Category: Economic Freedom

FITW_World_Map_nolabels_GF2016_FINAL_940pxA new report shows that global indicators of economic and political freedom declined overall in 2015, with the most serious setbacks in the area of freedom of speech and rule of law. Freedom House, an “independent watchdog organization dedicated to the expansion of freedom and democracy around the world,” released its Freedom in the World 2016 Report which included some disturbing statistics and worldwide trends, particulary as it concerns the progress made by women in some regions.

The beginning of the report summarizes the situation:

The world was battered in 2015 by overlapping crises that fueled xenophobic sentiment in democratic countries, undermined the economies of states dependent on the sale of natural resources, and led authoritarian regimes to crack down harder on dissent. These unsettling developments contributed to the 10th consecutive year of decline in global freedom. [emphasis added]

Key findings from the report: (more…)

We welcome guest writer Stephen Schmalhofer to the PowerBlog with this review of Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies by Charles Koch (Crown Business, 2015). Schmalhofer writes from New York City, where he works in technology and venture capital. He is a graduate of Yale University.

Charles Koch’s Metaphysics of Business

By Stephen Schmalhofer

Adam Smith, that venerable a supporter of free enterprise, held businessmen in low regard, alleging that their every meeting “ends in a conspiracy against the public, or in some contrivance to raise prices.” While deference is due to the Scottish master’s lasting insights into the sources of the values of men in The Theory of Moral Sentiments and their success in The Wealth of Nations, I observe that many executives tout their “core values” but not all of these companies are successful. Businessman and philanthropist Charles Koch is successful by any financial measure and his unique approach to the creation of value and values at Koch Industries in Wichita, Kansas, where he is chief executive officer, positions him against Smith’s caricature of scheming backroom businessmen.

Charles Koch

Charles Koch

Since 1967, Koch has overseen operations at Koch Industries where he developed and implemented “Market-Based Management.” Following a large acquisition by Koch Industries in 2004, he urgently systematized the method and continues to share it with the fervor of an evangelist. Koch’s first book on the method was grandiosely titled The Science of Success: How Market Based Management Built the World’s Largest Private Company but in 2015 he re-entered the marketplace of ideas with a more accessible version — Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies.

Removing the pretense of science from the title better reflects the method’s foundation in the ideas of spontaneous order and the price system articulated by Austrian economist F.A. Hayek rather than in the pseudo-scientific central planning opposed by the Nobel laureate. Koch Industries’ business model is based on acquiring complementary companies that either enhance, or can be improved by, the performance of existing Koch business units. Koch managers seek to integrate these new acquisitions into the company’s operations to realize the expected gains from economies of scale and knowledge sharing. But this integration can blunt the information signals provided by external networks as well as create wasteful internal political battles, especially over budgets and other signs of corporate status unrelated to “good profit.” (more…)

Happy Star Wars day!

The new Star Wars, Episode VII: The Force Awakens, opened across the US and worldwide today, and I can’t tell you anything about how well it’s doing. I’ve been avoiding Googling it because I’m a huge nerd and I don’t want to accidentally uncover any spoilers. (I haven’t seen it yet.) But I do know that the presales were over $100 million. So even if people end up hating it, it’s already done pretty well.

(Not that kind of spoiler.)

Eric Boehm, who is the national regulatory reporter for Watchdog.org and who I had the pleasure to meet at a conference last April, read my post this past Monday on Lando Calrissian as a Star Wars entrepreneur, and asked me to join him for a Star Wars-themed discussion of freedom and virtue for their regular podcast.

The podcast is up today. My interview comes up in the second half, but the whole show is worth your time. You can find it here.

And — okay, okay, I’ll say it — may the force be with you.

Note: Don’t take this guy’s ship. It didn’t work out well for the last guy.

With the newest installment in the Star Wars universe, Star Wars: The Force Awakens, releasing this Friday, I figured we need more Star Wars posts here at the PowerBlog. (Does the Force tend to corrupt?)

Because I’ve completely failed to maintain a cautious optimism and am now totally geeked for the new film, I recently re-watched the original trilogy (not that other one, oh no). Among other insights, I noticed that at least one major character is a small business owner: Lando Calrissian.

Lando explains his business philosophy in the clip from The Empire Strikes Back below … right before he sells out Han and Leia to Darth Vader and Boba Fett.

If you keep watching, you get see what is perhaps the worst first meeting with a girlfriend’s dad ever.

Now, notice: Lando’s gas mining operation on Cloud City has done well because he’s managed to keep the government, the Empire, out of his business as well as stay out of the mining guild. Doing so is “advantageous to everybody.” It attracts a certain clientele that would either be under-served or not served at all by larger businesses under a different regulatory climate.

No doubt, operating under the radar (or tractor beam, as the case may be) also allows Lando to charge lower prices, as he presumably wasn’t paying taxes to the Empire or dues to the mining guild.

However, (more…)

Blog author: jsunde
Thursday, December 10, 2015
By

elvesIn “The Elves and the Shoemaker,” the famous fairy tale by the Brothers Grimm, a cobbler and his wife struggle to survive, barely making enough to eat (never mind investing in the future of their business).

One morning, however, they wake to find that their last scraps of leather have been turned into a remarkable pair of shoes. Not knowing the source of such craftsmanship — and apparently incurious — the cobbler sells them off at a higher price, gaining new capital to grow his business. Each night thereafter, the miracle continues, and the enterprise grows in turn.

Months later, they finally take an interest in the source of such help, staying awake through the night to spot two naked elves, each happily laboring to make more shoes. The wife sews clothes for the elves, who, after finishing their work, express their thanks and graciously depart, never to be seen again.

One can find several morals or lessons in the tale, but Jeffrey Tucker does a marvelous job of highlighting its themes on the meaning of work, the gift of exchange, and the glories of capitalism. (more…)

The recent terrorist attacks in Paris have again brought to the forefront discussions about problems of culture faced by both Europe and the United States. The attacks have complicated western responses to the Syrian refugee crisis, with concerns about the stated intentions of groups like ISIS to smuggle operatives into western nations among the legitimate refugees in order to carry out terror operations. And of course, the questions of the compatibility of Islam with western political and economic values, as well as questions about the will of western nations to defend and uphold those values have returned as well. Acton’s Director of Research Samuel Gregg joined host Al Kresta last Tuesday on Ave Maria Radio’s Kresta in the Afternoon to discuss these important issues; you can listen to the full interview via the audio player below, and be sure to check out Sam’s article “The End of Europe” at Public Discourse.

laughton-465-(1)1Today marks the 152nd anniversary of the Gettsyburg Address, the speech given by Abraham Lincoln after the battle which left 7,000 American soldiers dead and 40,000 wounded.

Given its power and permanence, it may seem strange to memorialize it by pointing to an obscure comedy film from the 1930s. But it’s one that stirs all the right sentiments.

In Ruggles of Red Gap, the great Charles Laughton plays Marmaduke Ruggles, an English manservant who has been gambled away by his master (a duke) to a pair of unsophisticated “self-made” millionaires from America (Egbert and Effie). Ruggles sails to the New World, settles in with his rambunctious new employers, and hilarity ensues. (more…)