Kickstarter's magic

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In a world teeming with state interventions every where one looks, it is amazing to see how the free market continues its march unabated towards creative solutions treading through the heavily canopied forest of government growth.  Much like the lowly conifer trying to find uncharted territory where it will not be usurped by the preeminence of angiosperms, the market is always looking for room to flourish into a healthy retreat far away from the intermingled gov't branches which block out the sun of opportunity.

Along comes a company called Kickstarter, Inc.  To describe its primary function I will briefly summarize it.  Anyone with an idea - entrepreneurial in nature - can apply for a spot in its website by following its guidelines.  This enables the individual to formulate a page describing the purpose of their creation or project and providing detailed information on it.  People who visit the site are free to look at any of these postings and donate or 'back' a specific project that is to their liking or if they see it as a potential success.  Each project usually offers several layers or categories of backers, from the lowest dollar amount to the highest.  Depending upon the level of donation by a backer, the project owner provides certain incentives as a thank you.  These incentives may range from a simple written appreciation of your support, one of its products to be shipped to you upon launch or even perhaps a stake in the project.  Once meeting a certain goal of a particular 'funding amount' the entrepreneur is tasked with putting his plan into motion.  Here, he or she is responsible for maintaining timely updates about its progress to backers.  In a nutshell, this is Kickstarter.

As great as the service that this website offers is, imagine for a moment how this could be applied in a grander scale.  In a society sans central planning, without the involuntary redistribution of money (see taxation) to be allocated for specific projects which must go through loads of bureaucratic filters (see gov't) before it reaches the planning table and is actually put into action, I see the aforementioned as a modern voluntary alternative.

Nowadays, money must be "raised" through taxes and apportioned for a specific budget catered for a particular district in order to see a bridge be built, or a road re-paved.  The process offered by Kickstarter would effectively end these boondoggles that end up costing much more than forecasted leaving taxpayers on the hook for even more money.

Sticking to the subject of bridges, instead of them going 'nowhere' as most make-work programs seem to do; bridges would indeed be built based upon the demand of that particular locale.  A specific budget would be set aside that must be met prior to construction taking place.  Should enough be raised to meet this goal by backers that reside within the surrounding areas, the bridge would be built based upon pure market demand and not artificially and arbitrarily by a congressman or senator looking to be re-elected by 'creating [temporary] jobs' within the local economy.  Money would not be wasted ex-ante and backers would only be charged if the amount necessary was achieved, otherwise the quantity donated by each individual would be returned.  Likewise, the project could be proposed once more with a smaller budget that may find a more willing audience that would be more likely to help fund it.  Such trial and error is the essence of market function, proposals that are not within the needs of a community would certainly be met with failure and those within the right scope would be rewarded with success.

I, Pencil - I, Product - I, Think - I, Create

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One of the best descriptions and simplistic adaptation of the division of labor is found in one simple essay.  In "I, Pencil" Leonard Read captures the dynamism of the market in doing whatever is necessary to meet demands.  The coming together of thousands if not millions of individuals to act together freely, unbeknownst to them, each with their own little bit of focused knowledge and expertise, to create a final product that so many superciliously take for granted.  Why is it that anything really requires a centralized function known as government in order to operate?  Instead of natural flow, this results in an arbitrarily forced congruence with regard to specific processes that may otherwise not have come into being, or perhaps another more efficient version of itself would be in existence sans this consolidated mandate.  True harmonious [sans government] collaboration is easily found, all one has to do is look around for the smallest things and realize the amazing voluntary cooperation of free thinking individuals that went into the making of any particular object.  The sundry industries participating in the creative force and manifesting the energies necessary to supply the world with what it needs (nature -> commodities -> capital -> labor -> product).  

As much as one cannot explain a tree's creation and composition in fine detail - a task relegated only to a supreme intelligence and initial cause of all things - one cannot also explain the process of something as basic as a pencil in detail.  Not one mind has the wherewithal to do so.  This is the very myopic view that many inherit naturally when attempting to view a world where functions such as defense, first-class mail delivery, road construction and etc is done without governmental edict.  One mind cannot grasp the enormity behind these services, however, seeing as if simple objects require the coming together of many individuals, why is it that this same principle cannot be applied as a broad stroke of the brush when it comes to everything provided to us via public entities?  I submit that it certainly can. 

Now go and indulge your brain and read this wonderful essay at Mises.org:

http://mises.org/daily/4736

Wood & Faulk

In this vlog I cover the fine Horween Leather Watch bands from Wood & Faulk and also provide a quick profile on this great domestic online retailer.

Thanks for watching and remember to follow me on IG and Twitter @DavidKishere

Oak Street Bootmakers Vlog

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Wear Gustin - OCBD Japan Charcoal Oxford

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Pacific Rim Economy

"If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. … There was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don't need it, we need it in order to get some fiscal stimulus."

- Paul Krugman (Nobel Prize Economist) on CNN's "Fareed Zakaria GPS", August 21, 2011

Yes, the above is an actual statement which made its way out of a Nobel Prize winning economist.  The Keynesian economic logic or view that in a world wrought with war time policies, economies have no other choice but to ramp themselves up in order to keep up with what seems to be an incessant demand for the war machine as its violent appetite for more resources seems to never be sated.

To put this contemporaneously, let us imagine for a moment that the movie pacific rim transplants its fictional story arc into reality.  WARNING:  Spoilers.  The world is invaded by extra-dimensional creatures of giant proportions (Kaijus) which wreak havoc on large centers of population.  Conventional weaponry proved to be ineffective in taking down these beasts due to them lacking the necessary firepower to quickly quell these 'Kaijus.'

As a response to this inefficiency after the first victory and realizing that more of these monstrous beasts would appear intermittently throughout this [unconventional] 'war' the governments of all nations around the world got together and re-purposed several factories, engaged in ubiquitous research and development which required quite a bit of new resources in order to come up with the right weaponry to combat these invaders; thus the 'Jaeger' program came into being.

Giant mechanized units controlled by two pilots connected neurologically to the machine's AI in order to guide it through its battles was the solution presented and proven effective in subsequent Kaiju encounters.  However, as the Kaiju grew in strength some of the older generation Jaegers began to be destroyed.  This quick global demoralization led to new generations of Jaegers up until all nations decided to once again divert precious resources to the building of sea walls to protect the major coastal cities around the area in the pacific ocean where the extra dimensional rift was found.

In the above briefly described scenario, in Krugman's and many other modern economists' views, this would be a boon for employment and production for economies around the world partaking in the entire division of labor involved in the entire process of manufacturing a Jaeger and its maintenance.  Let us quickly put this fallacious argument to rest.

First of all, large cities endured the massive destruction that these encounters often brought.  Instead of a boon to the construction industry this put further strain in the economy as more resources had to be once again utilized in rebuilding efforts and repairs.  In essence, less resources were available than before.  Moreover, factories, business, or homes that were destroyed during these attacks put a halt to whatever productive measures those entities may have been engaged in at that moment.  The factory no longer will be producing (less goods available overall), the business stops its service, and the home owner(s) or resident(s) may lose their shirts entirely, thus decreasing the pool of capital that was hitherto in existence.

Secondly, factories were re-tooled and re-purposed to become dedicated manufacturing and maintenance facilities for Jaegers.  Ergo, whatever private goods that particular factory was producing before was no longer its final output.  Therefore, the amount of available consumer goods diminished causing a strain the the supply line which would result in an increase in prices as demand remained constant and [forced] rationing would more than likely be the most "rational" (pardon the word pun) action that the governments would undertake (as it did during the world wars).  The same would be applicable to commodity goods being diverted to these efforts such as metals, fuel, et al.  This would indubitably lead to a lower standard of living for all involved.

Thirdly, the precious resources diverted to the war effort were no longer being put towards the betterment of private society and voluntary exchange.  Instead it was being sent directly into the line of fire to their potential destruction.  This action would erase those carefully acquired resources from existence and what could have otherwise been used for an increase in the standard of living is instead squandered.

Lastly, more people would be employed by the public sector (or indirectly by private contract bidding) to work for these purposes.  Again, the labor pool would be constrained and working towards the ultimate resulting destruction of their own efforts.  This would be a wasteful job with non productive qualities.  These otherwise valuable professions which would certainly be involved in this vast project could have instead been focusing on private research for the betterment of society.

Now under the circumstances presented in this film, the Jaegers were borne out of immediate necessity and perhaps their existence justified.  This does not however cause the erroneous axiom that war brings prosperity to be true.  Even though humanity may have been able to protect itself and posterity in the movie, the economic consequences would still ring true regardless, but it is after all just a movie and not reality.  If such actions were truly beneficiary for sundry economies globally, wouldn't it just make sense economically to create a fake war scenario (or alien invasion) and start engaging in the aforementioned actions en masse in order to jump-start the current economic malaise into full production?  The simple answer; no.