Saturday, May 31, 2008

A Threat to Freedom

President of the Czech Republic Vaclav Klaus criticizes modern environmentalism as a dangerous threat to freedom and prosperity.

Friday, May 30, 2008

Nobel Laureate James Buchanan on Change

At a time when "Change" seems to be everyone's political slogan, it is a healthy exercise to listen to James Buchanan, a man who truly changed the world for the better.

In this lecture, you will find neither inspiring but vague promises nor soaring rhetoric, but you will find a brilliant mind expressing itself in an authentic Tennessee voice.

Nobel laureate Buchanan speaks at the 2007 Social Change Workshop hosted by the Institute for Humane Studies.

Thursday, May 29, 2008

Wasting Money

In his novel Anna Karenina, Leo Tolstoy (1828-1910) said wasting money is like drink to a drunkard. The first time it might hurt, the second time is easier, and the third time...well, you should read it yourself.

In this passage, the character Levin realizes that he and his wife are spending money they do not have. Perhaps this experience is common in capital cities everywhere.

"Only during the first days of his stay in Moscow Levin had been struck by the expenditure, strange to one living in the country, unproductive but inevitable, that was expected of him on every side. But by now he had grown used to it. That had happened to him in this matter which is said to happen to drunkards--the first glass sticks in the throat, the second flies down like a hawk, but after the third they're like tiny little birds. "

Wednesday, May 28, 2008

June 2008 Meeting

"Beyond Incentives Matter: Ideas and Institutions in the New Economics of Politics"
Professor Ed Lopez
Wednesday, June 4th
Imaging Arts Gallery
175 King Street
Charleston, SC
5:00 pm Reception 6:00 pm Speaker

Megan Rock

Professor Lopez's presentation will focus on the power and the limitations of incentives in bringing about beneficial political change. Economists have done a masterful job communicating to mass audiences the central idea that "incentives matter". But policies designed to incorporate this idea present two kinds of problems.

First, certain trends suggest policymakers can badly apply the idea or take it too far, resulting in ineffectual policies that increase tax burdens or decrease individual liberties. Many types of "nanny state" policies fall into this problem. Also, some policies that would be beneficial by the use monetary incentives are prohibited because people find them repugnant. An extremely important example is monetary compensation for vital organ donation. Both sorts of problems suggest examining the institutional context within which incentives take shape, as well as the popular beliefs and values that constrain institutions.

Incentives matter in politics, yes, but in limited ways. Understanding the contours of those limitations is critical to bringing about beneficial political change.

About the Speaker:
Edward J. López is Associate Professor of Law and Economics at San Jose State University, and currently Scholar in Residence at Liberty Fund in Indianapolis. He earned a B.S. in economics from Texas A&M University, and an M.A. and Ph.D in economics at George Mason University in 1997. He previously taught economics at the University of North Texas and George Mason University, and he served as staff economist on the Joint Economic Committee of Congress. Professor López's main area of research is in public choice and law and economics, with emphases on entrepreneurship, creative expression, voting, political ideology, and political institutions. He has also published articles on antitrust regulation, property rights, campaign finance, term limits, and fiscal policy. Currently Professor Lopez is editing one book on the application of public choice theory to the legal system, titled Law without Romance, and is also co-authoring a book, with Dr. Wayne Leighton, about public choice and social change for a popular audience.

Tuesday, May 27, 2008

Human Dignity

Biomedicine -- like business -- is often criticized as a dehumanizing enterprise. Indeed, the two fields often overlap, with biomedical products researched, produced and distributed by for-profit companies.

The arguments against biomedicine rest on a campaign for human dignity. But behind those noble-sounding words stands an effort to control a stunning variety of peaceful human behaviors.

In The New Republic, psychologist Stephen Pinker of Harvard explains how political attempts to limit biomedical research in the name of human dignity have taken a bizarre and authoritarian turn. Who knew licking an ice cream cone in public was beneath human dignity?

Two excerpts:

"The price of freedom is tolerating behavior by others that may be undignified by our own lights. I would be happy if Britney Spears and "American Idol" would go away, but I put up with them in return for not having to worry about being arrested by the ice-cream police. This trade-off is very much in America's DNA and is one of its great contributions to civilization: my country 'tis of thee, sweet land of liberty."


"In a free society, one cannot empower the government to outlaw any behavior that offends someone just because the offendee can pull a hypothetical future injury out of the air. No doubt Mao, Savonarola, and Cotton Mather could provide plenty of reasons why letting people do what they wanted would lead to the breakdown of society."

Monday, May 26, 2008

Tolstoy on Wealth and Justice

From Anna Karenina by Leo Tolstoy (1828–1910), a dialogue on wealth and justice between three aristocratic Russians. It takes place in a barn at the end of a day of hunting. The characters are Stepan Arkadyevitch Oblonsky, a married playboy; Levin, an intellectual with socialist inclinations and brother-in-law of Oblonsky; and Vassenka Veslovsky, a new acquaintance of the other two men.

The text is from Literature Network.

Malthus was a well-known capitalist, who had made his money by speculation in railway shares. Stepan Arkadyevitch described what grouse moors this Malthus had bought in the Tver province, and how they were preserved, and of the carriages and dogcarts in which the shooting party had been driven, and the luncheon pavilion that had been rigged up at the marsh.

"I don't understand you," said Levin, sitting up in the hay; "how is it such people don't disgust you? I can understand a lunch with Lafitte is all very pleasant, but don't you dislike just that very sumptuousness? All these people, just like our spirit monopolists in old days, get their money in a way that gains them the contempt of everyone. They don't care for their contempt, and then they use their dishonest gains to buy off the contempt they have deserved."

"Perfectly true!" chimed in Vassenka Veslovsky. "Perfectly! Oblonsky, of course, goes out of bonhomie, but other people say: 'Well, Oblonsky stays with them.'..."

"Not a bit of it." Levin could hear that Oblonsky was smiling as he spoke. "I simply don't consider him more dishonest than any other wealthy merchant or nobleman. They've all made their money alike--by their work and their intelligence."

"Oh, by what work? Do you call it work to get hold of concessions and speculate with them?"

"Of course it's work. Work in this sense, that if it were not for him and others like him, there would have been no railways."

"But that's not work, like the work of a peasant or a learned profession."

"Granted, but it's work in the sense that his activity produces a result--the railways. But of course you think the railways useless."

"No, that's another question; I am prepared to admit that they're useful. But all profit that is out of proportion to the labor expended is dishonest."

"But who is to define what is proportionate?"

"Making profit by dishonest means, by trickery," said Levin, conscious that he could not draw a distinct line between honesty and dishonesty. "Such as banking, for instance," he went on. "It's an evil--the amassing of huge fortunes without labor, just the same thing as with the spirit monopolies, it's only the form that's changed. Le roi est mort, vive le roi. No sooner were the spirit monopolies abolished than the railways came up, and banking companies; that, too, is profit without work."

"Yes, that may all be very true and clever.... Lie down, Krak!" Stepan Arkadyevitch called to his dog, who was scratching and turning over all the hay. He was obviously convinced of the correctness of his position, and so talked serenely and without haste. "But you have not drawn the line between honest and dishonest work. That I receive a bigger salary than my chief clerk, though he knows more about the work than I do--that's dishonest, I suppose?"

"I can't say."

"Well, but I can tell you: your receiving some five thousand, let's say, for your work on the land, while our host, the peasant here, however hard he works, can never get more than fifty roubles, is just as dishonest as my earning more than my chief clerk, and Malthus getting more than a station-master. No, quite the contrary; I see that society takes up a sort of antagonistic attitude to these people, which is utterly baseless, and I fancy there's envy at the bottom of it...."

"No, that's unfair," said Veslovsky; "how could envy come in? There is something not nice about that sort of business."

"You say," Levin went on, "that it's unjust for me to receive five thousand, while the peasant has fifty; that's true. It is unfair, and I feel it, but..."

"It really is. Why is it we spend our time riding, drinking, shooting, doing nothing, while they are forever at work?" said Vassenka Veslovsky, obviously for the first time in his life reflecting on the question, and consequently considering it with perfect sincerity.

"Yes, you feel it, but you don't give him your property," said Stepan Arkadyevitch, intentionally, as it seemed, provoking Levin.

There had arisen of late something like a secret antagonism between the two brothers-in-law; as though, since they had married sisters, a kind of rivalry had sprung up between them as to which was ordering his life best, and now this hostility showed itself in the conversation, as it began to take a personal note.

"I don't give it away, because no one demands that from me, and if I wanted to, I could not give it away," answered Levin, "and have no one to give it to."

"Give it to this peasant, he would not refuse it."

"Yes, but how am I to give it up? Am I to go to him and make a deed of conveyance?"

"I don't know; but if you are convinced that you have no right..."

"I'm not at all convinced. On the contrary, I feel I have no right to give it up, that I have duties both to the land and to my family."

"No, excuse me, but if you consider this inequality is unjust, why is it you don't act accordingly?..."

"Well, I do act negatively on that idea, so far as not trying to increase the difference of position existing between him and me."

"No, excuse me, that's a paradox."

"Yes, there's something of a sophistry about that," Veslovsky agreed. "Ah! our host; so you're not asleep yet?" he said to the peasant who came into the barn, opening the creaking door. "How is it you're not asleep?"

"No, how's one to sleep! I thought our gentlemen would be asleep, but I heard them chattering. I want to get a hook from here. She won't bite?" he added, stepping cautiously with his bare feet.

"And where are you going to sleep?"

"We are going out for the night with the beasts."

"Ah, what a night!" said Veslovsky, looking out at the edge of the hut and the unharnessed wagonette that could be seen in the faint light of the evening glow in the great frame of the open doors. "But listen, there are women's voices singing, and, on my word, not badly too. Who's that singing, my friend?"

"That's the maids from hard by here."

"Let's go, let's have a walk! We shan't go to sleep, you know. Oblonsky, come along!"

"If one could only do both, lie here and go," answered Oblonsky, stretching. "It's capital lying here."

"Well, I shall go by myself," said Veslovsky, getting up eagerly, and putting on his shoes and stockings. "Good-bye, gentlemen. If it's fun, I'll fetch you. You've treated me to some good sport, and I won't forget you."

"He really is a capital fellow, isn't he?" said Stepan Arkadyevitch, when Veslovsky had gone out and the peasant had closed the door after him.

"Yes, capital," answered Levin, still thinking of the subject of their conversation just before. It seemed to him that he had clearly expressed his thoughts and feelings to the best of his capacity, and yet both of them, straightforward men and not fools, had said with one voice that he was comforting himself with sophistries. This disconcerted him.

"It's just this, my dear boy. One must do one of two things: either admit that the existing order of society is just, and then stick up for one's rights in it; or acknowledge that you are enjoying unjust privileges, as I do, and then enjoy them and be satisfied."

"No, if it were unjust, you could not enjoy these advantages and be satisfied--at least I could not. The great thing for me is to feel that I'm not to blame."

"What do you say, why not go after all?" said Stepan Arkadyevitch, evidently weary of the strain of thought. "We shan't go to sleep, you know. Come, let's go!"

Levin did not answer. What they had said in the conversation, that he acted justly only in a negative sense, absorbed his thoughts. "Can it be that it's only possible to be just negatively?" he was asking himself.

Sunday, May 25, 2008

The Edifice Complex

Are publicly financed stadiums and other sports subsidies really worth the cost to taxpayers?


Saturday, May 24, 2008

Hayek's Liberalism

From Philosophy Bites...

Friedrich Hayek, though much admired by Margaret Thatcher, distanced himself from conservativism. He was a liberal philosopher. In this episode of Philosophy Bites, Chandran Kukathas of the London School of Economics, explains the key features of Hayek's liberalism.

Listen to Chandran Kukathas on Hayek's Liberalism

Friday, May 23, 2008

Central Planning

Central planning of any large, complex, and adaptable human enterprise is a daunting task. This is not to say that it is impossible or that it cannot yield useful results. There are times when central planning is absolutely essential; war, for example.

The question is can central planning produce results as efficiently and in a comparable variety as can dispersed, decentralized efforts.

The answer is a resounding "No." Consider Ron Bailey's review of Sex, Science and Profits: How People Evolved to Make Money, by Terence Kealey. Kealey is a well-known critic of massive government funding of basic scientific research.

An excerpt:

"Kealey shows in nearly every case the crucial inventions of the past two and half centuries were called forth by markets, not invented by scientists working from ivory towers. These include the steam engine, cotton gin, textile mills, railroad engines, the revolver, the electric motor, telegraph, telephone, incandescent light bulb, radio, the airplane—the list is nearly endless."

Read the rest here
Check out an interview with Kealey here

Wednesday, May 21, 2008

The Race

Tuesday, May 20, 2008

Generation E(ntrepreneur)

From the WSJ, a reason to be optimistic about the future of the United States...

"Half of all new college graduates now believe that self-employment is more secure than a full-time job. Today, 80% of the colleges and universities in the U.S. now offer courses on entrepreneurship; 60% of Gen Y business owners consider themselves to be serial entrepreneurs, according to Inc. magazine. Tellingly, 18 to 24-year-olds are starting companies at a faster rate than 35 to 44-year-olds. And 70% of today's high schoolers intend to start their own companies, according to a Gallup poll.

An upcoming wave of new workers in our society will never work for an established company if they can help it. To them, having a traditional job is one of the biggest career failures they can imagine."

Friday, May 16, 2008

The Quotable Frédéric Bastiat

"Away with the whims of governmental administrators, their socialized projects, their centralization, their tariffs, their government schools, their state religions, their free credit, their bank monopolies, their regulations, their restrictions, their equalization by taxation, and their pious moralizations!

And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works."

Thursday, May 15, 2008

How Should We Think About Climate Change?

Once upon a time, central planning of the economy was the greatest threat to freedom and prosperity. Now, it's environmentalism. Having failed in their attempts to manage the economy, large numbers of intellectuals, politicians, and sentimental Gaiaists now want to manage the Earth's climate.

No one ever accused these people of modest ambitions. Hubris, maybe, but never modesty.

What's a thinking person to do? Bjorn Lomborg gives John McCain some advice about global warming at National Review Online. Lomborg says:

"McCain strikes some of the right notes — he says he recognizes the need for clean, affordable alternatives to fossil fuels; he acknowledges that climate change is real (although there are very few leaders these days who don’t) and he says that we need to deal with the central facts.

But then he doesn’t stay focused on the central facts himself, and ends up reaching some conclusions that are not so sound: he pushes for a cap-and-trade scheme which will do very little good while imposing very high costs. In his speech notes, McCain planned to call for punitive tariffs on China and India, but he omitted that from his delivered speech: hopefully because he realized that protectionism for green reasons can be just as harmful as protectionism for plain old economic reasons."

More Lomborg...

In the following video, taken at an "Authors @ Google" presentation, Lomborg makes his case in 30 minutes.

Wednesday, May 14, 2008

Bastiat in The Online Library of Liberty

For those of you who would like to know more about Frédéric Bastiat and his work, the Online Library of Liberty offers a nice collection of his works in a variety of formats, in either English or French, some downloadable. The collection is also searchable.

Here is the Library's introduction to Bastiat:

Claude Frédéric Bastiat was a French economist, legislator, and writer who championed private property, free markets, and limited government. Perhaps the main underlying theme of Bastiat’s writings was that the free market was inherently a source of “economic harmony” among individuals, as long as government was restricted to the function of protecting the lives, liberties, and property of citizens from theft or aggression. To Bastiat, governmental coercion was only legitimate if it served “to guarantee security of person, liberty, and property rights, to cause justice to reign over all.” [The image comes from “The Warren J. Samuels Portrait Collection at Duke University.”]

Tuesday, May 13, 2008

To Serve Mankind

"Utopians no longer reject the market; rather, they now seek to geld and harness it 'to serve mankind.'"
From the forward by Steve Forbes, in The Role of Business in the Modern World by David Henderson

Monday, May 12, 2008

Henderson on Corporate Social Responsibility

British economist David Henderson is a well-known skeptic of corporate social responsibility ("CSR"), at least as it is popularly formulated. In this interview with the Italian free-market Bruno Leoni Institute, Henderson briefly makes his case.

He says companies should act responsibly, of course. But that does not mean they should swallow CSR whole. The popular version of CSR is based on a misleading view of the world. Followed blindly, that kind of CSR is more likely to do more harm than good.

Sunday, May 11, 2008

Pirate Treasure

Business people are often accused of acting like pirates. After a new look at pirate history, it turns out that might not be so bad.

Peter Leeson, an economics professor at George Mason University, argues that pirate ships were actually some of the world's earliest democracies. His new book is "The Invisible Hook: The Hidden Economics of Pirates."

An excerpt from a review in the Boston Globe:

In one successful cruise, a pirate could take home what a merchant sailor earned in 50 years. Yet a business enterprise made up of the violent and lawless was clearly problematic: piracy required common action and mutual trust. And pirates couldn't rely on a government to set the rules. Some think that "without government, where would we be?" Leeson says. "But what pirates really show is, no, it's just common sense. You have an incentive to try to create rules to make society get along. And that's just as important to pirates as it is to anybody else."

Saturday, May 10, 2008

Science as High Priest

Modern science is, unquestionably, one of mankind's greatest intellectual achievements. Unfortunately, success breeds arrogance, nowhere more apparent than in the following headline in Scientific American:

Scientists Know Better Than You -- Even When They're Wrong

As F. A. Hayek pointed out in his book, The Counter-Revolution of Science, scientific methods have their limits. Asking science to research the physical world is a wonderful thing. Asking it to correct the errors of the entire human race is a terrible mistake.

The headline of this article is completely misleading. It implies that the work of Harry Collins --the sociologist whose work it reviews-- tells us that non-scientists should kowtow to scientists, even when scientists make incorrect declarations outside of their narrow field of specialization.

That is clearly not Mr. Collins position. What he does say is that the tacit knowledge of a group is as important as explicit knowledge, and that without tacit knowledge, you can "talk the walk" but you can't do the job. Rather than aggrandizing the opinions of scientists, I believe his message is to respect the views of specialists, but to also be skeptical of those specialists when they offer themselves as definitive authorities on topics outside of their training and professional network.

Anything more than that is not respect; it comes dangerously close to worship, and I can hardly think of anything less worthy of that than a bunch of irredeemably fallible humans.

Thursday, May 8, 2008

New Links

Check out what's new in the Bastiat Society's Free Market Links.

First, you'll find a link to Laissez-faire Books. LFB is a venerable institution that began in the dark ages when book catalogs were hard-copy publications; when they arrived only via US Mail; a time when a toll free number was high-tech; a time when people actually dialed a telephone; a time called 1972.

Second, you'll find a link to TV Liberty, a collection of videos including Walter Williams discussing "The Entrepreneur as American Hero."

Wednesday, May 7, 2008

Advice to Grads: "Make a Bunch of Money!"

P.J. O'Rourke has written the commencement address every newly-minted college graduate should hear, but won't.

Among his advice:

"Go out and make a bunch of money!

Here we are living in the world's most prosperous country, surrounded by all the comforts, conveniences and security that money can provide. Yet no American political, intellectual or cultural leader ever says to young people, "Go out and make a bunch of money." Instead, they tell you that money can't buy happiness. Maybe, but money can rent it.

There's nothing the matter with honest moneymaking. Wealth is not a pizza, where if I have too many slices you have to eat the Domino's box. In a free society, with the rule of law and property rights, no one loses when someone else gets rich."

Read the rest here.

Monday, May 5, 2008

The Quotable Frédéric Bastiat

"Try to imagine a system of labor imposed by force that is not a violation of liberty; a transfer of wealth imposed by force that is not a violation of property rights. If you cannot do so, then you must agree that the law cannot organize labor and industry without organizing injustice."

Sunday, May 4, 2008

The More Things Stay the Same

When a business is not successful in the marketplace, it may try its hand at politics. Tariffs, quotas, taxes, and other laws will enrich a politically successful firm, but only at the expense of competitors, customers and taxpayers, and against their will.

This is nothing new. On May 6, 1850, Bastiat heard this plea for such abusive laws in France from the General Council of Manufacturers, Agriculture, and Commerce, asking:

"That science no longer be taught exclusively from the point of view of free trade (of liberty, of property, and of justice) as has been the case until now, but also, in the future, science is to be especially taught from the viewpoint of the facts and laws that regulate French industry (facts and laws which are contrary to liberty, to property, and to justice). That, in government-endowed teaching positions, the professor rigorously refrain from endangering in the slightest degree the respect due to the laws now in force." (The Law)

In other words, stop teaching free trade and start teaching students to obey the laws that favor French industry.

Plus ça change, plus c'est la même chose.

Saturday, May 3, 2008

The Purpose of Business

What is the purpose of business? That is a simple question with many answers. Among them are:

To increase profits. (Friedman)

To balance the competing interests of stakeholders. (Freeman)

The purpose is unique to each firm; it is specialized and evolving. (Mackey)

To maximize owner value by selling goods and services. (Sternberg)

To create and keep a customer. (Drucker)

To meet society's needs. (Brown)

To "serve the community skillfully as well as faithfully in offices of trust" and “aid in maintaining sound financial morality.” (Khurana & Gintis, quoting Wharton)

To improve society. (Ebertz)

To act as a vehicle of economic progress. (Henderson)

To "increase the general well-being of humankind through service, a creative invention and ethical philosophy." (Hawken)

To serve the state. (Mussolini)

To expropriate the worker. (Marx)

Friday, May 2, 2008

Friedman on Business and Government

Thirty years ago in Reason magazine, Milton Friedman wrote about business:

“How many businessmen have you heard in the past 10 years who have been willing to stand up on some public rostrum and take issue with governmental policies? Many a businessman gets up and expresses general sentiments in favor of free enterprise and of competition, but very few get up and criticize particular measures taken by government. And I don’t blame them. They would be fools to do it!”

—Milton Friedman, “Which Way for Capitalism?”

Thursday, May 1, 2008

The Birth of Freedom

A new documentary from the Acton Institute, "The Birth of Freedom," examines an often overlooked fact: freedom in the modern world has deep roots in religion.

From the Acton Institute web site...

"The American founders said that all men are created equal and are endowed with certain unalienable rights. That among these are life, liberty, and the pursuit of happiness. They called this a self evident truth. 87 years later, Abraham Lincoln reaffirmed this idea on the Civil War battlefield of Gettysburg. And in 1963 these same words echoed from the steps of the Lincoln Memorial as Martin Luther King, Jr. urged America to fulfill the promise of its founding.

But humans are separated by enormous differences in talent and circumstance. Why would anyone believe that all men are created equal? That all should be free? That all deserve a voice in choosing their leaders? Why would any nation consider this a self-evident truth?

For the millions around the world who have never tasted liberty the question cries for an answer."

The Teaser...

The Trailer...