Two Comments to Ponder This Weekend

1. Intellectual Dark Web — Am I the only one that is not completely either in awe or outraged by “the intellectual dark web”?  I guess I tend to agree with them more than I disagree with them, but I really true find them to be a bunch of nice people discussing milk toast ideas.  None of them say anything that is in the least bit extreme.  I don’t mean this to be a negative review of them.  I enjoy them.  All of them.  I am just saying it’s sort of embarrassing for our society that these are the outrageous guys saying the things you can’t say.

2. People keep calling Trump the most unpredictable president — Am I the only one that completely disagrees with this?  He is a completely normal president.  He does illegal stuff, he kills innocent people, he has a horrible moral compass, he speaks with bluster, he takes away liberty of the people, he plays to his base, he is divisive, he believes he can decide what foreign countries do.  These are all common things of a president.  Essentially, as Scott Horton puts it, he does all the bad things he promised and doesn’t do the good things he promised.  Mainstream.

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The Risk/Reward Tradeoff of Technology

One of the early concepts in finance is that for an investor to put his money in something of higher risk, he needs to be compensated with a higher expected return.  For example, US treasuries are assumed to be roughly risk free (an increasingly farcical phenomenon) and therefore yield only small returns.  Investments in Silicon Valley startups are highly risky and as a result the expected valley of payoff from an investment in a startup must be enormous.

This relationship strikes me as similar to the relationship we individuals hold with respect to our freedom.  While the benefits of technology have made our freedom immensely easier, more pleasurable and more relaxing, these exact same technologies present much greater a risk to our freedom.  Cellphones have made staying in contact with family members in other states and countries easier, it has also provided an avenue for an increasingly tyrannical government to snoop on everything we say and do.  While self-driving cars present a way to dramatically reduce the number of traffic fatalities, they also provide another avenue for the CIA to do irreparable harm.  Credit cards and Apple Pay provide excellent ways to pay for goods and services without using dirty money that is easy to lose but also provides another way for the powers that be to surveil and monitor us and everything we do.

The paradox of technology presenting a more rewarding life but also a life of more risk is a reminder to us all to stay vigilant with regard to those who can wield the power of these tools against us.  It is more important now than it ever has been that we remove the state from the mechanisms of control.  Should we be successful, the life we all can have will be immensely rewarding.

Cheers to taking all the power of the state away and our increasing prosperity.

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Federal Reserve Notes are Risk Free?

In finance, one of the earlier ideas you will learn is the idea of a risk free rate of return.  This is the amount of return you can expect on an investment by making that investment in a vehicle that has 0% risk of default.  You will get the return for sure, every single time – hence, risk free.

The risk free rate used in finance models is the return on long term government bonds.  Often, US federal reserve notes are the returns used, though in other countries, practitioners sometimes use foreign government bond returns.

This is at odds with the facts.

First, through printing money, some governments may continue to make payments on debt even when they don’t have the money to do so.  This may result in the nominal return being as advertised but the real return by definition will be lower due to the inflation eating away at some returns. Obviously, financiers take inflation into account these days but government debt being risk free is still at odds with the facts for the following reason…

Governments default on debt all the time!  Essentially every government that has ever existed has defaulted on its debt at some point.  Sure, they can go centuries without defaulting, but eventually they do and will default.  This makes them no longer risk free.

I have yet to see a strong push back on this idea but believe it to be worthwhile to consider should you work in finance and need to understand what type of rate is truly risk free.

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Privatize Veterans Affairs

Former Secretary of Veteran Affairs David Shulkin was recently fired from his post. Supposedly Shulkin was fired due to scandals as well as his opposition to the privatization of the VA.

Mr. Shulkin wrote an op-ed in the NY times recently where he said,

I believe strongly in the mission of the Department of Veternas Affairs, and nothing about my political experience in Washington could ever change that. I also believe that maintaining a strong VA is an essential piece of the puzzle that is the United States’ national security system: We can only expect our sons and daughters to risk their lives and fight for our freedom if we can keep our promise to care for them when they return home broken, injured or traumatized. There is no excuse for not holding up our end of the bargain.

What a load of bunk!

This is an embarrassment that a man of that high office could have such limited knowledge. Later in the piece Shulkin states “As many of you know, I am a physician, not a politician.” No kidding! Mr. Shulkin has immense more knowledge than me in medicine but clearly knows nothing of economics, politics or even national defense. Good riddance, David.

Shulkin states a VA is an essential piece of the national security of the US. Perhaps if we stop sending young and full of life men and women to foreign countries, where they can’t tell the difference between civilian and enemy, where they end up taking innocent lives for some unknown end goal, we may have slightly less need for medical services back home.

Shulkin states that we can only expect our sons and daughters to risk lives when we promise to care for them when they return. Tell this to those who were conscripted into fighting in Vietnam. They were forced to fight regardless of the care situation back home.

Shulkin implies that by privatizing the VA we would fail to provide care for veterans when they return home. Does Shulkin have the slightest idea how either markets or charity works?

When Mr. Shulkin provided care in his physician practice, did he only do so because the government forced him to? Or did he maybe provide care because he made a living from providing value to his patients and he felt fulfilled in aiding his patients to recovery?

In his opposition to the privatization of the VA, Mr. Shulkin embodies some of the worst and most disheartening ignorance in politics.

Does Mr. Shulkin realize that veterans would love to choose regular hospitals for access to care because the VA is slow, ineffective and is constantly on the defensive from latest scandals.

Privatizing the VA is:

  1. The most moral thing to do
  2. Irrelevant for national security (though we could be more secure by not starting wars all over the world)
  3. An easy way to save the government money
  4. The best way to ensure veterans actually get high quality healthcare back home when in need.

Mr. Shulkin ought to be ashamed of himself.

I don’t have much hope for Trump actually privatizing the VA but he deserves credit for floating the idea and should be urged at every moment to follow through. I will be doing my best to convince him!

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The Voluntarist Messaging Problem

Why do we voluntarists struggle to convince people of the fruits of our vision?  Why do people look at us as crazy when we say we don’t need a government to do anything?  Is it because kids have been indoctrinated in government schools for generations?  Perhaps, but I don’t think this is the majority or even a large minority of the cause.

I think it is Americans’ laziness.  It is easier and more comfortable to rely on the government’s coercive taxing ability to fund the roads, for example.  Never mind the immorality of this theft, it’s just easier and it works relatively fine so why bother.

This could properly called complacency.

When people start to really think about it, they come up with a few things they need the government to do.  National defense, courts and roads are three common ones.  I grant, these are somewhat trickier than welfare, healthcare for senior citizens, and funding for the national endowment for the arts, but the same question remains: Do we really need a government to do this?

Because we have these items (ie. Funding for the NEA, Medicare, food stamps) as low hanging fruit, people do not look beyond to the proper question.  People argue all day and night about the size of government but the proper question is really government or no government.

We are complacent arguing about how much we should tax, should we spend more or less on the military or health care for senior citizens etc..  This is a combination of we have easier problems to answer and people are too complacent to think about anything but the easy problems.  Unfortunately, while I support any and all efforts to reduce the size and scope of government, this takes our eyes off the ball.  We need to be fighting every day about if we need government.  Discussing the size of government cedes ground in the sense of implicitly affirming the need for government.

Because people tend to take the easiest possible answer to all problems, government is often used as an easy solution.  We would benefit by always encouraging people to think critically about the need for government at all.

My opinion is we don’t need a war mongering military and courts that throw people in jail for crimes in which nobody has been harmed.  This is the debate we should be having rather than the size of the military or its accompanying policies.

As voluntarists, the evidence and not to mention morality are always on our side.  We should use that as a calling card to constantly fight the implicit assumption of the need for government.  We need to change the messaging to fighting the idea of government rather than which policies or what size of government we want. In doing so, we may finally gain back some ground in public opinion.

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Who Will Build the Roads?

When people ask, “who will build the roads?” my usual response is, “the same people that currently build them, it’ll just be financed differently.”  Then I go on to give a few quick ideas.

Tolls are an obvious choice but so are trade associations that want you to visit malls and stores.  Perhaps non-profit organizations pop up to facilitate the easier movement of people and build the roads?  Maybe we will all start riding on drones or using other technology. Maybe unions or employee associations charge fees or payroll deductions from your paycheck in order to maintain the roads needed to access your job?

Point is, I don’t know the solution, I do know a solution exists and would become a reality.  What won’t happen is the government stops funding the roads and then the world descends into chaos, no business gets done and people live solitary lives and never leave their home other than maybe walking to a neighbors.  This, I am confident, would not happen.

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