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Justin Murray



Articles by Justin Murray

WeWork’s IPO Disaster and the Problem of Easy Money

November 18, 2019

One of the most spectacular events in the startup world this year was the collapse of The We Company IPO. Originally WeWork, We is a company that is, essentially, a gigantic sublessor. Started in 2010 by Adam Neumann, the vision of We was to provide collaborative short-term leases to companies. Later, it would branch out …

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Why the 100-Year Bond is Unethical

August 31, 2019

With central banks globally once again suppressing the borrowing cost of sovereign entities to near zero rates, with yields in some countries even going negative, there is significant talk of issuing a 100-year bond to take advantage of these rates. Part of the argument is to lock in low rates now to hedge against future …

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The EU, Not Brexit, Killed British Steel

June 2, 2019

On 22 May 2019, British Steel announced that they had become insolvent and the company entered receivership with the UK. The explanation provided for this failure is that British Steel is a victim of the UK’s decision to exit the European Union’s bureaucratic fold . On the surface, this appears to be true, as the …

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How Central-Bank Interest-Rate Policy Is Destabilizing Banks

May 19, 2019

Broadly speaking, banks operate under the concept of maturity transformation. Banks take short-term – less than one year – financing vehicles, such as customer deposits, and use that to finance long-term – more than one year – returns. These returns range from the most commonly understood loans, such as auto loans and mortgages, to investments …

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Billionaires Aren’t Quite As Rich as We Think They Are

May 1, 2019

One of the most enduring justifications for State intervention in an economy is the concept of wealth inequality. As the story goes, just 1% of the population owns roughly half of the wealth in the world. This is used as justification for a long range of programs, such as welfare, the graduated income tax and …

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“National Security” and other Thought-Stopping Clichés

April 9, 2019

I was browsing the news recently and came across an interesting headline. It read “ U.S. Orders Chinese Company to Sell Grindr App.” My first through was that the Federal Government was, once again, narrowly defining a monopoly to a ridiculous degree and decided this Chinese company was somehow monopolizing the swipe left/right mobile phone …

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The Sheriff Revolt on New Gun Laws Shows Why America Needs More Decentralization

March 20, 2019

Recently, a dozen sheriffs in Washington State announced that they would refuse to enforce the newly passed referendum 1639 which raised the legal age of purchasing a firearm of any sort to 21, expanded background check requirements, increased the waiting period and mandated weapon storage when not in active use. Predictably, political proponents immediately threatened …

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Having a Government-Granted Monopoly Means Never Having to Say You’re Sorry

February 7, 2019

Much of the market observer community recently has wondered why Pacific Gas and Electric’s stock had a sharp valuation increase over the course of a day. This is somewhat illogical given that PG&E admitted that their faulty equipment caused California’s worst wildfire in recorded history and is faced with tens of billions in losses and …

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The Inevitable Failure of Public Pensions

October 26, 2018

Unless your primary news feed is Facebook, you’ve probably been exposed to the fact that public pensions are in pretty big trouble with funding. Being a liberty-bent community with Austrian economics as a core focus, the immediate reaction is to think that the underlying is the fact that these public pension systems are run by …

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“Price Gouging” Sends Important Signals About Risk

September 15, 2018

With Hurricane Florence making landfall in the Eastern United States, the usual reports of the “evils” of the private sector price gouging the poor, desperate people in the disaster zone tend to crop up. The economic arguments as to why this claimed problem really isn’t a problem have been covered extensively. However, government laws on …

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La soberanía del consumidor es un problema para los planes de “estímulo” del gobierno

February 13, 2018

Lea esto en Español
Es un año nuevo y eso significa que estamos listos para otro año del mismo refrito de partidismo político disfrazado como análisis económico sólido. El último refrito es que la economía de EEUU sigue experimentando la peor recuperación tras una recesión en la historia de la nación (una historia que se vuelve a formular año tras año) y, como es usual, se desempolvan los viejos dichos y se presentan como explicaciones. Las explicaciones habituales adoptan la forma del “empacho de ahorro” y el “déficit de demanda” y la respuesta es normalmente aumentar el gasto en algo y ese algo es completamente dependiente de las inclinaciones partidistas en los dictámenes políticos. En otras palabras, es tarea del gobierno lanzarse al rescate, estimular la economía

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Consumer Sovereignty Is a Problem For Government “Stimulus” Plans

February 13, 2018

It’s a new year and that means we are in for another year of the same rehashed political partisanship disguised as sound economic analysis. The latest rehash is that the US economy is still experiencing the worst post-recession recovery in the nation’s history (a story that’s rehashed year after year) and, as usual, the old saws are dusted off and trucked out as explanations. The usual explanations come in the form of the “savings glut” and the “demand deficit” and the answer is usually increasing spending somewhere and that somewhere is entirely dependent on the policy pronouncement’s partisan leanings. In other words, it’s the job of the government to rush to the rescue, stimulate the economy and make up for the lack of aggregate demand, or the Keynesian policy

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Totalitarian Regimes Aren’t the Only Bloodthirsty Ones

November 29, 2017

Lately, there has been a buzz of stories attempting to discredit one form of government philosophy over another as being more dangerous. Some organizations are pointing to the horrors of Communism. Others are claiming that the greatest threat to humanity is Fascism. The conclusion we’re meant to draw is that if we only avoid a particular type of totalitarian government, then things will be fine. Unfortunately, even if we do avoid the worst totalitarian regimes — those that existed under famous despots like Hitler and Stalin — we still find that states have a particular penchant for killing immense numbers of innocent people. Let us take, for example, the United States. The latest fear gripping the US is the danger presented by a recent string of large scale shootings.

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To Combat “Hate,” Make Government Weaker

September 16, 2017

On 18 August 2017, the mayor of Boston Marty Walsh announced that the city should avoid the Commons on 19 August 2017 because of white supremacists and the chances of violence at a planned free speech rally. Predictably, thousands of people showed up to protest this group based on the words of the mayor. The mayor was rather unambiguous, “The courts have made it abundantly clear. They have the right to gather, no matter how repugnant their views are. But they don’t have the right to create unsafe conditions. They have the right to free speech. In return, they have to respect our city.” The mayor said that unpleasant white supremacists were going to show up and spout hateful rhetoric, so avoid it at all costs so you aren’t subject to these repugnant views.The problem here?

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Under Socialized Medicine, The State Owns You

April 25, 2017

Under Socialized Medicine, The State Owns You

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HealthPolitical Theory20 hours agoJustin MurrayAs Americans were spending time scrambling to give the IRS their annual protection fee, the court system in the United Kingdom, at the behest of National Health Service bureaucrats, abducted and murdered an 8-month-old baby. This brazen abduction was done in broad daylight with full press coverage and the UK government and courts claimed loudly this was humane and the right thing to do.This might sound like a severe bout of hyperbole, but that is exactly what happened. On April 11, 2017, the courts in the UK ruled that Charlie Gard, against the wishes of his parents, must be immediately removed from life support and left to die. Unlike cases in the US where it is usually the family that is arguing for or against extending hope that their loved ones can be rescued, the only people arguing against continued efforts were government officials and some third party public onlookers. What makes the Charlie Gard case so disturbing is that this is a case where no family member made any argument to remove the child from life support. The government simply overruled them and took their child.

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When Low-Wage Workers Are Better than Robots

April 19, 2017

When Low-Wage Workers Are Better than Robots

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Big GovernmentFree MarketsStrategy21 hours agoJustin MurrayTime and time again, these pages have listed numerous benefits of automation and robotics. The discussions point out that mechanization doesn’t make us poor, that attempting to tax machines is counter-productive. Automation even makes our jobs safer as we can offload dangerous tasks to a metal creation.However, automation is not always the best course of action and, as cost effective as automation has proved in many areas of our life, we are finding a rise of businesses beginning to automate for reasons other than improved productivity or cost effectiveness.The latest news is that a company called Miso Robotics has developed an automatic burger flipper called Flippy. Naturally, media outlets are already writing headlines of how this is replacing jobs. The issue in this case is that this particular form of automation isn’t being driven by any kind of cost effective plan but as a result of government action.When Should Companies Automate? Before we go any further, we first need to understand where and how automation works and why it works effectively in those areas it is currently used.

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A Problem with National Homicide Statistics

February 17, 2017

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U.S. HistoryPolitical TheoryToo much aggregation: It’s not just a problem for economic data.Donald Trump has been using and abusing national homicide statistics to suit his own political ends. But, using nationwide statistics — even correct ones — has long been problematic.We’ve learned, for example, that when comparing the homicide rate in the US, comparisons with other countries of vastly different size and demographics are not particularly useful. Because of the vast geography of the United States, it is important to break down the homicide rate into smaller pieces, and this gives us insights into how statewide and nationwide gun regulations fail to account for large disparities in rates of violence.One such method in breaking down the homicide numbers is to look at individual States. However, even this is problematic. If one is to look at a more detailed level, one finds that even neighboring jurisdictions can have wildly different homicide rates. One great example is the comparison of adjacent counties on opposite sides of the Mexico-US border. Further, if one were to visit the Trulia Crime Map, one can find that violent crime can vary depending on which block of a city you currently find yourself. This becomes evident in this map of Chicago —a city famous in the media for being a chronically violent place.

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Uncle Sam May Tip Deutsche Bank Over the Edge

October 4, 2016

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Global EconomyMoney and BanksMoney and BankingOn September 16, 2016, the US Justice Department threatened Deutsche Bank with a $14 billion fine for bond sales practices from before the 2007 Financial Crisis. Predictably, the share price immediately collapsed 8% and the financial markets went into a tizzy over equity holders losing value. This also rippled into other parts of the banking sector, for example hitting share prices of the Royal Bank of Scotland by 4%. For reference, the total market valuation as of this writing, September 29, 2016, for Deutsche Bank is 16 billion Euros, meaning the penalty the Justice Department is seeking is 88% of the total valuation of the bank and the announcement has wiped out 20% of the market value since the beginning of September.While the financial markets and media outlets are lamenting the loss of share valuation, there is a major stakeholder in this whole operation that is outright ignored. Because of the practice of fractional reserve banking, Deutsche Bank has managed to maneuver itself into a position where the leverage ratio is 3.5%. What this means is that, effectively, Deutsche Bank only has enough high quality assets to cover 3.5% of their liabilities.

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Decentralize the Elections

October 4, 2016

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U.S. HistoryPolitical TheoryIt is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.~ Joseph Stalin The federal government is making a move to move in the direction of further centralizing the administration of elections nationwide. The justification this time around is stated to be danger of Russian hackers who, we are told, will compromise election results. As if so often the case in debates about federal control, it is assumed that the federal government can do things with greater competence and more professionalism than any state government. The refrain is likely to soon be: "Hey states, running elections is so hard. Why not let us do it all for you?" At the moment, the feds are only offering "help" with voter registration systems. Even the feds admit hacking state-level election systems is very difficult. But, none of us should be surprised when the feds in the future start talking about the need to "modernize" election systems by centralizing them. The Member States Have Historically Controlled Elections Most Americans probably assume that elections are now and always have been, constitutionally, the domain of the federal government. But, this has never been the case.

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Don’t Slap a New Tax on High-Frequency Trading

September 28, 2016

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Financial MarketsTaxes and SpendingPolitical TheoryDemonizing the financial industry has proven to be a political winner. Exposure of the evil banks was followed by Michael Lewis’s exposé of the markets in Flash Boys. The markets are rigged, we are told, by high-frequency traders (HFTs) who are a bunch of tech-savvy parasites.1 The banks have been thoroughly chastened by Washington politicians and now it is the turn of the markets with more to come in the way of fines, regulations, and punitive taxation in the form of a financial transaction tax.Financial transaction taxes would be politically popular. They would disrupt the HFT gravy train while imposing a minimal burden on "legitimate" users of the markets and raising bundles of cash.Unfortunately, there is a lot wrong with this tidy assessment. HFT is badly misunderstood even by prominent economists, and it is attacked with about a dozen wrong but convincing-sounding accusations. The fact is that the world of finance going forward will be ever more dependent on a HFT infrastructure, and a new tax on the industry isn’t likely to cure what ails us.The Role of High-Frequency Trading in the Marketplace The early days of HFT involved a lot of very simple relationships, such as buying IBM on one exchange and selling it on another.

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The Consequences of Militarized Police Forces

July 22, 2016

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Big GovernmentU.S. HistoryPrivate Property
On Thursday 7 July 2016 during a Dallas protest of the killings of Philando Castle and Alton Sterling an attack on officers tasked to watch left five dead and an additional seven hospitalized. Politicians offered up meaningless platitudes and appear to use the attack as a method to gain exposure, offering up little in the way of understanding or real solutions. Additionally, media outlets are also missing the boat, claiming this attack is caused by racial tension.
However, the truth is far deeper than this and is, in fact, a natural consequence of the militarization of American police forces which in turn is the natural progression of police forces operated by the state. The state, with greater concern of protecting its own power base and its own agents, have begun to outfit small rural towns with heavy military equipment, such as hotbeds of violence like Ames, Iowa, homicide rate of 0 last year and Beaver Dam, Wisconsin, homicide rate 0. This is not including the rapid expansion of such military ordinance in larger cities around the country. The Department of Defense has looked to distribute 13,000 Mine Resistant military vehicles around the United States.

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Britain’s Minimum Wage Short-Changes Young Workers

July 22, 2016

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Global EconomyCalculation and KnowledgePricesThe national minimum wage introduced in 1999 by the Blair government was seen as one of the best policies to tackle exploitative work and the conditions of low pay. What better than to create a floor under which no one can fall? Well it seems that floor was not so stable, as young people have borne the brunt of this misguided policy. Effects as serious as rising youth unemployment, significant underemployment and a range of masking effects have led to a situation of under-saturated labour markets and the continual need for young adults to seek other activities such as university education and government-based training schemes, or simply drop out of the labour market altogether. It has also had the effect of de-skilling young people and making them reliant on the welfare state and low-skill, low-pay employment through Jobcentres and Jobseekers Allowance schemes.British labour markets have never resembled anything close to a free market. Rather, they have been under the control of corporatist management networks and centralised trade unions. The national minimum wage is simply a continuation of this franchise, with control held by the Low Pay Commission (the LPC, a collection of large employers and trade unions) and varying governments with their misguided policies.

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NBC’s The Blacklist: Why Reddington Is Better than the State

July 21, 2016

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Media and Culture“Never trust a criminal … until you have to,” is the official motto of The Blacklist, the American crime-thriller television series that premiered on NBC on September 23, 2013. But the real lesson of The Blacklist is “never trust the government … even if you have to.” Not many shows are both anti-state in their narrative and enjoyable at the same time. The Blacklist, however, deserves to be watched. If there is one show that takes the government for what it is, i.e., a “bandit gang” as Rothbard called it, it would be The Blacklist.The Blacklist is the story of an international criminal, Raymond Reddington, who decides, for mysterious reasons, to work with the FBI. In exchange for valuable information, the FBI lets him conduct his business freely. Hence, the question is does Reddington work for the government, or is it the other way around. Reddington says it explicitly in Season 1, Episode 2: “The FBI works for me now.”It is true that, after three seasons, we still don’t know much about Reddington. As he says in Season 1, Episode 1, “Everything about me is a lie.” Reddington as a Free TraderContrary to most politicians, bureaucrats and most self-proclaimed “pragmatic libertarians,” Reddington does not try to please people while pretending to be somebody he is not.

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America Needs a Good, Old-Fashioned Economic Depression

July 21, 2016

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Global EconomyFiscal TheoryInterventionismDescribing what he called the “crack-up boom,” Ludwig von Mises, the great Austrian economist, said:The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation — which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system.Or the banks stop before this point is reached, voluntarily renounce further credit expansion, and thus bring about the crisis. The depression follows in both instances. (emphasis added)Although it would be the wiser policy, there is no evidence that the world’s central bankers have the wisdom, either individually or collectively, to select the second alternative. More specifically, they lack “the courage to act” (as Ben Bernanke’s recent, self-congratulatory memoir was so ironically titled); they and their political, big finance and big business cronies are afraid to swallow the “d-pill,” the economic medicine named “depression.

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Brazil’s Lost Decade: We Must Free Our Economy

July 21, 2016

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Global EconomyWorld HistoryPolitical TheoryIt was a lost decade for Latin America. Years of populist governments combined with a commodity boom turned out to be our oil curse, our Dutch Disease. This disastrous mix made bad public policies look like temporary successes, pushing developing countries to an unsustainable path. The collectivist ideology monopolized the debate for more than 10 years, and now that the natural resource party is over, the harm of these policies have become clearer: deep economic crisis generated by a utopia whose greatest achievement was turning toilet paper into a rare-earth product.Populist and authoritarian South American regimes have set up government bureaucracies aimed at pleasing special interest groups that provide political support while tirelessly harming the population as a whole. These groups are divided into several small groups with special rights and privileges: judges, civil servants, members of parliament, friendly businessmen. These factions are getting their more-than-fair share while the unprivileged citizen foots the bill.Latin American politicians played it very well during these favorable times. Cronyism and populism greatly benefited some chosen groups, while the harms were diffused enough throughout the whole country and difficult to measure during favorable economic winds.

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Trump and Hillary Don’t Know How to Fix the Economy

May 30, 2016

Tags U.S. EconomyInterventionismPolitical Theory

Recently, Hillary Clinton was taped ridiculing Donald Trump for lacking a detailed plan for the American economy. The message, so it goes, is that Trump is not suited for the presidency because he doesn’t have a plan on how to turn the American economy around.
But is it really more dangerous to elect a president who makes up economic policy on the fly than one who proclaims to have a detailed plan for us?
The answer to this is no, it is not more dangerous to elect someone who makes up economic policy by the seat of his pants — as Donald Trump is prone to do — than it is to elect someone who thinks she can have the future of the economy neatly mapped out. However, this does not imply that seat-of-the-pants method is less dangerous either. The underlying problem is we have two competing people who think they can manage the American economy.
The core of why both philosophies are equally dangerous is best summarized by F.A. Hayek and the pretense of knowledge.

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