Notes on Harvard Justice Course Part 3/4

Quote from the section 3, part I of Justice – What is the right thing to do.

Taxation = Taking of Earnings

Taking of Earnings = Forced Labor

Forced Labor = Slavery (You are not longer the 100% owner of your own life – taxation means the state is a part owner, or a share holder of you).

Slavery = Against Principle of Self possession (we are the owner of the individual person – wholly)

Even laws to prevent us from hurting ourselves (like helm requirement and safe belt laws) are unjustified.

Fire Fighter’s Case

The example of the Arkansas Fire Corporation is interesting and inspiring – they only put off fire of the houses of its yearly subscriber, or only to make sure the fire does not spread to its subscribers. They get to the house with full equipment of a non-subscriber, and see the house to burn before them, only to make sure it does not hurt its subscriber’s house. The CEO said, he has no any choice to break the rule.

It reminds me that only a society where strange things happens everyday, is a society that has self-improving internal driven force.

Dilemma

Needing something is different than deserving something.

Need is one thing, and deserve is another.

Even for victims of earthquake, they need house, they need food, but they don’t deserve it. Ops. Seems very wrong.

The next question: Is it justified for the father to steal bread for his starving children? Is it justified to rob a store of drugs, to save his child’s life?

How about “use persons” for the aggregated sum of happiness of others?

If I am the 100% of owner of myself, do I have the right to give this ownership to another person? To become a slavery? Can one gives UP his natural right, like life, and property?

John Locke thinks the rights that naturally comes with human kind is unalienable, just like non-transferable air-line tickets. It is just for this person and cannot be transferred to another. It in one sense, makes the right less “owned”, but in another sense, make it more profound.

Private Property

John Locke says, we are the owner of our labor, so the fruit of the labor is the private property, so does anything that is mixed, or joined with the labor. If someone enclose a land from the common, it is his private land. If someone cultivate a land, that is also his private land. Because those things are mixed with his labor.

That implies that we can turn something from unowned to ours with our label.

Human laws is legitimate only when it respect the natural rights of life, liberty and property.

OK. That is all for today. I have paused at 27th minutes of this video .

6 thoughts on “Notes on Harvard Justice Course Part 3/4

  1. The spirit of enterprise fades

    Jan 21st 2010 | HONG KONG

    From The Economist print edition

    The cradle of China’s start-up firms is showing its age

    Chinese capitalism at work: the thrill is gone

    CHINA’S remarkable resurgence began three decades ago with the designation of Shenzhen, just north of Hong Kong, as a “special economic zone”. Businesses in the zone were free to re-engage with overt capitalism and make profits by satisfying customers, not the state. The result was the transformation of a farming village into a city of 9m people, bustling with production lines and sewing machines, making everything from iPods to Nikes, in a burst of entrepreneurial zeal.

    But that may describe its past more accurately than its future. Inevitably, prosperity has affected people’s attitudes and the local business environment. A study by the Shenzhen Academy of Social Sciences and the Chinese University of Hong Kong, released on January 18th, shows a precipitous drop in the fraction of the population involved in starting new businesses, from 12% in 2004 to 5% in 2009. “It’s not so special anymore,” says Kevin Au, a professor of management at Chinese University.

    Five other medium-sized Chinese cities that are part of a separate study show similar results, says Mr Au. Collectively, their levels of enterprise differ little from those seen in western Europe, which is to say slightly weaker than in Britain, much less so than in America, but much stronger than in Japan. The strongest signs of enterprise in China can be observed in very poor, rural areas that are just beginning to develop beyond agriculture.

    There are any number of explanations for what is happening in Shenzhen. Not long ago, it was a city that needed everything and attracted everyone. Immigrants flooded in from the rest of China, anxious to seize a unique opportunity. Few laws, if any, restrained business. Factories could be opened anywhere. Even the most qualified people found they could get better jobs by moving to Shenzhen.

    That has changed. China has begun to develop large corporations that attract talented employees. Shenzhen itself has at least two global leaders, the telecoms giants Huawei and ZTE. Land has become harder to find and, inevitably, more expensive. One of the last big parcels was not divided up for small businesses but transferred to BYD, a fast-growing manufacturer of cars and batteries. Many laws have been enacted to protect workers and the environment, making it more costly and complex to start a business. As factories have moved away, so has low-skilled labour.

    In some respects this is good news. Small firms with slipshod standards are being replaced by bigger, better ones. Where people are creating companies, they are doing so out of choice, not economic necessity. But not all the news is so positive. The study also examined two other things. Only 9% of the respondents said the technology they hoped to use in their new venture was truly innovative-less than one year old. That makes Shenzhen more engaged in innovation than Brazil or Russia, but far less than Japan or Israel, and thus more vulnerable to competition.

    The study also showed a sharp recent decline in the interest of private investors. That is, at least in part, a reasonable response to the financial crisis. But it is nonetheless a real problem, because the Chinese banks lean heavily toward large state-controlled companies. Shenzhen has become a global synonym for business creation, but there is reason to wonder how much longer it will remain so.

  2. CBRE On Chinese Real Estate: Slackening Rents, Rising Vacancies, Investment-Driven Homebuying

    Joe Weisenthal | Jan. 25, 2010, 6:38 AM | 2,231 | comment 1

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    Tags: Economy, China, Real Estate, Bubbles, Features

    1/8

    CBRE Global real estate broker CB Richard Ellis is rarely going to say anything too boat-rocking when it comes to the economics of real estate.

    And indeed, the firm generally takes a positive tone in a newly released Chinse real estate outlook.

    But there are a few key points that stick out violently, and raise suspicions of a bubble.

    Most notably:

    * Office rents in many cities are slackening due to overcapacity.

    * Many retailers are starting to get cautious on expansion plans.

    * For the first time, particularly in the second half of 2009, investors became major players in the residential housing market.

  3. Sorry, China, There Is No Short Cut To Economic Greatness

    Vitaliy Katsenelson | Jan. 26, 2010, 4:28 PM | 234 | comment 2

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    Tags: Economy, China, U.S. Government, Bubbles, Emerging Markets

    The Chinese economy must be really getting out of control, because the Chinese government is doing the unthinkable: it is desperately trying to put the brakes on the economy. When you pump a stimulus package that represents 14% of GDP through a fire hose into an economy, which was already on shaky bubble foundation, in a very short time you’ll have some serious unintended consequences – you’ll get super bubbles.

    To understand what is taking place in China today, we need to rewind the clock about a decade. At that time the Chinese government chose a policy of growth at any cost. To achieve that, it kept its currency (the renminbi) at artificially low levels against the dollar – this helped already cheap Chinese-made goods become even cheaper than its competitors’. The US and global consumers were eager to buy them. China turned into a significant exporter to the US. Normally, if free-market economic forces were at work, the renminbi would have appreciated and the US dollar would have declined. However, if China let its currency appreciate, its exports would have become more expensive and the demand for Chinese products would have declined, and its economy would not have grown at 10% a year.

    But China is not your local democracy, and it needed to grow at any cost. So instead, through the government-controlled banking system, China accumulated a couple trillion dollars of foreign reserves in US dollars and euros. This had an unintended consequence: it helped to keep US interest rates at very low levels, and lent a friendly hand in the financing of a huge consumption binge by the US consumer (i.e., China’s largest customer).

    The more China sold to the US, the more dollars they accumulated, and thus the more US Treasuries they bought, driving our interest rates down. The US consumer was in turn happy to leverage its future (through the “always” appreciating asset, its house) and delighted to consume cheap Chinese-made goods. (I am not dismissing the role in what took place of many other factors, like lack of financial regulation; missteps by rating agencies, the Fed, and politicians; securitization; etc., but I don’t want to steal the spotlight from China).

    This symbiotic match made in heaven between China and the US consumer worked great as long as housing prices kept rising and the financial machine kept multiplying dollars. But all good things come to an end, and great things come to an end with a bang. The financial meltdown erupted upon us, the US and global banks started dropping like flies … well, you know how that story played out.

    So now let’s fast forward a year. Today the global economy is stabilizing, thanks to Uncle Sam and various other “uncles” around the world. But the consumers of Chinese-made goods are overleveraged and now deleveraging, unemployment is high, the banks have got religion and are not lending, and there is not much demand for loans anyway (except from the US government).

    Despite this, the Chinese export-based economy, a manufacturer to the world, has clocked growth of 8.7% in 2009. The rest of the world looks at the Chinese growth miracle with envy; it seems that China has got economics figured out. But don’t hurry to trade your democracy for an authoritarian system. The Chinese grass is not as green as it appears.

    First, China lies. One should not believe all the economic numbers that are put out by the Chinese government. This is the government that magically managed to report 6-8% GDP growth in the midst of the financial crisis, when its exports were down over 25%, tonnage of goods shipped through its railroads was down by double digits, and its electricity consumption was falling like a rock. It is hard to manufacture 8% more widgets with a lot less electricity, and no, China did not suddenly become energy efficient during the financial crisis: electricity consumption rebounded in a few months once the stimulus kicked in.

    Despite reported rosy GDP growth, the Chinese economy was contracting during the economic crisis. But don’t be surprised, this is a government that will go to great length to maintain appearances to keep its ideology going. After all, it censors what its citizens may or may not read and imprisons the ones that write anti-government articles.

    Second, China will do anything to grow its economy, as the alternatives will lead to political unrest. A lot of peasants moved to the cities in search of higher-paying jobs during the go-go times. Since China lacks the social safety net of the developed world, unemployed people are not just inconvenienced by the loss of their jobs, they starve (this explains the high savings rate in China) and hungry people don’t complain, they riot. Once you look at what is taking place in the Chinese economy through that lens, the decisions of its leaders start making sense, or at least become understandable.

    Unlike Western democracies, where central banks can pump a lot of money into the financial system but cannot force banks to lend or consumers and corporations to spend, China can achieve both at lightning speed. The Chinese government controls the banks, thus it can make them lend, and it can force state-owned enterprises (a third of the economy) to borrow and to spend. Also, since the rule of law and human and property rights are nascent in its economic and political system, China can spend infrastructure project money very fast – if a school is in the way of a road the government wants to build, it becomes a casualty for the greater good.

    China has spent a tremendous amount of money on infrastructure over last decade and there are definitely long-term benefits to having better highways, fast railroads, more hospitals, etc. But government is horrible at allocating large amounts of capital, especially at the speed it was done in China. Political decisions (driven by the goal of full employment) are often uneconomical, and corruption and cronyism result in projects that destroy value.

    Infrastructure and real estate projects are where you get your biggest bang for the buck if your goal is to maintain employment, since they require a lot of unskilled labor; and this is where in the past a lot of Chinese money was spent. This also explains why, in 2009, new floor space constructed was up 100% and residential real estate prices surged 25%. And this explains why they keep building skyscrapers even though the adjacent ones are still vacant.

    To make things worse, before the financial crisis and enormous stimulus, China was already suffering from what I call late-stage-growth obesity, inefficiencies that are a byproduct of high growth rates sustained for a long period of time. Though Chinese growth in the past was high, in its late stages the quality of growth has been low.

    For example, in an echo of past Chinese government asset-allocation decisions, China built the largest shopping mall in the world, the South China Mall, that is 99% vacant, years after construction. China also built a whole city, Ordos, in Inner Mongolia, on spec for million residents who never appeared.

    The inefficiencies are also evident in industrial overcapacity. According to Pivot Capital, Chinese excess capacity in cement is greater than the combined consumption by the US, Japan, and India combined. Also, Chinese idle production of steel is greater than the production capacity of Japan and South Korea combined. Similarly disturbing statistics are true for many other industrial commodities. The enormous stimulus amplified problems that already existed to financial-crisis levels. China is a less shiny but more drastic version of Dubai.

    There is speculation that the Chinese consumer will pick up the demand slack for the US and European consumers who are deleveraging and buying fewer Chinese-made goods. This may happen, but it will take decades. The US and European consumers are two-thirds of much larger economies. The Chinese consumer is only a third of the Chinese economy, and its purchasing power is significantly undermined by the undervalued renminbi.

    We look at China and are mesmerized by its 1.3 billion people, its achievements of the last decade, its recent economic resiliency, and its ability to achieve spectacular results on the fly. But we have to remember that economic bubbles are usually just a good thing taken too far. This was the case with railroads in the US in the late 19th century: the railroads were supposed to change the landscape of the US, and they did, but that did not prevent a lot of them from going out of business first and investors losing money. The internet was supposed to change how we communicate, and it did, but in the process it generated a tremendous bubble, followed by the loss of wealth for many. The Chinese economy is no exception. Its long-term future may be bright, but in the short run we’ve got a bubble on our hands.

    Everyone wants a shortcut to greatness, but there isn’t one. It would be great if the word (economic) cycle only existed in a singular form, and the only cycle we had in the economy was happy expansion. If there were no cycles, there would be no painful recessions. But as heaven could not exist without hell, or capitalism without failure, economic expansion cannot exist without recession. China has been trying to bend the laws of economics for awhile, and with the control it exerts over its economy it may seem, at least for a short while, that the laws of economics work differently in China. But this is only a temporary mirage, which must be followed by huge pain and drastic consequences. No, there is no shortcut to greatness, in anything, not in politics, not in personal life, not in economics.

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  4. Tough stuff… Need vs. Deserve, it’s a touchy spot. It’s been played by many in today’s medical insurance reform in US.

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