The Manhattan Project (1986)

A couple of days ago, I found myself watching The Manhattan Project, a movie that is named after a real life program during World War II. To be honest, the movie is quite slow and revolves around this young physics student who wants to create a nuclear bomb for a national science fair. It is an extraordinary story but one that has been narrated and directed poorly, making it difficult for anybody to sit through the entire movie.

However, what kept me going were conversations in the movie that reminded me of the debates that libertarians have on gun licenses, and their views on liberty and freedom in general. While the movie is said to be inspired by the real life story of a Princeton University student, John Aristotle Phillips, who came to prominence in 1977 as the “A-Bomb Kid” for designing a nuclear weapon in a term paper using publicly available books and articles, it is pretty much relevant even today when nuclear power projects continue to be undertaken under a blanket of tight security.

In particular, the young boy reminded me of Snowden who earned himself the seemingly infamous title of a whistle blower for having exposed some top secret projects of the government that apparently violated the citizen’s right to live a private life. While Snowden might be constantly referred to as a traitor by many, for libertarians and alike, Snowden is no less than a hero who stood up for his right to privacy and freedom. For me, his significant contribution was that he revived the political discourse and debate on liberty and freedom, and the citizen’s right to question the decisions made by the State on behalf of its citizens.

Coming back to the movie, as I had earlier mentioned, certain conversations encouraged me to watch the movie till the end. When the protagonist in the movie, Paul uses “illegal” ways to obtain Plutonium from a medical company to construct an atomic bomb, he is cautioned by someone close who tells him “You try to tough it out with them, they’ll lock you in a room and throw away the room.” After the authorities find out what the Paul has been upto, they declare him a terrorist on all news channels even though it is clear to them that Paul is only a high school student interested in winning an innocent science fair.

Paul then goes into a hiding with his girlfriend Jenny and that’s when they exchange what I feel is the most memorable part of the movie. Jenny who is obviously very scared at the moment tells Paul: “If we get killed we won’t have any future.” Even though Paul might have been as scared, he replies: “Of course we will. You always have a future.”

I think in many ways, Snowden also sacrificed his bright career for a better future of his countrymen and that’s what makes him different from all of us who decide to go with the flow in life. And unlike the boy in the movie, we don’t know if Snowden will have a happy ending or not.

We might be really frustrated with the system around us, unhappy with the taxes we pay and indulge in corruption everyday just because everyone else is apparently more corrupt, but we do little to change things around us. That’s because we are scared of the government. Scared of the very system that was formed in order to protect us and our rights……

I would like to end the post with something that Jenny says to Paul in the movie though I can’t remember the context “Jesus why didn’t they do something. The whole world is collapsing. They just sat around, life as usual, maybe it’ll go away, but it never goes away it only gets worse and nobody thinks about the future. What’s the matter?”

Do watch the movie and let me know what you think. Don’t kill me if you fall asleep in between.

 

 

How it all began…

Image Courtesy: Link

(A small post trying to dig the past to identify the origins of my interest in political economy and my disposition towards libertarian ideas)

Well, I am not really sure how it all started.

During my graduation days, I was supportive of leftist ideas. I thought such ideas provided a safety net for the poor. During my post graduation, I do not remember having thought much about political economy. However, a distinctive libertarian thought I harbored during those days was that the US subprime crisis was a result of easy monetary policy pursued by the Fed post the dot com bust (and hence I laid the blame for the crisis on the Fed which ran opposite to conventional wisdom of putting the blame on ‘greedy’ bankers). Though I harbored this thought, I was unaware this has anything to do with libertarianism –  in fact, I was unaware of what ‘libertarianism’ even means. At the same time, I remember reading Taleb’s Black Swan and Fooled by Randomness. As I think hard, it is in one of these books (I am not sure which one) Taleb said something similar to the vein that capitalism is the best system as it maximizes the probability of benefiting from randomness (given that a necessary condition for capitalism is freedom without which property rights are meaningless, and freedom is what allows one to position oneself for black swan events). Given that I pretty much took whatever Taleb said as gospel, I remember the above as the first instance of consciously making a value judgement in favor of capitalism.

After my post graduation, came work life and pop macroeconomics became the center stage of my interest in economics. It is during this phase that I came across Milton Friedman’s TV series, ‘Free to Choose‘. And this would easily be the moment I can recollect as the beginning of my interest in political economy. Once you hit off with this brilliant TV series, landing on webpages of prominent libertarians like Tom Woods (Milton Friedman was not a libertarian, but we can keep all this semantics for later. Suffice is to know that like libertarians, Milton Friedman was a strong advocate of free markets) was just a matter of time. And once you are on Tom Woods’ webpage, the libertarian world is thrown open to you – Austrian school of economics, Mises Institute, Robert P Murphy, Cafe Hayek, Lew Rockwell and the likes. My Google Reader (previously, now its Feedly) has some 15 feeds of prominent websites which debate a lot of economics through the lens of political economy (most of the times, I would be hard presses to go through even 5 percent of the posts, but it feels good just to have feeds from them in the hope that one day I will read everything).

Over the years, I have devoured a lot of libertarian literature through these sources and it has been a fascinating journey. Mises Institute is a great resource for everything libertarian. Tom Woods and Robert P Murphy update their blog almost daily, and Tom was kind enough to even reply to a query I had. Cafe Hayek is absolutely brilliant in demolishing statist ideas. My journey has now led me to political philosophy in trying to understand which is the best social (un)order. Needless to say, there is a mountain to read and think over, and it feels like I have only taken a peep.

I am still scratching my head for more events from the past to trace my ideological dispositions. Maybe thinking hard will help. But its all so foggy…

How to misquote someone

Eugene F. Fama

Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller were awarded the Nobel Prize in Economic Sciences for the year 2013. Fama is well known for developing the Efficient Market Hypothesis (EMH), as per which, markets are efficient in the sense that prices reflect all available information. This obviously has the anti-market group up in arms given the hangover of the recent housing bubble. Questions have been raised on the validity of EMH in the backdrop of bubbles seen in the financial markets.

I will delve on the topic of whether bubbles in the financial market invalidate the EMH in a separate blog post. In the meantime, I came across a post in Krugman’s blog in which he criticizes Fama for expressing confidence in the housing market in late 2007. Below I quote from the post,

And he expresses confidence over housing (rather late in the game, wouldn’t you say?):

(Krugman quotes Fama below from here in continuation of the post)

Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed.

Well, apparently, that is only part of what Fama said. Here is the quote in full from the same source,

Region: Your efficient market hypothesis applies to stocks, of course. Recent events have led to scrutiny of housing markets. Are housing markets efficient? Is there greater potential for irrationality to crop up there, either because housing investors are less sophisticated than stock market investors or because housing markets are less liquid?

Fama: I don’t know. Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed. The bottom line is that real estate is a huge component of wealth and we have no data on it. So the answer to your question is, Who knows? (emphasis mine)

Obviously, the last two lines does not fit with what Krugman is saying in the post, and the same two lines are not part of his post.

Strange coincidence!

India’s tryst with destiny

The first prime minister of independent India made a speech on the eve of Independence which reverberates in our ears even today –

At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance……….We rejoice in that freedom, even though clouds surround us, and many of our people are sorrow-stricken and difficult problems encompass us. But freedom brings responsibilities and burdens and we have to face them in the spirit of a free and disciplined people……We have hard work ahead. There is no resting for any one of us till we redeem our pledge in full, till we make all the people of India what destiny intended them to be…..To the nations and peoples of the world we send greetings and pledge ourselves to cooperate with them in furthering peace, freedom and democracy….

To me, Nehru ji is a symbol of socialism and democracy. He not only laid the foundation for a planned economy but also ensured that the interests of the underprivileged remain protected under several social programs and policies of the government. While Nehru ji’s contributions during his era must have felt God-like, looking back I wonder if our country could have done better, had capitalism been promoted in the early years since Independence.

Gurcharan Das, in his book ‘India Unbound’ talks about the failures of promoting the State as the entrepreneur.  Das talks about how socialist policies like excessive industrial regulation and import restrictions kill competition, impede innovation, and lead to rampant corruption.

Through several anecdotal details, Das puts forth a strong case for capitalism as an economic system as opposed to socialism. One particular area he touches upon is the concept of redistribution of wealth. He talks about how our excessive focus on redistribution of wealth, rather than upliftment of the very poor, has done more damage to our economy than good.

During a lunch outing with Galbraith, a noted Keynesian economist whose principles India had welcomed, Das talks about how Galbraith actually felt that socialism as an economic system was relevant for nations who were much more developed and “affluent” and not for a country like India with a complicated caste system and population problem.

Das goes on to say that his conversation with Galbraith was a turning point in his life, and reinforced his doubts about Nehru’s policies.

In line with Das’ thought process I now wonder:

Had the Birlas and Tatas been promoted since the very beginning, would our industries have grown creating several jobs and employment opportunities?

Had the simple yet realistic Bombay Plan been taken more seriously than PC Mahalonibis’ detailed 2nd five year plan, would we have achieved more in terms of eradication of poverty?

Had major sectors not come under the direct control of our inexperienced bureaucrats, would our country  have probably competed with the rest of the world and produced high quality products?

In Nehru’s own words

“We have hard work ahead. There is no resting for any one of us till we redeem our pledge in full, till we make all the people of India what destiny intended them to be…”

would we have worked harder and fared better?

(Nehru’s image uploaded from motivationindia dot com)

The story of a welfare state….

Source

The welfare state starts with a few people on the wagon of government support. As time passes, more and more people clamor for government support and hop onto the wagon. It ends when the falling number of people pulling the wagon (i.e. people paying taxes) are unable to pull anymore (i.e. taxes are insufficient to meet expenditure).

For evidence, please see the European countries now bust.

Alan Greenspan and the Gold Standard

Alan Greenspan

Alan Greenspan was the longest serving chairman of Federal Reserve, from 1987 to 2006. And when the head of a central bank speaks approvingly of a gold standard, we should listen. Here’s what Alan Greenspan had to say in a January 2011 interview,

We have at this particular stage a fiat money which is essentially money printed by a government and it’s usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity… There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.

I read about the above in a Forbes article here and was surprised to know about Greenspan’s views. The gold standard is so antithetical to the existence of a central bank, that when a central banker says we need a “gold standard or a currency board”, you can’t help but think – is the gold standard really a “barbarous relic?”

A well functioning State should be the benchmark

A video by the International Growth Centre shows that a social programme, if designed and implemented well, has a positive impact on people’s lives. In this case, it changed the lives of school going girls. Watch this fascinating video:

Stories from Cyprus

Frederic Bastiat

Cyprus, the island country, is bankrupt. Here’s a little background to what is happening from a post on mr.conservative,

Nobody ever said socialism was going to be easy. No, wait a minute. Everyone, including our president, promised that it would be easy: just hand your worries and cares over to the government, and we’d get cradle to grave care for generations. While some Americans are still recognizing this for a blatant lie, in Europe they were foolish enough to believe in the socialist promise. Now, it’s all coming back to bite them in the butt.

The most recent problem started when the island of Cyprus went broke. Not the kind of broke that allows a country to struggle on for a while, but one that signals imminent collapse, of the type that happened in Germany before the Nazis came on the scene. Cyprus therefore negotiated a deal with the EU: the Eurozone would give Cyprus a $13 billion bailout, but in return it demanded between 6.75% and 9.9% of all bank deposits in Cyprus.

So, it seems the Cyprus citizens are slowly awakening to the fact that the gifts of the welfare state were not free after all. Which reminds me  of a quote from Frederic Bastiat,

Everyone wants to live at the expense of the State. They forget that the State lives at the expense of everyone.

How true.