Sunday, May 31, 2009

Judicial Compassion and Empathy

What might be wrong with judicial compassion and empathy? John Hasnas writes in the Wall Street Journal...

"Frederic Bastiat answered that question in his famous 1850 essay, "What is Seen and What is Not Seen." There the economist and member of the French parliament pointed out that law "produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them." Bastiat further noted that "[t]here is only one difference between a bad economist and a good one: The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen."

This observation is just as true for judges as it is for economists. As important as compassion and empathy are, one can have these feelings only for people that exist and that one knows about -- that is, for those who are "seen."

One can have compassion for workers who lose their jobs when a plant closes. They can be seen. One cannot have compassion for unknown persons in other industries who do not receive job offers when a compassionate government subsidizes an unprofitable plant. The potential employees not hired are unseen."

Saturday, May 30, 2009

Powerful and Secure

Every ruling class wants to enjoy feeling powerful and secure. This usually means power over others, and security at someone else's expense.

Once a ruling class feels powerful and secure, it will not relinquish either its power or its security without a fight. Sometimes it will fight with words, sometimes with fists, sometimes with vast armies, but it will always fight.

It will use public money to defend its private advantages. It will call on the intellectual community to provide justifications and, when necessary, mythologies to defend its actions. Finally, as a ruling power, it will use its police and armies in the name of law and order to harass, imprison, and destroy its opposition. A threatened ruling class is the one of the most dangerous things on earth.

Consider the American Civil War. The ruling class of the Old South depended on slavery for its feelings of power and security. From the beginning of the United States, the South did not stop using words and violence to justify, preserve, and expand slavery, until it was humiliated by a military defeat, exhausted by war, and economically crushed by uncompensated emancipation. In short, the ruling class of the Old South refused to surrender its power and security until they were taken from its cold dead hand.

The price of this defeat is staggering. Over 600,000 citizens died, a vast region of the country lay impoverished for a century, and bitterness and humiliation led directly to a political legacy of racism enshrined in law.

History provides us a stark warning, for today we exist under a new generation of the ruling class. This one lives in Washington, DC, the last boom town in America. It believes with all the fervor of an ante-bellum slave owner that it is leading a less-enlightened population down the path of civilization and progress. Towards that goal, it is justified in all that it does, from taxation, to regulation, to fines, punishment, and imprisonment. It is the modern equivalent of the Master. We are the modern equivalent of the property it governs for our own good.

Like all ruling classes, ours will attempt to characterize any opposition as ill-informed, misguided, irrational, delusional, dangerous, disloyal, treasonous, or evil. But the opposition is not the dangerous group here. In fact, simple humanity means that we should be pulling for those who object to being treated like human inferiors. We should hope that they will win this fight with words. The consequences of losing are too terrible to imagine.

The goal of the good society should never be class power or class security. That simply creates a group of especially dangerous people willing to set the world aflame rather than surrender their position. The goal of the good society should be individual power, what used to be called autonomy or individual liberty.

In liberty, every individual is free to seek as much or as little security as he or she sees fit, and no group of individuals can insist on dragging the rest of us through another Götterdämmerung.

Wednesday, May 27, 2009

The Bastiat Prize for Online Journalism

The Bastiat Prize for Online Journalism is awarded to journalists who defend the principles of the free society with wit and vigour.

Judges have included Milton Friedman and Margaret Thatcher. For the first time this year, there is an additional $3,000 prize for online journalism to recognise the role of bloggers and others in promoting freedom through their writing.

Get the full details of this year's competition at:

The Bastiat Prize is sponsored by the International Policy Network, and is not affiliated with the Bastiat Society.

Tuesday, May 26, 2009

Corporate Sellouts

"Communist Godfather Vladimir Lenin is alleged to have famously said, "The capitalists will sell us the rope with which we will hang them.

Nowhere is that observation more relevant than in the sorry spectacle taking place in Congress as corporations, in exchange for short-term government handouts, fall over themselves to endorse a carbon dioxide regulation bill that will impose a crushing energy tax on the American people."

From "Corporate Sellouts" in The American Spectator.

Monday, May 25, 2009

Corporate Sanction

The National Journal reports, "key business interests have decided to cut deals with a dominant Democratic Party rather than bet on a weakened Republican Party that is hoping to ride uncompromising opposition to Obama back to power. "You've got business that has sometimes opposed everything Democrats have done lining up to help get it done," White House Chief of Staff Rahm Emanuel said."

Sunday, May 24, 2009

Leave the Economists at Home

Via Organizations and Markets,  evidence that business is alive and well as long as it leaves the economists at home. 

Saturday, May 23, 2009

A Good Explanation

"Human beings are as good at devising ex post facto explanations for big disasters as they are bad at anticipating those disasters. It is indeed impressive how rapidly the economists who failed to predict this crisis — or predicted the wrong crisis (a dollar crash) — have been able to produce such a satisfying story about its origins. Yes, it was all the fault of deregulation."

Niall Ferguson writing in the New York Times

USA, Double A Credit

SR Rating, a Brazilian firm, will soon issue a judgment on American government bonds. Its verdict is not pretty: the company says it will issue a AA rating.

From The Economist.

Friday, May 22, 2009

The Briefing Book

"If there's one thing worse than being governed by Nancy Pelosi and Harry Reid and a bunch of idiot Republicans, it's being governned by our neighbors who have brain farts and write email letters to the president."

Monday, May 18, 2009

The Great Ethanol Scam

"Not only is ethanol proving to be a dud as a fuel substitute but there is increasing evidence that it is destroying engines in large numbers."

From Business Week.

Sunday, May 17, 2009

A New Foundation

What does the economic policy of a New Foundation look like?

Higher taxes

More regulation

Attacks on business

Illegal takings

Limits on compensation

A brewing trade war with Canada

Behind the glittering phrase "A New Foundation" lurks the more sinister one, "Private Ownership, Public Control."

Saturday, May 16, 2009

Obama Attacks Business

"Relations between President Barack Obama and U.S. corporate leaders have grown tense in recent weeks, with business groups bristling over his sharp rebukes of lenders and multinational companies in particular."

Read the rest here.

Friday, May 15, 2009

The Stand Up Economist

Stand-Up Economist Yoram Bauman: 

"Asking me about macroeconomics is like asking someone who works in a bank how to make money."

Thursday, May 14, 2009

A Savior-Based Economy

CNN's John King interviews South Carolina Governor Mark Sanford.

The Governor warns, “We’re moving precipitously close to what I would call a savior-based economy....what you see in Russia or Venezuela or Zimbabwe or places like that where it matters not how good your product is to the consumer but what your political connection is to those in power.”

Wednesday, May 13, 2009

An Assault on Business

US News wonders, "Another week, another assault on business-as-usual by President Obama. Or is it, as some critics are starting to wonder, an assault on business, as usual?"

Sunday, May 10, 2009

Thus Ended Capitalism

Today's Dilbert is too good to be missed. Click on the strip below to see it in its entirety.

View more capitalist humor at the official Dilbert website.

Saturday, May 9, 2009

State and Corporation

"The function of the state -- to record the creation of corporations -- is not essential to their existence any more than the registrar of births is essential to the conception or birth of a child.

This mere procedural requirement of filing the articles with a state official is equated with state creation. Procedural requirements, though, are not unique to corporations. On the contrary, procedural requirements apply to virtually all contracts. For example, to be legally valid, a marriage contract must follow specified procedural requirements: it must be performed by someone authorized by the state, it must be witnessed, and a signed certificate must be filed with the state If these requirements make the state a party to a contract, then every marriage is a menage a trois: bride, groom, and government. Quite literally, the government plays a smaller role in the creation of a corporation than of a marriage. Yet who, for that reason, would describe marriage as a creature of the state or claim that a marriage certificate contains a promise to serve the public interest?"

"The essence of capitalism is the inviolability of individual rights, including the right to use or invest wealth as one chooses and the right to associate with others for any purpose and under any mutually acceptable terms of association."
"Investment without control is not an evil if the owners freely consent to that relationship. Rather, it is an example of what has been called 'capitalist acts between consenting adults.'"
"Anyone whose professed goal is to give shareholders the widest possible range of choices would be unable to conceive of or to create the stock exchange system that spontaneously evolved over the past century. Far from being the antithesis of free choice and continuous accountability, the publicly traded giant corporation is the highest embodiment and expression of those ideals."

Robert Hessen. "A New Concept of Corporations: A Contractual and Private Property Model." The Hastings Law Journal 30 (1979)

Friday, May 8, 2009

It Cannot Happen Here

Over at Cafe Hayek, they commemorate the anniversary of F. A. Hayek's birth by recalling the opening paragraph of one of his chapters, "Totalitarians in Our Midst," published in 1944:

"Probably it is true that the very magnitude of the outrages committed by the totalitarian governments, instead of increasing the fear that such a system might one day arise in more enlightened countries, has rather strengthened the assurance that it cannot happen here....  But let us not forget that fifteen years ago the possibility of such a thing happening in Germany would have appeared just as fantastic, not only to nine-tenths of the Germans themselves, but also to the most hostile foreign observers (however wise they may now pretend to have been)."

From The Road to Serfdom View an illustrated version here.

Thursday, May 7, 2009

No Shame

I guess it is too much to expect any politician -- even a disgraced one -- to resist the federal open hunting season on banks and bankers.

Wednesday, May 6, 2009

May 2009 Meeting

Dr. Eric Daniels is the speaker for our May 2009 monthly meeting.

Dr. Daniels is a Research Assistant Professor at Clemson University's Institute for the Study of Capitalism. He previously served as a postdoctoral fellow and visiting assistant professor at Duke University's Program on Values and Ethics in the Marketplace, where he was nominated for a teaching award. In addition, Daniels has taught at the University of Wisconsin, where he earned his doctorate in American history. He has lectured internationally on the history of American ethics, American business and entrepreneurship, and the American Enlightenment. He has appeared on C-SPAN's "American Writers" series and his articles have appeared in the Atlanta Journal-Constitution and the San Diego Business Journal. Daniels's other publications include a chapter in The Abolition of Antitrust and five entries in the Oxford Companion to United States History. Most recently, he co-authored the U.S. Economic Freedom Index, 2008 Report.

View a pdf of the Report here.

Monday, May 4, 2009

The Secret to Economic Development

The secret to economic development in one sentence:

"If there were omniscient men, if we could know not only all that affects the attainment of our present wishes but also our future wants and desires, there would be little case for liberty. And, in turn, liberty of the individual would, of course, make complete foresight impossible. Liberty is essential to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realizing many of our aims. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it."

Friedrich Hayek, 1960
Quoted by economist William Easterly

Sunday, May 3, 2009

Property Without Law? You Must be Joking!

Which came first, private property or the law? Or, to ask the question another way, do humans recognize property rights even when there is no explicit legal protection of those rights?

The answer appears to be that property preceeds law, that humans acknowledge the right to private property before they write down legal codes to protect it. In other words, law emerges from cultural norms, not the other way round.

The case study in question comes from the business of comedy, where there is no established law concerning the copyright or ownership of jokes. Why do comedians continue to write jokes if they can't own them? The reason is that comedians have worked out a set of cultural norms that take the place of written law.

Read a synopsis of the study here.

The important conclusion is that law is not the primary force shaping human relationships, and thereby, human societies. Simply passing a law, without first considering the existing informal arrangements that are in place and working will have very little effect on subsequent behavior. That is why centuries of laws against prostitution, alcohol, adultery, drugs, and particular forms of worship have largely been ineffective.

Law, alone, cannot make man better. That is a crushing blow to both social progressives and social conservatives, both of whom want to use the law to remake human behavior and human society in their own image. 

Saturday, May 2, 2009

Just Say Non

From, Sorbonne-trained economist Veronique de Rugy of the Mercatus Center at George Mason University argues that embracing the French way would be nothing less than a train wreck, leaving Americans with fewer jobs and less disposable income.

Friday, May 1, 2009

A Simple Cloud

Physicist Freeman Dyson sounds reasonably skeptical about climate change, reported reasonably well in Scientific American:

"Too much of the science of climate change relies on computer models, he [Dyson] argued, and those models are crude mathematical approximations of the real world. After all, a simple cloud—small in scale, big in climate effects, the product of evaporation and condensation, all of which it is difficult to create equations for—eludes the most sophisticated climate models.

So climate modelers turn to what they call parameters or, as Dyson likes to call them: "fudge factors." These are approximations, such as the average cloudiness of a particular spot at a particular time, that are then applied globally. With the help of about 100 of these parameters, models can now closely match the world's present day climate, Dyson says. These models then, like the one developed at Princeton University where Dyson is a professor emeritus, are "useful for understanding climate but not for predicting climate."

That's too much of a temptation for scientists working on the problem, however. "If you live with models for 10 to 20 years, you start to believe in them," Dyson said."