Posts Tagged investment

Long Live the Artificial: Newt Gingrich’s Anti-Bain Blather

Of all the warts Mitt Romney boasts on his big smelly toe, Newt Gingrich and others have decided to attack the one thing Romney has going for him: his business-leader experience in the private sector. (go here for the full scoop)

This week at Values & Capitalism, I offer my critique of the Gingrich(/Obama) view:

Note to Newt: I know we’d all like a 100% success rate, but high-risk investment doesn’t always pay off, and when it doesn’t, bad things happen. Businesses close, people lose their jobs and human suffering abounds. Oh yeah, and another thing: it’s not great for investment firms either.

When these companies failed under Romney’s watch, I doubt that Jolly Fat-Cat Mitt was grinning in his Doctor Claw Chair while stroking a snickering kitty. Anyone who understands anything about investment firms should understand that bad investments are, well, bad.

There’s plenty of basic economic idiocy here, not to mention nostrils-full of that all-too-familiar “pre-conversion” Gingrich stench (does “moldy baloney” capture it?). But throughout all the confused prattle—e.g. Newt’s forthcoming wanna-be Michael Moore project—I find myself haunted by a single, disturbing reality. Some people actually swallow this stuff.

The deeper issue in Gingrich’s thinking — other than his basic goal of political revenge, of course — is his apparent disdain for creative destruction and his implicit worship of the artificial.

More from my piece:

Most of [this] seems to involve an embrace of the artificial—a belief that prosperity can and should be manufactured from the top down and that successful entrepreneurship, innovation, and jobs(!!!!!!!—those are for you, Joe Biden) demand nothing more than Sugar Daddy U.S.A.’s material blessing.

Implicit in such an orientation is a belief that risk can somehow be avoided or subverted—that turning companies around is always possible, that the solution (if there is one) is always accessible/know-able, and that investments will always produce a profit (when all else fails, there’s subsidies…duh!). All you need is a warm and toasty heart and a propensity to use other people’s stuff to Read the rest of this entry »

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The Magic of Regression: Following the Leader in Reverse

I recently posted my thoughts on Hans Rosling’s TED Talk, “The Magic of the Washing Machine,” which does a fine job of illustrating how progress can feed progress, and how human ingenuity is at the heart of it.

In my most recent post at Common Sense Concept, I focus on a different phenomenon: our tendency to greet such progress with opposition:

If humans are really the “ultimate resource” as Julian Simon suggested, it’s no wonder that the continuous maximization of human time and freedom will lead us toward ever-increasing output. Yet just as the fruits of industrialization and widespread innovation seem to be evidence of some kind of “magic,” various opposing forces seem intent on demonstrating their own variety of bizarre tricks. Alas, just as society seems to progress, we exhibit a strange tendency toward regress.

Yet not all opposition leads to regress. We should indeed meet each new technological innovation with plenty of skepticism and criticism. In some sense, that’s what being a conservative is all about. So how do we properly discern? How do we know what will truly lead to progress and what will actually push us backwards?

We don’t. At least not always — which is why I think the more important question has to do with who is doing the discerning rather than what we are discerning about. As Thomas Sowell says, and as I quote quite frequently, “The most basic question is not what is best, but who shall decide what is best.”

Here’s more from the post:

We will always have error, and we will always have disagreement, particularly in the realm of progress. But when we as individuals truly screw up, the consequences come quickly. When disruption comes, we humans are pretty good at responding and adapting. Nobody likes to look stupid and nobody prefers to be on the “wrong side of progress.” In a society guided by self-interest a la Adam Smith, the invisible hand typically spanks us when we need it, and progress gets back on track accordingly.

So what happens when the central planners mess up? What happens when lofty bureaucrats and paper-pushers start making decisions about what light bulbs we use, what toilets we flush, and how much salt goes in our French fries?

An inescapable, large-scale game of Read the rest of this entry »

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A Romantic Boom and Bust: The Opportunity Costs of Love

Last week, I explored the degree of risk and uncertainty involved in pursuing God’s ultimate will for our lives. This week, Tho Bishop has a great piece at the Mises Institute that echoes these themes from the angle of earthly love.

Bishop’s primary goal is to show the parallels between Austrian business cycle theory and what he calls an “Austrian romance cycle,” focusing specifically on the element of time.

The comparison makes for quite an enjoyable read.

Here is the gist:

Romance starts with a first move. Just as Austrians understand that it is the role of the entrepreneur to shoulder the risk of capital investment in order to potentially achieve profit, we can understand that it is the role of an instigator to take the risk in the hope of finding romantic success. Without an entrepreneur, economic growth is unobtainable; without someone making a first move, romantic growth is unobtainable.

To demonstrate the similarities, Bishop provides a brief parable about a young romantic named Adam. In the beginning of the story, Adam is interested in investing in a new relationship, and like any good investor, he is trying desperately to convince certain women that he is “worth the risk.”

Becoming a bit impatient with the slow growth of his success, Adam begins to “stimulate” his love life in the same way a government might try to manipulate an economy: by faking it.

Adam has become frustrated by romantic failure. Fed up with his lack of success in romance, Adam begins to tell every girl who will listen that he saved orphans from the rampaging cannibals of Rojinda, climbed Mount Everest, and once out debated Ron Paul on the House floor. Adam has decided to manipulate his “interest rate.” All of a sudden Adam finds himself as the center of attention.

Behold! The impressive splendor and all-encompassing prosperity of the boom! Spending for the sake of Read the rest of this entry »

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Planners and Searchers: Locating Demand Among the Poor

farmer, foreign aid, development, AfricaIn today’s post at Common Sense Concept, I summarize economist William Easterly’s marvelous dichotomy of planners vs. searchers.

Here’s the gist of the contrast:

The planners are the high-level organizers, sitting comfortably in their air-conditioned offices as they crunch numbers and try to plan their way to global prosperity. The searchers, on the other hand, are the folks on the ground, working effortlessly to locate direct needs, collaborate with on-the-ground resources, and create value.

The deeper issue, in my opinion, is that we need not confine such a contrast to matters of economic development. We as Westerners also need to transform our worldview to being that of a searcher.

Here’s another excerpt:

We as individuals, moral agents, and Christians, must become the searchers ourselves. Like an entrepreneur launching a new business opportunity, we need to get as close to the demand as possible. We cannot rely on a “fail-proof” plan for eliminating poverty. We cannot cower to a policy that promises to make the proper transfers on our behalf. Instead, we must expose ourselves to the searching process.

To read the full post, click here.

Read the rest of this entry »

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The Ultimate Resource: Investing in Human Potential

What if misery was a product?” asks June Arunga.

“Assume for an instant that it is one of Africa’s exports, and that the money sent to relieve it by many well-wishing humanitarians is a form of capital. The amount of capital expended to purchase this product makes it as great an export — if not greater — than Nigeria’s oil or Congo’s gems.”

This comes from a speech by Arunga at a recent event sponsored by The Economist. I highly recommend watching the video in full (HT).

Arunga covers a few specific areas related to the ineffectiveness of foreign aid, but her main concern seems to be this:

The scary thing for me might be that [foreign aid is] not merely ineffective, but that it is in itself a form of investment in misery…It is a choice to invest in pain and suffering rather than in aspiration and human potential…It is a choice between on the one hand, a blinding pessimism, and on the other hand, an illuminating optimism. It is a choice between denial and acknowledgement of human potential.

Arunga provides a few scenarios to illustrate how aid proponents typically approach Africa’s downtrodden, focusing primarily on Read the rest of this entry »

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The Billionaire’s Dilemma: Charity vs. Job Creation

Carlos SlimI have thus far expressed mixed feelings about the pledge by Bill Gates and Warren Buffett to donate half of their wealth to charity, so I thought it would be fitting to pass on the latest addition to the narrative. According to Bloomberg, Mexican billionaire Carlos Slim recently said that he would prefer to use his money for job creation rather than donate it to [so-called] anti-poverty causes (HT Dambisa Moyo).

Here is Slim’s perspective:

“The only way to fight poverty is with employment,” Slim said at a conference in Sydney today. “Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything.”

As I’ve mentioned previously, I obviously don’t think philanthropy is “bad,” nor do I think it is something we should necessarily avoid. But if we are talking about addressing the particular concern Slim is pointing to — namely, “fighting poverty” on a global scale — it seems highly convincing to me that increasing employment through traditional investment is usually the most successful solution from a macro perspective. (Could I add any more caveats!?)

But that doesn’t mean it always is (or even that it actually is). There are plenty of counterarguments that leave the solution a bit up in the air for me. For example, philanthropy has the potential to bring plenty of spiritual benefits to the table by funding missionaries, planting churches, and simply promoting Christ-like behavior. Depending on what you believe, such spiritual transformation could indeed lead to Read the rest of this entry »

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Coffee in Rwanda: A Lesson in Individual Empowerment

Rwanda Coffee Exports by Unit Value of Destinations

Source: William Easterly / Aid Watch

William Easterly and Laura Freschi recently posted some encouraging words about Rwanda’s coffee industry over at the Aid Watch blog.

According to Easterly and Freschi, there have been some recent signs of success:

“There is preliminary evidence that the coffee industry is creating jobs, boosting small farmer expenditure and consumption, and possibly even fostering social reconciliation.”

In any other country, such progress might seem ordinary or mundane, but as you probably know, Rwanda has had its fair share of economic turmoil. Most are familiar with the tragic genocide that rocked Rwanda in 1994, but Rwanda’s socio-economic woes have roots that go back much further.

When it comes to the country’s coffee industry, Easterly and Freschi provide a brief history:

The history of coffee in Rwanda is intertwined with the country’s political fortunes, and stretches back to the 1930s when the Belgian colonial government required Rwandan farmers to plant coffee trees, while setting price restrictions and high export taxes, and controlling which firms could purchase coffee. These policies helped create a “low-quality/low-price trap” that would bedevil the post-colonial governments that continued similarly heavy-handed policies.

This poor foundation held the country down for most of the century, but it reached its inevitable collapse after the Read the rest of this entry »

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Organic, Local, and Slow: the Pampered vs. the Starving

Pesticide to be sprayed on food crops.

You can thank "poison" like this for helping us feed the world's billions.

Robert Paarlberg has a fantastic piece over at Foreign Policy on the negative organic food is having on the world.

“What’s that?” you say. “You mean I can’t improve my body, heal Mother Earth, and fix poverty in Africa all with one chomp of my socially-conscious organic apple? But I paid an extra dollar!”

People “go organic” for plenty of reasons, but whether it’s for health, the environment, or charity, Paarlberg argues that your efforts are ill-conceived and counterproductive.

But what’s his primary problem with the organic movement?

Helping the world’s poor feed themselves is no longer the rallying cry it once was. Food may be today’s cause célèbre, but in the pampered West, that means trendy causes like making food “sustainable” — in other words, organic, local, and slow. Appealing as that might sound, it is the wrong recipe for helping those who need it the most.

Indeed, the way people obsess over the food they eat has always struck me as downright bizarre. I understand that we should eat healthy and take care of our bodies, but this global effort to organicize the planet has always seemed a bit overhyped and preachy to me — particularly because the evidence for the argument never seems to match the impetus for its execution.

The more I watch the organic movement’s momentum increase, the more I realize that its implications are much grimmer than I originally suspected. This isn’t so much on the health side of things — in fact, I don’t think there is really any difference on that front — but the push for organic food is doing great harm to the environment, as well as our efforts to decrease global poverty.

In case you didn’t know, many moons ago all farming was “organic,” and people were starving to death.  Some things never change, for you’ll notice that in most Read the rest of this entry »

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Foreign Aid: Charity, Justice, and Bono’s Anti-West Prejudice

Bono at the World Economic Forum

Bono says that Africa remains poor because the West is greedy and prejudiced.

Every time I hear Bono talk about Africa’s problems, his passion makes me want to be on board with his mission. The problem is, whenever I hear about his actual solutions, I realize that the guy cares more about having compassion than achieving success.

Bono loves to talk about justice and equality, but the conversation is always entirely based around materialism. For Bono, Africa’s plight is primarily about a lack of resources, and thus it is simple enough to be solved by 40 cents here and an iPod there.

Bono & Co.’s efforts in Africa have been ineffective and counterproductive, as plenty of critics have pointed out (e.g. here, here, and here), but what I’d like to focus on at the moment is the false premise behind those efforts, which holds that success in Africa is dependant on the financial benevolence of Western governments.

The Cato Institute’s Marian Tupy recently wrote a piece in the Wall Street Journal focusing on this video’s assertion that financial aid to Africa is “not about charity. It’s about justice.” The video is pretty light on specifics, but Bono has since adopted the language on several occasions, offering a bit more illumination on why he thinks our donations are a matter of justice rather than charity.

My first reaction would usually be, “Of course the solution to poverty is justice,” but Bono and the ONE campaign consistently misconstrue the word “justice” by applying it to Read the rest of this entry »

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Case Study: Manakintowne Meets a Need

The video posted below is another submission to the Free Enterprise Video Contest. I recently wrote a post in response to the Grape + Bean submission by Caleb Brown.

The video highlights the Manakintowne Specialty Growers, a family-owned farm that grows fresh herbs and greens for restaurants and markets throughout Virginia.

You can watch the video here:

Communist leaders were infamous for their dreams of utilizing the State to create wondrous agrarian paradises, but while such grandiose visions may look quaint and picturesque on a propaganda poster, not everyone loves to grow stuff. One thing that’s obvious from watching this video is that free enterprise reserves the farming for the farmers, and it’s fun to see their passion.

Also, many critics of free enterprise point much of their criticism toward big businesses, forgetting that every business starts Read the rest of this entry »

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