Saturday, June 24, 2006

ASG's Battle With Hawaiian Air Covered in 'Honolulu Advertiser'

Stuart K. Hayashi

As you can see here, here, here, here, here, and here, ASG Critique founder and editor-in-chief Talifaitasi "Tali" Satele has been following the controversy over the America Samoan governor's attempt to punish Hawaii Airlines for "price-gounging" on its route from American Samoa to Hawaii. The governor's rhetoric brings to mind the same fallacies that mainland Americans spouted when calling for passage of the Interstate Commerce Act to regulate freight rates when the railroads charged higher rates on cargo delivery for shorter lines than longer ones.

The Friday, June 23, 2006 edition of the Honolulu Advertiser ran an Associated Press article on this subject titled "Hawaiian Air Won't Pull Out of Route."

Tali, what do you think of it?

Friday, June 23, 2006

The Ultimate Defense of Laissez-Faire Political Economy

Stuart K. Hayashi

Many great free-market advocates have read and recommended Ayn Rand's anthology, Capitalism: The Unknown Ideal, which contains contributions from Alan Greenspan prior to his becoming Federal Reserve chairman.

However, I should state, for the record, that Capitalism: The Unknown Ideal is not Ayn Rand's definitive statement on politics or economics.

In reality, the ultimate defense of laissez faire is . . .

The Virtue of Selfishness: A New Concept of Egoism, also by Ayn Rand.

I have to admit that the provocative title is a double-edged sword. On the one hand, many close-minded elderly people, such as Whole Foods founder-CEO John Mackey, are instantly turned off by the title and thus close their minds against anything the book has to say.

On the other hand, I know from personal experience that, back when I was in high school and sick of all the social conformity that my teachers and classmates tried to push upon me (calling me "selfish" for refusing to conform to their irrational demands about how I dress and talk), I was immediately captivated by the bold title. I saw it and said, "Virtue of . . . selfishness?!" I admired that somebody had the guts to pen a tome with that title.

Of course, when Ayn Rand upholds "selfishness," she doesn't mean that there is anything right about harming other people for one's own benefit. She explains the ethics of rational self-interest, which means that, as long as you violate no one else's rights, it is ethical and even noble of you to creatively pursue endeavors that benefit yourself, your loved ones, and everyone and everything else you value.

That is what the most productive entrepreneurs do in a free market.

It is The Virtue of Selfishness -- not Capitalism: The Unknown Ideal -- that explains all of the important principles behind a laissez-faire political economy. Capitalism is a merely a sequel and extension of the ideas first elucidated in Virtue.

Virtue of Selfishness explains all of the following important points, which are not addressed as clearly in Capitalism and sure as heck not as well-addressed in any Libertarian-authored book:

* Why you have a right to the private property that you have justly acquired through either homesteading or through consensual transactions.

* Why, if you have very few posessions, you have no right to demand that the government take the property of other people and hand it over to you.

* Why coercive taxation is immoral, and of how government can be financed through consensual transactions instead of through coercive taxation. (The only problem I have here is that Ayn Rand uses the fallacious term of "voluntary taxes"; a tax, by definition is not voluntary, and consensual financing of government should not be given the label of "taxation" at all, but of "user fee.")

* The ultimate defense of the right to private profit, which no American Samoan politician will ever be able to refute.

So, despite the greatness of Capitalism: The Unknown Ideal, it is time to put that book aside, and to pick up the all-time best primer on liberalization and free enterprise: The Virtue of Selfishness.

Another terrific book on this subject, which beats the pants off of anything recommended by the Ludwig von Mises Institute, is Andrew Bernstein's The Capitalist Manifesto, which uses history, economics, and science to demonstrate the ethical necessity of a laissez faire political system.

Thursday, June 22, 2006


Hawaiian Airlines is not public property. They bought the planes, paid the wages, stored the fuel, and maintained all the equipment. They took the risk that no one else around here wanted to take and still managed to survive in our market against other competitors. High prices may hurt our pocketbooks, but what is the alternative? Rowing our canoes to Hawaii?

If Togiola and his experts from the mainland are so certain that they can get an airline to outperform HAL, why does HAL have to leave our market for that to happen? Why can’t this hypothetical airline compete against HAL instead?

The answer: Aloha Airlines.

Whatever Togiola has up his sleeves can’t make it in this market because HAL will match them pound for pound. That’s what competition does. If Togiola can find somebody to offer $500 roundtrip tickets here, HAL will follow suit. Yet such price wars would be unsustainable in a market with a very low-seat occupancy rate like ours. Togiola’s contender would literally fall out of the sky.

My only conclusion is that Togiola wants HAL to leave so that his new airline will be the new monopoly, and he would benefit in some way from it. If this is the case, we would have traded terrible service from HAL for Togiola’s tyranny.

Tuesday, June 20, 2006

Intellectual Ammunition Department: Good Books for the American Samoan Libertarian

Stuart K. Hayashi

There are so many great books out there for the libertarian free-market advocate from American Samoa.

On Persuading People of a Pro-Freedom Ideology

* The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell -- Excellent primer on how mass movements form and its ideas are spread. It explains the sort of people needed to spread a self-replicating, self-perpetuating, "viral" love of liberty. That sort of "virus of the mind" is known as a "meme" (which also happens to be a word that snooty pseudo-intellectuals often like to say because they think it makes them sound smart). The book rocks, despite its blindness to the many flaws of the Game Theory that its thesis replies upon.

* The True Believer by Eric Hoffer -- A classic that explains the psychology of mass movements. We free-marketers have our work cut out for us, since, as this tome shows, the most effective social movements are collectivist in both thought and practice. In many ways, a collectivist attitude is essential for keeping a social movement alive. This raises the question of how we can spread an ideology of individualism among the masses.

* Influence: The Psychology of Persuasion by Robert Cialdini, Ph.D. -- Exposes the many dirty marketing tricks of businesspeople and cults, explaining how such tactics succeed in persuading people. All of the conclusions in this book are backed up solidly by scientific experiments complete with control- and experimental groups. This is important reading for those concerned about spreading one's ideology through ethical means instead of using the manipulative hard-sale approach taken by famous cults and pushy salesmen alike.

* Changing Minds by Howard Gardner, Ph.D. -- A Harvard psychologist explains the qualities an individual needs to induce a long-term change in politics. He even uses a great free-marketer and privatizer -- Margaret Thatcher -- as his example of a highly prolific persuader and tells you how you can duplicate her success.

* Also, despite the overheated and pedantic verbiage about it "stigmatizing" and "pigeonholing" and "stereotyping" people, it helps to read up on Type Psychology here, just as long as one keeps in mind that Type Psychology is extremely far from being a panacea.

A Must-Read for Every Libertarian Soldier:

* Corporate Warriors: The Rise of the Privatized Military Industry by P. W. Singer -- This is actually written by a leftwing author with a very shallow understanding of libertarianism. What makes this book relevant, however, is its in-depth investigation of the little-known phenomenon of the U.S. Army increasingly outsourcing its operations to private, for-profit companies . . . even for combat!

Because of the author's left-wing ignorance, the book does make many false assumptions. For example, it points to all of the corruption involved when a represive government contracts out its operations to a private military firm and pays it with tax funds . . . and then has foolishness to assert that this is the laissez-faire we-should-abolish-all-taxes ideology taken to its logical conclusion. The author doesn't even catch the contradiction in its implication.

Despite the author's many misunderstandings and equivocations, however, his case studies about entire countries being taken over by private, for-profit hitmen still manages to raise questions about the "anarcho-capitalists'" assumption that a domain could never be more oppressed under an anarchy of competing private "security firms" than under a single State.

This book has been reviewed by Libertarians (including "anarcho-capitalists" and U.S. soldiers, but I have yet to see it read by a Libertarian soldier interested in "anarcho-capitalism." And yet that kind of person is the one most qualified to judge its merits and shortcomings.

Besides, for many years, "anarcho-capitalists" have only discussed the private sector replacing the military in only an abstract sense; it is this book that has added actual life to the debate by providing empirical data on the consequences of this actually coming about -- empirical data on private firms that much more closely mirror the players of an actual "anarcho-capitalist" economy than the example of Medieval Iceland, in which peasants had the right to choose which landholder they wanted to dictate over them.

Talking about "anarcho-capitalism" without being exposed to the information in this book is like talking about dogs without even knowing what a dog is.


The Most Important Issue Widely Neglected By Libertarians Is...

* Global Warming -- Libertarians will not be taken seiously in the twenty-first century until Libertarians address this century's most pressing issues. Haven't you heard that America Samoa will be underwater in a few decades if something isn't done about this? This is indeed a problem that will not vanish, and is in need of a solution.

The proponents of regulation demand that the United States join the Kyoto Accord. And what alternative do Libertarians present? As of yet, none. Until such time as Oceanian Libertarians can offer a free-market alternative to the Kyoto Protocol, this issue will remain a trump card whereby Big Government advocates win the debate and Libertarians in the Pacific lose.

Saturday, June 17, 2006


Now that the University of Hawaii has hiked high-to-the-sky fees on our children, will King Togiola demand that UH lower their new tuition rates or face a lawsuit? I doubt it because the university is an arm of the powerful State government of Hawaii. It seems that when it comes to private companies like Hawaiian Airlines, our governor shows no restraint in making dangerous threats like his recent ultimatum. But when it comes to harm done to us by higher government authorities, like the federal government’s cabotage laws and the Jones Act, our politicians’ irrational temperament that passes destructive laws like price-gouging legislation is no where to be found.

Wednesday, June 14, 2006


There has to be some incentive for ASG departments to save money instead of spending every penny in their annual allocations. Asking agencies to save money every chance they get, while still achieving their performance goals, allows them to be proactive rather than reactive to budget cuts. Departments currently work under the expectation that if they don’t spend all the money in their budgets, they’ll be punished by smaller budgets next year around. Moreover, if agencies don’t overspend then they will have no justification for asking for more money as well. To address the first issue, the ASG should implement revolving funds, which would allow agencies to use money saved in one fiscal year for the next. As for the second issue, budgets should focus on the agency’s efficiency and performance goals rather than on the previous year’s level of spending. Being thrifty in the good times helps you prepare for the bad. Let’s be the ant not the grasshopper in this story.

Monday, June 12, 2006

Running as a Democrat?

Amata promises more taxpayer dollars to provide more healthcare, housing, education and jobs if elected this November. Isn’t this the same platform Faleomavaega and the Democrats run on? The promise of government “benefits” to keep our people in perpetual dependence on the political classes. The Republican Party espouses conservative ideas that revolve around self-initiative, limited government, traditional values and free enterprise, addressing issues like healthcare through market incentives instead of government. Now it’s either Amata is not Republican or she feels that our people are not ready to hear new ideas or approaches to solving our long-standing problems. Either way, why elect her to do something Faleomavaega has more experience and connections in doing by virtue of being in office for many years?

Thursday, June 08, 2006

High Prices vs. Low Prices

A friend asked me how I could support high prices for LBJ and then turn around and support low prices from imports. I don’t support prices being high or low. What I support are prices that reflect costs, profits and losses.

Lowering costs is important. Raising costs harms us. No one says we should ban sunlight just so people can have more jobs making candles and coats. That’s the sort of logic Senator Moliga used when he formulated his plan to ban imports in an effort to create employment here. If raising costs was such an economic stimulus, scientists would be working on ways to blow up the sun instead of making efficient things like computers or the internet.

Lowering costs legitimately lets you do other things with your money. Because we don’t have to worry about light and heat during the day, we can work to grow food, build houses and sew clothes instead. While we may lose jobs making candles and coats, we progress by being able to provide ourselves with food, shelter and clothes.

But when costs are high, we should bare them ourselves. Why? Because God said, “Thou shall not steal.” A majority vote to tax people out of their property doesn’t nullify his commandment. Redistribution is not the proper role of government no matter how you slice it. Muamua le Atua? Not in American Samoa apparently.

More importantly, bearing costs comes with the right incentives. We tailor our behavior around costs. When the costs are low, you do more of something. When costs are high, you do less of something. I’m fine with any person living an unhealthy lifestyle just as long as I or anyone else doesn’t have to pay for it. Drive as much as you want, but pay for your own gas, man.

We may open more businesses with low-interest DBAS and other federal loans, but operating a business is always a risk. Why should taxpayers bare the risk for someone else’s profit? Why should taxpayers foot the bill for someone else’s loss?

Prices should reflect profits and losses. Profits tell us what people want. If someone is profiting from the market price of lemonade, it tells everyone that lemonade is in demand. More suppliers come in and the higher supply lowers prices and eats away at profit margins. Losses, on the other hand, tell us that we need to focus our limited resources elsewhere.

Economies of scale (where one makes more money selling 100 cups of lemonade for a $1 each than 1 cup for $10) and competition ensure that sky is not the limit for prices. On the flip side, charity and humanity take care of those things that may not be profitable but still necessary in a civil society.

So while I applaud Senator Moliga and the Senate’s efforts to diversify our economy and setting the example in keeping our island clean, the debate is not high prices vs. low prices. It should be about lowering costs by removing barriers to investment and competition, lowering taxes, cutting government spending and implementing user fees.