Leeson on the Recession

Professor Peter Leeson of George Mason University on the recession and his new book...



Visit his blog, The Public Choice Capitalist.

White People with Blue Eyes

“This crisis was caused by the irrational behaviour of white people with blue eyes, who before the crisis appeared to know everything and now demonstrate that they know nothing.”

Brazil’s President Luiz Inácio Lula da Silva

A More Reliable Partner

"The notion that big business and big government are at war with one another is one of the great enduring myths of the 20th century. The truth is that ever since Teddy Roosevelt abandoned his love of trust-busting, progressives have liked big businesses big, really big. The bigger the business, the more reliable the partner for big government.

That’s why any huge corporation that plays ball on health care, or “green jobs,” or countless other initiatives, is hailed as a “forward-thinking” or “progressive” company. Companies such as GE, which stands to make billions from Obama’s energy proposals, are vital sidekicks in the new era of public-private partnerships. Why is Obama working tirelessly to save Detroit automakers? Because GM is a wonderful poster boy for peddling nationalized health care, and UAW is an indispensable cog in the Democratic Party."

Jonah Goldberg, "Big Bedfellows," NRO

April Monthly Meeting

Our Bastiat Society meeting for April will be on our usual first Wednesday of the month, April 1. Kathy Gornik, president of Thiel Audio and past president of the Consumer Electronics Association, will be our speaker,

A few days ago, Kathy testified before Senator Orrin Hatch's subcommittee on the administration's proposed "card check" legislation, which would eliminate the secret ballot in union organizing elections and allow federal arbitrators to resolve differences between unions and management, in effect, putting federal bureaucrats in control of all aspects of unionized businesses. Kathy was against it - and explained eloquently why.

During her tenure at the CEA, she converted this large organization to a free market point-of-view that is now clearly expressed in their ads - an astonishing and important achievement.

Her talk will be "A Question From the Trenches: Why Do Those Who Work In Freedom Not Know How Freedom Works?"

We hope to see you on the 1st! Bring your friends.

Please R.S.V.P to April Herrea

Conservatory of the Human Spirit

A Czech warns the United States that it is making the same mistakes Europe made in the 1930s, and warns us that we are on "the road to hell."

Chinese Communists ask uncomfortable questions about the claims-paying ability of the United States, and hint that they may move away from the dollar as a reserve currency because of reckless US government spending.

The Mexican government lectures the United States on free trade and international law.

The United States was once the unquestioned world leader in individual liberty, limited government, sound money, private property, the rule of law, and free trade.

Now, it takes the rest of the world to remind us of our historic guiding values, and to warn us of the dangers that lie down any other path.

At least it is encouraging to find these values expressed in places far and wide. These values are the conservatory of the human spirit. So long as they exist somewhere, there is hope. 

Devalued PM of a Devalued Government

Daniel Hannan, Member of the European Parliament for South East England, delivers that rarest gem of all -- a parliamentary speech worth listening to.

Blood Frenzy

Not so very long ago, there was a civilized and progressive country that used its legal system to punish a financially successful but politically unpopular minority.

It accused this minority of greed. It accused this minority of being a parasite on society. It accused this minority of theft.

Some lawmakers, caught up in the frenzy, called for blood. Some citizens threatened to deliver it.

Germany in the 1930s? Yes, and the United States today.

The People Behind Things

In Sweden, a "right-leaning government" -- at least by the completely objective standards of the New York Times -- has refused to bailout the ailing auto-maker Saab.

The Times quotes one Swede who says “I don’t think the government knows the situation in this town, how many people depend on Saab...To them it’s just a factory. They don’t see the people behind it.”

In one sense, this is completely correct. Government rarely knows the situation in every town. Government is supremely ill-equipped to deal with such fine-grain knowledge.

On the other hand, this comment can quickly be turned around. Ignorance doesn't run just one way. A "right-leaning" Swede could correctly state, "I don't think the factory workers understand where this money comes from, how many people in other places have to live with less in order to bailout people making things no one wants to buy. To the workers, it's a bailout. They don't see the people behind it who have to pay for it."

Yet another example of human folly as described by Bastiat's famous essay,  "What is Seen, and What is not Seen."

The Market Economy

"When the market economy is compared to alternatives, nothing is better at raising productivity, reducing poverty, improving health and integrating the people of the world."

Economist and Nobel laureate Gary Becker, in an interview with Mary Anastasia O'Grady in the Wall Street Journal.

Is Rand Relevant?

The National Review asks "Is Rand relevant?" A bunch of smart people answer. Read their answers here.

The difference between a Conservative and an Objectivist boils down to two just issues: religion and altruism. Rand viewed both as poison. Conservatives praise both as virtue.

F. A. Hayek -- who famously declared himself not a conservative -- struck something of a compromise. Yes, individual reason is a useful guide for human action, but it can quickly be perverted into the hyper-rationalist claims of a scientific state (see his book The Counter-Revolution of Science).

On the other hand, tradition is a kind of reason, too. It is literally "the wisdom of the ages,"an evolved body of knowledge drawn from human nature, including such human behavior as altruism. But tradition, too, can be perverted into the mindless protection of ideas and institutions. 

The Hayekian view acknowledges the important role that tradition in general and religion in particular plays in human affairs, while acknowledging that social adaptation is essential for social groups to respond to a constantly changing environment. 

In other words, there are two kinds of prisons of the human spirit. The first is the prison of hyper-rationality. The second is the prison of unalterable tradition.

Today, the greatest threat to freedom is hyper-rationality, the belief that top-down economic planning is better than bottom-up growth, the expectation that Congress and the President can solve personal problems. Rand is still an effective weapon against this threat. No one else has attacked collectivism as successfully, as intelligently, and with such wide appeal. Compared to Rand, Rush Limbaugh is an amateur. Long after Rush is forgotten, people will be reading Rand.

Book sales tell us all we need to know about her relevance. Ayn Rand is the best weapon we have.

Economic Arson

Joe Nocera writes in the New York Times...

"...I’m worried that the political response is making the crisis worse. The Obama administration appears to have lost its grip on Congress, while the Treasury Department always seems caught off guard by bad news.

And Congress, with its howls of rage, its chaotic, episodic reaction to the crisis, and its shameless playing to the crowds, is out of control. This week, the body politic ran off the rails.

There are times when anger is cathartic. There are other times when anger makes a bad situation worse. “We need to stop committing economic arson,” Bert Ely, a banking consultant, said to me this week. That is what Congress committed: economic arson."

The End of America?

"One test of whether we are witnessing the end of America is how many more times Americans put up with congressional show trials of individual business people and their employees, slandering and vilifying them for their actions and motives. And for how long will they tolerate a President who berates business and corporations as dens of crime and malfeasance? If the majority of Americans come to accept the caricatures of business as true, then America is closer to the end of its life as a global leader, as a champion of markets and individualism."

Read the rest of "Is This the End of America?" here.

The Law, Perverted

One of the most important features of a just society is that the law must apply to everyone, equally. That is the true meaning of the often used, but often misinterpreted phrase, "rule of law."

A just law cannot apply to some people and not others. For example, Senator Max Baucus, Finance Committee Chairman, has proposed a special tax on the bonuses paid to AIG executives. This proposal is clearly unjust because it targets a small group of people. It is an example of what Bastiat called the perversion of law, when the law becomes an instrument of plunder.

While the Senator's position may strike a populist note, it also sets a dangerous precedent. Why not tax the wealth and income of other, politically unpopular groups? Because being politically unpopular is not a crime. It is, all too often, justification for the persecution of the innocent. 

Contrast the proposal of Senator Baucus with the position of the IRS on the deductibility of investment losses for victims of Bernie Madoff. The IRS says these guidelines will apply to all victims of Ponzi schemes, not just the people who lost money with Madoff.

Apparently, somebody at the IRS has more respect for the rule of law than does the Chairman of the Senate Finance Committee. 

Growth and Decay

Listening to much of the discourse on the state of the economy, it's easy to form the opinion that it is the responsibility of the government to ensure a stable economy with lots of job security for everyone.

Of course, nothing could be further from the truth. Economies are dynamic, adaptive social organizations, more akin to a rain forest than an engine room.

That means at any point in time, some businesses are healthy and growing, others are unhealthy and shrinking, and others are doomed to extinction. Attempting to make something that big and that complex "stable" requires the kind of blind faith that used to believe that the sea and stars obeyed the command of kings.

Healthy economies are places of growth and decay, "gales of creative destruction" in the words of the famous economist Joseph Schumpeter.

Well, here's more evidence of a gale. The Seattle Post-Intelligencer is dropping its print edition and going Internet-only, the largest daily newspaper to do so to date -- but surely not the last.

The print newspaper had a good run. But print news is fast going the way of the clay tablet. Curious, isn't it, that while the world grows more modern in some ways -- no more clay tablets to lug around-- it continues to demonstrate a troubling faith in the power of kings?

Rand Illusion by Colbert

While there is a great deal of confusion in Stephen Colbert's video on "Going Galt," there is undeniable comic talent.

Unfortunately, he, like so many people, does not make the important distinction between between an honest and productive business person, and a political entrepreneur masquerading as a business person.

With that caveat, enjoy...

The Colbert ReportMon - Thurs 11:30pm / 10:30c

The Word - Rand Illusion

Colbert Report Full Episodes
Political Humor

Rap Battle
NASA Name Contest

Signs of Sanity

As a result of political bullying...

"Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens."

We finally get signs of sanity...

"Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo."

Read the rest in the NY Times.

Least Surprising Headline of the Year

Stimulus Package Attracts Con Artists

"Federal regulators and consumer advocates say the economic stimulus package has given scam artists a new angle. Websites offering free government stimulus grants offer hope to people desperate for relief. What they end up with is a monthly charge on their credit card for up to $70 that's nearly impossible to shake. Tamara Keith reports from member station WCPN in Cleveland."

Listen to the NPR story here.

I must add that for decades, the United States poured money into foreign aid, trying to "stimulate" the economies of poor countries. The only thing that money stimulated was the lifestyles of politicians and the friends of politicians; and the lifestyle of anyone who got away with stealing from the politicians and their friends. Very little changed for the average citizen of these countries.

Tell a Story

If you want to change the world, you'd better be able to tell a pretty good story.

For the majority of the human race, ideas just aren't meaningful until they are contained in a memorable story. This is the essential function of all art great and small, good and bad: it conveys ideas beyond the art itself.

Literature, music, lyrics, painting, sculpture, theater, and photography are the technical means for capturing and propagating ideas. As such, they are extensions of language, the most successful art of all.

The idea in question might be that life is meaningless; or that life is full of meaning. The idea might be that individuals matter; or that individuals don't. The idea might be anything or its polar opposite. But the vehicle that transmits that idea, the method that makes that idea popular, is the art that contains it.

Great stories are repeated over and over. They influence human thought and behavior for long periods of time. Jesus Christ didn't deliver learned theological lectures. He told stories that weren't even written down for nearly a hundred years, and we still tell those stories today. In 1852, Harriett Beecher Stowe published the novel Uncle Tom's Cabin.  The book so galvanized popular feeling against slavery that Abraham Lincoln called her "the little lady who started this great war." In 1906, the socialist Upton Sinclair declared he was going to write "the Uncle Tom's Cabin of the labor movement." The result was The Jungle, a novel still read and discussed despite its many flaws.

If you want to give an idea life, give it a story.

Consider the perennial popularity of Atlas Shrugged, a 52 year-old, 1,000 page novel. The ideas contained therein can be found in many other places -- lofty debates in academic tomes and impenetrable journals -- but nowhere else have those ideas found such longevity and resonance in the popular imagination. And now, more than ever.

The Economist reports, "According to data from TitleZ, a firm that tracks bestseller rankings on Amazon, an online retailer, the book’s 30-day average Amazon rank was 127 on February 21st, well above its average over the past two years of 542. On January 13th the book’s ranking was 33, briefly besting President Barack Obama’s popular tome, The Audacity of Hope."

Obamanomics

"The encouraging thing [about Obamanomics] — and perhaps this too was inevitable — is that the right wing is getting its act together. It has suddenly discovered that economics matters. You can cheer on the hot wars, fight the culture wars, and crack down on political dissidents all you want. But in the end, what makes for the good society is a sound economy. Without it, all the rest falls apart."

Lew Rockwell, "Beating Back Obamanomics"

Birds of a Feather

Where does a disgraced state politician go to rehabilitate his reputation and make a little money?

Where else? Washington, DC.

Three reasons why:

1. It's the best place to find the sympathy and support of kindred spirits.

2. It's the best place to find lots of people with even worse reputations (op. cit.).

3. It's the only boom town left in the United States.

Who is John Galt?

One of the most famous (and rightly so) speeches in defense of individual liberty and free markets is the speech of John Galt in Ayn Rand's novel, Atlas Shrugged.

Here is part of that speech, combined with video and music. It does an excellent job of capturing the essence of Galt's much longer speech.

Everything's Amazing, Nobody's Happy

Think the foundations of capitalism are shattered?

Maybe that is a good thing, says comedian Louis CK. How else will a generation of spoiled brats learn to appreciate the miracles that fill their lives?

Watch "Everything's Amazing, Nobody's Happy" here.