The Daily Reckoning October 26th


In Praise of Toleration

Ayn Rand would not like this book.

She wouldn’t like its subject matter. For Rand, libertarians were “hippies of the right,” who “subordinate reason to whims and “substitute anarchism for capitalism” — a “monstrous, disgusting bunch” of “intellectual cranks” who “plagiarize my ideas.” Rand evidently regarded libertarians’ arguments as unworthy of engagement, since she never, in fact, engaged with them. A book celebrating this dreadful movement and tracing it to her would be far from welcome.


Nor would Rand like the book’s style. Rand’s tolerance for humor in general was limited; her tolerance for humor directed at herself and her own ideas was zero. In Rand’s view, humor was a “denial of metaphysical importance to that which you laugh at”; this made humor a “destructive element,” legitimate only when directed at objects despicable or worthless. But to “laugh at that which is good, at heroes, at values,” was “monstrous,” and to “laugh at yourself” was the “worst evil that you can do,” a form of “spitting in your own face.”

That Rand’s conception of humor might be bizarrely narrow — that there might be forms of affectionate humor, in which respect and admiration could be mixed with a keen appreciation of foibles and a heightened sense of the ridiculous — seems never to have crossed her mind. Thus, a book by a devoted libertarian making fun of the libertarian movement even while celebrating it would have baffled her; and a book making fun of Ayn Rand herself, even while acknowledging the value of her influence, would have enraged her.

But Jerome Tuccille didn’t write this book for Ayn Rand. He wrote it for, as he says in the dedication, “deviationists all over the world.” Welcome, deviationist!

We can argue about when the libertarian movement began. We could point to the Old Right of the 1930s and ’40s, to the classical liberals and individualist anarchists of the 19th century, or even to the 1640s with the Levellers in the English Civil War. But the libertarian movement as we know it today began with the publication of Ayn Rand’s Atlas Shrugged in 1957; and in the decades that followed, reading Atlas Shrugged was the most common entry point into that movement (as it was for me as a geeky high schooler in 1979).

That’s not to say that the libertarian movement was made in Atlas’s image. Influence takes many forms, and reacting against various aspects of Rand’s thought — her egoism, her atheism, her adulation of big business, her doctrinal rigidity — was as common a libertarian response as was emulation. But Rand had set the terms of discussion by asking the right questions and highlighting the crucial issues, and had laid out a radical and inspiring vision of individual human creativity and initiative set free from rulership, violence, and unreasoned dogma — a vision that no one could confuse with the conventional political nostrums of left and right.

Jerome Tuccille was present at the creation as the ripples from the massive pebble that Rand had dropped into world culture were beginning to spread out in various directions, sometimes merging with other ripples to form new shapes and trajectories as the terrible beauty of the libertarian movement was born.

Tuccille knew most of the major figures and organizations, and in It Usually Begins With Ayn Rand he offers us a lively and frequently hilarious memoir of the movement’s early days — before the Libertarian Party was founded, before today’s vast constellation of libertarian think tanks and periodicals existed, and before Friedrich Hayek’s and Milton Friedman’s Nobel Prizes and Robert Nozick’s Anarchy, State, and Utopia would win libertarianism a tincture of respectability in mainstream circles (if “mainstream circles” isn’t too mixed a metaphor).

Tuccille’s portrait of the libertarian movement is drawn in broad impressionistic strokes; it’s not intended, and should not be regarded, as a literally accurate record of all the doctrines and personalities involved. In reality, for example, Ayn Rand did not endorse anarchism, condemn private charity, or deny the existence of degrees of evil; Andrew Galambos credited Thomas Paine with ghost-writing the Declaration of Independence, not with inventing the word “liberty”; not all libertarians were enthusiastic about the Barry Goldwater campaign (Murray Rothbard, for instance, denounced Goldwater as a dangerous nuclear warmonger); and Rocco Fantozi’s name was not Rocco Fantozi.

It Usually Begins With Ayn Rand is a jazz improvisation on the early history of the modern libertarian movement, not a transcript. But what a sax solo! (Of course, Rand didn’t like jazz either.)

In light of the widespread tendency to regard libertarians as right-wing apologists for the corporate elite, one of the many strengths of Tuccille’s book is its stress on libertarianism’s distance from conservatism. “The ‘capitalist’ system under so much attack from left-wing groups today,” Tuccille reminds us, “is actually state capitalism, an economic ideal as far removed from the ideal of free-market capitalism as an equal degree of state socialism would be”; and the “squabbling over property rights that always plagues attempts at dialogue between the Left and Right” stems from a failure on both sides to distinguish between “legitimate private property” and “monopolistic corporate property established with the help of the state.”

(Rand, who sometimes championed the corporate elite as “America’s persecuted minority” and at other times condemned them as an “aristocracy of pull” reaping the benefits of “a mixed economy with government controls slanted in favor of business,” would perhaps have agreed with Tuccille’s remark on even-numbered days.)

In the years after the first publication of It Usually Begins With Ayn Rand, the movement would continue to grow and change. Tuccille would go on in 1974 to run for governor of New York on the Free Libertarian Party ticket, famously courting publicity by reenacting, in Central Park, Lady Godiva’s famous anti-tax/anti-clothing ride (not himself taking the role of Godiva, I hasten to add); and the Internet would give a dramatic boost to libertarians’ numbers and influence.


Ayn Rand is no longer as dominant an entry point into libertarianism as she once was, though her books continue to sell well and her public visibility is higher than ever (indeed, part two of an Atlas Shrugged film trilogy is being released in the same month as this e-book). Perhaps nowadays it usually begins with Ron Paul — though it often ends someplace very different.

Tuccille describes the early libertarian movement as having an Ayn Rand right, a Karl Hess left, and a Murray Rothbard middle; and as having myself one foot in each of those camps (yes, I have three feet; you have a problem with that?), I can happily report that all three are still going strong, though the Randians have finally split into officially pro-tolerance and anti-tolerance factions (and some of the former could even admit to enjoying this book).

Some of Tuccille’s predictions from 1972 are a bit saddening, as in the case of his forlorn hope that in the near future we would all be “living in a less militarized and more decentralized atmosphere than exists today.” But he is sometimes more successful as a prognosticator, as when he notes in his 1997 afterword: “The computer has already replaced the Molotov cocktail as the preferred weapon of revolution, and the hacker may hold the key to subverting the system from within” — words that can be seen as prophetic 15 years later, in our age of WikiLeaks and Anonymous.

Tuccille characterizes today’s libertarian movement as “sober and cleanshaven” in comparison with its beginnings; but if you want to see the freewheeling, eccentric, occasionally feud-riven crazy quilt of “left-wing anarchists and acid-dropping love children; middle-class tax resisters and blue-collar hard hats; right-wing free traders and intransigent individualists” whose portrait Tuccille limned with mingled affection and frustration four decades ago, with its mix of neckties, tie-dyes, and dollar-sign pins, just browse the libertarian blogosphere — or stop by one of the annual libertarian festivals like Libertopia or PorcFest.

Even the floating ocean platform libertarians that Tuccille describes are still with us, with serious funding behind them this time around, though many of the captains have recently (as of this writing) jumped ship, or platform, to a charter city project on the terra firma of Honduras.

The party (not necessarily the Party) continues. Come on in, the water’s fine. Or possibly spiked with acid.

Roderick Long

In Praise of Toleration appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

The “Renminbi Bloc”: China’s next step to the end of dollar supremacy

China has quietly taken a huge step toward supplanting the dollar as the world’s reserve currency.

A report from the Peterson Institute for International Economics concludes a “renminbi bloc” has formed in East Asia. That is, since the Panic of 2008, seven out of 10 major economies in East Asia have tracked the renminbi closer than the dollar. That includes South Korea, Indonesia, Malaysia, Singapore and Thailand.

The lone holdouts are Hong Kong, Vietnam and Mongolia.

Indeed the report finds the currency’s influence extending beyond China’s backyard. Turns out the renminbi is now the dominant reference currency in India, South Africa, and Chile.

“China has long vowed to raise its currency’s global sway, along with the rise of its economy, which became the world’s second-biggest last year,” crows a China Daily story summarizing the report.

“There’s been no question whatsoever,” mused Chuck Butler in this space last June, “that the Chinese have gone well down the road to removing the dollar as the reserve currency of the world.

“It will take time, lots of time, but the Chinese have awaken from their slumber, and everything they’ve put their minds to, they’ve accomplished. They wanted to be the biggest exporter, and now they are. They wanted to pass Japan as the second-largest economy in the world, and they did.”

Dave Gonigam

The “Renminbi Bloc”: China’s next step to the end of dollar supremacy appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

The “Murder Capital” Puts Down its Guns

Fifteen years ago Colombia was almost a failed state. Leftist revolutionaries controlled big tracts of jungle. There were battles with the army and paramilitaries. Drug cartels ran many of the big cities. It was one of the last places on earth you would think of investing in real estate.


However, these days that’s exactly what I’m doing. And here’s why…

Even before April of this year, when TIME magazine wrote about “the Colombian comeback,” I visited the country to see for myself what was going on.

I spent time in Medellín — one-time “murder capital of the world,” now a totally transformed city. I visited the country’s Caribbean coast. And I saw for myself wealthy Colombians enjoying their new vacation pads and relaxing on sandy beaches.

Colombia’s middle class is on the upswing. The rich are getting even richer. And we can profit by buying the type of apartment these people want to live in. Prices today reflect Colombia’s past. Not her present or future potential. You can net an 8% yield from a rental here. And you are buying so cheap that, as this middle class grows, values will increase. You are also getting diversification from your dollar; real estate here sells in Colombian pesos.

This “comeback” hasn’t happened overnight. Nor is Colombia rid of the security issues that ripped the economy apart. If you are trying to pipe oil hundreds of miles through the jungle or prospect for gold in remote areas surrounded by armed gangs or guerrillas, the issues are clear. Powerful criminal elements have emerged that are bold and brazen.

But the income of the average Colombian has doubled in less than a decade. Shiny new boutiques and restaurants line Medellín’s Golden Mile.

Medellin, Colombia

Roads are tightly packed with cars, many of them brand-new. Approximately two out every five Colombians is under 20. And they are full of optimism as they congregate in open squares and plazas. Many of their older brothers and cousins who left in the 1990s are returning.

Foreign companies — Canadian resource and European manufacturing — are establishing themselves. Expat hangouts are packed with Canadian and European resource contractors.

On Wall Street they call Colombia “the next Brazil” with good cause. Colombia has gold, oil, and hydroelectric power. It grows coffee and has plentiful forests. Debt levels are low. The population is young.

And after two decades of liberalization the Colombian government is one of the most forward- and outward-looking in the region. “We don’t expropriate,” President Santos told a group of Spanish businessmen who arrived shortly after Argentina’s President Kirchner took control of oil company YPF. The Colombians have closed a free-trade deal with the US and wealthy Venezuelans are now flooding into the country, bringing oil expertise. Growth is running at 6%. Inflation is low at 3.4%.

Colombians and international investors have good cause to be confident. It’s just like what I saw in northeast Brazil in 2008. (See below.)

An ambitious, $100-billion infrastructure plan is in the works (and desperately needed) for the next decade. Roads, airports…even an $8-billion, Chinese-funded railway that will compete with the Panama Canal. The Chinese want to get Colombian coal out without having to incur hefty Panamanian tolls. A government program calls for 200,000 new houses. And there is a focus on initiatives to improve social mobility.

How exactly do you play this upward swing? By buying the type of apartment the new upper middle class wants to live in. The best opportunity is in Medellín. The notorious Medellín cartel is finished — history. (You can now take a guided “Pablo Escobar” tour.)

In the city’s upscale areas of El Poblado and along its Golden Mile, you can buy a well-built, 1,000-square-foot condo in an older building for as little as $100,000. This area of Medellín is the place to be and to invest.

There’s a real café culture here. Like what you’ll find in a leafy European city. But here you get to sip your coffee or dine outside year-round. Scorching summer heat or cool winters won’t cramp your style, seeing as the perfect weather (Medellín sits at 5,000 feet) only varies by one degree all year. You’ll find great restaurants, trendy bars, and fancy boutiques.

Minutes away from El Poblado, the Golden Mile is an area of banks, offices, boutiques, and outdoor eateries that buzzes with traffic and commerce. On the weekends the nightlife is around here and in the Zona Rosa in El Poblado.

Sizes are quoted in square meters. You can multiply by 10 for a quick-and-dirty calculation of what that converts to in square feet. Prices on a per-square-meter basis are generally higher here for smaller units. Interestingly, large penthouse units with outside space can be found at the lower range of prices per square meter. Views just don’t seem that important to locals.

Pre-construction condos sell for $2,000 per square meter and above. This is a crazy anomaly. Pre-construction is dramatically overpriced compared to older apartments. Figure $1,500 to $1,600 per square meter for a shiny new condo in a high-end building that was delivered within the past couple of years.

You’ll find that short-term rentals aren’t permitted in the nicer, owner-occupied buildings. It’s illegal to rent your unit short-term (less than one month) if 70% of owners in the building haven’t agreed to this. But these are still the best buildings in which to buy. The best-maintained and the quietest. The type of building in which the new upper middle class will want to buy or rent. You could net a yield of 8% by renting to a visiting executive from abroad for a few months at a time. There’s a constant flow, as well as agents who specialize in this market.

Sign a year-long contract with a local and your yield will be a bit less. Multinationals like Hewlett-Packard are making Medellín their home. Domestic Medellín-based multinationals are strong in cement, financial services, and food products.

With Colombia staying the course to normalization and beyond, prices are set to rise strongly over the next five to 10 years. And each year while you wait you could bag an 8% yield. Confidence is everywhere.

When I visited Santa Marta and neighboring resort towns on the Caribbean coast, condo buildings were shooting up from beachfront plots. They were selling fast, and long before buildings were finished.

Not on the cheap. A decent condo with a view could set you back $300,000. The buyers were Colombians living in Medellín and Bogotá. And Colombians living in the US and Europe. Five years ago they would have bought a condo in Miami or Panama. Now they have the confidence and comfort to put themselves and their money in their home country.

Don’t expect Colombia’s progress to be without disturbance. But Colombia is on the up. The people are enjoying a peace dividend. They won’t hand that back easily. The fighters and revolutionaries are old and tired. If Colombia comes close to reaching its potential, it will live up to its label as “the next Brazil,” where real estate values rose by up to 20%…year after year.


Ronan McMahon
for The Daily Reckoning

The “Murder Capital” Puts Down its Guns appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

A Global Growth Trend, In Pulses!

Opportunities abound in feeding the world, from farmland to irrigation, from processing crops to food ingredients.


The basic outline of the story rests on a couple of estimates: a 30% increase in world population by 2050, which translates into a 70% increase in food production. Even if those numbers turn out to be only sort of right, they are a reliable base to build on investmentwise.

Though seemingly timeless, there are a few things happening now that make opportunities in agriculture more urgent…

On this, my friend Brad Farquhar at Assiniboia Capital in Regina, Saskatchewan, sent me a couple of interesting things over the weekend.

I like to call Brad “Our Man in Saskatchewan.” He is a great source of insight on agricultural markets, as well you might expect. Assiniboia Capital manages the largest farmland fund in Canada. I’ve quoted him many times in these pages (here or here, etc.) over the years.

Anyway, Brad sent over a newsletter called the Global AgInvesting Quarterly. The letter’s main story is on drought and how it will impact harvests this year. For the U.S., we just had the worst drought in 50 years. Citing U.S. Drought Monitor, at the end of August, GAI Quarterly notes:

  • 53% of the U.S. is in moderate drought or worse
  • 65% of U.S. farms are in areas of drought
  • 70% of crop and livestock production are in areas of moderate or worse drought.

The USDA recently cut harvest forecasts for corn and soybeans by 25% and 18%, respectively.

But it is not just the U.S. that Old Man Drought has bled dry. Russia, India and the EU all struggle with dry weather. Here is a snippet from a chart included in GAI Quarterly:

GAI Quarterly speculates, with evidence both anecdotal and empirical, that we’ll see more and drier weather in the U.S. Corn Belt — a continuation of a near-term trend. Rising temperatures have helped the Canadian Prairies, however; warmer and wetter weather means more prime farming acreage. Brad reports on successful corn and soybean plantings for the first time in Saskatchewan. Brazil is another area that has escaped drought with expected record corn and soybean production.

Dealing with drought means more opportunity for irrigation, but also for a group of foods called pulses.

One company I follow processes pulses like lentils, beans and chickpeas. This company has facilities in the U.S., Turkey, South Africa, Australia and China. Long term, I’ve always liked the story here, it fits perfectly with our “feeding the world” thesis.

Pulses have much to recommend them. In a world where water is a constraint, it takes much less water to produce a pound of pulses than other foods. 

Take a look at how many gallons of water we use to produce the following foods:

  •  1,857 gallons/lb of beef
  •  756 gallons/lb of pork
  •  469 gallons/lb of chicken
  •  368 gallons/lb of peanuts
  •  216 gallons/lb of soybeans
  •  43 gallons/lb of pulses.

Pulses, as you see, use the least amount of water. They are also high in protein and fiber, nutrient dense, low fat, gluten free and non-GMO.

Pulses also make their own fertilizer by fixing the nitrogen in the soil and require half the nonrenewable energy to produce than other crops, such as wheat. Growing pulses, therefore, also lowers carbon emissions.

Food producers are starting to appreciate these things. I remember sitting in an Italian restaurant with one CEO while he explained how one day food companies would mix pulses with wheat to make pasta. Well, that day has arrived.

Food companies are now making flour with pulses and mixing it to make not only pastas, but baked goods, snack foods and other packaged goods. Doing this allows them to make health claims, as in the above picture. 

Here is another picture.

Look closely at the ingredients:

Yes, “legume flour blend” — you’ll see more of this, I guarantee it. And once one food producer like Barilla does it, they’ll all follow suit. After all, they can’t let a competitor make all those claims while they stick to old-fashioned wheat flour!

Already, a number of food companies have declared ambitious goals: PepsiCo wants to reduce its water use in five years. Heinz wants to reduce carbon emissions by 20% by 2015. Wal-Mart, Carrefour, Tesco and others are all tracking things like water use and carbon emissions. Products that can help them meet those goals — like pulses — will get more attention.

So this is an exciting story. Companies that processing pulses, like the one I follow, should see plenty of business in the years ahead.

Traditionally, the markets of South Asia, Latin America and the Middle East and North Africa have been the main drivers. But the new emphasis on pulses as a food ingredient, and a water-efficient, protein-rich crop, opens up new markets in Europe, the U.S. and China. 


Chris Mayer

Original article posted on Daily Resource Hunter

A Global Growth Trend, In Pulses! appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

avatarThe Daily Reckoning - The Daily Reckoning posted Friday, October 26th, 2012.

Post a Comment

* Copy This Password *

* Type Or Paste Password Here *