currency and extract a rent (seigniorage and sometimes debasement).

The invention of the banknote was a major technological evolution. Originally introduced to facilitate increased trade, banknotes have gradually become a monopoly of the power in place. As a striking example, Napoleon Bonaparte gave the monopoly of printing bank notes to the Bank of France, of which he was a major shareholder.

The creation of central banks is the logical continuation of the state’s growing influence over money. Under the pretext of stabilizing money issuance and protect depositors from banking crises, the creation of central banks actually greatly facilitated state indebtednesswar funding, and ultimately inflation.

Speaking of inflation, here is precisely what Keynes said about it:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.”

From Social Contract to Social Control

But inflation is not the only stab to the social contract of money. From the moment the money is imposed by the government rather than freely chosen by citizens, it loses its legitimacy. Initially acting as a social contract, money in state hands becomes a tool of social control. It allows a minority to exploit their privileged position for profit and power.

The states impose the use of their currency in more or less subtle ways. In the most authoritarian countries like China, the currency is subject to strict controls.

Exchange rates are set by the government and capital movements are tightly monitored. In the so-called democratic countries, the currency is imposed through legislation and numerous regulations. For example, the official currency is the only one allowed for the payment of fines and taxes. Banking and insurance regulations require individuals to invest a proportion of assets in state bonds, to inform the government of all transactions above a certain amount, etc.

In terms of social control by the currency, governments can be very creative. One example is the introduction of price and wage controls. Another example is the introduction (and increasingly pervasive use) of the food stamp program.

A more pernicious threat now hangs over the money with the disappearance of cash so desired by our governments. The abandonment of cash threatens to increase our dependence on the banking system. It also increases the stranglehold of states over their citizenry by facilitating the establishment of taxation on savings accounts or even an outright confiscation of bank accounts, as was the case in Cyprus.

Freeing the Money

All monies do not fulfill their social contract equally. Among fiat currencies, large differences exist, depending on the objectives of central banks and economic policies. So if we compare the consumer price index (a proxy for inflation), we observe that the US Dollar has lost about 54 percent of its purchasing power over the last 30 years.

The Swiss Franc saw a decline in purchasing power when it was limited to 31 percent and then 14 percent for the Japanese Yen. At the same time, the currency’s purchasing power fell by more than 99 percent in Mexico, Turkey, and in many countries of the former Soviet Union.

Gold and precious metals enjoy a lasting credibility because these commodities are difficult to manipulate. Precious metals have also provided an effective hedge against inflation and other monetary turpitudes throughout history. Gold is still a reserve currency of choice for central banks.

Finally, a new form of currency has recently emerged: the cryptographic currencies among which Bitcoin is undoubtedly the most famous. Bitcoin appeared in 2009, at the height of the subprime crisis and bank bailouts by the taxpayers. If they have often aroused disbelief in their infancy, these cryptocurrencies now enjoy a combined capitalization largely exceeding $100 billion.

More fundamentally, cryptocurrencies are the perfect illustration of the competitive bidding of private currencies. This is similar to what was proposed by Friedrich Hayek in his book “The Denationalization of Money.” 

Since the use of these currencies is free, their value fluctuates according to the interest they generate and the resulting demand. Their course is closely linked to the services they can provide, as a means of payment, and their credibility, as a store of value. The proliferation of these cryptographic currencies is a full-scale laboratory experiment for the future of money.

Money Guarantees a Free Society

Money, even more so than democracy, embodies the essence of the social contract. Its legitimacy comes from its acceptance, freely chosen by all users. 

The fundamental role of money in exchange explains its catalytic action in the seeding of the development of human societies, long before the emergence of democratic institutions. Finally, currency manipulation inevitably causes the decline of a society,as democratic as it may be.

Nothing better sums up money that Ayn Rand’s quote:

“Money is the barometer of a society’s virtue.”

Money is a tremendous source of emancipation for the society. It promotes cooperation and peaceful exchanges between humans, no matter their views, gender, origin or preferences. It is the conductor that imperceptibly regulates the human action.

Conversely, anyone who aims to suppress money should be prepared to substitute it by a planned economy with cohorts of bureaucrats who impose by force. Anyone who denounces the dictatorship of money should recall that the worst tyrannies are those where citizens were deprived of their currency. And if money is regularly accused of being the root of all evil, it is all too often the victim of those who control it. Rather than blaming the money, let’s blame those who corrupt it.

Perfect currencies do not exist. As the brainchild of fallible humans, monies are bound to constantly face primal temptations. Failing to find such an illusory ideal, the freedom to choose currencies is the best guarantee of having sound money in a free society.

 

Republished from FEE.org

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Millennials Are in a Love Triangle with Capitalism and Socialism

By Andrew Taylor

There’s been a lot of talk recently about how Millennials – the generation born between roughly 1980 and 2000 – think about economics. Much of it was sparked by the fanatical support for self-described “Democratic Socialist” Bernie Sanders from young people in the Democratic primary for president last year.

Gallup found in April 2016 that, whereas Hillary Clinton had a net favorability rating of -23 among 18-24 year-olds, Sanders’s score was +39.

Harvard University poll administered at about the same time revealed how this has been translated into policy views. The survey reported that only 42% of Millennials supported capitalism. According to a contemporaneous Gallup poll, that was about 10 percentage points lower than the general population. The Harvard survey showed 33% of Millennials wanted socialism.

So Millennials have economic attitudes that are different from older Americans. But is their economic behavior different? Do they walk the socialist walk?

Here, the evidence is decidedly mixed.

Health Care

Socialists tend to embrace public goods because all citizens can consume them. Millennials certainly like them. A Pew Research Center poll from June revealed 45% of 18–29-year-olds favored a single-payer health care system. This was 14 percentage points higher than any other single age group.

Census data show Millennials adopted health insurance more rapidly than any other age cohort when Obamacare began in 2014-15. I’m not entirely sure what kind of political philosophy this behavior illustrates, but it does seem to suggest Millennials embraced the Affordable Care Act, legislation most people believe moved health care in this country solidly to the left.

Recycling and Personal Consumption

Socialism, unlike capitalism, makes a virtue of constrained personal consumption. A major reason for this, of course, is that it is less suited to production. But the connection has helped fuse ecology to socialism in the platforms of left-wing parties across the globe.

You may have heard the argument that Millennials are more environmentally conscious than the rest of us – they don’t use plastic shopping bags or flush the toilet, etc. A survey commissioned by Rubbermaid reported earlier this year that two-thirds of Millennials would give up social media for a week if everyone at their company recycled.

Interestingly, however, the data on behavior do not bear this out. A 2014 Harris poll conducted for the Institute of Scrap Recycling Industries (ISRI) revealed that whereas roughly a half of respondents over thirty said they “always” recycled, only a third of the younger group did.

Millennials talk about saving the planet for humanity, behavior a socialist mindset deems heroic, but they do not seem to be doing more than anyone else to secure our world’s survival.

Transportation

Millennials also use public transportation much more than other groups. Over one-fifth ride a bus or train on a daily or almost-daily basis according to a Pew survey from late 2015. This was nearly double the proportion of any other age group.

Indeed, younger people seem to have much less love than their elders for that ultimate of American private goods, one’s own car. The number of licensed drivers in both the 24-29-year-old and 30-34-year-old cohorts decreased by about 10% between 1983 and 2014 according to the University of Michigan’s Transportation Research Institute. The drop for 18-year-olds was a fifth. At the same time, everyone over 45 continues their love affair with the automobile.

This seems consistent with the socialist rejection of material goods, but whether this is correlation or causation is unclear.

Sharing Economy

Moreover, Millennials have almost single-handedly nurtured the “sharing” economy – a marketplace in which peer-to-peer transactions are facilitated by a software platform that permits participants to divide consumption, as exemplified by Uber and Airbnb. According to Vugo, 57% of all ridesharing customers are aged 25 to 34.

The sharing economy may sound quite socialist because it seems to eschew private ownership. But as Duke professor Mike Munger has pointed out, people, in general, wish to consume the services that tangible goods provide, not the goods themselves. The sharing economy, in fact, provides access to the services of more material goods than the user would otherwise have – whether that’s a five-minute ride in a car or a two-day stay in a house. Its fundamental principles, therefore, are capitalist.

Entrepreneurialism

A 2014 Bentley University survey of Millennials reported that two-thirds of respondents expressed a desire to start their own business. But Millennial behavior is different. An analysis by the Wall Street Journal last year found that the proportion of Americans under 30 who own a business has dropped by 65% since the 1980s. Millennials might say they want to be Mark Zuckerberg, but they’re not particularly entrepreneurial.

There does exist therefore a disconnect between Millennial economic attitudes and behavior. What explains it? The generation is intrigued by the idea of socialism. It embraces many of its values and the public policies that would bring it about. But Millennials’ behavior is ambiguous. Entrepreneurship in private enterprise is not a particularly appealing career path to them in practice.

Additionally, Millennials’ reduced consumption is probably as much a function of economic necessity as it is a sacrifice of their personal wants to some grand social plan. The Great Recession has left them playing financial catch-up. A Pew analysis of census data reveals 15% of 25-to-35-year-olds still live with their parents. Traditionally that fraction has been around one tenth. A 2016 study by the left-leaning Center for American Progress found that Millennials make less than Gen Xers did in their early 30s. They only earn about the same as Boomers, who are 30 years older and 50% less likely to have graduated from college.

So perhaps there’s another explanation: When they appear to be rejecting capitalism, it’s often because Millennials are simply adjusting America’s core economic principles to new technologies and economic realities.

Reprinted from Learn Liberty.

 

Andrew J. Taylor

Andrew J. Taylor is professor of Political Science in the School of Public and International Affairs at NC State University. He received his Ph.D. from the University of Connecticut and teaches courses in American politics, including Introduction to American Government, the Presidency and Congress, the Legislative Process, Public Choice and Political Institutions, and the Classical Liberal Tradition.

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ASUU, the Government and Tertiary Education in Nigeria: The Way Forward

By Ashton Dagana

Since 1999, successive governments have at least two things in common; ASUU and strikes. ASUU strikes. The ASUU strikes always follow the same pattern; initial noise about a possible ASUU strike, a warning strike, government ignores ASUU all along, the public isn’t particularly interested, ASUU goes on long strike, everyone gets interested, government and ASUU meet over and again, agreements are signed, ASUU goes back to school, tick tock tick tock, repeat cycle.

As usual with most things Nigerian; no one really cares about a sustainable solution that ensures there is no repeat of a bad situation, attention is often paid to what Nigerians would call ‘patch-patch’ solutions. Each government deals with ASUU in a way that ensures ASUU returns to the classrooms, knowing fully well that the underlying problem of why ASUU goes on strike remains perpetually unresolved. Like debts and corruption cases, they pass on the ASUU burden to future governments. It is why over 18 years into our new democratic experience; our universities continue to face exactly the same challenges they faced in 1999. Poorly funded, absenteeism of lecturers, normalization of the handouts menace, strikes, dilapidated infrastructure and the inability to compete globally. This simply means that we are not going to fix our universities and the recurrent ASUU challenge with the same Band-Aid approach we used in the past. We need a far more sustainable solution. The challenges of our universities and indeed other tertiary institutions are not that these challenges exist; it is that these challenges more or less remain the same over decades. What we must now do is solve them and work out ways of meeting new challenges and not continue to sink under the weight of the same challenges decades on.

We should not be in this position where all the lecturers in virtually all the public universities can go on strike at the same time. None of the countries where the children of the rich and powerful go to school abroad have this model. Our leaders, including even some of the privileged lecturers have their children in schools everywhere but public schools where they are exposed to some of the menace already mentioned above. Like with most of the challenges Nigeria has had to deal with over the course of almost its entire Independent existence, the problem is centralization and control by the Federal Government. The current structure does not work and we already know that. What we probably aren’t so sure of is how to move forward.

The universities should be run by Trusts. Government should simply give grants. Trustees should include private sector big wigs and people that can help raise money and endowments for the University. They will also check fraud by the VCs, which is very rampant. At the moment, at least six former or current Vice Chancellors are under investigation by the Economic and Financial Crimes Commission, EFCC. There are verifiable rumblings for the arrest of some others. Some of them have even been charged. This piece is not about the obvious so I will not be elaborating on that but I should add that University administration has since been taken by the general Nigerian malaise; corruption. The Trust sets the terms and conditions for employment. That way, each lecturer is an employee of the trust, not directly of the Federal Government. For instance, if UNILAG lecturers choose to strike against their Trust, the strike will only affect UNILAG. This is the same problem we have with Health and why doctors constantly go on strikes. These problems have become permanent simply because we choose the same Band-Aid solutions that are not sustainable and far reaching over much more sustainable and effective ones.

The FGN appoints people as Ministers of Labour or portfolios of the type and automatically assumes that they were born as skilled negotiators. No negotiation skills. No training. Two things then happen. First, each strike is an opportunity for the Labour Minister or the cronies to make money. In the past, huge sums were ferried at night to Labour leaders to persuade them to call off strikes. The Minister, of course, got a huge cut and it was in his interest to collude with the unions to hold out for more money, while publicly “appealing to them to go back to work.” Secondly, the glory for him was that he had successfully ended the strike. He would therefore sign anything, knowing fully well that government could not afford it. In his mind, ‘the next Minister can worry about that.’ This, just so he can say, “when I was Minister, I ended the strike.” This is all that matters to them in a country where the interests of personalities continually trump the collective interest. Today, they agree with ASUU. Tomorrow, Non-Academic Staff of Universities will claim that you can’t give ASUU alone and so they go on strike too. The Minister will sign another agreement with them. ASUU will get angry again and the cycle continues. The exact same thing we do with Doctors of NMA and Health Workers under JOHESU. It’s a sad expensive joke, really.

While one is sympathetic to the claim that agreements should be honoured, the quantum of ASUU’s claim is put at about N1.2 Trillion. In 2009 when this was agreed, this was about 25% of the Budget. Someone was illogical enough to sign this on behalf of government. To move forward, there may be a need to overhaul the system altogether. This reset of the system could even cost an entire academic year but if it fixes this particular problem permanently, it would be a very useful sacrifice to make for the sake of the future. Since 1999, ASUU has embarked on some 12-strike actions that lasted about over years cumulatively.

ASUU through the individual universities establish university staff schools without consultation with government. There is apparently an agreement with the government on funding the staff primary schools and secondary schools. Government had in the past agreed to fund the primary schools 100% and part-fund the secondary schools. Then the universities open the schools up to outsiders and charge handsome fees. They pocket those fees and don’t remit a kobo to the FGN. The schools want government to pay the teachers that they – the schools – recruited. They want government to maintain the schools while they pocket the fees they charge. This, according to available reports is part of their reasons for striking. I wonder, did a government official sign these agreements without making it clear these schools were to serve the children of the staff of the schools or make it clear government funding would not cover for discretion taken by the schools outside of the agreement?

ASUU has organised resistance to IPPIS, the government biometric payroll system that has already helped to weed out thousands of ghost workers in several ministries, this so that they can continue to create ghost workers. There is an estimate from a reliable source at IPPIS that some 30% of the people ASUU is striking for are ghost workers. Part of government’s negotiations should therefore be to do biometric capture so that they know who they are paying. The situation is the same with hospitals. They refuse to go on IPPIS, recruit illegally and create ghosts. That way, the salaries government sends are spread to half pay for all and government is then accused of owing salaries when it has paid everybody it gave approval to be recruited in full. Government gets to be used and treated like an entity whose failings mean nothing, when in reality the people are the government.

Government needs to cut a deal with ASUU but must think sustainability when going to the table. A recent news report has the current Education minister Adamu Adamu saying the ASUU strike will be over in a matter of days. This simply means that we are about to wash and rinse the same dirt from the previous playbook. This means that in the very near future, another government, if not this one even, will have to call ASUU back to the table again, when they embark on yet another strike. The government must go all out to overhaul this system once and for all by divesting and relinquishing control and ending this centralization that favours everyone else but the very people the universities were set up for, the students.

Ashton Dagana, a Quantity Surveyor writes from Port Harcourt. (ashtongana@gmail.com)

Republished from AfricanLiberty.org

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IMANI: Update on Efficiency in Ghanaian Ports – A Discussion with Stakeholders & Vice President Bawumia’s Commendable Efforts

IMANI Centre for Policy and Education has been studying the challenges – both current and potential – that negatively impact trade in Ghana. These challenges have been analysed under two major areas: 1) trade competitiveness and diversification, and, 2) trade facilitation and port efficiency.


IMANI published its first major report in June 2017. The paper, titled ‘’IMANI’s ‘Efficiency’ Report on Operations at Ghana’s Tema Sea Port; More Needs Doing’’ can be assessed @ http://www.imaniafrica.org/2017/06/27/imanis-efficiency-report-operations-ghanas-tema-sea-port-needs/

This article provides a summary of the research that has been undertaken into port efficiency and performance in Ghana, which includes discussions with and the perspectives of various stakeholders such as the Ghana Ports and Harbours Authority (GPHA), Meridian Port Services (MPS) Ltd., the Ghana Institute of Freight Forwarders (GIFF), and a and a shipping line executive.

The importance of an efficient port for trade, development and economic growth cannot be understated. Efficient ports facilitate trade competitiveness and greatly increase revenue mobilisation. The appropriate question to pose now is what makes Ghanaian ports inefficient, and what are the salient challenges they face? One pertinent issue that was mentioned by nearly all stakeholders involved the inefficiencies within the cargo clearing process. These include 1) long cargo clearing and processing times, 2) the multiplicity of agents in the inspection and customs processes, 3) the absence of paperless processes throughout.

Long cargo clearing and processing times

During IMANI’s interview with a shipping line executive, the lengthy cargo clearing processes at the ports was highlighted as a serious issue. Most importers are unable to clear their containers within the 7-day demurrage-free time. This observation was also noted by GIFF. In addition, GIFF stated that in an ideal and efficient situation, it should take approximately 5 days for goods to be cleared at customs. However, this is not the case in reality. It can even take more than a fortnight for goods to clear. The unnecessary delays affect both the ability of importers to quickly distribute their goods, and tend to lock up much needed capital for other business operations. Importers are required to pay container detention fees and demurrage deposits to shipping lines prior to a container being cleared from the port. Container deposit fees serve as a guarantee that importers will return containers back to the shipping line in time, once their contents have been emptied. GPHA estimate that shippers pay over $100 million in container demurrage annually to the government, in ports throughout the country. The longer the cargo clearing and processing time, the longer the funds sit with the shipping lines, and the fewer funds are made available for the importer’s business. This challenge is compounded as the repayment of container detention fees often takes a while to come into effect.

Multiplicity of regulatory agents in the inspection and customs process

Multiplicity of regulatory agents and the duplication of roles during the physical examination is also a serious inhibitor of efficiency at the Port of Tema. Custom Examination Officers physically examine container, alongside about 18 agents from different Ministries, Departments and Agencies (MDAs) – sometimes more – which is highly unnecessary, allows room for corrupt activities, and lengthens the whole inspection and customs process. As GIFF so adequately described, ‘the more layers you have, the more corrupt the port is’. This issue was also brought up by MPS, who mentioned that the inspection and customs processes were duplicated. Other stakeholders including the Ghana National Chamber of Commerce and the GPHA have also decried the challenge of multiple regulatory agencies and their impact on efficiency at the port.

mandatory joint inspection has been announced by Vice President Dr Bawumia to address this challenge. This policy is expected to take effect from 1 September, 2017. Under this policy, not all containers will be inspected, only those with a certain risk level. A risk engine will be introduced, which will assign risk levels to importers depending on the level of their compliance. Further, if an inspection is necessary, only the agencies required for the inspection will be informed, and they will have to sign in electronically to confirm their participation.

The absence of paperless processes

The lack of paperless processes at the Ports is another significant inhibitor of efficiency. However, MPS Terminal is the only terminal operator at the ports that has implemented a paperless system, which has allowed it to become a leader in port efficiency.

As of Monday 7 August 2017, Ghana Community Network (GCNet) began to pilot paperless processes at the Tema Port. This is one part of the three highly commendable policy ideas put forward by the Vice President. The policy ensures that by 1 September 2017, all transactions at Ghanaian ports will be 100 per cent paperless, enabled by an electronic system, which will be powered by GCNet. It will also ensure that the processes and players along the value chain from exporters, cargo tracking, warehousing, freight forwarding, payment systems, free zones, regulatory bodies and shippers all operate on an electronic basis.[1] These will greatly improve trade facilitation, revenue mobilisation and port efficiency and has significant impacts for economic development across the nation. Moreover, the introduction of paperless systems will also make multiple inspections and the role of superfluous agents and MDAs redundant.

Additional measures to improve port efficiency

Additional measures taken by Vice President Bawumia, to be put into effect by 1 September, 2017, also include the removal of internal customs barriers. This means that duties will be paid on goods that are destined for re-export, and no vehicles will be able to leave the ports without paying their duties, as a new automated gate opening system will be linked to the risk engine for inspections. Consequently, these new measures will expedite the inspection process and ensure that duties are paid where they are due. Moreover, the resultant decline in the complexity of inspection and control procedures will lead to a decline in costs, delays and minimise corrupt and informal payments which would have been used to speed up processes, and even make government agents and importers compliant to such unlawful situations.

Commendable efforts

Vice President Dr Bawumia and the NPP Government must be commended on the practical measures that are currently being put into place to improve port efficiency in Ghana, and ensure that the nation becomes one of the most competitive ports within the sub-region, and in the long-term, even globally. These measures are necessary to stimulate national economic development, increase tax revenues and minimise the corrupt practices among importers, customs officers and clearing agents. With these measures in place, and the active participation of key stakeholders, the nation will see positive and sustainable improvements in the realm of trade and economic development.

 

Republished from IMANI Ghana

This update was compiled by Ms. Anita Nkrumah and  Ms. Nana Dei-Anang with IMANI’s Centre for Economic Governance and Political Affairs. For interviews please call 0554309966 or 0302972939.

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