A brass age?

By Thomas Sowell

This may be the golden age of presumptuous ignorance. The most recent demonstrations of that are the Occupy Wall Street mobs. It is doubtful how many of these semi-literate sloganizers could tell the difference between a stock and a bond.

Yet there they are, mouthing off about Wall Street on television, cheered on by politicians and the media. If this is not a golden age of presumptuous ignorance, perhaps it should be called a brass age.

No one has more brass than the President of the United States, though his brass may be more polished than that of the Occupy Wall Street mobs. When Barack Obama speaks loftily about "investing in the industries of the future," does anyone ask: What in the world would qualify him to know what are the industries of the future?

Why would people who have spent their careers in politics know more about investing than people who have spent their careers as investors?

Presumptuous ignorance is not confined to politicians or rowdy political activists, by any means. From time to time, I get a huffy letter or e-mail from a reader who begins, "You obviously don't know what you are talking about..."

The particular subject may be one on which my research assistants and I have amassed piles of research material and official statistics. It may even be a subject on which I have written a few books, but somehow the presumptuously ignorant just know that I didn't really study that issue, because my conclusions don't agree with theirs or with what they have heard.

At one time I was foolish enough to try to reason with such people. But one of the best New Year's resolutions I ever made, some years ago, was to stop trying to reason with unreasonable people. It has been good for my blood pressure and probably for my health in general.

A recent column that mentioned the "indirect subsidies" from the government to the Postal Service brought the presumptuously ignorant out in force, fighting mad.

Because the government does not directly subsidize the current operating expenses of the Postal Service, that is supposed to show that the Postal Service pays its own way and costs the taxpayers nothing.

Politicians may be crooks but they are not fools. Easily observed direct subsidies can create a political problem. Far better to set up an arrangement that will allow government-sponsored enterprises -- whether the Postal Service, Fannie Mae, Freddie Mac or the Tennessee Valley Authority -- to operate in such a way that they can claim to be self-supporting and not costing the taxpayers anything, no matter how much indirect subsidy they get.

As just one example, the Postal Service has a multi-billion dollar line of credit at the U.S. Department of the Treasury. Hey, we could all use a few billions, every now and then, to get us over the rough spots. But we are not the Postal Service.

Theoretically, the Postal Service is going to pay it all back some day, and that theoretical possibility keeps it from being called a direct subsidy. The Postal Service is also exempt from paying taxes, among other exemptions it has from costs that other businesses have to pay.

Exemption from taxes, and from other requirements that apply to other businesses, are also not called subsidies. For people who mistake words for realities, that is enough for them to buy the political line -- and to get huffy with those who don't.

Loan guarantees are a favorite form of hidden subsidies for all sorts of special interests. At a given point in time, it can be said that these guarantees cost the taxpayers nothing. But when they suddenly do cost something -- as with Fannie Mae and Freddie Mac -- they can cost billions.

One of the reasons for so much presumptuous ignorance flourishing in our time may be the emphasis on "self-esteem" in our schools and colleges. Children not yet a decade old have been encouraged, or even required, to write letters to public figures, sounding off on issues ranging from taxes to nuclear missiles.

Our schools begin promoting presumptuous ignorance early on. It is apparently one of the few things they teach well. The end result is people without much knowledge, but with a lot of brass.

SOURCE

****************************

The Contrarian View of Argentina

There is no doubt that America is in for some hard times. Obama is spending $3 for every $2 he raises in taxes and that bubble has got to burst. When it does all sorts of nastiness are possible. And Obama's verbal war on the "rich" will be remembered -- meaning that anybody with substantial assets will most likely be hit particularly hard. A small number of Americans are trying to protect themselves in various way from the turmoil to come. The much-travelled David Galland gives his solution below. I think he overlooks Australia but be that as it may:

After receiving a number of queries on the topic, I felt compelled to further clarify the rationale for helping to establish a community of largely libertarian-thinking individuals in the remote northwest of Argentina.

I am, of course, referring to La Estancia de Cafayate – or "Casey's Gulch" as it is often referred to in deference to the role Doug Casey played in creating the vision for the place. As we have mentioned in the past, La Estancia has made incredible progress over the past five years and now boasts a community of over 200 property owners from over 30 countries.

Simply, after investigating and living in a number of countries, Argentina was the hands-down winner because of the quality of life, which is very high. Especially if you have a certain net worth, the bulk of which resides in a different country: no one with any other option would leave serious money in an Argentine bank… but that’s a detail, not a problem.

This gets to a common misperception about the nature of internationally diversifying your life. Namely, no one who has any understanding of the topic would dream of picking up everything from one country and dropping it into another. That would be simply trading one set of problems and risks for another. Successfully diversifying – which has never been more important – involves doing as much as possible of the following:

* Securing your assets in a number of countries.

* Having your tax residency in one country (ideally, one with favorable tax policies)

* Your actual residence(s) in places where you can enjoy a very high standard of living, but ideally not where you are a citizen – as that makes you a serf as opposed to a welcomed visitor.

* Your business incorporated elsewhere (which is much easier these days, thanks to the Internet).

In other words, Argentina, for those of us who love the place, is just one part of the equation, the part about living well. As I mentioned a moment ago, after wandering the globe for three full years, I couldn't find a more agreeable country – and Doug would tell you the same thing.

That is especially true of Salta province, where the up-and-coming wine-growing town of Cafayate is located. It boasts altogether excellent weather – with sunshine on the order of 330 days a year. Importantly to those of us who care about such things, it’s an agricultural community, meaning high-quality, naturally grown food, almost all of which is grown within a 50-mile radius of the town, as well as excellent wines and free-range beef. Then there’s the still relatively inexpensive domestic help, friendly people and an active lifestyle that always makes time for leisurely meals with friends and family.

In the case of La Estancia de Cafayate, the lifestyle is supplemented by the many amenities (South America’s largest golf course, a world-class athletic club, polo fields, horseback riding, etc.) and a community of intelligent and largely like-minded individuals. In short, the place has an abundance of the best things in life.

The things that are not present also define the place. For example, unlike developed countries, when you are in Argentina – and especially in the countryside – you will be amazed how quickly all of the noise that comes from living in the frenzy of an “always-on” modern society fades away. No more constant drums of war or cable news programs blaring excitedly about the latest fabricated emergency or threat.

(And, no, Argentina isn’t about to go to war with the UK over the Falklands again – the relatively recent debacle from military rule has left the Argentines viscerally against all things military. Today, as a percentage of GDP, the Argentines spend the same amount on their military as does Switzerland – just 0.9%. By comparison, the Chileans spend 3.2% and the US 4.8%.)

Absent all that noise, it’s always a very pleasant surprise to discover how tranquil everyday life can be. The only thing I can compare it to is a sort of peace of mind that settles over you in the second week of a long vacation.

What Most People Don't Know About Argentina

I bet you didn't know that, in dollar terms, the Argentine economy has been growing at a compounded year-over-year growth rate of around 15% for the last decade.

That level of growth is on par even with China. Of course, like China years ago, Argentina was starting from a low point following its last crisis – but it has certainly not stagnated since.

Thanks to the Argentine government’s controversial default in 2002, the country has almost no public-sector debt, very much not the case with most of the world’s large economies. Specifically, its current debt-to-GDP ratio, net of debt held within the public sector, is less than 14%.

The private sector is also virtually debt-free. That is because credit in Argentina is viewed entirely differently than it is in the West, in part because of the country’s regular bouts of inflation, but also because it's just not part of the culture. For example, almost no one has a mortgage on a house – they just aren't available. That means prices for property aren’t inflated by a bubble of debt.

On a macro-level, Argentina is currently running a minimal overall public-sector deficit and, thanks to the commodity boom, steadily runs a current account surplus. As I don't need to tell you, the US government’s deficits are now running close to $1.5 trillion a year, and the country has been running a current account deficit on the order of 5% of GDP for decades – trading the nation’s wealth for other countries' products. In Argentina, it is the other way around.

Of course, as just touched upon, one big advantage that Argentina has is that it is a commodity producer in a world with a growing appetite for commodities. Furthermore, a country that deals in tangible assets – corn, beef, soy, oil, minerals – has a big structural advantage in a world undergoing an explosion of money printing.

Still in the positive camp, anyone who has spent time in the country will tell you that, on the whole, the country’s population is well educated, and those from the higher social strata are typically well read and sophisticated (with an Argentine, you are far more likely to find yourself in a conversation about philosophy than the weather or sports scores). I can’t tell you the situation throughout the country, but the public school kids in Cafayate are given inexpensive personal computers as part of the curriculum.

Also important, the country has a young population, so while there is always some nonsense going on with the unions, it pales in comparison to the endemic problems related to old-age pensioners in Europe – problems that will only get worse.

Furthermore, while the US and so many Western countries are struggling with high levels of unemployment, Argentina has almost no unemployment.

And, finally, while the uninformed might be tempted to think of Argentina as a Latin American backwater, that’s hard to square up with its membership in the G20.

Of course, Argentina’s economic successes are very much in spite of the government, which seems determined to take every opportunity to throw sand in the wheels of progress. Clearly, however, Argentine businesses have learned how to deal with those interventions. More than that, they have managed to prosper at a time when so many industries around the world are struggling: earnings for publicly traded Argentine companies rose by 13% in 2011, second only to Peru in South America, which was up 14% (earnings in Chile were up only 6% and Brazil 7%).

The resilience of the Argentine economy is important on a number of levels, starting with the reality that economies with a lot of desperately poor people tend to have more property crimes. A recent ranking of countries by per-capita purchasing power (an indicator of how much of life’s essentials you are able to afford) placed Argentina at 58 out of 192 countries, ahead of Chile, Turkey, Mexico, Uruguay, Costa Rica, Thailand, Panama and, of course, China and India. Argentina’s per-capita income is the highest in South America.

It is worth noting, too, that while many dear readers may not be in favor of socialized medicine, in Argentina health care is free and the quality of the doctors, in my direct experience, very good, even in the public facilities. In Cafayate, there is a new and reasonably well-equipped hospital, and the doctors are well trained: one of our partners recently had an emergency appendectomy done there, laparoscopically, and was impressed with the high quality of care.

Not to go on, but here’s another little-known fact – that Argentina has one of the highest levels of per-capita water usage (500 l/day) in the world. While I haven’t verified the actual reason, I was told by someone I trust it is because a high-level personal hygiene is the cultural norm, so much so that it is standard to provide showers to construction workers as part of normal work practices. That people pay attention to their appearances, as well as their hygiene, is also evidenced by the fact that Buenos Aires has a reputation as one of cosmetic surgery capitals of the world. (Need a little tuck? Prices are about half of what they are in the US.)

The Challenges of Argentina

Now, nothing I have said here should give you the impression that Argentina is perfect. As I learned from the aforementioned three-year quest for paradise, there is no such thing. Every country has its flaws.

In the case of Argentina, dealing with the bureaucracy can be incredibly frustrating. Not so much in terms of daily interactions; for example, the odds of your being pulled over for a traffic offense are barely above zero, and transiting through airports for local flights involves minimal interference (and yes, you get to keep your shoes on).

The dealings with the government become cumbersome when trying to do business or get an official stamp on some document related to what should otherwise be a mundane activity. For example, buying a car. There are, of course, ways that you can circumvent much of this if you have a few dollars – and I'm not talking about paying a bribe, because I've never been asked for a bribe in any of my dealings in Argentina – but rather by hiring a good local attorney (or an inexpensive gofer) and letting them deal with the nuisance issues.

This unfortunate truth aside, however, there is no question that you can get business done in Argentina. Using La Estancia de Cafayate as a relevant example, five years ago the place was literally a horse pasture. Today, it is almost fully built out with all the infrastructure in place and about 30 homes either finished or in the construction process. By infrastructure, I refer to a championship golf course that has been playable for going on two years, a beautiful clubhouse, all the roads, power, water systems and a world-class athletic club, which is now in the final stage of being equipped before opening. A deluxe boutique hotel operated by the award-winning Grace Hotel Group is under construction and moving towards completion next year.

It is no exaggeration to say in any developed country in the world you'd be lucky to even have your permitting at this point. Most likely, you'd still be deep into investigating the natural habitats of the local insects to make sure you weren't going to inconvenience any of them.

The shame of Argentina is that it literally has everything necessary for it to be one of the most successful countries in the world. The only thing standing in its way is a government that, thanks to circumstances from a half-century ago, is supported by many in the population who remain steadfast in their misdirected affection for the long-dead wife of a hardcore populist.

Should common sense prevail – perhaps forced upon it by the next government-engendered crisis – and the free market be allowed to regain even a little lost ground, the country's economy would be a force to reckon with. I'm not optimistic in that regard – either it will eventually happen, or it won't. But that has nothing to do with the quality of life in the wine country of rural northwest Argentina, a place of stunning beauty, a warm and intelligent population, very high-quality food and all the other essentials for living well.

More HERE

**********************

My Twitter.com identity: jonjayray. I have deleted my Facebook page as I rarely access it. For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena

List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)

****************************