Wednesday, July 6, 2011

One solution: How to increase New Zealand's R&D spending and stop educated people from leaving the country

I've engaged in an interesting debate with TUANZ Chief Executive, Paul Brislen (@paulbrislen) on Twitter. Paul asked this country's politicians:

"NZ has some of the lowest R&D spend in the OECD. What will you do to fix that?"

My response to Paul is that I don't believe that the statistics are accurate. New Zealand companies don't have an incentive to account for R&D. In fact there is a big disincentive to account for it. If you hired someone or purchased something and your intention is R&D, that means that it is a capital expense. Capital expenditure is not immediately tax deductible. You have to capitalize and depreciate it. This means that not only you are out of pocket for investing into something that doesn't bring you any immediate return, but you also can't claim it as tax deductible expense. I believe that the way New Zealand businesses structured is to ensure that their efforts are considered operational expenses and not R&D. This is why the statistic Paul refers to is inaccurate and meaningless.

To this, Paul responded:

"not according to the OECD and that means investors looking for new stuff pass us by." "... if you're looking around the world for centres of innovation what do you look for? R&D spend. If we hide ours..."

I don't believe it works like that with investors. I believe investors are looking for returns on their investment, not centres of innovation. Technology investors, in particular, are looking for two things: (a) Availability of talented people to perform the R&D and (b) Markets to sell the resulting products. In New Zealand we are short on both.

Paul's latest comment was:

"I'm talking about the angel investor funds and the like. If all it takes to get on the radar is an accounting change, why not?"

That comment has prompted me to write this blog, as I don't think 140 characters is enough for this important subject. It is not as simple as an accounting change, as I described earlier, as people will loose real money. However, even if it wasn't for that, some government statistic is still not enough incentive for businesses to change their accounting practices.

Last government's answer to the problem was to introduce tax rebates for R&D. That policy was a complete failure and didn't achieve the desired result. The definition of R&D was too narrow and didn't cover any real commercial R&D. However, being a "tax credit" - translation, "cash handout", if you made the definition any broader, anyone and everyone who's business relates in any way to any technology will be asking government for cash. I applaude the current government for dumping that tax credit scheme.

The problem of trying to drive R&D through other company tax incentives is that by its nature, R&D doesn't produce any immediate income, therefore there is no tax to pay. So what can you do?

I believe I have an answer to this problem. Here are a simple two step solution:

Step 1. Make all R&D related expenses 100% tax deductible, same as operating expenses.

This step will remove the accounting disincentive. However, in itself it is not enough.

Step 2. Redice the income tax burden for all employees that are engaged in Research & Development activities. Make it so the higher the qualification, the lower the tax burden.

This will achieve many goals desired by the people of New Zealand:


  1. It will be more attractive for people with higher education that can be applied to R&D (scientists, engineers, programmers etc...) to stay in New Zealand - they've just got a pay raise!
  2. In fact, educated people from overseas will want to come and work here so they can earn more
  3. It will be more attractive for investors to set up shop in New Zealand - they will have happier staff earning more money without themselves having to shell out extra.
  4. It will be more attractive for business people to account for R&D appropriately - their staff will earn more so will be happier to stay
  5. It will be more attractive for young people to pay for higher education - your student loan is no longer such a burden, it will be paid for by the tax break
  6. You will have young people more interested in science and engineering than arts and law
  7. You will have larger pool of talent so international technology investors will be interested in coming here to set up shop.


And this policy is not too expensive to implement. According to that OECD report there isn't much R&D accounted for in New Zealand, so there will be minimal revenue loss to the government. They will pay in tax breaks to the researchers, however that will be made up by other activity of the companies doing R&D. Also, the ratio of research to other staff in those companies is pretty small.

It will also be a very minor cost to businesses - we already have a system of PAYE tax codes, so all that needs to be implemented here is a new code.

So, would any political party like to adopt this policy? You'll have my vote!

And, to top it all, this policy is really easy to sell to New Zealand public. At the end of the day you are not giving any money to someone as extra profit. You are leaving more money for the worker - the researcher and the engineer.

Friday, June 10, 2011

New Zealand software innovators overwhelmingly support software patent exclusion

Matt Adams posted yesterday an opinion  about the software patent exclusion:

Opinion: Innovators reject software patent exclusion

Matt posted this on a closed Linked in group, so I thought I'd open the debate to public by posting my response here:

Matt,

Your statement is rather misleading. A correct statement is:

New Zealand software innovators overwhelmingly support the draft legislation to exclude software from being a patentable invention.

We understand that a software patent system is only damaging to our ability to innovate. A patent is not a property right, it is a monopoly right managed by a government. History has proven that monopoly rights primarily responsible for:


  • Reduction of innovation
  • Increase in pricing
  • Reduction in supply of product or service that also leads to
  • Reduction of job availability that also leads to
  • Abuse of worker's rights


There is no evidence to suggest that monopoly rights (or patents for that matter), specifically in the software industry, lead to any kind of increase in investment into research and development. As a matter of fact, the opposite is true.

The list of companies you give can hardly be included as the representation of the software industry. I am sure they all are doing great work as far as software development goes and they do develop good software, however lets examine the the company interests here:

Airways Corporation

Airways is a State-owned Enterprise (SOE), a fully-owned subsidiary of the NZ Government. It is in the interest of any government body to support government control of business. Ditto – granting monopoly rights.

Air New Zealand

Not a software development company – they fly planes! Again, largely government owned.

Plant and Food Research Limited and Geological and Nuclear Science Limited

Again, both CRI, government organizations, who's focus is not software but, as their name suggests, Plant and Food Research and Geological and Nuclear Science research.

Hardly representatives of software industry who are primarily affected by the legislation.

Auckland UniServices

A vehicle to turn (largely) government funded university research into commercial (patented!) products

Fisher & Paykel Appliances

A hardware manufacturer, whose submission focuses firmly on embedded software. I believe the legislation as drafted specifically excludes software that runs inside embedded hardware from being a non-patentable. Also, the hardware widget itself is patentable.


The so-called industry bodies you quote do not represent New Zealand software companies, instead are largely funded by international organizations, some of whom have been known to abuse their monopoly power. Is it them that you propose our government should be granting monopoly rights?

Matt, the organizations you mention were invited to participate in the public debate on this matter, here is the video:

http://liberty-by-ip.blogspot.com/2010/10/public-software-patents-debate.html

They have either declined or withdrawn their participation in the last minute. This felt like either cowardly behavior to me or an admission of support for our views.

I do welcome your courage to start this public conversation. However, opening with the debate with a misleading statement – come on!

Sunday, November 14, 2010

Modern solution to crime - punish the victim again!

In our modern society the only solution we have to crime is to punish the victim twice. First, the perpetrator of the crime harms their victim or their property. Then, to add insult to injury, the government takes more of the victim's money out of their taxes, and wastes it on the perpetrator.

Where is the justice in that system? Can anybody explain to me why we all tolerate this?

What is wrong with the following:

- Keep the laws outlining the punishment for each crime, the crime must be punished
- Create another law that says that the perpetrator must return to the victim the financial equivalent of whatever was taken from the victim: that is real justice!
- Ensure that both the punishment and reparation is paid for by the perpetrator.

This would be real justice, would it not be? Also, it will not cost the taxpayer as much, if anything, so the criminal doesn't get to rob us twice.

Now, can anybody tell me why is our justice system so unjust? Why are we being punished twice, as if the governments tells us "don't you dare to be a crime victim - that is the real crime!"

Saturday, October 30, 2010

Liberty vs. Socialism Debate

In the question of Liberty vs. Socialism I choose Liberty! What will you choose? Does Ayn convince you like she convinced me?

This is a debate between me and Emil Ostrovski, a relative from united states, that happened over the following link that I posted on my Facebook account:



Emil is a student studying Philosophy. His political views are, as described on his page: Independent, but I lean left on most issues.

Here is Emil's reply to my initial post:

Emil Ostrovski:

She was a smart lady, but I'm not convinced. She says herself that we are moving in the general direction of socialism as a result of our "altruist morality." What she has to prove, then, is not just that she feels the result of this morality (full collectivism ) will be bad because it compromises liberty, but that an altruist morality in and of itself is bad.
If she only proves the result will be bad, then we can simply dispute whether the result will ever actually be brought about. There is also the question of whether the world she proposes will be any better, even with regard to her fundamental pillar of liberty.

All we have to do is look at America and Europe in the nineteenth century/industrial revolution period to see that laissez-faire capitalism is hardly the champion of individual liberty Rand wants us to believe it is, despite the way she tries to skirt the topic (certainly not all abuses were due to legislation.) A mixed-economy may not be a perfect system, but, as pointed out, it evolved due to the failures of the previous system (laissez-faire). Even a fairly conservative western democracy like America has many socialist elements. Yet, it is important to note, we are very far from full collectivism. What socialist elements do we have? Well, take social security. Why do I have to pay my hard earned dollars to support some old fart who didn't have the sense to plan ahead for his retirement? Well, because under the laissez-faire model, older folk in greater and greater numbers were put in situations where they were starving and homeless and their families who, according to laissez-faire, again, would ideally have taken them in, were not always doing such a good job at that (especially during periods of economic hardship. It is not a coincidence that Social Security legislation sprang up during the Great Depression.)

So the question became, is it necessary, in order to pursue the preservation of human life, to ask our citizens to pay for a program which everyone will be able to make use of, and in the process, make life better for older generations? Yes, it is a sacrifice of liberty in the sense that it is compulsory, but the alternative is sacrificing life itself.

My response to Emil was:

Igor Portugal:

Dear Emil,

I believe that in her numerous works Ayn was proving exactly that "altruist morality" in itself is actually immoral.

I personally can see nothing wrong in giving to others and deriving satisfaction from giving. I've done that plenty of time in my life and will hopefully do more. However, it is way too often demanded from people that they give to others and people's property is taken away from them by force in the name of altruism. That is when altruism itself is bad.

There is no question at all if the world she proposes is better than the alternative simply because it offers personal liberty as the fundamental right. Liberty is better than being enslaved, no matter what the motive is for the enslavement.

Laissez-faire capitalism is the only champion for individual liberty, by its definition. It is the only system derived from liberty – you can't derive any system from any imposition on personal freedom by a government, and call it “liberty”. The definition of personal liberty is that the person is free to do what they want with their life and their property, as long as they don't initiate force on other's or take other's property. The minute you bring a regulation in place, you take the liberty away.

The abuse of liberty can only stem therefore from a government body, based on legislation. Any abuse that comes from a non-government organization or a person is simply braking the law, and should be prosecuted. Do people ever break the law? Of course they do, in every society. Those who break the law should be prosecuted – that is the only proper function of government.

The point is, governments, like all people, will abuse power. Only there is no-one to prosecute them – law enforcement is the function of government.

Neither America nor Europe ever had fully implemented laissez-faire capitalism, it was always mixed system at best. The mixed economy did not grow from laissez-faire capitalism, but from government's and people's desire to control other people. Each new legislation was imposed to remedy badly drafted old legislation. Bad legislation is when one group of people gets unfair economic privileges over another group of people and exercises the unfair right to their benefit and other's detriment. Instead of removing the unfair advantage from the original lot, people prefer to demand an unfair legislation that favors them instead. They always do it in the name of altruism – they find a “poor person” to whom we all have to “give” and guilt-trip everyone into agreeing with yet another enslaving law. This is why altruism is bad.

As for the old folk – they haven't been dying in droves in the economies like Singapore and Hong Kong where there is no social security for them – none whatsoever. However, I have seen old folk struggling very hard in the economies where the governments taxed them up to their ears, promising to look after them in their retirement, and than neglecting to deliver. This is when usually those governments also blame the situation on capitalism - “I didn't mismanage the economy, it failed … hrm... laissez-faire!”

And many periods of economic hardship, as is very well documented, are delivered to us by undue government controls imposed on the economy. The great depression is the greatest example of all – was a direct result of paper money and centralized reserve banking. So is the recent recession, contrary to what governments want us to believe. This kind of economic hardship just doesn't happen if there was no centralized reserve, if money were a gold or a silver standard, and if fractional reserve banking was treated appropriately by the enforcement agencies – as a fraud.

So here is a prime example of what I was describing earlier – government went ahead and created a legislation to favor an elite group of bankers so they “government” could “stimulate” the “growth” in the economy. Than when their experiment failed, they blamed it on the bankers (not the government, of course, they had only … tried to stimulate the economy....mmmm... do good , eh?) Than, instead of removing failed legislation, they go and introduce legislation to “help” those affected by that government failure, the poor unemployed. They take away the money from everyone else, and give it … to the unemployed... wonderful idea – rob everybody to fix your own screwup. The fact that the particular unemployed didn't really exist before that original legislation was introduced... well... everybody conveniently forgotten about that.

In a society where your liberty is respected you can always find something to do. Nobody guarantees full employment, but, if you are struggling, you can always find yourself a piece of land and work it for it to provide you with the basic necessities (metaphorically speaking....)

So, is it ever necessary to rob people and steal their property? Only if you are an evil person who likes power over people and take joy at their suffering.

I am not like that.

Emil responded:

Emil Ostrovski:

Igor, sorry it took so long to get back to you. With school about to start up again (we had a week-long break) I figure I better respond lest I not have another chance! Ha.

“There is no question at all if the world she proposes is better than the alternative simply because it offers personal liberty as the fundamental right. Liberty is better than being enslaved, no matter what the motive is for the enslavement.”

Ah, but organized society is all about curtailing liberty. I think social contract theorists like Locke had it right. We give up certain rights, under the assumption that everyone will give up certain rights, and that the society as a whole will be better off. An example of this would be murder. I do not have the liberty to kill anyone. I give up that liberty, under the assumption that everyone else in my society gives it up as well. Now, it is possible to argue, I think, that a world of complete liberty, aka, anarchy, is the best of all possible worlds, because the good that exists in that world is of the very highest, purest order.

What I mean by this is simple. Let’s imagine an anarchic world in which our friend, Bill lives his life doing everything in his power never to hurt or harm anyone else. There is something incredible in that. Bill is something of a Saint, because he performs good (Or at the very least, refrains from bad) without any guarantee of reciprocation. Without entering into any kind of social contract. He is something of a martyr, a hero. Whereas in the modern day world, with our social contracts, there is very little we find extraordinary in a man who tries not to harm others. In fact, we all think of ourselves, more or less, as such men.

You could argue that the goodness that arises from a system of limitation, curtailment, control, and social contracts is an artificial sort of goodness, and if you wanted, you could apply this to taxes vs giving to charities (taxes are required, thus, you are forced to be good, whereas charity is given freely.) I would be sympathetic to this view. However, when it comes to practicality (yes, a philosophy major is about to get practical), the simple fact is that I would not want to live in an anarchic world, and I would not wish such a world on anyone. Why? Because we know from social psychology that situations greatly influence peoples’ actions.

If there is nothing that compels people to be good, then there will be a lot less good in the world. True, the good in the anarchic world, on average, will be of a purer, more natural sort than in our controlled society. But the anarchic society, on the whole, will be a much uglier place than our controlled society, because the majority of people will not go out of their way to do good, if there exists nothing to compel them to do so. And so, the reality is, unless we want to live in a world where rape, murder, robbery, etc are commonplace, we need, and for this reason have developed, systems which curtail our natural liberty.

We see this in other animals, as well. A wolf pack, for example, has a very specific hierarchy, and by virtue of this hierarchy, a very specific set of rules that all the wolves must follow. To put it bluntly, in order for any animal to live socially, it must give up certain liberties. A wolf pack cannot function, cannot cooperate if each wolf does not know its place. I cannot have a friend, if the friend thinks at any moment I may try and murder him.

So what we really want is a system which curtails our liberty yet allows us to remain as individuals. We are looking for a happy medium between a society of robots and anarchy. To champion individual liberty over the good of the society is to advocate for anarchy. What we should champion instead, is mediation. Individual liberty within certain limits. So yes, Igor, I support your right to free enterprise.

I support your right to have a company, to make your own money on the basis of your hard work, etc etc. AS LONG AS you are not employing your workers in dangerous conditions (see industrial revolution.) As long as you’re paying equal pay for equal work. As long as you’re paying your full time workers enough so that they can actually afford, at the very least, the bare necessities. Etc.

A democratic government, far from being the tentacled monstrosity conservatives like to paint it as, is the only organ that is intended to serve the interests of the entire society. It is not a perfect system, but a government striving for democracy will always serve the interests of society better than a bunch of businessmen who are only interested in profit (again, we saw this with factory owners in the industrial revolution.)

True, America and Europe never had full laissez faire capitalism (though they were certainly far more laissez faire than they/we are now), but that’s because full laissez faire capitalism is as much of an ideal as Marx’s vision of communism.

Here’s what would happen if we had complete laissez faire capitalism. Over time, oligopolies and monopolies would emerge, and the country would be run completely by them. Instead of looking to politicians as the most powerful men in our country, those who can effect change, we would be looking to the businessmen. And unlike politicians, businessmen are not interested in serving their constituents. They are interested in maximizing profit.

Eventually, people would grow discontent and 1) look to government for some kind of intervention 2) look to change the system, aka, revolt (Marx did not come up with communism in a vacuum, it was a response to the abuses that he saw perpetrated on a daily basis in the time of the Industrial Revolution.

The businessmen, in response, or perhaps preemptively, would look to infiltrate the government (or establish a new one themselves) that would allow them to maintain their power.

Regarding old folk. Bringing in new examples does not refute old examples. In an America during the great depression, when unemployment was 20-25% and where there were virtually no safety nets for older folk, YES, older folk were starving. Still, a quick internet search showed that not everyone views the situation of the elderly in those countries in the same way you do. http://www.littlespeck.com/content/people/CTrendsPeople-070304.htm
http://catscarpediem.blogspot.com/2010/02/homeless-in-singapore-real-story.html
http://theonlinecitizen.com/2010/02/homeless-people-are-defective-needs-rehabilitation/
http://www.temasekreview.com/2010/01/31/mcys-increase-in-number-of-homeless-people-in-singapore-not-linked-to-financial-crisis/

You take a look at the elderly in countries like Britain, Sweden, Canada, etc—none of them are struggling the way it seems some of the elderly in Singapore are, doing menial labor into their seventies and possibly beyond.

I can’t comment much on the Great Depression, because I just don’t know enough about economics to discuss it intelligently. I will say, however, that if there’s one thing I’ve learned from a lot of my classes, it’s that no one thinker/writer manages to get the whole truth right. If there are a sizeable chunk of people arguing against you, then the chance is better than not that they have at least a few grains of truth to what they’re saying.

Ultimately, I believe in the search for the happy medium between two extremes. I think that compelling people to be good (to a certain extent) is preferable to allowing them to be bad, and unless you want to advocate for complete anarchy, that’s something you’ll have to swallow. Once you’ve swallowed it, then it makes no sense not to adopt a system which looks out for all the people, the entire demos. In order to look out for the entire demos, regulations are necessary. As James Madison, one of America’s founders, wrote in the Federalist Papers, “If men were angels, no government would be necessary.”

My response to that was:


Igor Portugal:

Dear Emil,

Thank you for the time taken to research and reply - I am enjoying this.

From Wikipedia (yes, I know, not the best source for making assumptions, however a good quick reference point): Anarchy (from Greek: ἀναρχίᾱ anarchíā, "without ruler") may refer to any of the following:

1. "No rulership or enforced authority."
2. "A social state in which there is no governing person or group of people, but each individual has absolute liberty (without the implication of disorder)."
3. "Absence of government; a state of lawlessness due to the absence or inefficiency of the supreme power; political disorder."
4. "Absence or non-recognition of authority and order in any given sphere."
5. "Acting without waiting for instructions or official permission... The root of anarchism is the single impulse to do it yourself: everything else follows from this."

When you are referring to word “anarchy”, which of the above are you referring to? My understanding that the anarchy you are referring to is "Absence of government; a state of lawlessness due to the absence or inefficiency of the supreme power; political disorder."

I don't advocate lawlessness – I absolutely advocate law and obedience to the law. In my view, however, the authority's powers should be limited to enforcing property rights and stopping violence and aggression. That, in my books, is NOT the “anarchy” you are painting.

You say that the organized society is all about curtailing liberty. That is a misconception that has absolutely no foundation, and quite the opposite is true. An organized society functions perfectly well without curtailing people's liberty - provided that you don't consider violence against another person or another person's property as liberty.

All your examples of why liberties should be given up are based on examples of violence. What you are advocating for is that society is based on the premise that violence is a liberty. The society you are advocating for is therefore based on violence! That is worse than the “evil of anarchy” that you are painting and are scared of – it is institutionalized, legalized violence, lawlessness and theft. I don't want to live in such a society – been there (USSR), done that, got the t-short, had enough!

Unleashing evil on the world in order to force people to “be good” is an oxymoron and doesn't achieve any good at all. If you fall for that kind of line, you are naïve and opening yourself up for being taken advantage of by people, wanting to control you and use you for their own purposes, in their own interests and potentially against your interests.

What is good for one person is often evil for another, so for the society as a whole “being good” should not be the rule, as it is an impossible goal to achieve. One must find good in themselves for the benefit of themselves and their loved ones and practice it for the benefit of themselves and their loved ones. That is the only kind of good I recognize.

However, when someone wants to harm me in the name of “good” for somebody else I must question their intentions, and if indeed that “good” is any good at all, or is it a wolf in sheep's clothing – and when you dig deeper it almost always is!

When you compare humans to other animals you fail to recognize the basic difference between humans and other animals. We, humans, have the capability of turning the produce of this earth into more useful goods for ourselves. We apply our labour in order to sustain and improve our lives. We can survive, adopt, and provide for ourselves. We are not parasites living of whatever has been fed to us by nature ready to eat. We will not die if we are not spoon fed. A human is perfectly capable of producing enough goods to sustain their life. What we have recognized however, long time ago, is that if we specialize, we can produce a lot more and infinitely improve our quality of life and increase our power. When you specialize you are dependent on other people producing things that you need and want. That is why we need to live socially. However, all those relationships are perfectly well guided by entering into voluntary contracts between people to trade their labour.

When I look at the pack of wolves I see a pack of parasites – roaming the world, murdering and eating their prey; dying, when there is nobody else to murder and eat. This is the society you are advocating for – a society of parasites who don't want to produce and prey (slaves) who are forced to produce. That society is unsustainable, because eventually the prey realize that it is better to be a parasite and stop producing.

I will refuse to produce for the benefit of parasites. I refuse to have a company where I have to provide employment for parasites – I would rather go on strike and do nothing at all. Thankfully, I live in reasonably free society, so I don't have to.

I will only have a company which employs free people, who agreed, in contract, uncompelled, based on free choice, to trade their labour for the company's money. It is up to them to decide if the money is enough – not me, or some third party who has no business sticking their nose into our relationship. It is up to them to decide and participate in ensuring the environment is safe.

I want to work with free, responsible people – I don't want to have slaves or be enslaved by others.

The industrial revolution began as a good thing, and produced lots of advantages for our lifestyle. However, it is the legislation, that given some industrial tycoons unlimited powers and brought enslavement to workers, that is at fault in the examples that you are providing. Don't confuse government sponsored slavery with the free market! Capitalists who seek government protection of their monopoly are taking away the liberty of the workers – that is not the world I am advocating for at all, so please don't confuse liberty and slavery.

Yes, it is true, that some times throughout the history America and Europe had more laissez faire than other times. It is also true, that the economic and lifestyle improvements we enjoy now, came from those laissez faire times. So we need more laissez faire not less.

Governments always blame laissez faire for each of their monumental failures to govern. Those failures and blame is good for the government as it gives them the ability to strengthen their power even further as people fall for that blame game.

The fact that oligopolies and monopolies emerge in a laissez faire society is a fallacy that has no single example in history of man kind. In fact the opposite is true – all oligopolies and monopolies that ever existed were created by government sanction or legislation. Of course when the government enslaves people like that at a barrel of a gun, otherwise known as legislation, the only way for people to respond is rebellion and revolt. This is exactly what happens to create the environment you and Marx describe as leading to revolution.

The problem is that every time people revolt, their leaders, now in power, undertake identical abuses against which they revolted in the first place – often even worst abuses.

Ditto – your old folk examples. The great depression which was caused by government regulation of the blood of free society – money – is the great example that proves my points above. Guess what happens when people like me get enslaved and stop working – there is no production, food and people are dying, and the weakest, the elderly get hurt first. That is the exact scenario of a world you are advocating – a world where the liberties are given up in the name of “good”.

And if you look at the examples of stories that you've provided around Singapore, they all claim that increase in homelessness “not linked to financial crisis”??? A thinking man has to wonder.

How many homeless people has America produced out of the financial crisis? How many homeless people who struggles in Europe that were created by the crisis?

That is another example of government regulating money supply, hurting people – exactly what economists like Hayek and Mises predicted. And what is the result? The usual – the governments blame laissez faire.

How do they get away with it? Simple: most people don't understand and don't want to understand economics. Laissez faire is counter intuitive – to understand that laissez faire and liberty is the best option for people you need to understand economics.

So, your statement “I just don’t know enough about economics” is representative of what is going on in the world. You are building a whole opinion and philosophical framework about how the economics of the world should work without the understanding of economics!

There are no “two extremes” here. There is liberty, and than there are evil people that want to take it away from us by manipulating us into believing how bad the world is, by creating devils that don't exist. If you understand economics, you understand that there is nothing to fear in laissez faire economy.

And when you understand that there is nothing to fear, you will see that liberty is the happiest medium!

1 Nov. 2010

There was a response from Emil. Unfortunately it is too long for the comments below, so here it is:


Emil Ostrovski:

“Thank you for the time taken to research and reply - I am enjoying this.”

Likewise, thanks to you, Igor, for having this dialogue with me, and thanks to all readers and commenters. Bob and Another day in Paradise, I apologize for not being able to address you specifically, but this response will be lengthy as it is.

Before I begin, I’d like to point out something I should’ve pointed out a while ago. This really is not a debate of socialism vs liberty. This is more of a debate between laissez-faire and any kind of regulation. The way Rand has framed it is misleading, purposefully incendiary, and part of a long tradition of conservatives calling everything they disagree “Socialism.” Socialism, I will remind you (according to dictionary.com) is “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.”

Nothing I’ve said here, and nothing Rand’s interviewer said, is advocating for the adopting of a socialist system.

Regarding anarchy. I suppose I should have been clearer. What I meant was closest to "A social state in which there is no governing person or group of people, but each individual has absolute liberty (without the implication of disorder),” except without that last bit in the quotes. Anarchists feel there will not be disorder, because social relations/relations of reciprocity will develop naturally, in an un-coerced manner, within an ungoverned state.
The example I was making, for the purpose of our argument, was a sort of “absolute anarchy,” in which there are no reciprocal relations (this is an ideal state, and obviously impossible to actually achieve. It was meant to be taken primarily in an illustrative sense.)

“I don't advocate lawlessness – I absolutely advocate law and obedience to the law. In my view, however, the authority's powers should be limited to enforcing property rights and stopping violence and aggression. That, in my books, is NOT the “anarchy” you are painting.”
So then, you are not making liberty foundation at all. Rather, you are advocating constraining liberty via law, for the purpose of something more foundational than liberty (which is basically what I said myself.)

Now, I already know you will protest this characterization, because you go on to protest that liberty is only ever a good thing, and express indignation at my calling the ability to do violence a liberty. So before we can progress, we must tackle that roadblock.
We’re going to tackle it in the Socratic tradition. By asking questions.

What is liberty?

My answer is that liberty is the ability to act and think of one’s own accord.

For me, having liberty is having freedom (to act, think), and freedom from constraints (on acting, thinking.) To be free, autonomous, have free will. This conception of liberty is not by any means new, and is largely agreed upon.

Dictionary.com includes a number of definitions for liberty, including “freedom from control, interference, obligation, restriction, hampering conditions, etc.; power or right of doing, thinking, speaking, etc., according to choice.” NOTE, nowhere does it talk about reciprocity.

Now, you seem to define liberty as such: The ability to live, own property, and act and think of one’s own accord, *as long as one does not infringe upon someone else’s life, property, or ability to act and think of their own accord.*

The highlighted part is a qualification. The part you are qualifying is “The ability to act and think of one’s own accord,” and you are qualifying it in such a way so that it constitutes a reciprocal relationship.
Now, it’s worth it here to take the time to state, explicitly, that the difference between us, so far, is that I argue for qualifying liberty (freedom of action, thought) through law, whereas you enclose within the definition of liberty itself, something that qualifies it.

================================================
Before we go on, here’s something for you to consider. This is mostly an aside, and not 100% necessary to my actual argument. What would you call “the ability to act and think of one’s own accord?” What word would you use to describe this? Freedom? Autonomy? Whatever word you would use, that is the word that is more foundational than your version of liberty, because whatever word it is, you have to make it reciprocal in order to get your version of liberty. In other words, what you’re calling Freedom, or autonomy, or (insert word here) I’m calling liberty. This is a debate of semantics.
================================================

The next question then, is, WHY are we both qualifying liberty (you are doing it internally within its definition, I am doing it externally via law)?

The answer that I actually should’ve given you before, but didn’t, and the answer that I think you’ll agree with, is that a world that does not qualify liberty (either internally or externally) is an immoral world. THAT is the real reason why we don’t want to live in such a world.

The next question is, why is such a world immoral?

We can answer this by restating what we’ve established already: “This world is immoral, because liberty is not made reciprocal.”

But WHY must liberty be reciprocal, in a moral world?

Because we believe all humans have an equal right to life, liberty, and property.

Why do all human beings have an equal right to life, liberty, and property?

Because human beings are all rational, intelligent beings, who have autonomy/free will, and in making the conscious decision to accept/respect the autonomy of other rational intelligent beings, we are doing what no other animals can, and thus affirming our humanity. To be moral, then, is to be human. To be immoral, to act in an animalistic fashion, is to act, as you say, like a “parasite.”

Now the question is, how do we ensure that every member of the society’s rights life, liberty, and property are equally protected? (note, when I say everyone has an equal right to property, I’m NOT saying everyone should own everything/advocating for communism/socialism.)

Well, we do this through our social contracts and our laws.

Up to this point, we should largely be in agreement. As I said before, the main point of disagreement seems to me to have been on the level of semantics.

So the point at which we diverge is the next question, which is, “What constitutes a violation on someone’s equal right to life, equal right to liberty, and/or equal right to property?”

I believe that having a system where the quality of healthcare available to its citizens varies according to how much a given citizen makes, is a violation of an equal right to life. Such a system seems, rather, to give those who are more financially endowed a higher right to life than those less financially endowed.

I believe that having a system in which the employer is not required to provide (reasonably) safe working conditions does not make due on the promise of an equal respect for life. If the owners in some of these industrial age factories had to spend one day a week working in their own factories, I bet you all my money that safety conditions would have been on a much higher level.

Your claim that the abuses of the industrialists all stemmed from government regulation is off-base to say the least. There was no legislation that said, “It is okay for an employer to put the worker in needlessly dangerous conditions if the worker is desperate enough to agree to it.” Rather, the problem was that there wasn’t enough legislation to protect the worker. There was no regulation that said, “It is okay to pay women half of what you pay men.” Rather, the problem was, there was no regulation that said, “Equal pay for equal work.”

I believe that having a system in which a company saves money by polluting indiscriminately violates the equal rights to liberty, life, and property of the people living in the affected region. The company GE, General Electronics, over the years dumped tons and tons of chemicals into our local Hudson River, with little regard to the consequences, and even after it was discovered that the chemicals they were dumping were a “probable cause of cancer,” they didn’t stop until the government made them.

“For 30 years, General Electric dumped PCBs into New York's Hudson River from two plants that made electrical capacitors. In 1976, when PCBs were found to be a probable cause of cancer, GE didn't stop the dumping - until ordered to do so by the federal government in 1977.” http://www.sierraclub.org/planet/200103/hudson.asp

I believe that there needs to be a federal public education system, and that this system should strive to provide all students throughout the country with an equal level/quality of education (the higher the quality, the better, of course.) Because to have poor schools in poor regions and rich schools in rich regions, is not to give all students the same opportunities to succeed, but rather to privilege students on the basis of their economic situation. And at the point at which you give some students opportunities while denying other students those same opportunities, simply on the basis of how much their parents make, you are not treating them equally.

I can go on, of course.

Regarding the Great Depression. I have a friend who is a senior economics major, vice president of some economics/business club, applying to Grad School to study economics and/or political economy. I asked him what caused the Great Depression. He told me

1. The contraction of the money supply by the Fed
2. The failure of the banks, which came about as a result of people withdrawing their money when the stock market crashed and the fed’s contraction of the money supply.

So, fair enough. But nowhere did I say that the Federal Government should have the power to play with the money supply. All I said is that it must enact regulations that allow for the equal right to life, liberty, and property. So you have a point. It's just not one that I intended to contest.

Unfortunately, then you go and say this. “Guess what happens when people like me get enslaved and stop working – there is no production, food and people are dying, and the weakest, the elderly get hurt first.”

This is just kind of silly, Igor. People didn’t stop working in some great act of rebellion against their enslavement via government regulation. People stopped working, because there weren’t enough jobs. And at the time, the country was completely unprepared to deal with the social ramifications of an economic failure of such a magnitude, and did not have the safety nets in place to prevent widespread suffering.

I’d recommend you read the novel, The Grapes of Wrath, by John Steinbeck. It’s perhaps my favorite novel, and it deals with an average family from Oklahoma and how they navigate the Depression. It is NOT a partisan novel. It merely gives you an idea of what was going on.

All this said, I also asked my economics major friend the following.

Me: What do economists attribute the rise/existence of oligopolies to in our modern day, mixed economy?

Him: Natural competitiveness. Oligopolies arise out of collusion. It’s easier to make a buck with a few companies all fixing prices together.

Me: And why wouldn’t this happen in a hypothetical, modern day laissez faire economy?
Him: It would.

Regarding Singapore.

First you say there is no homelessness problem in Singapore.

When I show you there is, you change your tune a bit, and say, well, the homelessness is not linked to the financial crisis. I just want to clarify that this is a point you’re ceding me.

Now, my response is, well, from what I understand, Singapore, broadly speaking, has been relatively unaffected by the financial crisis. So, if Singapore as a country was largely unaffected, why would we expect their homelessness rates to be affected? In the event that Singapore suffers a major economic meltdown, you can bet homelessness rates will be affected.

“So, your statement “I just don’t know enough about economics” is representative of what is going on in the world. You are building a whole opinion and philosophical framework about how the economics of the world should work without the understanding of economics!”

I am building a philosophical framework on how to have a moral society, and applying that to the economic field (among others), yes.

I’m not saying that the economy should be controlled by the state. All I’m saying is essentially what you’re saying, that the equal rights to life, liberty, and property must be respected. The difference is, you’re making all regulation out to be evil, which is simply not the case. It’s a vast oversimplification and highly misleading.



And here is my response:


Igor Portugal:

Dear Emil,

This last reply of yours is excellent and your discussion on definition of liberty is a masterpiece, I must admit I really enjoyed your philosophical argument about liberty. Unfortunately your conclusions from that argument are not so logical and the facts you present later are incorrect. Let me explain.

Before I do, I will attempt to reply to your philosophical discussion on definition of Liberty (naturally, I disagree with your logic. However, unlike you, I haven't studied philosophy, so you are actually giving my brain a workout – I love that, thank you!)

Your logic somehow goes against some of the greatest thinkers in history on what Liberty is. According to John Stuart Mill, on Liberty:

“The only freedom which deserves the name, is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”

Perhaps he got it wrong?

Another great thinker, Frédéric Bastiat talks about Liberty:

"In short, is not liberty the freedom of every person to make full use of his faculties, so long as he does not harm other persons while doing so?"

Perhaps he got it wrong too?

So, excuse my inexperience, but others before me had fallen into the same trap.

A definition is a kind of a limiting thing. When you define something, you are qualifying what it is, and what it isn't. If you have to go on qualifying it externally, the definition is incomplete. If you need a process to keep adjusting your definition – you haven't defined anything at all!

If your definition of liberty requires a government to continue passing laws to qualify what it is, then it is not a definition. I fully agree with your assessment of the morality of the world that you are advocating to build, based on your definition of liberty – it is immoral. As I previously argued, it is also violent.

I will stand by my definition of liberty, for the purposes of this debate, unless you can come up with a complete one, that does not require further qualification - a definition upon which we both can agree. At the end of the day, you replied to my statement that uses the term “Liberty” - so you must abide by my definition of the word for the purposes of the debate, unless you can show that there is a universal definition accepted by everyone.

You agreed with me that I don't advocate for anarchy. Great, lets leave it at that.

It is funny, however, you should try to distance this debate away from socialism, “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.”. There is a certain stigma about it in the world, as the history unequivocally has proven to us that economically socialism doesn't work – it brings about poverty. Politically, it brings oppression.

One must replace “community as a whole” in the above definition with “government” - I hope you agree with me on this minor alteration of your definition as being synonymous. So if you argue for “ vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in government” than you are arguing for socialism (that is what you seem to say)

When you are talking about purely philosophical matters, I grant it to you, I can't relate what you are talking about to socialism. However, every single argument and example you bring on practical implementation of your philosophy absolutely falls under the definition of socialism you yourself adopted.

Also, without much explanation or philosophical foundation you suddenly work a notion of “equal rights” into this debate. The “rights” you are talking about are usually a “right” for one and a “wrong” for another. Do I need to go into the history books and find you the count of how many buckets of blood was spilled in the name of “equal rights”? Nobody has a right to help themselves to my property or my liberty or my life. I don't recognize that right.
“Equal rights” are the primary motto of socialists.

An “equal right” to healthcare means government equally dishing out healthcare, means “ vesting of the ownership and control of the means of production and distribution “ of healthcare in government – that is socialism according to your definition, as advocated by you.

A system whereby government bureaucrat decides what is safe and what isn't safe in a workplace is, again, vesting control of production in government – falls perfectly under your own definition of socialism.

You advocate for a federal public education system, thus “vesting of the ownership and control of the means of production and distribution “ of education in government... no matter how sound your argument and logic is, you are still advocating for socialism.

So this is absolutely a debate of Socialism vs. Liberty, and you are advocating for Socialism time and time again.

The proof for my claim that abuses by the industrialists stemmed from government regulation can be found in history. The nature of what the conditions of workers during industrial revolution were was studied and described by Ludwig von Mises in his book “Human Action: The Scholar's Edition” (excerpt can be found here: http://mises.org/daily/4604)

Of course nobody explicitly passed a legislation to put workers in “needlessly dangerous conditions” - just like people didn't explicitly call for murder while advocating for “equal rights”.

It is the legislation that granted to privileged few a monopoly over production, that has led to scarcity of work, was fully responsible in the creation of the conditions of abuse.
Is a company by polluting indiscriminately violates the property of the people living in the affected region? Sue the bastards! Get them to repair the damage to the property! Why can't you sue? Because the government legislated against that! In New Zealand, for example, we have legislation on ACC – a universal government “insurance” - that stops people from suing any business for accidents happening from neglect to provide safe environment. In other terms, the government protecting industrial negligence. Under that pretense they also given themselves the right to regulate and police workplace safety. So when they fail to police good workplace safety practices, the impacted worker has no right to ask “the industrialist” to repair the damage. All done in the name of “equal rights” and “protection for workers” - now, how is that logical?
In the US it was the so called “public nuisance laws” that were used to stop people from suing industrialists. Why? Because government wanted industry to develop, to increase GDP, so they “induced” the development of industry by stopping people from defending their liberties.

“For 30 years, General Electric dumped PCBs into New York's Hudson River from...” - ditto – how many years did General Electric and its businesses enjoy government protection, laws that given it monopoly rights?
Here is at least one example where government is trying to undo its own doing – a patent GE had on making lightbulbs apparently makes them a monopoly... dohhhh:
http://www.time.com/time/magazine/article/0,9171,718128,00.html


When PCBs were found to be a probable cause of cancer, why could the people affected not seek compensation for their health? Or could they? If it was in New Zealand they wouldn't be able to – based on that ACC legislation.

Fact is that governments around the globe control the money supply. Fact that it affects business, often destroys it, thus affecting jobs everywhere! I am glad you are not advocating for that to continue. I hope you can also see how governments created banking oligarchies (or the oligarchies bought governments?) - well, whichever point of view you take, the banking oligarchies enjoy government protection of their monopoly position. Ditto – problems with jobs and plunging some people into poverty.

You say “People didn’t stop working in some great act of rebellion against their enslavement via government regulation.” - metaphorically speaking, they did in Ayn Rand's Atlas Shrugged – a great novel, I would recommend anyone to read it who hasn't.

In reality – of course they do! Don't be silly – if my business gets regulated out of existence, I will not carry on risking everything I have for the greater moral good. I'll shut it down and either go work for someone else, government if I have to, or perhaps collect social security benefit. The only reason I'll need the benefit is because government regulated the business out of existence in the first place.

“People stopped working, because there weren’t enough jobs” - not enough jobs? what an absurd concept! Why is there not enough jobs? There is always plenty to do! Who do you think is creating jobs? We are! By us, I don't mean me, I mean all of us, people. The only reason there isn't enough jobs is because government regulated jobs out of existence.

There is very good scientific proof offered by many modern economists that existence of monopolies and oligopolies is impossible in laissez faire economy. Here is one:
“One of the worst fallacies in the field of economics—propagated by Karl Marx and accepted by almost everyone today, including many businessmen—is that the development of monopolies is an inescapable and intrinsic result of the operation of a free, unregulated economy. In fact, the exact opposite is true. It is a free market that makes monopolies impossible.”
Read more here:
http://www.nathanielbranden.com/catalog/articles_essays/question_of_monopolies.html


So, I am afraid, IMHO, in this particular matter your student friend doesn't really know what he is talking about.

Don't get me wrong – businessmen are often as much to blame for influencing protectionist legislation to grant them monopolies. That is done to shut down competition – and because of the natural competitiveness. But it is only possible because the rest of the public advocates for government controlled economy. It is impossible in laissez faire environment.

I never said anything about homelessness in Singapore. We were talking about the old folk, and I simply pointed out a surface theme of the articles that you provided, without doing much further research. So your last comment is not very relevant to the discussion – perhaps neither is my earlier statement.

I am advocating, and agreeing with you that rights to life, liberty, and property must be respected – and protected by government!

I just don't like the word “equal”. That word is loaded and it justifies all sorts of nasty behavior. By perceived inequality bloodshed and oppression are justified.

To me “equal rights”=“ultimate evil”.

“The difference is, you’re making all regulation out to be evil” - no, I don't. Only the regulation that takes life, liberty or property away from people who did not violate other person's life, liberty or property. All other regulation is good.

“I’m not saying that the economy should be controlled by the state.”

Alleluia! We finally agree – our Facebook dream come true!


If there is a reply, I will publish it.

To the reader, whoever you are, if you are reading this, feel free to join the debate by posting a comment below.

Saturday, October 23, 2010

Like lambs to slaughter - climate change supporters are feeding us to the forces of nature

Climate is changing, it has always changed and it always will. Thanks to advances in technology people can now deal better with natural disasters. According to Dr. Keith Lockitch, disasters like hurricane Katrina are taking less lives than similar disasters used to.

However we are now facing a real threat. The environmentalists, in the name of man made climate change, are advocating the world to arrest the development of technological advancements that help us survive. They want us, under the banner that the climate change is perhaps man made, to completely disarm ourselves against nature. They want people to slow down industrial advances, stop producing and go back to the time when natural disasters have taken thousands of lives. They are taking us like lambs to the slaughter....

Dr. Keith Lockitch provides a valuable insite into the climate Policy in a Free Society

Thursday, October 21, 2010

Global Financial Crisis - who is the guilty party?

Every failure gives us a golden opportunity to learn what went wrong and improve our systems.

Global Financial Crisis was a failure of the financial system on a global scale. Unfortunately while we all suffered from the crisis, our leaders are depriving us of the golden opportunity that the crisis has presented to us in return for our suffering. So they are robing us twice.

Why?

Because they are the guilty party.

Here is some analysis to support that view:

From The Wall Street Journal:

How Government Created the Financial Crisis

The classic explanation of financial crises is that they are caused by excesses — frequently monetary excesses — which lead to a boom and an inevitable bust. This crisis was no different: A housing boom followed by a bust led to defaults, the implosion of mortgages and mortgage-related securities at financial institutions, and resulting financial turmoil.

…Other government actions were at play: The government-sponsored enterprises Fannie Mae and Freddie Mac were encouraged to expand and buy mortgage-backed securities, including those formed with the risky subprime mortgages.

Government action also helped prolong the crisis. Consider that the financial crisis became acute on Aug. 9 and 10, 2007, when money-market interest rates rose dramatically. Interest rate spreads, such as the difference between three-month and overnight interbank loans, jumped to unprecedented levels.


Yes, it is the mismanagement of the financial system by central banks, not the free market that brought about the failure. It is government's responsibility.

The Global Financial Crisis events were unfolding exactly like events from Ayn Rand's book Atlas Shrugged.

This is why the book is becoming more popular:

Ayn Rand and the Financial Crisis:

In this time of financial crisis and the Democrats' irrational response to it, Americans are showing a growing interest in Objectivism, the philosophy of Ayn Rand. Increasing sales of her masterpiece, Atlas Shrugged, have been reported around the United States.


“One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.” —Ayn Rand, 1975

That is exactly what happened to the financial industry.

Are our leaders out to destroy our freedom and enslave us all under the pretense that free market (and therefore personal freedom) has failed? I hope not. I am certainly not the one to believe in conspiracy theories.

On the other hand our leaders have done this once in the 1917 Russia...are we witnessing an attempt to repeat this history? I sincerely hope not.

However, in order for that history not to be repeated itself, there need to be more voices in defense of personal freedom. This is why I started this blog. I love freedom. Freedom has my voice.

It is about time our leaders acknowledged the failure and shared the benefits of that golden opportunity with all of us.

Thank you for reading. I hope you find the links posted here useful. Feel free to comment and follow my blog.

Tuesday, October 19, 2010

The Public Software Patents Debate

Here is the video of the public software patents debate, organized by the IEEE, held in the University of Auckland on the 15th October 2010 :

Part 1, Peter Harrison, case against software patents:



Part 2, Mitchell Cooper, case for software patents:



Part 3, Igor Portugal, case against software patents:



Part 4, Brett Roberts, case for software patents:




Part 5, Peter Harrison, case against software patents:



Part 6, Ben Milsom, case for software patents:



Part 7, Mitchell Cooper, case for software patents:





Part 8, Igor Portugal, case against software patents: