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I’m not sure how many times you’ve heard it, or even brought forth this point yourself. Personally, I’ve stopped counting long ago, as it seems to be an issue almstatue-of-liberty-568688_640ost inevitably addressed every time one discusses the significance of capitalism. Almost perfectly following orthodox Marxian theory of history, people declare that whatever arguments one might make in favor of (classical) liberalism, they are of minor relevance only as the Age of Capitalism has surely passed. There were times when one could get along with it (die-hard Marxians might say: when it was necessary for the final evolution towards communism), but nowadays? As a matter of fact, it is too simple a system to be truly applicable to modern circumstances. The world grew complex, and will definitely continue to do so, which makes it easy to see that straightforward property rules and an anarchic production structure with no one directing it at a meta-level, have become insufficient and therefore obsolete. (more…)

Statue of Justice in Bruges, Belgium. Photo Credit: Emmanuel Huybrechts.

Statue of Justice in Bruges, Belgium. Photo Credit: Emmanuel Huybrechts.

The State is a creative monster. Always justifying their policies in the name of a “higher good,” politicians are eager to find and implement new policies that limit economic and social freedom. With many unintended costs, these policies are as dangerous as they are immoral.

In democracies throughout history the government has found countless ways of enforcing certain views and ideologies on those who have voted them into office. Very often their voters accept another dose of bondage, covered with the sweet promises of a better future. The number of tools available to those in power to “shape” or “steer” a society and its economy are manifold.
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It is common practice for governments to provide subsidies to childcare. For example, in my native UK there is an entitlement to 15 hours of free childcare each week (and there is pressure to increase this further). In this article, I shall demonstrate that these subsidies are unjustified and ought to be abolishedbaby-20607_640 (1).

The basic case against childcare subsidies is very familiar and very simple: they cost money, money which is extracted from taxpayers, if not at gunpoint, at least with the implicit threat of violence if people refuse to pay. In any other context we would call this extraction of money “theft” and demand an end to it, so you need a very good reason as to why it should be permitted in this case.

A second reason against these subsidies is that they are anti-egalitarian. (Many libertarians are hostile to government efforts to promote equality, but perhaps we can agree that if something is anti-egalitarian then this is an extra reason for the government not to do it?) Higher earners make more use of childcare, as we would tend to expect since they would forgo higher wages by staying at home. The payment to an individual high earner may not be any larger than the payment to an individual earner, but if more high earners make use of the childcare subsidy then the anti-egalitarian effects will still occur.

Third, if you believe that being put into childcare is bad for children in the long-term, then you have a very good reason not to want the government to subsidise it. (NB. I hold no position on whether childcare actually is bad for children. It is merely the case that this claim has been made, and that if true would provide an additional argument against subsidising childcare).

With these in mind, what might one offer as a justification for childcare subsidies? The crudest argument, one that would never even be made let alone taken seriously were we discussing anything other than politics, is that “childcare is too expensive for most working parents”. I can’t afford to live in Schloss Neuschwanstein, but this hardly justifies any government in paying for me to have this privilege. Things have prices because they cost resources, and we could be using those resources for other purposes. Government can’t just make the costs of something magically disappear.

With that said, it is worth noting that one of the key reasons for childcare being expensive is government intervention in the market. Looking after children is not skilled labour, but occupational licensing makes it much harder for new people to enter the market on the supply side while strict regulations raise the costs for those who are already in the business. Indeed, subsidies such as those I decry in this article will also raise the price of childcare by raising the effective level of demand.

The next justification for childcare is that it is seen as a way of helping low-income families. However, this raises an important question: if you want to help these families, why would you insist that any help to them be in the form of free childcare? This policy is not only precisely targeted to avoid helping the very poorest – that is, the unemployed – but it ignores the fact that many people gain great pleasure from looking after and raising their children. Focusing upon wages and ignoring happiness is crass and materialistic.

Even so, perhaps you think there are particular reasons why this help ought to be limited to working people, as a way of incentivising them to choose work over other activities. Further assumptions are still required to explain why one should prefer childcare subsidies rather than targeted wage subsidies (do people earning £100,000 a year really need further incentives to work?), and this implies a rather unpleasantly paternalistic attitude to the public.

One final reason which is sometimes given as a justification for government subsidies to childcare is as a way of promoting gender equality. Historically, married women have tended to stay at home to look after the house and children while men have gone off to work and even now (the story would say) cultural factors mean that men go out to work and women stay at home, despite women being just as qualified to be the main breadwinner. This violates sexual equality, and therefore the government needs to do something about it.

Even accepting all the premises of this argument, this hardly justifies subsidies to childcare. The presence of gender equality hardly discredits the one-parent-works, one-parent-stays-at-home model. If gender equality is such a problem then perhaps you might tax families in which the men work and the women stay at home to redistribute towards families which work the other way around until these types of family reach a more equitable ratio. This would be cheaper, less distortionary, and probably a lot more effective at actually achieving the goal of moving towards gender equality in parenting.

There are other arguments in favour of state intervention to subsidise or provide healthcare but these are the main ones, and none of them come close to justifying what they are supposed to.

 

exosflAs a follower of ESFL, you stand to benefit from the recent partnership between ESFL and EXOSPHERE, a learning and problem-solving community dedicated to raising a new generation of battle-ready entrepreneurs.

11211593_10204200408746074_1407456623_oExobase is a full day program for curious students and aspiring entrepreneurs to take the next step on their journey by gaining a better understanding about themselves and and an entrepreneurial view about the world.

Exobase is an intense process of introspection about your options, your calling, and your life, combined with the exploration of practical philosophies and tools to help you in taking your next steps. We invite you to be an active participant in the discussions about the most basic and important ideas defining your life and the world around you to apply new ideas and new perspectives to your individual situation.

At Exobase you will learn about:

Self-Reliance

The awareness that your success is predicated on your willingness to own your life and decisions.

Antifragility

What is the opposite of fragile? Things that gain or improve from disorder and chaos.

Startup Win with Fakegrimlock

A straight-forward, honest approach to building businesses quickly, effectively, and AWESOME.

Personality Type Test

A framework to discover how you and others perceive and interact with the world.

Community

As the word community has been overused, we will explore the true meaning and how it relates to success in life and relationships.

Perception Biases

Opening your eyes to the inaccurate perceptions that mold our decision making process and see new and better opportunities.

 

Dates…

Join us for the workshop!

As a member of the ESFL network, just use the code ENTSFL for 35 percent off the total price.

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May 16:           Bari (Italy)

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When the state tries to tell us what we should consume, there are no limits. Sugar and chocolate bars could be slapped with extra taxes or mandated plain packaging just as much as alcohol or cigarettes. And it just doesn’t work.

A detailed study by London Economics on the introduction of plain packaging in Australia in 2013 revealed there has been “no statistically significant change in smoking prevalence among adult Australians” since it was mandated.

Individuals can make better decisions about their own lives. No nanny needed.

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Whether it’s video games, alcohol, sex, gambling, eating, or even laughing, the government thinks it knows best. But today’s young people don’t need a nanny and don’t need the state to run their lives and tell them which activity is fun and which isn’t. Legalize choice. No nanny needed.

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When the state bans supermarkets from selling alcohol at certain times, it’s taking away our individual choices. Don’t let the nanny ruin your fun.

 

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Laws which tell businesses how long they can be open are well-intentioned but actually do more harm then good.

An article in the Journal of Health Economics analyzed the liberalization of closing times for pubs in England and Wales in 2005 and found that letting bars stay open much later caused traffic accidents to significantly decrease. Accidents on Friday and Saturday nights decreased by 32.5 percent. Rather than being forced onto the roads after a night at the pub because the state mandates a closing time, drinkers can take their time and responsibly get home when they’re ready. No nanny needed.

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With an ever-increasing interventionist government, supplies become restricted and cartels form to protect their profits and keep away the competition.

These are the same bad incentives created by the state which allow Mexican drug gangs to run wild and Afghan war lords to control the opium trade. And what if ordinary products like butter and chocolate were the next restricted items?

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There’s a danger in every aspect of life. Imagine a world where government mandates warning labels on anything and everything which could could harm. We don’t need a nanny to tell ban everything. Say NO to the Nanny State.

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The global movement to require plain packaging on every product the government deems harmful is the ultimate extension of the Nanny State. The desire for governments to brand everything the same and allow no creative expression for the perceived safety of the population is exactly what the government of North Korea has done for years.

dietwars_hiresWhen the government becomes the arbiter of what is healthy, they almost always turn out to be wrong. Don’t let the Nanny run your life.

sjokoladeplater

Når staten først begynner å fortelle oss hva vi bør kjøpe er det ingen grenser. Sukker og sjokolade kan bli skattlagt og påkrevd nøytrale innpakninger akkurat som alokohol og sigaretter. Alt dette er forgjeves fra staten sin side.

London Economics bekrefter i en studie fra Australia i 2013 at nøytral innpakning av sigaretter ikke har noen statistisk signifikant virkning.

Individer kan gjøre beslutninger om eget liv på egenhånd. Overformynderi er ikke nødvendig.

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Uansett om det er videospill, alkohol, sex, gambling, mat, eller til og med latter, tror staten den vet best. Dagens ungdom trenger ingen overformynder til å bestemme over livene deres og fortelle hva som er gøy og ikke. Legaliser egne valg. Ingen overformynder er nødvendig.

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Staten bestemmer når butikkene får selge alkohol. Dette er på bekostning av vår frihet til å gjøre individuelle valg. Ikke la overformynderne ødelgge moroa.

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Lover som dikterer hvor lenge utesteder kan holde åpent har kanskje en god intensjon, men gjør faktisk ting verre.

En artikkel i Journal of Health Economics analyserte liberaliseringen av åpningstider i England og Wales i 2005. Den fant at antall trafikkulykker fredag og lørdag kveld sank med hele 32,5 prosent. Istedenfor å bli tvunget ut på veien når staten har bestemt stengetiden, kunne folk nå ta den tiden de trenger og dra hjem når de er klare. Overformynderi er ikke nødvendig.

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Med stadig økende innblanding fra staten begrenses tilbudet, og karteller blir formet for å beskytte profitt og stenge ute konkurranse.

Dette er de samme dårlige insentivene som tillater meksikanske narkotikakarteller å holde på som de gjør og afghanske krigsherrer å kontrollere opiumhandel. Hva om de neste produktene med slike begrensninger var smør og sjokolade?

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Alt i livet kan være farlig. Forestill deg en verden der staten krevde advarsler markert på alt som kunne være skadelig. Vi trenger ikke en stat til å fortelle oss alt. Overformynderi er ikke nødvendig.

It seems like everybody has an opinion on capitalism. For some it is the fountainhead of all that is good, for others the root of all evil. Stances on capitalism are used to place people the diminutive spectrum of left and right, marking anyone who supports capitalism as “right-wing” even if they are disgusted by almost every other policy associated with the political right.

However, despite the attention given to capitalism, both advocates and critics often share some common beliefs about capitalism that are actually rather misleading.

 

Capitalism is all about competition

If you talk to most people about capitalism they will usually talk either about the destructive, or productive power of competition. To critics the cut-throat competition for resources drives people apart and is denounced as wasteful. Wouldn’t we all be happier and better off if we cooperated and worked together? They will usually pull out the prisoners dilemma as a demonstration of how cooperation leads to better results (as if criminals getting away with their crimes is somehow the socially desirable result). Typically capitalisms apologists will go along with the assumption that a free market is nothing more than a competitive arena of opposed firms. But they point to the benefits of competition, and how it should drive out inferior products and lead to innovation as every firm tries to get ahead.

Of course capitalism does involve some competition. Firms in the same industry compete for market share and spend money advertising, innovating and cutting costs in order to sell more of their product, often at the expense of their rivals. But capitalism involves far more cooperation than competition. Firms are in competition with only a few other firms providing similar products (or what economists would call substitute goods). Meanwhile firms are dependent on dozens of others to provide them with raw materials, energy, labor, transport, accounting services, legal advice, IT support, marketing and every other function that they contract out. Likewise they sell to often sell to a wide range of customers who are dependent on them. The defining feature of capitalism is not that it isolates us from one another but that it brings us together in a tangled web of economic interaction. And where needs arise a free market creates an incentive for it to be quickly filled. Capitalism makes it much more profitable to meet unfilled needs than compete in a market where there are already good products.

The truth is that all human societies involve competition. People’s interests will never align completely and some people will be willing to ruthlessly pursue their own interests at the expense of others. Capitalism restricts people to competing for voluntary exchanges. You can’t get ahead by seizing other people’s property or cheating them. And when we play by a set of rules that are fairly and equally enforced, then we can start to trust each other. Instead of wasting resources trying to build up power and alliances to defeat our enemies and take what they have we build up networks to produce for one another and outsource justice to a third party.

Capitalism is “pro-business”

For some people capitalism is understood as a system which upholds the interests of the capitalist class (usually identified as factory owners, the 1% or simply “rich people”). The other side might talk about being “business friendly” or being good for “job creators”. But there is a consensus that capitalism is on the side of corporations, especially big corporations.

An actively pro-business capitalism, complete with bail-outs, subsidies and other political favors is what we would call “crony capitalism”. For libertarians any intervention by the government in favor of businesses is a violation of capitalism. And while regulations are rightly seen as contrary to free-market capitalism, the reality is that they are often supported or at least shaped by big business in order to strengthen their own position.

When capitalism is working right it shouldn’t favor the interests of any class. The division between property owners and workers is a Marxist myth. A fundamental part of capitalism is that it protects the property rights of all people – and the most important of these rights is over one’s own body and labor. It is often forgotten that the historical alternative to capitalism is not communal ownership (a fantasy system that has never existed anywhere on the scale of a nation and has failed even in small scale experiments) but rather slavery, serfdom or a rigid caste system that assigns economic roles to people at birth. Capitalism is as much about setting labor free as it is about allowing corporations to act without interference – which means that restrictions on immigration are anti-capitalist.

Capitalism is violent and militaristic

Like “blood for oil” and “check your privilege”, the expression “military-industrial complex” is probably now more often used in satire and straw-man arguments than real criticism. However, there is still a common belief that capitalism goes hand in hand with an authoritarian, nationalistic and military government. There is also a tendency to build upon the misconception that capitalism is all about competition to suggest that capitalist society in its pure form is a heartless Darwinian survival of the fittest – the devil take the hindmost. Even people who consider themselves pro-capitalist often see it as consistent with conservative positions on a strong, interventionist military and a tough on crime domestic policy.

However, of all the misconceptions about capitalism this is perhaps the most completely wrong. Capitalism is first and foremost a pacifist system that completely forbids the initiation of force, coercion and fraud. Even retaliatory force is restricted in many cases. Instead the legitimate use of force is reserved for a third party (the State) and can only be exercised only within a framework laid out in laws and enforced by courts. If you believe in capitalism your highest priority should be a rule of law that acts without prejudice and is free of corruption.

Capitalism also forbids the state from using force to interfere in consensual interactions. When we are looking at the economic sphere this means allowing people to trade freely. But for libertarians the principles applies to interactions that are economic (minimum wages), social (gay relationships) or that are both (prostitution).

It may be difficult for people to accept capitalism as peaceful, cooperative and opposed to cronyism. For many their opposition to capitalism is so ingrained that it becomes more important than genuinely liberal values like sexual equality, individual liberty and freedom of conscience. This causes leftists to support dictators and oppressive regimes because they are nominally against capitalism. The right’s support of anti-communist regimes that were equally restrictive of freedom shows that the mistake is made on both sides.

The common wisdom on capitalism needs reviewing. The principles of capitalism are the same as those that support a liberal social agenda: Respect for private property (including a person’s body and labor), consensual interactions free from coercion or fraud, disputes settled through impartial courts and through consistent procedures that are fair to all parties. When these principles function correctly, societies see high levels of cooperation, peace and affluence.

In the first part of this series I briefly defined what intellectual property is and what are its practical effects. Then I argued that from an economic point of view how intellectual property is an entirely unnecessary and harmful concept. In this part, I am going to expand on the economic argument and also analyze some of the ethical problems with IP and its legal consequences from a libertarian standpoint.

Probably the most important thing to remember when we consider the issue of IP is that when we gain knowledge of a certain ideal object (using this term somewhat loosely), such as a recipe, technique, or a story and use it, i.e. apply it to the tangible physical (and scarce) goods that we possess, we are not taking anything from anyone against his will, we are simply copying someone’s idea. This is a large difference, which a lot of the defenders of IP muddy, either incidentally, or on purpose. To copy someone’s technique of harvesting his crops is not to take it away from him with force. He can still use it in his own harvesting activities i.e. he can still apply this idea he is aware of, to his own tangible property (and as explained in the first part, ideas are not scarce the way tangible goods are and there can be no theft and no property to begin with, without scarcity).

Many proponents of IP try to make it sound as if copying is the same as stealing. We have all seen and heard the “piracy is theft” campaigns against internet ‘piracy’, which is simply the online sharing of digital copies of music, books, articles, and etc. It is crucial to remember that copying is a very different thing from stealing, even when we are talking of tangible physical goods. When something is stolen, the original owner loses his tangible good – it is taken away from him against his will and this necessarily involves violence. When something is copied on the other hand, the original owner still keeps his own good it’s just that now another person has a copy of that same good for his own use.

This leads us to another big problem with the enforcement of intellectual property – it necessarily entails arbitrarily restricting the use of other people’s property. IP ensures rights in ideas, but this has a direct effect on the usage of tangible goods in which those ideas are instantiated.

Let’s illustrate this by returning to the example I gave in the first article of me inventing a new sort of potato and patenting it. If another person who grows potatoes figures out how to grow this new sort, and attempts to do so on his own property, with his own tools, labor, and potatoes, he would be considered a criminal and persecuted by the State as a thief. He is operating entirely with tangible physical good which he rightfully owns, yet my patent limits his use of those goods!

Following up on this line of reasoning Roderick T. Long argues that information is a universal which exists only in the minds of humans, and thus you cannot own information without owning the humans in whose consciousness that information is contained. And that means attempting to enforce something like partial slavery over the people who are aware of copyrighted and/or patented ideas. In essence then, anyone’s “intellectual property” in some idea, will always necessarily interfere with someone else’s free use of their own tangible physical property and even their own body! From the libertarian standpoint, this is a disturbingly contradictory consequence of attempting to enforce such ‘rights’ and should raise a lot of red flags.

From the economic and natural rights point of view then, there are clearly some massive problems with IP. But there are a lot of people who argue in favor of intellectual property based on utilitarian arguments, especially insofar as patents are concerned, claiming that it stimulates innovation and that without IP there would be no motivation for technological inventions or even new developments in the arts. This utilitarian argument in favor of IP of course does not solve the numerous problems and contradictions we already discussed, both economical and ethical, but the question is, does it make a legitimate point on its own?

For the most part, no it doesn’t. In fact I would argue that patents will always tend to have an obviously detrimental effect on technological innovation. Think about it – we are supposed to believe that something which is designed specifically to secure monopoly privilege for an arbitrary amount of time and thus restrict potential competition somehow is conductive to innovation? If a given inventor knows that when he innovates a new technological gadget he can secure exclusive right to produce and sell that gadget for a given time period, will he be incentivized to innovate more in that time period? No, because he has a secure income stream from his first innovation and as long as his patent lasts, he doesn’t have to worry about losing his market share.

Especially when it is a new technological innovation, the innovator is very often guaranteed an inelastic demand for his new good which only he can satisfy, because no one is legally allowed to copy his idea. This way, the inventor has no incentive to develop his innovation further and keep creating new and better products. But if the invention couldn’t be patented, the inventor would have to keep upgrading and developing his product further in order to stay ahead of his competition, which is attempting to copy him at his every step. The only way he or she can stay ahead and keep reaping profits is to constantly keep innovating. Thus, on the contrary, I would argue that patents do not stimulate innovation at all, but in fact limit it to a very large degree.

In conclusion, intellectual property laws, by attempting to establish property rights in ideas by state fiat, not only create artificial scarcity, but also necessarily lead to violations of people’s natural rights in the tangible goods that they rightfully possess. Starting with economic nonsense, the concept of “intellectual property” results in a serious violation of libertarian ethics. And on top of that, as a monopoly privilege granted by the State, IP such as patents necessarily dis-incentivize innovation and hamstring competition.

If this series hasn’t convinced you that a libertarian should oppose intellectual property, I hope that it has at least sparked some interest in the subject. There are many other problems with intellectual property besides these discussed so far, but to attempt to go through all of them would take us far beyond the scope of this two-part series of articles. If you are interested in some further reading on the topic, I encourage you to check out the works and authors that I have already referenced.

When in mid-April 2015 a ship filled with African refugees capsized and a large number of its passengers drowned, we experienced the latest terrible episode of a tragedy that has been going on for too long. The plight of refugees who drown en masse in the moats of Fortress Europe has stirred up an extreme controversy about individual rights that has created two positions.

The official EU stance is to ramp up security. Like a feudal lord who builds higher walls and digs deeper moats to reenforce his castle. More money for more controls, higher fences with more barbed wire and better technology to avert those who try to enter the EU. Even opening fire on refugees swimming in the sea appears to be an appropriate means to this end [LINK]. The strategy is simple: Shock and awe to scare refugees back into their own home countries.

Another position on this issue is the complete opposite. It fights for open borders and insists on the essential right of freedom of movement for all people. The loudest of those who support this view are young, liberal students. Either via blogging or by spreading awareness of this issue on this years ESFLC, the demand is clear: Open borders now!

The idea is that every human being has the right of freedom of movement. This freedom creates the necessary flow of people and ideas to increase wealth by means of trade and economic exchange. The importance of free trade for a peaceful society has always been an essential part of classical liberal thinkers. Not just does free trade create better conditions for peace, but also it does increase the overall wealth. If people in African and European countries could benefit from the positive effects of free trade, the issue of refugees fleeing due to economic reasons could be effectively reduced.

Tearing down the walls of Fortress Europe is a good start in order to reach this goal. But there is another factor that inhibits growth and prosperity: the stale fume of mercantilism.

Modern-day Mercantilism at work

That is because the EU not only makes sure its physical walls are high and insurmountable, it also builds economic walls that block out others. These walls have only one goal: protecting domestic industries from foreign competition at the cost of others.

There are several tools in use in order to fulfill this goal and to control the EU market place. Various tariffs and quotas on goods that are being imported into the EU warp whole business sectors with the goal of protecting local interests. On the other hand EU subsidies generate additional income for certain industries, regardless of their actual performance. This is especially true with the EU agricultural sector. Not only do European farmers benefit from import tariffs, but they also receive direct payments in the size of several billion Euros. The strength of the agricultural lobby is widely known and in order to get their will they are not even scared of wasting foodstuffs, such as milk. Their interest lies solely in protecting their benefits, no matter the costs. Free trade and all its benefits is being sacrificed for the interests of a well-organized industry.

A world without walls

Removing these obstacles to free trade and prosperity would benefit everyone involved. The renewed competition would help reduce consumer prices in rich European states. Money formerly being spent on expensive local goods could either be saved or spent to purchase other goods. At the same time the European industry is being forced to find new ways of staying competitive, while farmers and companies importing freely into the EU will benefit from additional sales. Additional money would generate new capital for investment and thus growth in their home countries. While additional growth means new investment possibilities for European entrepreneurs. 

But the strength of the agricultural lobby and its influence on EU politics is a sign of how a strong and well-organised minority can benefit at the cost of a majority. Archaic tools, such as import taxes or subsidies that are being publicly paid for show how the ghosts of Mercantilism still haunt us today.

The question of economic refugees also needs a „home-grown“ solution and that lies in the positive economic development of their own countries. Only growth and prosperity can lead poor countries out of their misery. The most effective way of achieving this is by destroying both physical and economic walls, so that people, goods and money can freely cross borders.

Mario Draghi, President of the European Central Bank, who put a controversial negative interest rate in place last year. Photo from the European Central Bank.

Mario Draghi, President of the European Central Bank, who put a controversial negative interest rate in place last year. Photo from the European Central Bank.

Any topic involving money will eventually lead to a discussion about them. No matter whether you open a bank account, take a loan, invest in a stock market company or talk about the financial crisis, sooner or later someone is going to mention them. Some see them as a sign of the wickedness of money lenders, some as fair price for a product they offer, while others even see them as a viable tool to control whole economies. In some cultures they are even officially banned, yet they continue to exist. What are interest rates, what makes them so controversial and why are they still important to us?

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