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EU

UK: The Potential for Productivity

HSBC has decided to keep its headquarters in London after Brexit. Given HSBC's historical ties to Hong Kong, that is no surprise.

Hong Kong shows that even a tiny island with slightly less government than its surroundings can become an economic powerhouse. Having less government than China turned this island into one of the dominant business, financial, cultural, and trade centers in the world.

Hong Kong's per capita income is around $35k a year. China's is recently UP to a laughable $7k a year.

Hong Kong is full of wealthy and productive entrepreneurs and businesses. The few wealthy in China are largely crony capitalists, skilled primarily at using political connections to get special favors.

HSBC knows this: It won't matter how easy the EU makes internal trade among European countries. It won't matter if the EU develops a single legal code, or a single "simplified" European language. Being absorbed into a single, monolithic, big government, overregulated, cronyist disaster will not help England. Being free to lower regulation, make independent trade agreements, and allow innovation and cultural development will.

China may succeed in reabsorbing Hong Kong, forcing Hong Kong to adopt China's inflationary currency and dumbed down language, in the hope that doing so will bring Hong Kong's skill and wealth into China. But the main advantage that Hong Kong has that China doesn't: less government. If you add Chinese cronyism, state propaganda as "education", and inexplicable central planning (e.g. ghost cities) to Hong Kong, you'll just lower Hong Kong to China's level. Or you might just empty it of talent, as all the productive people leave to seek opportunities where hard work and innovation pay off.

During the last decades, the EU has partially succeeded in doing just that with the UK. It turned one of human history's most vibrant centers of innovation into a backwater of welfare socialism and crony capitalism.

The UK has the incredible opportunity to become Europe's Hong Kong. It must first reject any bad trade deals with the EU. The EU's "free trade" is nonsense. It is, in fact, highly closed trade. It's free trade and movement of labor within Europe, in exchange for massive restrictions on trade and movement of labor from outside of Europe.

The UK should seek trade relationships with productive, capitalist(ish) economies like the U.S., not with Europe's hubs of laziness and socialism. Second, it must reduce its own regulation and taxes. It can become a place that attracts and keeps entrepreneurs and innovative businesses, instead of repelling them as it does now.

If the UK remains courageous, rejects restrictive trade deals with nonproductive countries, refuses to bail out foreign nations, and lowers its own taxes and regulations, it can become to Europe what Hong Kong became to China.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

FTSE 100: The Wrong Measurement

Many economic "experts" are fixating on FTSE 100 as the primary indicator of the UK's economy. When the FTSE 100 is down, they panic. When it rebounds, they rejoice.

The fact is: they are looking in the wrong place. The FTSE 100 measures the hundred wealthiest companies - not the 100 most innovative ones. The new, innovative, largely undiscovered small startups will be the drivers of growth in the UK's new, innovative economy. Those businesses are not part of the FTSE 100; most are not publicly traded at all. They are small startups that will be the next large job creators.

The majority of new jobs in America come from small businesses. The same is true in the UK, and will become increasingly true as the UK's economy moves away from large crony capitalists and towards entrepreneurial startups. New jobs in the UK will come from innovative small businesses, not from businesses that have the ability to get special favors from EU regulators.

Some economists have suggested that the FTSE 250, which looks at the 250 wealthiest companies, is a better measure. It might be, but not by much. The companies that will make the UK's new, independent economy great might show up in the FTSE 10,000 (if it existed). But in reality, most of those companies are not even publicly traded.

Some of the FTSE 100 companies are not even UK companies, and are headquartered elsewhere in Europe. Some of the fluctuations in their stock prices simply reflect the fact that without the UK, the lazier economies in Europe will lose one of their biggest crutches. In other words, if their stock prices fall, that doesn't necessarily show a lack of faith in the UK; they show a lack of faith the socialist economies in the rest of Europe. Investors realize that without the UK shouldering a huge portion of the burden (1/6th of the EU economy), the EU won't last.

A government bailout or similar "stimulus" will certainly help the FTSE 100 companies - at the expense of the innovative entrepreneurs who could actually build the economy. It amounts to replacing EU special privileges for large businesses with UK special privileges for large businesses. It creates unsustainable, bailout-based jobs, instead of meaningful, lasting, productive jobs. That's a lateral move at best.

Instead, the UK should reject crony capitalism, eliminate regulations on small entrepreneurs, and reduce the taxes that stifle innovative small businesses. That means more innovation, better products and services, and more real jobs.

If the UK can disentangle itself from the EU crony capitalism and UK crony capitalism, and move towards a capitalist and innovative economy, it will soon see a massive resurgence in jobs and economic growth. This will be true economic growth, without crony capitalist strings attached.

In Liberty

Arvin Vohra
Vice Chair
Libertarian National Committee

Sell Sovereignty Rights

Imagine if you knew someone with a house made of solid gold. Imagine if he had run out of food, and had no income. Would you buy him food for the next ten years? Or would you suggest he sell a small piece of his house, and pay for his own food?

Right now, many countries are in a similar position. Venezuela and Greece are the most well known, but dozens of other countries are struggling and demanding foreign aid.

But the fact is: they don't need foreign aid. They all have large quantities of the most valuable resource on earth: sovereign territory.

Normally, when you buy land, you don't also buy sovereignty rights. You cannot treat your house like a private country, setting your own laws, regulations, and taxes.

But any country can theoretically sell you those sovereignty rights. Sovereign rights over land have been sold many times in history. Obviously sovereignty rights are much, much more expensive, but that just makes them a great way for desperate countries to quickly raise capital.

Most countries have huge amounts of unused, state-owned land. Selling sovereign rights to that land to private companies would quickly raise billions of dollars in capital. For some countries, the sale of a small piece of sovereign land could eliminate their entire debt.

Other countries might consider selling sovereignty rights to current property owners. Those who already own large amounts of land or developments could also be interested in purchasing sovereignty rights.

Of course, the creation of new, private countries would benefit everyone else. How much would a hundred new Hong Kongs help the global economy? As private nations competed with public nations to offer better services, lower taxes, and lower regulations, it would force all countries to improve.

Citizens would also have more choice. You could choose to live in a private nation in which all drugs and all alcohol were banned. You could live in a nation where everything was legal. Because private countries would be smaller than public ones, you could easily leave or avoid countries whose rules you found objectionable.

Some private countries would look like Hong Kong. Others like Monaco. Others like Silicon Valley. And there would be plenty like nothing we've ever imagined before.

The U.S.government should first stop all foreign aid, and stop any direct or indirect funding of the World Bank or IMF. Then, encourage countries to sell sovereign territory, allowing the creation of many more private nations. Finally, we must politically pressure our own governments to extend preemptive and immediate diplomatic recognition to all new sovereign nations.

The benefits: more money for desperate nations...without IMF strings attached. More choice for citizens who want to move to an innovative, new nation...or a very traditional, conservative new nation. Many different experiments in governance, as we find new and better ways to run countries.

Small, private, entrepreneurial nations will revolutionize and improve governance just as much as small private entrepreneurial companies have repeatedly revolutionized and improved business.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

America-exit

Over 200 years ago, a group of British citizens chose to leave the British empire. They were tired of having to follows laws and regulations set down by people that they didn't vote for. They were tired of having to pay for massive debt. They didn't want anyone to tell them who they could buy from or sell to.

At the time, the choice to leave the British Empire must have seemed risky. It was a far larger and more powerful organization than the current EU. Choosing sovereignty over being part of a massive economic empire must have seemed crazy.

But those Brits who became the founders of the most powerful economy on earth, knew that control over your own destiny matters. They knew that allowing others to make bad policy was a horrible idea, no matter how economically powerful they pretended to be.

A few days ago, we saw that 17 million Britons still have the will to be free and prosperous. And they will have a chance to do so...if they can truly follow the example of the renegades who founded America. If they can prioritize freedom over welfare, innovation over regulation, and self determination over obedience, we'll see a new bastion of economic growth and innovation across the Atlantic.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: The British Pound Will Be Fine

Fear mongers have said that the pound is "taking down the Euro." Nonsense.

Remember group projects in school, in which a few people would work together and everyone would get the same grade? You always wanted as many A students and as few D students as possible in your group.

The EU is like one of those groups. It had two A students: Britain and Germany. It also had 26 D students. Now one of those A students is leaving.

The pound is going down for a simple reason: investors are pulling out of crony capitalist companies whose primary value is special privileges from EU regulators. That lowers demand for those stocks, and thus lowers price.

Those investors have started looking for innovating and productive companies instead. In a few weeks or months they will find those companies. At that point, demand for those new stocks (and their prices) will rise.

But what about the euro? Why did the price of the Euro fall? If the pound falls, if anything, the Euro should go up. After all, the dollar and yen did, as people looked for temporary alternatives to the pound. If people believed in the EU, then nothing much would have changed in the euro.

The euro dropped because people don't want to invest in D student economies. A thousand fools don't make a wise man, and 27 D students don't make an A student. That's why the Euro has been steadily declining for years. Free trade is good; but welfare for lazy countries more than cancels out the gains from free trade.

Maybe Germany can carry the rest of Europe, keep bailing out Greece again, etc. Maybe it can't. Maybe it will also exit, and let the D student countries fend for themselves.

The fall in the pound is just temporary rearrangement. If Britain moves towards capitalism and away from welfare socialism, the demand for the pound will go right back up. But the euro?

It would require a massive movement away from current socialist policies and towards a massively freer market. No one would be happier than I if that happened in Europe. I would love to see modern Greece reach the work ethic and greatness of Ancient Greece; I would love to see a France that followed the effective economic policies of Bastiat. I would love an Italy as innovative, resourceful, and hard working as it was in the early Roman republic.

But I doubt that will happen until the EU finally goes the way of the USSR.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: Good Riddance Goldman Sachs

Goldman Sachs has threatened to leave London after the UK leaves the EU. That's like cancer threatening to leave your body.

Goldman Sachs is the co-creator of the 2008 American recession, and the primary creator of the Wall Street Bailout, in which hundreds of billions of dollars were stolen from producers and given to financial parasites. They then contributed to the Greek financial collapse.

There are some companies that you just don't want around. Halliburton, Monsanto, and Goldman Sachs are at the top of the list. These companies are rich, but their wealth comes from cronyism and corruption, not from the creation of value.

They are the worst of the crony capitalists. They produce nothing of value, but instead manipulate government into making them rich at the expense of hard working producers.

No country needs companies who get rich off of government sanctioned theft instead of productivity. Imagine how much better off America would have been if companies like Goldman Sachs had not turned a minor housing surplus into a massive financial catastrophe.

As Britain transition from a cronyist, EU economy into an innovative, independent one, it will need great innovators and producers. It will not need reckless financial parasites. It will not need the company whose largest financial success in its history was getting bailed out for its staggering incompetence.

The only possible downside of Goldman leaving London: they might bring more of their people to America. While jobs are usually good, it's never great to have parasitic, crony capitalist, corporate welfare queens around. Maybe we can ask Trump to build a wall to keep them out.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: Positive Market Readjustment

In a couple hours, you may see the British pound and stock exchanges massively fall. Here's why that's good:

1. For the last several years, investors have been strategically investing in crony capitalists. They have been investing in whichever companies had most political influence to get special favors from EU regulators.

2. With Britain out of the EU, that no longer makes sense. Special favors from EU regulators don't matter as much now in Britain.

3. Investors' first step is to pull money out of stock in those crony capitalist companies. Those corrupt companies just aren't as valuable any more. When investors leave crony capitalists companies, stock prices will obviously fall, and the demand for the pound sterling will also fall.

4. Their next step is to find innovative, productive companies to invest in. It will take several weeks or months to figure out who those companies are. Few investors have been looking, since it didn't matter. In the EU, innovation doesn't matter as much as political influence. But in Britain, innovation will be king.

5. Once investors figure out which new, innovative companies to invest in, demand for British stock and currency will increase again.

As long as Britain can stay competitive by lowering taxes and regulation, its economy will grow. They've thrown off the yoke of the EU. If they can throw off the yoke of their own socialism, they will succeed.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: Truly Free Labor

Free flow of labor is great - but that's not what the EU provides.

The EU makes it easy to hire workers from within the EU. They make it nearly impossible to hire skilled workers from outside the EU. If you want to hire a skilled engineer from outside the EU...good luck.

In other words: you can hire anyone you like from 28 socialist factories of laziness. But it's much harder to hire anyone from anywhere else.

Dyson, for example, routinely needed to wait four months to hire the engineers it needed. Imagine the struggle of smaller companies!

Britain now has the option to continue that insane policy, if it wants. It can hamstring its own industries by preventing companies from hiring skilled and productive workers from outside the EU.

But it can also turn that policy around without any approval from Brussels.

While the rest of the EU prioritizes refugees, Britain can prioritize engineers. While the rest of the EU makes it easier for people to not work, Britain can make it easier to be productive. Britain can invite the best and brightest from the other 160+ countries. They can help grow industries and create more jobs for Britons.

Britain has its own socialist welfare and statist policies to fight. But if it can overcome them, it can become the center of growth and innovation in Europe.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee

Free Trade

Free trade with a bunch of obligations and restrictions attached to it isn't free trade. It's trade with a bunch of obligations and restrictions.

Free trade simply means eliminating tariffs, trade quotas, and the like. A country can simply eliminate its own tariffs, and that presents a major step forward. That country can enjoy cheaper access to the tools of production, and thus become more productive.

As a simple example, Brazil and Argentina could eliminate their self destructive taxes on computers, and immediately allow their productivity to increase as more people have access to modern computers.

If you encourage other countries to also eliminate their tariffs, that helps free trade even more. But beware! Once you get into negotiations, you often end up adding a bunch of government wastefulness and burdensome obligations. Big corporations and big unions will demand special favors in exchange for supporting lower tariffs. Usually, those special favors end up costing almost exactly as much as the savings from lower tariffs. As an example, look at TPP.

The EU isn't free trade. With the EU, access to lower tariffs comes with major obligations and restrictions. There are the direct costs of the EU fees. There are the nearly guaranteed costs of bailouts (given that at least some of Europe's socialist economies are collapsing.) There are the welfare costs of having to support basically anyone who comes to your country.

There are the lost free trade opportunities with other countries. As part of the EU, Britain could not set up free trade agreements with other countries (e.g. the US). Free trade agreements had to be with the entire EU, or with no one at all.

Any divorce can be a little messy at first. But if you were married to 27 deadbeats, who felt that they had the right to barely work, retire at 40, and spend all of your money on their laziness...dropping that dead weight would help you out. And even if one of those 27 deadbeats (Germany) actually worked, you could still divorce the group and start a new relationship with any one of them individually.

Even better: you can now set up new relationships. You've learned not to share a bank account with people who lie about their finances and debts (Greece). You've seen that other people can get the same benefits without the burdens (Switzerland). You realized that the most successful people (U.S., China, Japan) weren't a part of your 28 person expensive marriage.

Britain is now free to pursue better opportunities. It no longer has the massive obligations of carrying around EU socialist deadbeats.

It may still fail. After all, Britain has its own wasteful welfare socialism to eliminate. But it will now succeed based on whether it embraces free market capitalism or welfare socialism, not based on whether other nations embrace free market capitalism or welfare socialism.

In Liberty,
Arvin Vohra
Vice Chair
Libertarian National Committee

Brexit: Breaking up the Cartel

Monopolies are bad for consumers, because they increase price, decrease quality, and reduce choice. Cartels do the same. When a group of businesses work together to reduce consumer choice, it hurts consumers by lowering quality, raising price, and restricting choice.

That's equally true for countries. A large number of small countries, all competing with each other, is great for individuals. Individuals (and businesses) can choose where to go, based on the regulation, taxes, etc. of the country.

The EU is functioning as a cartel. High, uniform regulations and massive fees apply to everyone in the EU. And businesses and entrepreneurs cannot simply go to a neighboring competing country, because that country has the same restrictions.

Brexit is the first step to breaking that cartel, and eventually creating more choice. As the EU breaks apart, countries will engage in regulatory competition. That means that they will compete to have better, more attractive laws to attract the most productive people.

A single European cartel is good for large, politically powerful businesses that seek to politically and unfairly control the marketplace. It is good for politically powerful unions, who increase costs and hamper productivity. But is is bad for everyone else. The rest of us benefit from regulatory competition.

When countries compete for productive citizens, all productive citizens win. It gives us better options and more choices.

Imagine if governments had to compete for productive citizens by lowering taxes and reducing regulations on entrepreneurs. There would be more jobs and a better quality of life. Brexit is the first step in that process. I encourage productive individuals in all other EU nations to push for referendums, and to vote to leave.

In Liberty,

Arvin Vohra
Vice Chair
Libertarian National Committee