I spent a large number of hours in adolescence playing Rummikub with my family. We played the game according to our understanding of the printed rules that came with the game. Eventually we lost that piece of paper, but we kept playing and having fun.

As an adult I sometimes play this game with new groups of people with prior experience of the game. Sometimes they interpreted the rules differently. Generally we resolve these differences without calling the police or giving someone the right to beat up whoever disagrees. I would be very unhappy if the police threw my friend in jail because he wanted to play the game differently. I would be very unhappy if my friend had to pay a heavy fine because he understood the rules differently than a judge.

Do I really need a government forcing my friends to play Rummikub with a specific set of rules? Things seem to work pretty well without it. Maybe the same can be said of coercive government in other areas too.

A person may note the necessity of judges in any highly competitive game. The World Cup and World Series use judges to resolve inevitable disputes. Not all people agree with the results, but the process works pretty well.

Does this idea work as well in real life?

The nature of games and real life have a very importance difference: the goals of a game are predetermined. Everyone playing the game agreed to play by those rules beforehand. It is impossible to play outside the rules or invent new rules while still playing the game.

For example, a player cannot decide during a chess match that he wants to arrange his pawns in the shape of an S. His goal is predetermined: capture the other player’s king. The black and white teams cannot decide to work together to move all their pawns to the other side of the board.

Real life is more flexible. A baby is not born holding a piece of paper upon which a handy set of rules and goals are written.

In Human Action, Ludwig von Mises noted how man must discover his own goals:

man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference.

And the best way to accomplish them:

Means are not in the given universe; in this universe there exist only things. A thing becomes a means when human reason plans to employ it for the attainment of some end and human action really employs it for this purpose. Thinking man sees the serviceableness of things, i.e., their ability to minister to his ends, and acting man makes them means. It is of primary importance to realize that parts of the external world become means only through the operation of the human mind and its offshoot, human action. External objects are as such only phenomena of the physical universe and the subject matter of the natural sciences. It is human meaning and action which transform them into means.

We will disagree on both goals and the means to achieve them: I want to code; you want to fish.

Daneil Lapin explains how these disagreements are what creates prosperity:

If we all agreed that fishing was better than sitting on a computer, none of us could be discussing such things on the internet.

It is strange to see Dave Reichert’s (WA-8) absence from the list of congressmen cosponsoring the Federal Reserve Transparency Act of 2009 (HR 1207). Based on his previous comments as a member of the Ways and Means Subcommittee on Oversight, one would expect to find him an energetic supporter of the bill.

What is causing the delay?

I have heard from many of his constituents in Bellevue, Mercer Island, Issaquah and the rest of the 8th congressional district. They want him to cosponsor the bill. They have been calling his office, reaching out to their neighbors and delivering petitions in an attempt to get it. Reichert’s response? Nothing. He has declined to make any statement: nothing in support, nothing in opposition to the bill.

This silence is very surprising. He is on the record voicing the importance of transparency and fact collection. In March he made opening relevant remarks to this bill during a hearing on TARP oversight. From Reichert’s official YouTube channel:

one particularly troubling change is the apparent transfer of authority from treasury to the federal reserve without any new congressional oversight

without transparency we are left with outrageous abuses like bailout bonuses for companies surviving on the backs of taxpayers alone.

we have an obligation to [taxpayers] to find answers, to collect facts and data and to hold accountable the policies and people that lead to the abuses like those at aig

He voices the right words. Consider contacting Reichert and reminding him of those words.

Let him know that The Federal Reserve Transparency Act of 2009 is a great opportunity for Reichert to join his colleagues and convert those words into action.

The latest Washington state congressman to announce his intention to cosponsor the Federal Reserve Transparency Act of 2009 (HR 1207) is Jay Inslee from Washington’s 1st congressional district.

Inslee held two town halls this weekend. The first town hall was in Shoreline. Numerous people wanted to know whether he intended to cosponsor HR 1207, but I heard that he made no commitment either way in Shoreline.

I attended the second town hall in Woodinville. A man representing a group of local Democrats expressed his anger about the banking oligarchy. This received a huge applause line, as well as a laugh when Inslee remarked that there must have been few oligarchs in attendance.

The next questioner reminded Inslee of the Democrat’s pledge of greater government transparency. The questioner said this should include the Federal Reserve, and suggested HR-1207 would be a great way to demonstrate his commitment to that pledge. Inslee agreed and promised that she would find his name on the list of cosponsors by 10am Tuesday morning.

The crowd erupted into applause. Watch the TheConcernedVoter’s movie and see it for yourself:

It was a great moment for Inslee, the Campaign for Liberty and the Democratic process.

I am looking forward to finding Inslee’s name on the list of HR 1207 cosponsors. He will be in good company.

It is official. Both Republicans and Democrats in Washington State are now cosponsors to the Federal Reserve Transparency Act of 2009.

Congratulations eastern Washington! Republican Congresswoman Cathy McMorris Rodgers joins her peers from the Democrat caucus: Jim McDermott (WA-7, Seattle) and Adam Smith (WA-9, Renton to Olympia) as cosponsors of the bill.

As a “member of the Republican Leadership team” let us hope she can lead the rest of Washington’s congressional representatives to join her! That means you, Dave Reichert. They will be in like company: the bill has 134 cosponsors as of the time of this writing.

Do you want her to do this? Send her a line and your thanks for supporting the great Washington state.

Representative Jim McDermott was the only Democrat in the house to change his vote on the bailout from Yes to No. This made me optimistic that he would listen to his constituents again.

What risks does Bernanke take with our tax dollars? Which banks benefit from his credit programs? We deserve to know. In April we asked him for greater transparency into the Federal Reserve.

We received that support. Recently Congressman McDermott made the wonderful decision to join Ron Paul, Adam Smith (WA-9) and 120 of his congressional peers in cosponsoring the Federal Reserve Transparency Act of 2009 (HR-1207):

SECTION 1. SHORT TITLE.

This Act may be cited as the `Federal Reserve Transparency Act of 2009′.
SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) In General- Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after `shall audit an agency’ and inserting a period.
(b) Audit- Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:
`(e) Audit and Report of the Federal Reserve System-
`(1) IN GENERAL- The audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) shall be completed before the end of 2010.
`(2) REPORT-
`(A) REQUIRED- A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each subcommittee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.
`(B) CONTENTS- The report under subparagraph (A) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.’.

I know the Campaign for Liberty members in the 8th congressional district delivered many petitions to Rep. Reichert. Why is his support still missing?

And what is preventing Inslee from joining his colleagues? Luckily he is holding townhalls in Shoreline and Woodinville this weekend. We intend to ask him.

I read a report today that Massachusetts Representative Bill Delahunt and Wyoming Senator Mike Enzi seek to use the federal government to force our local businesses to comply with 49 other states’ draconian tax laws.

There are 7,000 different tax agencies in the United States. Who do you think can better afford to comply with these myriad regulations: A large, multinational company like Wal-Mart or someone starting up in his West Seattle basement or Queen Anne apartment?

It is hard enough for local, Seattle businesses to get by in this troubled economy. The last thing we need are distant governments making it too expensive for our new businesses to grow and provide new jobs to Seattle residents. Is not unemployment high enough already?

If Enzi and Delahunt believe their local constituents pay too little taxes, fine. They can go to their constituents and collect any necessary taxes. But they have no right to place this burden of collection and compliance on our local businessmen, thousands of miles from their localities.

Seattle needs to concentrate on what we are best at: providing great products and service for the best value. Learning how to comply with Wyoming tax law prevents this.

Please contact your representatives and let them know you feel the same.

The Seattle Tea party rally at Westlake Center was massive! I’ll add some audio clips soon. Meanwhile, check out the pictures of the protest:

More pictures after my comments.

Here are my observations:

Lots of anger at the unconstitutional Federal Reserve System.

• People passed around fliers supporting Ron Paul’s efforts to Audit the Fed.
• Lots of people talking about the evils of fiat currency.
• People talking about gold. Have they been reading Mises?

The movement has many very dedicated, well organized members:

• The MC encouraged everyone to send a text message to help count size of group; doing so also registers people for the “Tax Revolt Coalition”.
• Organizers repeatedly displayed phone numbers for Jim McDermott and Patty Murray — and then everyone left Patty Murray a group voicemail (McDermott has no voicemail).
• When overly partisan speakers left the stage — some prospective Senator who only talked about cutting taxes — the MC reminded everyone that we are tired of people forgetting the need to cut spending; the group has not forgotten the results from the last time the GOP rode the wave of a small-government rebellion and became fraudulent conservatives.
• Some counter-protestors brought some obscene signs. The MC was careful to add distance from the obscenities while respecting their right to free speech.

The Seattle event felt a little more partisan to me. People calling for an end to the trillions we spend murdering

I talked with friends at the Libertarian party, Campaign for Liberty and Committees of Safety. I believe this is a great time to be a libertarian. In fact, one of the C4L members looked like he had a body guard. Of course, the body guard was at the last C4L meeting promoting a marksmanship class. I wanted to say hello but he had that serious, “on duty” attitude.

I saw many Objectivist signs: Ayn Rand was right; Who is John Galt? etc. Bill Herman, one of the leading Objectivists in the area was passing out fliers. I think this is an exciting time to be an Objectivist.

More pictures:

[caption id="attachment_1350" align="alignnone" width="300" caption="Probably my favorite non-Fed related billboard of the evening."][/caption][caption id="attachment_1352" align="alignnone" width="225" caption="How old was this guy? He clearly explained to me why we must abolish the tyrannical Federal Reserve System. Brilliant! Awesome!!"][/caption]

More pictures here.

I just returned from the Bellevue, WA tea party rally.

I observed the following:

• Very loud, powerful rejection of the idea of a state income tax and taxation in general: property taxes, excise taxes, etc.
• Lots of love on the liberty and constitution.
• Most people were libertarian/non-partisan, but partisan sentiment did exist:
  • Repeated attempts to assert the non-partisan nature that went over well.
  • Partisan attacks usually began with an apology, “I know this is not a partisan event but…”
  • Partisan flavor was almost all Republican/Conservative.
  • Far less excitement over partisan attempts to criticize Obama (ie, he’s weak on foreign policy type comments) than on criticism of debt, spending and taxation.

I plan to attend the rally in Seattle this afternoon. I hope to see some of you there!

More pictures:

Robert Murphy posts that God could create a rock so heavy that even he cannot lift it but chooses to abstain from such activity. He also claims that God could kill himself. Let us consider this question further.

We ask this question because we consider God to be like ourselves. We can lift some things but not others. God is omnipotent. Does that mean God can lift everything?

Lifting requires a subject and an object. It implies the existence of two things: the subject doing the lifting and the object receiving the lifting. An object like a stone will only lift after forming a relationship with a subject. Until the object is subjected to some other force, it remains in its current state.

Lifting — like action generally — adds characteristics to the object at the expense of the subject. I expend energy in order to add velocity and altitude to the boulder. The first law of thermodynamics tells us the work outputted never exceeds the work inputted. So if the object of input and output are one and the same it is impossible to accomplish anything. I cannot move myself. Lifting — like all action — requires distinction between subject and object.

At first it may appear otherwise — I can lift myself in the air with a handstand. But this ignores the other forces at play. A handstand works on the ground because I can push against the earth. But throw me out of a plane: my handstands no longer have any effect. I can only perform a handstand when a platform is under me. In reality, the object of my handstand is the earth itself. I do not lift up myself; I push down the earth.

So the question, “can God create an unmovable object?” assumes that God can create something beyond himself. Is this a wise assumption?

Saint Anselm described God as that than which nothing greater can be conceived. He used this idea to prove God’s existence in reality. To do so, he assumes attributes can only add to existence. So existing with attributes A and B is greater than existing with attribute A alone. If we consider God to have all the attributes that we imagine, then we can also conceive of God having those attributes and in addition the attribute of existence in reality.

Spinoza and Leibniz built upon this framework to show that God must be part of everything. If we can conceive of God having the particular set of attributes that allows him to create an unmovable object, we can also conceive of him having the attribute where he is part of the unmovable object in addition. Therefore, God includes the unmovable object — and everything else. God is everything and everything is God.

Who wonders whether he is a better lover than God? This assumes love is possible outside the presence of God. The reality is that it is only through God’s graces that love is even possible in the first place. The question makes no sense. No one asks this question.

The unmovable rock makes no more sense. The idea of a rock — movable or unmovable — existing outside of God contradicts the very meaning of the word God. Asking whether God can move himself assumes there is a place outside of God to which he can move. This is no less a contradiction. So asking whether God can create an unmovable rock makes no more sense than asking whether God can create a square circle or a colorless blue.

I have an interesting question for the author of the Human Action Study Guide: Can a God who is all knowing nonetheless act?

Advertising is a dead, decaying disease. Usage-fees are positive-sum games. So why are usage-fees generally unsuccessful and advertising everywhere?

Like so much in today’s society, we can find the answer at the Federal Reserve.

Advertising

Fundamentally, TV exists in order to help Dove and Budweiser convince people to pay more for soap, shampoo and beer. Companies pay based on NBC’s perceived ability to persuade. Hey Busweiser, why not just lower the price?

I suspect that the vast majority of the 20th century’s advertising bonanza depends on cheap debt subsidized by the Federal Reserve.

Coca-cola borrows money at a fixed cost subsidized by the Fed. The money spent today convinces customers to spend more tomorrow. The extra revenue services the subsidized debt and adds a little to KO’s bottom line.

This only works on account of the Federal Reserve and US Treasury’s policy of permanent inflation. Tomorrow’s supply of money is always greater than today’s. This growing money supply makes it easier to stimulate someone into spending nominally more on sugar water tomorrow. In addition, Coca-cola can repay their nominally-fixed debts with a dollar that is increasingly less valuable per unit.

Honest money would make profitable advertising far more difficult: Coca-cola would have to borrow money at higher interest rates today; they would have to repay their creditors with equally valuable money tomorrow. We would have far less advertising in such a world.

Eric Clemons, Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania, gives a dim forecast for advertising’s future:

Advertising will fail for three reasons:
There are three problems with advertising in any form, whether broadcast or online:

• Consumers do not trust advertising. Dan Ariely has demonstrated that messages attributed to a commercial source have much lower credibility and much lower impact on the perception of product quality than the same message attributed to a rating service.Forrester Research has completed studies that show that advertising and company sponsored blogs are the least-trusted source of information on products and services, while recommendations from friends and online reviews from customers are the highest.
• Consumers do not want to view advertising. Think of watching network TV news and remember that the commercials on all the major networks are as closely synchronized as possible. Why? If network executives believed we all wanted to see the ads they would be staggered, so that users could channel surf to view the ads; ads are synchronized so that users cannot channel surf to avoid the ads.
• And mostly consumers do not need advertising. My own research suggests that consumers behave as if they get much of their information about product offerings from the internet, through independent professional rating sites like dpreview.com or community content rating services like Ratebeer.com or TripAdvisor

So why is advertising is everywhere? I only expect to see the end of most advertising after the collapse of either pure-paper currency systems and/or legal tender laws.

For example, Clemons seems to think Google’s business model will be an eventual loser:

Misdirection, or sending customers to web locations other than the ones for which they are searching. This is Google’s business model. Monetization of misdirection frequently takes the form of charging companies for keywords and threatening to divert their customers to a competitor if they fail to pay adequately for keywords that the customer is likely to use in searches for the companies’ products; that is, misdirection works best when it is threatened rather than actually imposed, and when companies actually do pay the fees demanded for their keywords. Misdirection most frequently takes the form of diverting customers to companies that they do not wish to find, simply because the customer’s preferred company underbid. Misdirection also includes misinformation, such as telling a customer that a hotel is sold out when, indeed it is still available, if the hotel has chosen not to pay a promotional fee, and then allowing the guest to choose an alternative property. Misdirection is, regrettably, still a popular business model on the net, although for reasons I explored in an earlier TechCrunch post on Google it seems ultimately to be unsustainable. More significantly from the perspective of this post, it is not scalable; it is not possible for every website to earn its revenue from sponsored search and ultimately at least some of them will need to find an alternative revenue model.

Google still makes money today, but I consider Clemons’ pessimism all too valid in world using sound money. So how will companies make money?

Usage-Fees

People want access for information. Public demand for information access is the primary reason Verizon, Comcast, etc. earn revenue each month. It makes logical sense for me to pay Qwest more as I access more information. After all, this is how things work on my water, electrical and gas bill.

Yet this is not my arrangement with my internet service provider. I seem to pay the same amount regardless of whether I check my email once a day or use BitTorrent to download every episode of every tv show ever made each month.

In other words, Verizon and Comcast’s business model resembles a fitness gym. They make money based on their ability to convince people to buy more than they need or are willing/able to use. The ideal gym customer is the overweight engineer-economist who resolves to finally get in shape and signs up but is too lazy to actually do any physical labor (like me). The ideal Comcast customer is the person who signs up expecting to download movies and music, video-chat and play exciting video games but never actually figures out how to do anything (like far too many people).

The typical gym has too few lockers for everyone to work out as much as they intend. Show me an internet service provider that has enough bandwidth for everyone to video chat with each other at the same time: I will almost certainly show you a calculation error.

So in effect, I subsidize the cost of the fitness enthusiasts’ equipment usage. And grandmas subsidize the cost of their children’s pornographic downloads. While this often benefits the subsidized users, the model often misaligns a company’s financial interests with the demands of their customers.

Misaligned interests cause aggressive, unfriendly behavior towards customers: the fitness center that refuses to cancel my subscription until I appear in person (and turn down the gorgeous woman insisting to know how she can make my membership more valuable). Time pushing buttons on my touch tone phone, waiting on hold for a customer service agent and finally receiving terrible technical support.

Imagine a restaurant that optimized their menu according to what their most frequent patrons like least and told waiters to antagonize these customers. It sounds absurd but this is exactly what service providers do: spend resources to throttle their most active customers.

Luckily the dining reality is that the guy who goes to the same restaurant seven days a week is a favored, profitable customer. The restaurant goes out of their way to assist this person. They are likely to make his desired dish, even if it is not on the official menu.

Internet usages fees would create the same type of customer relationship. New services like BitTorrent or video chat will periodically appear, dramatically increasing bandwidth demand for a subset of users. The increased usage revenue signals a profit opportunity for Verizon. Since Verizon’s financial interests are aligned with what their customers value, they will seek ways to make it easier for as many users to discover and benefit from as many services as possible.

The benefits to usage fees are clear.

So ask yourself: what is preventing service providers from successfully adopting this model?