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Guest Post: Meet The Man Bankrupting The Eurozone (And Maybe The Rest Of The World)

Zero Hedge
Thursday, 19 April 2012

Guest Post: Meet The Man Bankrupting The Eurozone (And Maybe The Rest Of The World)Submitted by James Miller from the Mises Institute of Canada

*Meet the Man Bankrupting the Eurozone (and Maybe the Rest of the World) *

No, it’s not Greece Prime Minister and bankster puppet Lucas Papadermos who serves his former masters at Goldman Sachs rather than the people of the country he was “appointed” to lead.  No, it’s not German Chancellor Angela Merkel who is putting the interests of the banks and bailout recipients above her fellow Germans at the risk of a continually devaluing euro.  And no, it’s not European Central Bank president Mario Draghi whose cheap euro policies are propping up both the banking sector and governments of the periphery at the expense of capital investment in sectors that would result in actual wealth creation rather than sustaining a clearly unsustainable status quo.

It’s the man pictured here:Meet Ed Houben.  He is not solely responsible for the slow implosion of the poster boy of New World Order also known as the Eurozone, but the results of his career certainly play a part.  So who is Ed Houben? Well, he is not a politician buying votes with stolen funds.  Nor is he a banker looking to use taxpayers to cover his poor investments.  Mr. Houben is just a lowly entrepreneur.  His business just happens to be in putting a strain on the various welfare states which permeate throughout the Eurozone.

Ed Houben is a sperm donor; but he is not just any sperm donor.  The “fruits of his labor,” pardon the phrase, have thus far granted him 82 children; with at least 10 more on the way.  From Spiegel Online:

He already has three children in Berlin. The remaining 79 live in other cities and countries, including Belgium, Italy, the Netherlands, New Zealand and Spain. Houben has entered their names, dates of birth and genders into an Excel table at home. The oldest child is almost nine, while the youngest is only 2 months old.

Houben is a sperm donor. He gives women his sperm and, according to his estimates, he succeeds in giving them a child in 80 percent of cases. “That’s my success rate,” he says.

For an entrepreneur, Houben has proven to have quite the successful business model.  In his grand economic treatise Man, Economy, and State, economist Murray Rothbard defines as an entrepreneur as follows:

These are the men who invest in “capital” (land and/or capital goods) used in the productive process. . . . The capitalist-entrepreneur buys factors or factor services in the present; his product must be sold in the future. He is always on the alert, then, for discrepancies, for areas where he can earn more than the going rate of interest.

What gave rise to this realized profit, this ex post profit fulfilling the producer’s ex ante expectations? The fact that the factors of production in this process were underpriced and undercapitalized—underpriced in so far as their unit services were bought, undercapitalized in so far as the factors were bought as wholes. In either case, the general expectations of the market erred by underestimating the future rents (MVPs) of the factors. This particular entrepreneur saw better than his fellows, however, and acted on this insight. He reaped the reward of his superior foresight in the form of a profit.

What Mr. Houben has done is bypass the bureaucratic red tape which dominates many sperm banks within Europe. For example, German sperm banks often charge around $5,000 per treatment and require a comprehensive medical examination along with documenting the whole affair.  The procedure at a sperm bank goes like this:

The would-be mothers are heterosexual and preferably married, and their identity is not revealed to the donor. According to the guidelines, the donor is not older than 40, undergoes a thorough examination and has sperm that meets the “minimum requirements,” or 10 specific criteria. The “practical execution” is documented, and the document is kept on file for 30 years.  It normally takes about six months before the first attempt at pregnancy is made.

Houben takes advantage of these hurdles by providing “a solution for those who lack the time, money or opportunity to take the official route.”  Though not illegal, there is nothing to stop the women whom Houben impregnates from coming after him for child support should they renege on their initial agreement.  Houben saw these “discrepancies” in the market and has proposed a solution while bearing the risks that come along with such a career.

While in a market economy unperverted by the state, Houben’s occupation would be laudable.  Instead, the results of his career end up imposing a burden on his fellow Europeans.  Pia, a Vietnamese woman who has one child named Max through Houben and wishes to have another, has

to deal with the youth welfare office almost every day since Max’s birth. She receives unemployment, and the youth welfare office pays the child support that the father would normally pay. If it ever emerged that she had lied on her application, she would be required to repay the money, and charges could be brought against her for “benefit fraud.”

One general rule in economics follows that if something is subsidized, more of it will likely follow.  If unemployment compensation is indefinitely extended, claims will keep being made.  If you provide food stamps to the poor because, politically, the price of food remains too high, prices then remain elevated.  If student loans are provided via the government to help students with the high cost of tuition, the price of university admission is kept from falling.

Put simply, throwing money at a problem often ends up inducing little change.  The same applies to the dependency-creating welfare state.  As Rothbard notes in a Journal of Libertarian Studies article:

Being-on-welfare, like all other human economic acts, has a “supply function”: in other words, if you make welfare pay enough, you can produce as many welfare clients as you wish to have. Pay them little enough and you can reduce the number of clients at will. In short, if the government should announce that anyone who signs up at a “welfare” desk gets an automatic annual check of $40,000 for as long as he wishes, we will find soon enough that almost everyone has become a welfare recipient – and what is more, will join a “welfare rights” organization to lobby for $60,000 to offset the rise in the cost of living.

The welfare state, rather than being the product of political compassion, is really just a vote buying machine that is self-reinforcing and does little to help the poor.  It turns the beneficiaries into impoverished wards of the state by paying for lifestyles marked by high consumption, high time preferences, and sparse, if any, thought given to the future.

It isn’t referred to as the entitlement society for nothing.

It can be reasoned that much of Houben’s career as a sperm donor is subsidized in part by the various welfare state programs predominating around Europe.  Should any of Houben’s clients find themselves in the same position of living on the government dole like Pia, the tax hindrance on his fellow Eurozone inhabitants increases as another child is fed, clothed, and cared for with tax funds.  As more strain is put on the public purse by those feeling entitled to benefits promised by politicians merely seeking to win their next term in office, those governments in turn become more indebted and less able to pay out on empty assurances.  Western governments are bankrupt, both financially and morally due to central bank-enabled fraud (money printing) and are barreling toward a great default.  Entitlement promises of everlasting welfare payments will not be made; less they are paid out in increasingly worthless currency.  The politicians know this.  The enlightened public which sees the political class as nothing by liars, crooks, and thieves knows it.  The majority of voters still don’t.  The welfare state has turned them into dependents still seeking to use the force of government to rob their fellow man.

It has in part helped Houben’s career as a sperm donor.  As long as the safety net remains in place, women can have children without worrying if a check is on its way.

In a free society not plagued by the cancer known as the welfare state, Houben’s profession would be admirable as he out-competes others for market share.  Instead, his actions further bankrupt a deteriorating system of impoverishing dependency.  Bringing about a collapse of the welfare state sooner rather than later would no doubt be a positive development for all.  The short term pain will only serve as a lesson to those who rely on the productivity of others.
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