Martino Fassina
Freedom Enthusiast
I love reading, thinking, and writing about economics, politics, and ethics. Explore my latest articles by clicking the button below.
Articles
As of September 2024, I have started the ambitious project of writing a daily article. Writing brings clarity and articulation like nothing else. Often, I begin typing with one perspective and realize by the end that I no longer agree with it completely. It’s a fascinating process.My articles are never meant to be provocative. I’ve spent too much of my life being cynical, which, I’ve found, leads to losing sight of where you stand. While it's not necessary to have an opinion on everything, there is value in having one on something.My views are not driven by ideology, and I remain open to refining my opinions through thoughtful consideration and new insights.There’s no inherent merit in holding onto an opinion blindly, nor in changing it frequently. What matters most is intellectual honesty, and I will do my best to uphold it to the highest standards in all my writing.Thank you for taking the time to read!I welcome your thoughts. Feel free to share them with me by visiting the contact section.(The most recent writings are at the top)
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August 31, 2024
Why Profits Matter
There’s been some talk lately about “price gouging,” especially after the Democratic presidential candidate mentioned it in a recent speech. She criticized companies for allegedly making record profits while everyday people struggle with rising prices. The call is for government intervention to set “reasonable” prices and curb the greed of companies that seem to be profiting at the expense of consumers.But why is government intervention called upon only to inhibit the so-called greed of investors and entrepreneurs and never the “greed” of employees asking for higher wages? The truth is, anyone involved in economic activity—whether an employee, entrepreneur, investor, or business owner—naturally seeks to maximize their income. Each person tries to charge the highest price the market will bear, whether it's for their labor or for the goods and services they sell.When the wages of a particular category of specialized labor rise, it's not because those workers are greedier than others. It’s a signal to the market. Higher wages for plumbers, for instance, indicate a high demand for their skills compared to, say, travel agents, whose wages might be falling. These price signals guide both individuals and businesses.Price changes provide valuable information about where resources—like labor and capital—are most needed. At the same time, they create incentives for people to act on this information. Anyone entering the job market or choosing a college major can align their career paths with market demands—that is, with what consumers want most.This idea is usually understood and accepted when it comes to wages. You don’t hear engineers or professors being accused of greed. However, when it comes to company profits, the same economic principles are often ignored. Let's break it down with a simple example:Imagine you're a potential business owner, and you notice that there are no pizza shops in your town. You decide to open one, and since there’s no competition, you can sell pizzas for $50 each—an “unreasonable” profit, some might say. But will this situation last long? Probably not. The owner of the hot dog stand down the street might see your success and decide to open his own pizza shop, selling pizzas for $40 each—still making a substantial profit. Others might follow, raising capital to expand their operations thanks to investors who see opportunities for high returns. The labor market will also adjust to these new demands. Aspiring chefs might decide to specialize in making pizza rather than sushi, and so on.As more people see the high profit potential, more capital and labor flow into the pizza business. The result? More pizza shops, more variety, and lower prices for consumers. The initial high profits attract competition, leading to better choices and lower prices.Now, let’s consider what happens if your high profits attract the attention of a politician who start denouncing you for “price gouging” and for exploiting your position as the only pizzeria in town. Suppose this compassionate politician steps in and uses government power to set a price ceiling at $10 per pizza. Would this lead to the same result as above? Hardly. At such a low price, there would be no incentive for new businesses to enter the market. You, as the original owner, wouldn’t be able to expand without the capital that comes from higher profits, and your low rate of return would not attract investors. If earlier you had customers willing to pay $50 for pizza, their numbers would now likely multiply several times at a lower price, leading to long queues and customers needing to place orders days in advance. To maintain profitability, you might cut costs by using cheaper ingredients or reducing portion sizes. These are two inevitable outcomes of price controls: shortages and a decline in quality. History shows us time and again that these are the consequences when governments interfere with the natural workings of the market.These consequences aren’t just theoretical; they have played out in practice worldwide. Rent control laws, for example, were meant to keep housing affordable. Instead, they led to less investment in housing, a decline in quality in rent-controlled apartments, and a shift in investment to other sectors. When profits are capped, investors look elsewhere, and the supply of the controlled good or service fails to keep up with demand.But what if profits aren’t capped, and businesses are allowed to “price gouge”? The caring politician won’t have to lose sleep over it, as the situation will naturally change. If the profit rate is truly high, it will attract new investors and businesses, leading to increased production and competition. The “unreasonable” profits won’t last. Over time, competition will drive prices down, and the rate of profit will settle to match the normal market rate.High profits may seem unfair when viewed solely as rewards for past actions. However, they serve a vital function as incentives: they signal where resources are most needed and where they will be most productive. Even if a company didn’t do anything extraordinary to earn high profits—such as a business that happened to start making face masks just before a pandemic—those profits encourage others to enter the market and meet increased demand. Allowing temporary high profits isn’t about rewarding a lucky business owner but about keeping the incentive alive to better serve consumer demands.If we want a prosperous society, we can't ignore the mechanisms that allocate resources to their highest-value uses. High profits may not look appealing on the surface, but they play an essential role in guiding resources where they are most needed. Suppressing these signals with price controls or other government interventions will only lead to shortages, lower quality, and fewer choices for consumers.The real path to affordability and abundance lies in allowing the free market to operate, with prices guiding labor and capital to where they can best meet consumer demand. Only by respecting these principles can we ensure a future of economic prosperity.
September 1, 2024
Kamalanomics
In a recent CNN interview, Vice President and presidential candidate Kamala Harris kicked off with a predictable word salad. When asked, “If elected, what would you do on your first day in office?” she responded:“When I look at the aspirations, the goals, the ambitions of the American people, I think that people are ready for a new way forward. In a way that generations of Americans have been fueled by hope and by optimism. I think sadly in the last decade we have had in the former president someone who has really been pushing an agenda and an environment that is about diminishing the character and the strength of who we are as Americans. Really dividing our nation. And I think people are ready to turn the page on that.”No information whatsoever. But of course, she managed to mention Trump within the first 30 seconds. She knows that her best strategy to win the election is to keep the spotlight on her opponent, banking on the widespread dislike of Trump among Democrats and many Republicans.As the interview went on, Harris did share some specific proposals, although they were still short on details. Let’s dissect these “specific” points and see what they reveal about her vision for what she calls an “opportunity economy.”1. Bringing Down the Cost of Everyday GoodsWhat Harris likely means is bringing down the "price," not the actual "cost." The government doesn’t have a magic formula to lower production costs—no secret technology, no superior management systems. What they can do is mandate lower prices. However, prices aren't arbitrary labels that can be changed without consequence; they convey vital market information. Interfering with them can have serious repercussions.Harris promised to address “price gouging” by companies making excessive profits. (She must have brushed up on this, as a few days before she referred to it as “price gauging.”) If high prices indeed reflect great profit opportunities, forcing them down artificially will destroy the incentives for new competitors to enter the market. And competition is the best way to achieve better and cheaper products for consumers.There is a genuine way for the government to reduce costs—by eliminating the costs it imposes. For instance, ending subsidies and price guarantees in agriculture (such as those for sugar, dairy, and many other crops). Currently, the government pays farmers when market prices for certain commodities fall below a predetermined reference price, essentially enforcing a minimum price at the taxpayer's expense. With a guaranteed minimum price, there's no incentive to become more efficient.After ending all agricultural subsidies, Harris could tackle other government-imposed barriers to free trade that artificially drive up consumer prices. Take, for example, the Jones Act, which mandates that shipments between U.S. ports must be on U.S.-built, U.S.-owned, and U.S.-crewed ships. This makes it sometimes cheaper for Hawaii to import food from Canada, Australia, or Asia rather than from the U.S. mainland. Bringing down the cost of consumer goods would require the immediate repeal of the Jones Act, as well as lifting regulations on trucking and shipping and eliminating existing tariffs and trade barriers.2. Investing in America’s Small BusinessesHarris didn’t provide specifics on how she plans to “invest” in small businesses. But let's challenge the use of the word “investment.” Making an investment means buying assets expected to appreciate over time. This requires two things: specific knowledge and a personal stake with an expected return. If I took your money and blindly bought stocks, you wouldn’t call that “investing.”When the government talks about “investing” in small businesses, it usually means giving out loans or grants. However, handing out credit indiscriminately, without specific knowledge of the businesses, expected returns, or any personal stake from decision-makers, isn't investment—it's a handout. Credit is already available in the free market through banks and other institutions specifically geared to assess and manage credit risk.What could the government actually do to help small businesses? Reduce regulations that restrict hiring and firing practices, simplify compliance so businesses spend more time on productive activities and less on paperwork, lower corporate tax rates, reduce tariffs and trade barriers, and end subsidies to large corporations that can afford to maintain expensive lobbying apparatus in Washington to divert public money and policies to their advantage.If Vice President Harris is genuinely concerned with promoting real investment in small businesses, how about abolishing capital gains taxes on small business investments? Unfortunately, this is certainly not what Harris has in mind, as her platform proposes raising capital gains taxes, including a 25% tax on “unrealized capital gains”—a diabolical scheme that deserves its own critique elsewhere.3. Investing in the American PeopleHarris’s vague pledge to “invest in the American people” is more empty rhetoric. Here’s an example of what “investing in people” might actually look like: Boxing coach Cus D’Amato saw potential in a troubled teenager named Mike Tyson. D’Amato provided Tyson with free coaching and mentorship in exchange for a percentage of Tyson's future earnings. That’s what real investment in people looks like—it requires specific knowledge and a personal stake, something the government cannot provide.Let’s not be fooled by the rhetoric. Harris isn’t talking about genuine investment; she’s talking about government handouts, funded by resources taken from current and future taxpayers. At best, this is mere wealth redistribution, not investment.4. Extending Tax Credits for New ParentsHarris suggests “extending a tax credit of $6,000 for the first year of a child’s life to help parents buy a car seat, baby clothes, and a crib.” While tax reductions are beneficial, they should be unconditional and apply to everyone, not as selective handouts. Besides, what does it mean to “help them buy a car seat, baby clothes, a crib”? Do parents have to prove that the money was spent on child-related expenses? Specifying that the credit must be used for certain expenses adds bureaucracy and compliance costs. It would be more efficient to reduce the overall tax burden, allowing families more disposable income without strings attached.It would also be great to know how this credit would be financed. It could be offset by cutting government spending elsewhere, but let’s not get our hopes up. More likely, it will be paid for by increasing taxes or incurring more debt, effectively robbing Peter to pay Paul.5. Investing in American Families with Affordable HousingHarris proposes “extending a tax credit of $25,000 to home buyers so that they can just have enough to put a down payment on a home, which is part of the American dream.” This proposal reveals a lack of understanding of basic economic concepts.A tax credit is typically claimed when you file your annual income tax return, which is after the tax year has ended. If you purchase a home in 2025, you would claim the tax credit when you file your taxes in early 2026. By contrast, a down payment is required at the time of closing on a house, which happens well before you can claim any tax credit. Good luck walking into a bank and using your tax credit as a down payment, as the vice president suggests.Once more, while any tax relief is welcome, it should not be conditional or used as a political tool to gain favor with specific groups. Again, the question arises: how will this be funded?It would have been nice if the interviewer had asked the uncomfortable question of “How will you pay for it?” at least once. But of course, for that, you would need professional journalists, not propaganda agents.Two other remarks by Harris in the interview reveal her perspective on the role of government:“What we have done to improve the supply chain so we don’t rely on foreign governments to supply American families with their basic needs. I’ll say that that’s good work.”And later, speaking about American families:“We should be able to take care of their children in their most formative years.”It is clear that, in the Vice President’s worldview, only “governments” provide for people and their families, who apparently cannot be trusted to take care of themselves.Perhaps it’s time to recall the principles on which America was founded. The American dream was about freedom and self-reliance, attracting people to the New World to escape the oppression of their own governments. They wanted to be left free to act and take care of themselves.To the Founding Fathers, Kamalanomics might sound more like the American Nightmare.
September 2, 2024
The Overturning of Roe v. Wade: a Setback for Liberty
In Roe v. Wade in 1973, the United States Supreme Court recognized that a woman's right to have an abortion is protected by the Constitution. Fast forward to June 2022, when the Supreme Court, in a 6-3 decision, reversed this landmark ruling. In the majority opinion, Justice Samuel Alito argued that the Constitution does not confer a right to abortion and that Roe v. Wade was "egregiously wrong from the start." The opinion emphasized that the issue of abortion should be returned to the states and their elected representatives, allowing each state to determine its own abortion policies. So, where do we stand two years later?Since the overturning of Roe v. Wade, several states have moved to enforce abortion bans. As of September 2024, fifteen states have enacted near-total abortion bans, with exceptions typically only when the mother's life is at risk or in cases of rape (though some states, like Missouri, don’t even allow exceptions for rape).The right to abortion is grounded in the natural right of self-ownership over one's own body. The debate over when life begins and whether a fetus should be considered a human being is completely irrelevant. Murray Rothbard made this case succinctly and clearly in The Ethics of Liberty:“The proper groundwork for analysis of abortion is in every man’s absolute right of self-ownership. This implies immediately that every woman has the absolute right to her own body, that she has absolute dominion over her body and everything within it. This includes the fetus. Most fetuses are in the mother’s womb because the mother consents to this situation, but the fetus is there by the mother’s freely-granted consent. But should the mother decide that she does not want the fetus there any longer, then the fetus becomes a parasitic ‘invader’ of her person, and the mother has the perfect right to expel this invader from her domain. Abortion should be looked upon, not as ‘murder’ of a living person, but as the expulsion of an unwanted invader from the mother’s body. Any laws restricting or prohibiting abortion are therefore invasions of the right of mothers.”Note that this isn't a discussion of whether abortion is moral or immoral—that's a matter of personal ethics and belief. But legality and morality are two distinct categories. The role of the law is not, despite what some conservatives might think, to enforce a set of preferred moral rules on the population. Instead, its purpose is to establish the legitimate (legal) sphere of human actions, grounded in natural rights. Within these boundaries, how an individual chooses to exercise their rights is their own business, according to their personal moral values and beliefs.Was the overturning of Roe v. Wade constitutionally sound? Possibly. There is no explicit mention of abortion in the Constitution, and the original Roe v. Wade decision was always on shaky constitutional ground. In 1973, the Court based its ruling on a supposed ‘right to privacy,’ which it argued was implicit in several amendments to the ConstitutionShould we then applaud the overturning as an upholding of the rule of law? Not at all. As we have seen, the reversal has led to significant overreach by states, infringing on the natural rights of women across the country. The effect has been a substantial restriction of freedom.Does the fact that the abuse is enforced by state governments rather than the federal government make it any less coercive or oppressive? Was slavery in the South any less oppressive because it was enforced by state laws rather than federal law? Let’s not forget that slavery was perfectly constitutional before the Civil War. How is the situation different with abortion now? As with slavery, a grave abuse is being committed against the right of self-ownership (this time of pregnant women) by the state, while the federal government turns a blind eye and justifies that abuse by citing states’ rights under the Constitution.Conservatives argue that each state should have the right to decide its own abortion policy, as this would better represent the preferences of its citizens. It’s true that decisions made closer to home tend to be more representative of the local constituency than those made by a distant federal government. But why stop at the state level? Why not let each city, county, or municipality decide? If you follow this logic to its conclusion, the only consistent end is that the decision should be left to the individual.Moreover, we must consider which decisions should be made by majority rule. Surely, we wouldn’t agree that a 51% majority should have the power to oppress the 49%. Inalienable rights, including the right of self-ownership, cannot be restricted by the government at any level, even if a majority supports such restrictions.Every person committed to the cause of liberty should mourn the overturning of Roe v. Wade, regardless of the constitutional merits of the decision, and should join the call for a constitutional amendment to grant the right to abortion. The Constitution was intended to be a living document. There is nothing sacred about the Constitution—it wasn't handed down by Moses on Mount Sinai. A constitutional amendment was necessary to address the issue of slavery, and perhaps the same will be needed to end the abuses of abortion bans.While we are rethinking the Constitution, perhaps it’s time to reinterpret the Tenth Amendment to remove the states from the equation, ensuring that individual rights are not encroached upon at any level of government. The Tenth Amendment states:"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."Let’s emphasize the last part: "to the people." This phrase should be central to any discussion about rights and governance, underscoring that power ultimately resides with individuals, not governments. To make this crystal clear, I propose a revised version of the Tenth Amendment:"The powers not delegated to the United States by the Constitution are retained by the people individually, free from coercion or interference by federal or state governments, particularly regarding matters of personal autonomy, such as bodily integrity and the right to choose. No level of government shall infringe upon these individual rights under any circumstance, regardless of majority opinion or political ideology."The fight for liberty must be taken one step at a time, in a pragmatic way. Pragmatic libertarians, or even anarchists committed to freedom, should have no qualms about using the machinery of the federal government in specific cases where it is necessary to uphold liberty against the encroachment of state power. In the strategic battle for freedom, we must carefully choose our allies. After all, in war, the enemy of my enemy is my friend.