Rich and Hardworking

John Tamny has published an excellent defense of every hardworking American, even the rich ones, in National Review.

An excerpt:

"Hillary Clinton wants to distinguish between the rich and the hardworking. But the two are not mutually exclusive. And while the senator is correct in lauding the efforts of industrious Americans, she is unwise to demean the staggering efforts of the vital few rich who have done so much to make America great."

Myths Christians Believe About Wealth and Poverty

From the Acton Institute, Jay W. Richards presents the key economic mistakes religious people in general, and Christians in particular, make when thinking about wealth and poverty.

Acton summarizes his lecture below:

"For Christians, compassion for the poor is a non-negotiable. Compassion alone, however, doesn’t help the poor. In fact, many ideas that Christian leaders advocate really exacerbate the very problems they were intended to solve. So how do we insure that we not only mean well, but also do good? Jay Richards discusses the need to think economically about wealth and poverty in the Christian community."

Listen to his lecture here.

Lower Prices

News flash: NPR reports Wal Mart has lowered its prices on more prescription drugs.

Question: why is it a bad thing when Wal Mart lowers prices, and a good thing when politicians lower prices?

Observation: the demonstrations in Myanmar include, among other issues, a demand that the government lower gasoline prices.

Conclusion: Perhaps Myanmar needs a little more Wal Mart or a little more Hillary?

The Exaggerated Language of Politics

As we approach the election of the next President of the United States, the political promises of the candidates are going to grow more and more exaggerated. Behind the hyperbolic language of modern politics stands a real danger: the spectre of central planning.

Before citizens and businesses call on government for the remedy of every ill, they should consider the possibility that the cure is worse than the disease. There is no better statement of the necessity of caution than F. A. Hayek's 1944 book, The Road to Serfdom.

The video below is based on the Reader's Digest condensed version of the book. The condensed version is still available from the Institute of Economic Affairs in London.

Frying a Small Fish

Many years ago, as a young undergraduate at the University of South Carolina studying ancient Chinese thought, I made the observation that the philosophy of the 4th century BC sage Lao Tzu was really that of a small-government, free-market, economic conservative.

My professor derided the idea. He insisted that Lao Tzu's philosophy of wu-wei, or non-intervention, was a cleverly disguised attempt to diffuse political tension, not a call for liberty.

Fast forward to the present. Lo and behold, James Dorn, vice president for academic affairs at the Cato Institute, writes in The American Spectator that Lao Tzu was the intellectual forerunner of famous free-market thinkers like Adam Smith, F. A. Hayek and Milton Friedman.

Here are a few of the sayings of Lao Tzu from Dorn's article. They leave little room for doubt.

"The more restrictions and limitations there are, the more impoverished men will be....The more rules and precepts are enforced, the more bandits and crooks will be produced. Hence, we have the words of the wise [ruler]: Through my non-action, men are spontaneously transformed. Through my quiescence, men spontaneously become tranquil. Through my non-interfering, men spontaneously increase their wealth."

"...without being ordered to do so, people become harmonious by themselves."

"When men are deprived of food, it is because their kings [rulers] tax them too heavily."

"When men are hard to govern, it is because their kings interfere with their lives."

"Governing a large country is like frying a small fish. You spoil it with too much poking."

The intriguing question then becomes, why didn't a philosophy of liberty take root in China? The answer, according to Dorn, was that Lao Tzu never developed the idea of private property rights, and the importance of the rule of law.

The legend is that Lao Tzu grew disillusioned with society, and left China on a water buffalo heading west. It would be over two thousand years before his dream of liberty would become a reality. Fittingly, it would happen in the strange lands far to the west of China.

When People Become Numbers

Business is often accused of making numbers more important than people. Science used to be accused of exactly the same thing.

Here is the late scientist, Jacob Bronowski, responding to that criticism. This video is taken from his 1973 series, The Ascent of Man, aired on PBS. As is typical for Bronowski, his response is intelligent, thoughtful, and moving.

The Island of the Worker's Paradise

Michael Moore has produced some great propaganda for the Island of the Worker's Paradise, also known as Cuba (official motto, Socialismo O Muerte, "Socialism or Death").

Before another citizen of the free world packs his bags and heads south, he should consider the following grim statistic. According to the US State Department, per capita income in Cuba is around $14 per day. That means the average Cuban would have to work nearly three days to buy the book recently seen in the hands of the Commander-in-Chief of the Island, The Age of Turbulence, by Alan Greenspan.

In contrast, the average Cuban exile in South Florida has an average annual income of $37,440, according to Cubanet.org. That means a Cuban exile in Florida would use just 1/10th of 1% of his annual income to buy the same book.

Geographically, only ninety miles separates the Island of the Worker's Paradise and South Florida. Culturally, very little separates Cubans and Cuban exiles. Economically, however, they exist in different worlds, and one is clearly better than the other.

Castro's Book Club

This AP photograph from Fidel Castro's first interview in three months shows El Comandante showing off what his book club -- membership of one -- has been reading. The story said Castro:

"...held up a copy of the new book by former U.S. Federal Reserve chairman Alan Greenspan, The Age of Turbulence: Adventures in a New World. At one point he quoted from it, reading excerpted passages in very large type instead of using the book itself."

While Castro enjoys the luxury of reading whatever he wants, the average Cuban faces three serious problems trying to get his hands on anything worth reading. First, no money to buy books. Second, books and the ideas in them are dangerous to his health. He will be arrested if he is caught with anything in print that is deemed "subversive." Third, a government crackdown on libraries and librarians makes it dangerous for him to hang around either one.

Amnesty International reports that Cubans have very limited freedom of expression and association. The Cuban government controls everything that is printed or broadcast. The Cuban police harass and intimidate anyone who doesn't follow the party line, especially independent journalists and librarians. The Cuban police arrest anyone suspected of links with dissident groups or involved in the crime of promoting human rights. In Cuba, you can be arrested on a charge of "pre-criminal dangerousness." The Cuban government limits internet access.

So what was Castro doing with Greenspan's book? Perhaps he was simply eager to discuss the book with someone else who has read it, for the likelihood is that no one else in Cuba has or will.

Business As a Creative Act

The genius of the creative spirit runs wide in the human race, but it doesn't run deep. Imagination and labor produce such a wide variety of products and ideas that we often pay more attention to their glittering differences than to the common cognitive process that made them all.

This is, of course, a troublesome thought. Most artists consider it heresy to suggest that creating a work of art shares anything at all with the mind and motives of a business person. That heresy, however, simply tells us that artists know very little about business. Business, as a creative act, draws on the very same strengths and suffers the same weaknesses as the creative act in art. They are more alike than dissimilar.

We can illustrate just how much artistic creativity and business creativity have in common with the following paragraph of advice to writers, taken from an interview of William Faulkner published in the Paris Review in 1956:

"Let the writer take up surgery or bricklaying if he is interested in technique. There is no mechanical way to get the writing done, no shortcut. The young writer would be a fool to follow a theory. Teach yourself by your own mistakes; people learn only by error. The good artist believes that nobody is good enough to give him advice. He has supreme vanity. No matter how much he admires the old writer, he wants to beat him"

Now, notice how well it works as advice to entrepreneurs -- those troublesome dreamers and innovators in business -- with a few strategic substitutions.

"Let the entrepreneur take up surgery or bricklaying if he is interested in technique. There is no mechanical way to get business done, no shortcut. The young entrepreneur would be a fool to follow a theory. Teach yourself by your own mistakes; people learn only by error. The good entrepreneur believes that nobody is good enough to give him advice. He has supreme vanity. No matter how much he admires the old business, he wants to beat it."

Faulkner was no fan of business. The most unpleasant characters in his novels, the infamous Snopes family, used it to get ahead at the expense of everyone around them. Yet, in giving young writers advice on their craft, Faulkner unwittingly revealed a universal human truth worthy of his profession.

William Faulkner, 1954Photographer: Carl Van VechtenCredit Line: Library of Congress, Prints and Photographs Division, Van Vechten Collection, reproduction number LC-USZ62-110952 DLC (b&w film copy neg.)

What Do You Know?

The Intercollegiate Studies Institute has conducted its second test of how well American colleges teach their students about American history, government, international relations and the market economy. The idea is that in a democracy, the people who vote should have some idea about what they are doing and how it is all supposed to work.

Nice idea. The reality is they do not have a clue. Even at America's most prestigious schools, college seniors failed a basic test of America's history and institutions. In fact on average, the bigger the reputation of the college, the worse the score.

The result is an electorate of apparently well-educated college graduates who are nevertheless ignorant of the proper role of government in a free society. That makes it ever more likely that they will demand government intervention in areas that are politically popular, but economically unwise, areas like wage and price controls or government subsidies.

Ignorance of the proper role of government also makes it more likely that voters will fall prey to ambitious politicians who offer government intervention as an immediate and necessary solution to every problem or inconvenience, from terrorism to telemarketing.

Some of the findings:

*Seniors do not know basic facts of American history. Only 45.9% know that Yorktown was the battle that ended the American Revolution.

*Seniors do not know the basic timeline of American history. Only 47.7% know that Fort Sumter came before Gettysburg and that Gettysburg came before Appomattox.

*Seniors do not know America’s founding documents. Only 45.9% know that the line “We hold these truths to be self-evident, that all men are created equal” comes from the Declaration of Independence.

*Seniors do not know the rudiments of America’s historical relations with the world. Only 42.7% know that NATO was formed to resist Soviet expansion.

You can take the quiz yourself here. There are sixty multiple choice questions. Are you as smart as a Harvard senior? Odds are, you are.

Here are a few of the questions on free enterprise:

50) Free markets typically secure more economic prosperity than government’s centralized planning because:
A. the price system utilizes more local knowledge of means and ends.
B. markets rely upon coercion, whereas government relies upon voluntary compliance with the law.
C. more tax revenue can be generated from free enterprise.
D. property rights and contracts are best enforced by the market system.
E. government planners are too cautious in spending taxpayers’ money.

52) Business profit is:
A. cost minus revenue.
B. assets minus liabilities.
C. revenue minus expenses.
D. selling price of a stock minus its purchase price.
E. earnings minus assets.

53) National defense is considered a public good because:
A. a majority of citizens value it.
B. a resident can benefit from it without directly paying for it.
C. military contracts increase employment opportunities.
D. a majority of citizens support the military during war.
E. airport security personnel are members of the Federal civil service.

55) Over the past forty years, real income among American households has:
A. remained the same when averaged over all households.
B. involved the rich getting richer and the poor getting poorer.
C. involved the poor getting richer and the rich getting poorer.
D. decreased for the middle class and increased for the upper class.
E. increased for the lower and middle classes and increased most for the upper class.

56) Why are businesses in two different countries most likely to trade with each other?
A. They know that although one business will be hurt from trading, the other will be better off, and they both hope to be the winner.
B. Businesses are unable to sell their products in their own countries.
C. Each business expects to be better off as a result of the trade.
D. Their respective governments require them to do so.
E. The natural resources of both countries are similar.

57) The price of movie tickets has increased. According to the law of demand, what is likely to be the result?
A. Theaters will sell fewer tickets.
B. Theaters' revenues will increase.
C. The quality of movie theaters will improve.
D. The number of videos rented will decrease.
E. Popcorn purchases at theaters will increase.

Epstein on Property Rights, Zoning and Kelo

Richard Epstein, of the University of Chicago and Stanford's Hoover Institution, makes the case that many current zoning restrictions are essentially "takings" and property owners should receive compensation for the lost value of their land. He also discusses the Kelo case and the political economy of the regulation of land.

Listen to it here.

A Humane Skepticism

Astrophysicist Sallie Ballunis (Harvard Smithsonian Center for Astrophysics) reminds us of exactly what happened the last time political authority was absolutely certain that it knew the cause of climate change, and tried to do something about it.

Beware those who believe they have rid themselves of all superstitions, for that is the most dangerous superstition of them all.

October Meeting of the Bastiat Society

"Merging Business and Personal Values: The Story of the Goodrich Family of Indiana"

Dane Starbuck, author of the official biography of James and Pierre Goodrich, will be the speaker at the October meeting of the Bastiat Society.

James Goodrich (father) and Pierre Goodrich (son) built a successful business dynasty in Indiana during the first half of the 20th century. Pierre then used the family fortune to build a legacy of education and philanthropy, including the unique accomplishment of establishing the Liberty Fund , Inc. of Indianapolis, a non-profit educational foundation that promotes the study of a society of free and responsible individuals.

Every year, Liberty Fund sponsors hundreds of conferences around the world for professionals and academics. It also publishes an extensive list of classic texts on social theory.

Dane Starbuck is an attorney in private practice and member of the Board of Directors of Liberty Fund, Inc. His quest for knowledge has taken him from Huntington College (B.A. in English, magna cum laude) to Indiana University (M.A. in English Literature) to the University of Melbourne in Australia (M.A. in English Literature and Language with Honors) to Oxford University in England (B.A. and M.A. in Jurisprudence) to Georgetown University Law Center (J.D.).

He says of his presentation, "in today's world we have compartmentalized our lives to such a degree that most people, especially business people, aren't aware of their multiple personas and conflicting values. It is why business people often don't realize that their behavior and decisions are frequently at odds with the type of world they would like to live in.

...the Goodrich family didn't have this conflict, at least to the degree that modern businessmen do, because they viewed business, community, freedom and personal responsibility differently from how these aspects are viewed today."

DATE: Wednesday, October 3

LOCATION: Imaging Arts Gallery, 175 King Street, Charleston, SC

TIME: 5 pm reception, 6 pm speaker

RSVP: Stephanie Whitener

"The Stuff of Thought"

Steven Pinker, Harvard psychology professor and brilliant writer, never fails to be informative, thought-provoking, and entertaining. This presentation is on his new book, The Stuff of Thought. While not directly related to business, it concerns itself with "language as a window into human nature."

If business is inherently human, i.e., the instinct to trade is an ineradicable part of human nature and not a social construct, then understanding human nature is the first step to successful trading.

The Literature of Capitalism

Fifty years ago, Ayn Rand published a book that continues to inspire fans and critics. The book was Atlas Shrugged. People have been loving it or hating it ever since.

Among the business people who say Atlas Shrugged positively influenced their thinking are John Allison, CEO of BB&T; Alan Greenspan, former chairman of the Federal Reserve and a one-time member of the Rand inner-circle; Darla Moore, vice president of Rainwater, Inc., and benefactress of the University of South Carolina School of Business; and Mark Cuban, owner of the Dallas Mavericks.

Read more about "Ayn Rand's Literature of Capitalism" in the New York Times.

Pulitzer Prize Winner to Speak at Clemson

"WHY AMERICA WANTS TO PROMOTE DEMOCRACY AROUND THE WORLD"

The Clemson Institute for the Study of Capitalism is proud to present world-renowned historian and winner of the 1993 Pulitzer Prize for History Gordon S. Wood, the inaugural lecturer in its John William Pope Lecture Series.

America was born as a republic in the world filled with monarchies. It immediately felt a need to promote the spread of republicanism (or what we today call democracy) throughout the world not only out of self-interest but out of the belief of most of its citizens that a republican form of government based on the rule by the people was the only just polity. This led to America's emotional and diplomatic support for revolutionary movements throughout the Western world during the nineteenth century, a support that was brought to an abrupt end by the Soviet takeover of the Russian revolution in 1917. The collapse of the Soviet Union in 1989 presumably changed everything, but in the past two decades America has had difficulty finding its proper role in the world.

Gordon Wood is currently the Alva O. Way University Professor at Brown University.
Date: Wednesday, October 3, 2007.
Time: 4:30 p.m. to 6:00 p.m. (doors open at 4:15)
Place: Self Auditorium in the Strom Thurmond Institute on the Clemson University campus
Details: This event is free and open to the public.

The lecture will be followed by a brief question and answer period. Limited employee and visitor parking is available at the Strom Thurmond Institute. Visitors to the Clemson campus should proceed to the visitor's center (109 Daniel Dr. in Clemson) to obtain a temporary parking pass. This event is sponsored by The Clemson Institute for the Study of Capitalism, part of the College of Business and Behavioral Science, and the John William Pope Foundation.

Public Transportation

Private enterprise is famous for delivering a reliable consumer experience.

Nominally, commercial air travel in the United States is a private enterprise.

So why does flying commercial feel more like public transportation than a consumer experience?

The answer to that question certainly begins with the penitentiary-like lines and searches at the TSA security checkpoint. It continues with airlines that are allowed to operate while officially bankrupt. It finishes with an increasing number of mechanical failures, schedule delays, missed connections, cancelled flights and last minute gate changes. No wonder everyone, crew and passengers alike, doesn't look as happy as the people in the advertisements.

In reality, air travel has never been a fully deregulated business. It has always been insulated from a fully competitive market by one form or another of government protection, such as regulated fares or government bailouts for busted airlines. As Warren Buffett once famously quipped, commercial aviation is such a bad business that had there been a self-respecting capitalist at Kitty Hawk, he would have done the right thing and shot down the Wright brothers' airplane.

As long as the airlines can get away with what they offer today, they are unlikely to offer anything better.

Bjorn Lomborg

Stephen Colbert interviews the original skeptical environmentalist, Bjorn Lomborg, about his new book, Cool It.

The Once Mighty

In the long centuries of the Islamic Golden Age, from the middle of the 8th century AD to the middle of the 13th, the Arab-speaking Muslim world presided over the greatest commercial civilization on earth. It offered the most tolerant government policies to people of other faiths, including Jews and Christians. Indeed, if Arabic civilization had not done such a good job preserving and expanding the realm of human knowledge, Europe might never have had its Renaissance.

One of the great puzzles of the modern world is how a civilization could go from being so wealthy, enlightened, and tolerant to one that is known for its violence, anti-intellectualism, and blind hatred. There may even be lessons here for the West, which views its commercial and moral achievements as unassailable.

Although the causes of the Arabic decline are hotly debated, two things played important roles. First, the rise of a powerful external threat, the Mongols. Second, the rise of religious and intellectual leaders who insisted on imitation and obedience, rather than independent thought and reason.

Of course, the circumstances of history change. But human nature does not. Perhaps there is a lesson here for the West, which faces its own external threat, and which has its own set of voices calling for imitation and obedience.

"Daily Business Triumphant"

The following column by Paul Maidment was originally published on Sept. 11, 2002. It appears again today in Forbes. It is a thoughtful reminder that the routines of daily business are expressions of human freedom, hope, and opportunity.

"Daily Business Triumphant"
by Paul Maidment

New York -

I held it truth, with him who sings
To one clear harp in divers tones,
That men may rise on stepping-stones
Of their dead selves to higher things.
--- Alfred, Lord Tennyson

Today should be a day of remembrance; foremost for the more than 3,000 victims of the terrorist attacks on New York and Washington, D.C.; second for what they innocently represented: the principles and values of free-market democracy.

The media plays a role in defining the appropriate response of a society to such terrible violence wrought upon it. In that respect, there is little we can add to the millions of words that have been exhaustively written and broadcast elsewhere. We honor those who died and the bravery of those who tried to save them. We celebrate the strength of those who survived.

Our path is clear. Free-market democracies must root out terrorists and their supporters. It is urgent work and nonetheless necessary for being testing. But the causes of terrorism will only be eradicated by spreading everywhere the prosperity, hope and opportunity that democratic capitalism creates.

Today a globalized world is replaying the struggle for primacy between theocracy and rationalism that the Western hemisphere resolved in the 17th and 18th centuries. America is arguably the supreme expression of rationalism triumphant, a republic of natural law, inherent freedoms and self-determination, which free enterprise nourishes.

That is why America is the focus of the terrorists' attacks. If those freedoms are diminished--either by external assault or by being dismantled internally--the terrorists win.

Those who perished on Sept. 11, 2001, were freely going about their daily business when the attacks occurred. Each in their own way was manifesting the extraordinary dynamism and creativity of a capitalist system that prizes and encourages people who, in Abraham Lincoln's words, try to improve their lot in life--and thereby the lot of us all.

For most of us, our most eloquent testimony to them this day, tomorrow and ever after is to do the same.

The Shock Doctrine

In his book, Crisis and Leviathan, Robert Higgs argues that the national government expands its power to deal with a crisis, and never shrinks back to its pre-crisis size once the crisis is solved. Every crisis leaves the national government bigger and more powerful than before.

The Shock Doctrine argues exactly the opposite thesis. Author Naomi Klein aims to demonstrate that capitalists use "disaster capitalism" to rapidly re-engineer societies reeling from shock, in a kind of capitalist blitzkrieg. If this were true, we should all be anarcho-capitalists by now. Goodness knows, there have been enough shocks.

Check out her video. Warning: it's disturbingly well-made.

Social Responsibility

Robert Reich, now an economist at the University of California, Berkeley and former Labor Secretary under President Clinton, is ready to give up the fight to make companies socially responsible. The Economist reports that in his new book, Supercapitalism, Reich denounces corporate social responsibility as a dangerous diversion that is undermining democracy.

However, Reich is no Milton Friedman, he who once famously proclaimed, "The social responsibility of business is to increase its profits." Reich believes the push for corporate social responsibility is a diversion from more important work, namely, protecting society with the right set of government rules.

But one question remains unanswered: in a land where government makes all the rules, who will protect society from the government? Self-interested individuals do not immediately become saints when they get a government job. They continue to behave in self-interested ways, only now they have the power to make the rules. And those who make the rules can define social responsibility any way they want to.

A Fat Czar

Professor Barry M. Popkin, author of "The World is Fat" in the September, 2007 Scientific American, is working with the Ministry of Health in Mexico to devise fat taxes on soda-pop. He is working with the Chinese government to devise fat taxes on vegetable oil. He is intrigued with a proposal to make any advertisement for fat foods a crime. He wants to make meat, poultry, and dairy products more expensive, so poor people will eat more whole grains. He doesn't like supermarkets like Wal-Mart, Carrefour and Ahold because they offer too many cheap snacks and soft drinks. He frets that watching too much television is bad for poor people, thinks that they would be better off if they walked more than rode, and, after extensive study, is absolutely certain that working behind a desk burns up fewer calories than hoeing a field.

Stripped of their scientific pretension and summarized above, Professor Popkin's views are revealed for what they truly are: a call for someone or something to be a fat czar, a potentate charged with regulating the daily dietary and lifestyle choices of billions of people. It is ridiculous to believe that such a thing could exist. It is frightening to think that someone is foolish enough to try.

Sub Prime Paradox

Not so very long ago, politicians and other pushy types demanded that banks should loan more money to more people without worrying about details like, can the borrower make the payments? Any bank's failure to obey was undeniable evidence of unforgivable discrimination.

Since politicians carry the heavy hammers of legislation and regulation -- why do you think they love being politicians? -- lenders obeyed. At first, things looked pretty good. Then something went wrong. Something always goes wrong. That's something else politicians love. It's their job security.

What went wrong is simply this, in the witty words of Michael Lewis, "This is what happens when you loan money to poor people."

Now the politicians and other pushy types insist that the banks acted unfairly by loaning money to people they knew could not make the payments. According to the revisionist history of the angry mob toting the hammers, the diabolically clever bankers' wanted make a bunch of bad loans, just so they could go around foreclosing. That's ridiculous, of course. It's like saying that Moët & Chandon makes champagne so drinkers can wreck their lives with alcohol.

No legitimate business wants to harm its customers. Why? Because customers leave. In a competitive economy, one where customers have more than one or two choices, they can choose to do business with those companies with reliable track records and reputations for customer service. The Chinese, relative newcomers to capitalism, are learning that lesson first hand, as concerns about lead-based paint in toys manufactured in China lead more and more parents to throw out anything made in China. No government action required. As the old saying goes, it takes a long time to build a good reputation, and only a moment to destroy it. The Chinese government is learning that in a capitalist economy, a consumer with a choice is a powerful force.

Unfortunately, the hammer toting crowd in the US imagines the consumer as a powerless victim of dark forces arrayed against him and aiming for his destruction. The truth is the most dangerous threat comes from the politicians themselves. They had large role to play in creating this mess. Now, paradoxically, they want to claim credit for its resolution. They are the last place we should look for solutions.

Less Aid

Journalist Andrew Mwenda argues that foreign aid makes objects of the poor. His proposal to improve the quality of life in Africa? Something you'll never hear from a celebrity concert: Less Aid.

I'll Sue Ya

A great article by Ralph Reiland in The American Spectator on the effects of ridiculous law suits. Some of the highlights:

* no full service at full service gas stations
* no seesaws on playgrounds
* no more games of tag during recess
* no way to control student misbehavior
* no open windows in high rise buildings

And everywhere you look, warnings, warnings and more warnings:

* do not use a hairdryer in the shower
* do not put a toilet bowl brush in your mouth
* do not eat the toner from a laser cartridge
* do not use a wheelbarrow on the highway

Perhaps music says it best. This is a video from the musical satirist Weird Al Yankovic. It's called "I'll Sue Ya." It's done in the style of the group Rage Against the Machine, a notoriously anti-capitalist bunch of musicians who fancied themselves carriers of a revolutionary message. That makes Yankovic's satire even better.

Oh, the Irony

Via Club for Growth

The Work of Genius

Labor Day produces meditations on labor, but few of them celebrate work as a uniquely human act.

Animals build things, of course, but they build because of an evolutionary algorithm. There is no evidence that they build anything with an image of the finished product in mind, or that they consciously compare one product to another. They probably do not understand what they have done.

Humans, on the other hand, have the ability to journey back into the past, and to project the results of their activity into the future. They imagine what they will do, and compare it with what has been done before. They do all this through the powerful institutions of language, literature, science and culture, all of which are made possible by the human mind. In a very real sense, we all work with our minds.

Our planet holds six billion people, each with a unique and valuable mind, a set of cognitive skills and knowledge that expands the creative possibilities of all the world. Mathematically, the varieties of human creativity are endless. We are surrounded by the work of genius every day. We just don't recognize it, because it is not our genius. But it is genius, nonetheless.

How can we best explore the possibilities of this creative energy? Freedom. Only freedom allows individuals to utilize their cognitive skills and knowledge to the fullest. Only freedom allows individuals to own what they create. Only freedom allows for a continuous process of discovery and innovation. Only freedom allows individuals to discuss, compare and criticize the work of others, living and dead, both the famous and the obscure.

Work, as the conscious creative act of free individuals, is what makes us fully human.

A Blunt Instrument

Will Rogers wrote "This country has come to feel the same when Congress is in session as when a baby gets hold of a hammer."

Read more here from economist Gary M. Galles of Pepperdine University about the dangers of using the blunt instrument of legislation to solve sensitive, complex, and life-threatening problems.

Another Hand of Poker

Here's a response via the Bastiat Society web site from an 82 year-old poker player, Pat Black, who disagrees with my post on business and poker.

I've heard it's a good idea to never accept an invitation to play poker with anyone named after a city or a state. Maybe we should add, "or anyone 82 years old named Black."

Subject: poker

Mr. Rast,
Read your letter to Financial Times on above subject. Obviously managing other peoples money has not brought you into the real world of business. I am 82 and have done business in 58 countries over the years I am also a poker player since the age of 15. I can tell you my poker skills were a big advantage. If you have ever negotiated with a king, or a president, or a general over an upcoming project, you would understand. No, one does not want to get something for nothing but they want to get the best deal they can. If McDonalds didn't make the fries, it is simple, I wouldn't pay and move on to Burger King.

Business involves a lot more than customer service. Harvard can't be
that bad.

Regards,

Pat Black

The Millionaires of Maralal

In 2002, a group of Samburu herdsmen in Africa received $7 million (US) as compensation for injuries caused by ammunition left by the British. Headlines proclaimed "From Herdsmen to Instant Millionares."

What did these tribesmen do with the money? As reported by James Shikwati in the magazine African Executive, they went on a spending spree. All that remains today of the money are cell phones and televisions that don't work.

Shikwati cites this story as an example of why "big money" foreign aid does nothing to eliminate poverty. Until individuals have the human capital to handle financial capital, they will squander whatever financial capital comes their way.

Unfortunately, this is not an isolated African problem. In the West, stories of superstar athletes who make millions of dollars and wind up bankrupt are all too common. And sadly, many lottery winners end up spending their way back to whatever standard of living they had before their good fortune. For people like this, wealth is a vacation, not a lifestyle.

An individual and cultural expectation to save and invest for the future, rather than live entirely in the moment, is more valuable than all the "big money" in the world. Somebody tell Bono.

$425,000 Per Person

Larry Kudlow, cable TV's unapologetic champion of free-market capitalism, points out that the Federal government has spent $127,000,000,000 over the last two years to rebuild New Orleans.

That works out to $425,000 per person for the 300,000 people living in the city.

That works out to almost as much as the economic output for the entire state of Louisiana for one year.

After two years with Uncle Sam's open checkbook and all the government brain power it could use on call, New Orleans is the murder capital of the world, with a murder rate 40 percent higher than before Katrina.

Kudlow says this is a shinning (or sinking?) example of what happens when bureaucrats and planners ignore markets and the individual preferences revealed thereby. The result is spotty and slow progress, massive waste, and the creation of a whole new universe of problems that must be met with even more spending and bureaucracy, if those who believe in big government aren't going to abandon their faith in social planning.

Why Women Shop

The human mind evolved to solve an entirely different set of problems than those it faces in the modern world.

This simple but startling truth affects everything around us, from the colors we prefer to the ways we like to spend our leisure time. Take shopping, for example.

As reported in the Economist, researchers have come up with a possible evolutionary explanation of why women like to shop more than men, why women like the color pink more than men, and why men are better at spacial orientation via landmarks than women (somebody tell my wife, please). It all has to do with the ancestral division of labor: men hunted things that moved around a lot, women gathered food from stationary locations.

As a result, the male brain evolved orienting skill, and the female brain evolved the skill to recall the precise location of a food source, probably some kind of fruit. Since a lot of fruit is colored on the red end of the spectrum, the female brain evolved a preference for those colors.

Frauds and Nuts

Forbes magazine reports on a new Reason Foundation study that concludes, "The real motivation behind most occupational licensing regulations is one of special interest, not the public interest," the report says. "By banding together and convincing governments to impose new or stricter licensing laws, existing practitioners (who typically are exempted from the new laws through grandfather clauses) can raise the cost of doing business for potential competitors."

Capitalism gets a bad name -- justifiably -- when capitalists use the threat of violence via the political system to limit competition and set prices. Unfortunately, all too many business people think it's a great business plan to do just that. That's why so many businesses spend so much time lobbying government at all levels, local, state and federal. There's gold in those licenses!

That would explain why you need a government license to tell fortunes in Maryland, or a government license to be a tribal rainmaker in Arizona. It's not because customers are clamoring for certifiable skill in these dubious occupations. It's because one group of greedy business people wants to protect cosa nostra, "our thing," by getting the police to do their dirty work.

Of course, such schemes are usually promoted as a civic virtue, as a way of assuring the customer he will get a more reliable product or service. But we're talking about fortune tellers and rainmakers here, not brain surgeons. Do we really need a government license to tell the difference between a fraud and a nut?

Gipsies Fortune-telling.--Fac-simile of a Woodcut in the "Cosmographie Universelle" of Munster: in folio, Basle, 1552.

Damned If You Do...

Some cogent analysis in Reason from Steve Chapman on the political grandstanding going on around the problems in the sub-prime mortgage market. An excerpt:

"In the old days, financial institutions that refused to lend to people with low incomes or imperfect credit were accused of victimizing the needy. Today, financial institutions that make many loans to those same people are found guilty of the same crime."

Lofty Intentions Result in Horror

The following is my response to a letter from a sincerely Red writer on the web site for the magazine The Nation. A part of the original is quoted verbatim in italics. Any spelling or grammar mistakes are his, not mine.

"I wish people would realize that a true communist government has ever been established. Pointing at Russia and China is pointing to authoritarian governments, which is diametrically opposed to communist theory. People need to forget 1950s US propoganda."

Jonathan,
I'm glad you cleared up my confusion. I thought the 20 million people who were murdered in the USSR died at the hand of a communist government. Now I learn that they died at the hand of an authoritarian government.

Too bad we couldn't have made that distinction clear to them before they were snuffed. I’m sure it would have made death a little easier to understand.

But I guess I'm still afflicted with 1950s US propaganda. What's the difference between communism and authoritarianism? As F. A. Hayek made incontestably clear in "The Road to Serfdom", the lofty intentions of one system inevitably lead to the horrors of the other.

The Bastiat Collection

From the Ludwig von Mises Institute, a wonderful introduction to the first edition of the collected works of Claude Frédéric Bastiat, the namesake of the Bastiat Society.

"In this thirty-minute interview, Dr. Mark Thornton, the compiler and general editor of The Bastiat Collection, explains Bastiat's significance, and tells the fascinating story of how this definitive collection came to be. He further explains its significance for the future of liberty."

Order your own copy here.

Commercial Judgement Day

On PRI's "Marketplace," Daniel Mitchell of the Cato Institute makes a good point with style, while commenting on the economic turmoil of the last few weeks:

"A capitalist system without losses or bankruptcy is like religion without hell."

Image attributed to Hans Memling (c.1440-1494) "Last Judgement Triptych" (open) in Muzeum Narodowe, Gdansk, Poland.

Smashing Capitalism

Barbara Ehrenreich celebrates an unusual working class revolution in The Nation, one where the masses advance social justice by making a mess of their credit report, then cry about it. An excerpt:

Somewhere in the Hamptons a high-roller is cursing his cleaning lady and shaking his fists at the lawn guys. The American poor, who are usually tactful enough to remain invisible to the multi-millionaire class, suddenly leaped onto the scene and started smashing the global financial system. Incredibly enough, this may be the first case in history in which the downtrodden manage to bring down an unfair economic system without going to the trouble of a revolution.

First they stopped paying their mortgages, a move in which they were joined by many financially stretched middle class folks, though the poor definitely led the way...

Then, in a diabolically clever move, the poor--a category which now roughly coincides with the working class--stopped shopping.

A few more smashing victories like this one, and the "low, strangled, cry of pain" of the poor will rise to howls of indignation at a system that makes them wait in line for basic necessities, offers loans only to those who don't need them or those who are politically well-connected, and gives consumers their choice of shoddy products or nothing at all.

At least it does all this with a nice color scheme, most likely red.

Poverty at the Gold Mine

Last night (Tuesday, August 21), PBS aired a documentary entitled "Gold Futures" about the environmental controversy surrounding a proposed gold mine in the small village of Rosia Montana, Romania. The program apparently leaves the impression that, although there are a few villagers who are in favor of the mine, most residents of Rosia Montana don't want it.

This is the same controversy examined by another documentary "Mine Your Own Business," whose South Carolina premier will occur September 5th in Charleston. "Mine Your Own Business" is an unapologetic look at "the dark side of environmentalism." It comes to a very different conclusion.

Writing in the Wall Street Journal, John Fund noted that, unlike "Gold Futures," "Mine Your Own Business" is a film that "will never be shown on PBS, but is nonetheless rattling the environmental community...[it] is a documentary by Irish filmmakers Phelim McAleer and Ann McElhinney. They conclude that the biggest threat to the people of Rosia Montana "'comes from upper-class Western environmentalism that seeks to keep them poor and unable to clean up the horrific pollution caused by Ceausescu's mining.'"

Ultimately, the debate about the future of Rosia Montana is a debate between those who believe human freedom and prosperity are more desirable than external control and poverty, and those who believe with religious fervor that poverty is a price worth paying to preserve the environmental status quo. So long as someone else pays it.

The Rhymes of History

Criticizing a war is much easier than winning one. Consider the following bit of history.

In the space of six weeks during the Civil War, the Union army under the command of General U.S. Grant lost over 61,000 men, more than the US lost in all the years in Vietnam. Many powerful and vocal critics in the Union denounced President Lincoln as a bumbling incompetent and General Grant as a butcher. Many in the press called for an immediate end to the war, even if it meant dividing the country and the continuation of slavery. Lincoln did not waver. It cost him his life.

How would the US look today if those who opposed Lincoln and Grant had won the day? Would black Americans be free or would they still be another man's legal property?

Would the divided states have grown to be the world's economic and business leader with the highest standard of living in the world, or would a divided country have been gobbled up by some more powerful and ruthless nation?

Impossible questions to answer, but frightening possibilities. No doubt the Civil War was a terrible thing. But who can seriously argue that nothing good came from it?

Now consider this question: how will the world look one hundred years from now if we listen to those who denounce President Bush as an idiot and the war on terror as a failure? As the saying goes, "History does not repeat itself, but it rhymes."

Contrary to the opinion of too many people, business does not find prosperity in war. War, as an activity that uses up lives, property and wealth, is good only insofar as it is protects far greater numbers of lives, far more property and far greater wealth.

Business Is Not a Poker Game

A Harvard Law school professor thinks the world would be a better place if more people played poker. Among the many benefits he envisions from playing poker are business acumen, negotiation skills, and improved risk management.

I'm sure this all sounds very sensible in the halls of Harvard Law, but out here in the world away from Cambridge, the professor's great idea looks silly, and maybe even dangerous. Business isn't about taking someone else's chips and leaving them worse off. It's about trading for mutual benefit. Poker has more to do with swindling than trade.

Consider what happens when you buy something. If poker were the appropriate model for a business transaction, your goal would be to get something for nothing, and the seller's goal would be the same. The counter help at McDonald's would sell you fries, then triumphantly proclaim "I was bluffing. We didn't make any," and you, fool that you are for not detecting the bluff would have no recourse.

Only a person who sees business as a win-lose proposition could believe poker is a way to develop business acumen. Bluffing is a great poker strategy. It's a lousy model for customer service.

Talkin Bout My Generation

Roger Daltry, best known as the lead singer of the English rock band The Who (founded in 1964), has achieved the apotheosis that appears to be the destiny of aging rock stars. He has become a global policy aging rock star.

Daltry offered this bit of advice about climate change: "burn all the f***ing oil as quick as possible and then the politicians will have to find a solution.”

At first glance, this might just be another splendid illustration of the risks associated with asking rock stars for advice on global policy.

How odd that the young person who once scolded the establishment is now an old man who turns to politicians for solutions.

On second thought, he almost got it right. When the oil is gone, it won't be the politicians that find the solution. It will be business.

Why the Fed Cut Rates

Today, the Federal Reserve made an interesting call. After weeks of financial turmoil caused by too many borrowers who can't make payments, and too many lenders who can't make loans, the Fed cut one of its key short term interest rates. The securities markets responded with predictable enthusiasm.

Apparently, the Fed sees prolonging malinvestment caused by unusually low interest rates as the lesser of two evils, especially when the other evil is an angry political attack on the remaining institutions of free enterprise.

When Credit Collapses

Much of the economic turmoil of the last few weeks is explained by the monetary policy of the last few years.

As the Federal Reserve lowered interest rates, the lower cost of borrowing encouraged many business projects and investment decisions that would not normally make sense. The result was what some economists call malinvestment.

Malinvestment looks very much like growth, at least for a while, just like a gambler on a winning streak looks prosperous. Then something happens. Luck runs out. Business hits an unexpected problem. First someone, then many someones can't make the payments on their loans. The problems expand, credit contracts, and growth stops.

The Fed knows this. That's why its been trying to raise interest rates after pushing them to historic lows after 9/11. It's trying to reload the monetary gun after using nearly all its bullets.

The most important question of the next few weeks is, how will the Fed respond? Will it cut interest rates to keep growth going a little longer, or will it sit back and let businesses and individuals suffer the consequences of decisions made under conditions of the Fed's own making?

Either decision leads to problems. If the Fed lowers rates, then it merely postpones the reckoning. If the Fed holds rates fast or raises rates, it creates an angry mass of voters susceptible to ambitious political rhetoric affixing blame and promising solutions.

Unfortunately, angry voters and ambitious politicians rarely blame the right people or deliver the right solutions. That might be the biggest risk of all.

Michael Graham Rounds Up the Usual Suspects

Press release from SC Hotline...

15 Years Of Political Humor and Commentary Comes To An End with

One-Night-Only Live Performance in Downtown Charleston

CHARLESTON, SC— A column that began with his banishment from South Carolina Public Radio fifteen years ago will come to an end when author, comedian and former GOP political consultant Michael Graham “Rounds Up the Usual Suspects” at Theatre 99 on Thursday, August 23^rd.

The “Usual Suspects” column first appeared regularly in the Columbia, SC Free Times in 1992. It has since run in newspapers across the Southeast, including the Charleston City Paper, where it (and the paper) will celebrate 10 years together later this month.

Graham is currently morning drive talk host for Boston’s WTKK-FM, where he writes a twice-weekly column for the award-winning Boston Herald. “I love column writing, and I’m particularly proud of the success of the Usual Suspects. But between talk radio, the Herald column and my other projects, I can’t give the column—or the readers—the attention they deserve,” Graham said. “So I’m getting out while the nouns and verbs still occasionally agree.”

Graham spent six years as a national, touring comedian, working with performers like Robin Williams and Jerry Seinfeld. In 1992, he returned to South Carolina to begin a career as a GOP political consultant. This special one-time-only performance will be Graham’s first stage appearance since his successful 1997 one man show “Strom Thurmond’s Love Child Tells All.”

“It’s a part of my past that many of my readers aren’t familiar with, but the truth is, I spent years staying up late, doing blow and partying with my friends,” Graham confesses. “That’s right—I was once state treasurer of South Carolina.”

“Michael Graham Rounds Up The Usual Suspects” will feature highlights of Graham’s political commentary, from 1992 through today. “Hillary, McCain, Lindsay Graham, Joe Riley, David Beasley, Robert Ford, Cousin Arthur and—of course—my old friend John Graham Apartheid III,” Graham said. “I’m going to do the one thing guaranteed to inspire howls of side-splitting laughter: Quote them all accurately.”

Graham is the former afternoon drive talk host from WSC-AM in Charleston and the author of REDNECK NATION: How The South Really Won The War.

DETAILS: “Michael Graham Rounds Up The Usual Suspects.” Theatre 99, 280 Meeting Street, Charleston, SC. 8pm, Thursday, August 23^rd. Tickets are $12.50 and may be purchased by calling 843-853-6687.

The World Goes by Itself

Sometimes, the link between the airy world of intellectual ideas and the practical job of building a business is hard to find. Sometimes, the link is as obvious as the history of a father and a son. For example, consider the idea of "laissez faire."

The term "laissez faire" has been around since the 18th century. Today, it is synonymous with "free market."

"Laissez faire" is just part of a longer phrase adopted by a group of 18th century free-market French intellectuals called the Physiocrats. The complete phrase is “laissez faire, laissez passez, le monde va de lui-même.” That translates into English as "let do, let it pass, the world goes by itself."

Doesn't sound like much of business plan, does it? But wait. There's more.

The Physiocrats produced many famous names, one of which is pictured here. His name was Pierre Samuel du Pont de Nemours. In his book La Physiocratie, du Pont advocated low tariffs and free trade. Pierre believed that if the government would just get out the way, individuals could peacefully and spontaneously coordinate a world that "goes by itself."

After the French revolution, the DuPont family got into trouble because their political views weren't radical enough. Their printing business was ransacked and, for brief time, they were imprisoned.

In 1799, the family fled to the United States where their political views were mainstream. There, in 1802, Pierre's son E. I DuPont founded the E. I du Pont de Demours & Company, now one of the largest and most successful science and technology companies in the world.

What is the connection between the airy ideas of intellectuals and the practical world of business? Just this: ideas embedded in the cultural and political life of a country can either drive business talent away or allow it to flourish. The result is the difference between poverty and wealth, misery and the opportunity for happiness.

Catch Ball, Pay Tax

Many years ago, when soccer-style place kickers with unspellable foreign names first began kicking field goals in the NFL, a friend of mine used to imitate their broken English, post-game interviews by saying "Kick ball, cash check."

That phrase came to mind amid the news frenzy after Barry Bonds hit his record-breaking home run. A college student named Matt Murphy caught the ball, and managed to hang onto it during a scrum. The good news for Murphy is that experts estimate the ball is worth around $600,000. The bad news is the ball represents taxable income. That means Murphy could end up owing the IRS more than $200,000.

If this is truly a case of "Catch ball, pay tax," wouldn't all those other guys who tried to take the ball from Murphy be guilty of attempted grand theft? If he had handed the ball to a friend, would Murphy have to file a gift tax return? Could Murphy put the ball in a trust? What happens to the tax bill if Barry leaves the game in disgrace and its value drops?"

Strange things come from a strange tax code. Too bad we have to pay bright minds to dig up the answers to such questions.

Uncommon Public Service

Politicians love to claim the title of "public servant," but all too often they end up being more "public" than "servant."

What's the best way for them to be better servants? The answer to that question lies in a little history lesson. Before there were politicians, there were kings. Kings made the same claim about public service, and faced many of the same problem politicians face today. Faces, names and costumes change in history, but human nature endures.

According to Robert Wright, author of Nonzero: The Logic of Human Destiny, kings figured out they "could win gratitude by performing the public service of harmonizing law and settling disputes. Indeed, by bringing trust and predictability to the system, he could unlock enough economic non-zero-sumness to pay his salary in the form of taxes."

In effect, government earns its keep by creating the conditions under which people can reliably own property, trade with one another, and peacefully settle disputes. The king that created those conditions was a king worth keeping. The government that creates those conditions is a government worth voting for.

Statue of Israel King David in Copenhagen, Denmark. Sculptor: F. A. Jerichau (1860)

"He Lives Well Who Lives Lightly"

Success does not come from hoarding things. Rather, it comes from the pleasure of using familiar things to make something new and unexpected. In that respect, business is every bit as much a creative act as painting or poetry.

The fact that business must produce something that is not only beautiful, but useful as well does not take anything away from the creative nature of the act. Varying standards of beauty often pose a challenge to the appreciation of individuals who do not possess the knowledge of the specialist, but it is beauty, nonetheless. Just because we don't all recognize something as beautiful doesn't mean that it is not.

Finally, like art, business is restless. It constantly seeks new inspiration and new ideas, and stands ready to jettison the old ones. Someone once described capitalism as "institutionalized restlessness."

The words of the contemporary English poet Peter Abbs also describe the genius of the entrepreneur:

He lives well who lives lightly,
hoards nothing,

lets go the air he breathes—

to draw in more.

For more on Peter Abbs, check out this review of his work in "The Economist."

Free Riders of the World, Unite!

A couple in Sweden collected ten years of welfare payments because they claim to be conscientious objectors to work.

The husband justified the payments by writing, "Conventional work is out of the question for me - both in terms of my conscience and on an intellectual level - as it seems objectionable with regard to both my personal well-being and the well-being of society as a whole. Emotionally too it creates unbearable pain and dejection."

Unfortunately for people with such refined sensibilities, a local court decided that aversion to work isn't a good enough reason to continue collecting welfare payments. The couple is appealing.

Meanwhile, teenagers and worthless uncles across the world have enthusiastically praised the husband's articulate summary of their common cause. Free riders of the world, unite!

Cut Taxes on Business

Why should the US cut taxes on business? Because other countries are, and that leaves businesses in the US at a competitive disadvantage. Like it or not, the best economies in the world are playing a game called "tax competition," and the US is losing.

Here's an excerpt of the story from the The Economist:

"IT IS more than two decades since America led the world in tax reform, and what Ronald Reagan called “that old jalopy of our tax system” is looking in need of a lot more than a new spray of paint. Last week Hank Paulson, the treasury secretary, held a summit in Washington, DC, to address the part of the system that is most visibly lagging behind best practice in the rest of the world—the taxation of firms."

Sub-Prime Politics

Thomas Sowell says the sub-prime problem is the direct result of two popular political decisions : restrictions on building that resulted in rapidly rising home prices, and pressure to loan money to people who otherwise would not qualify. He writes:

"Attractive and heady phrases like “open space,” “smart growth,” and the like have accompanied land use restrictions that made the cost of land rise in many places to the point where it greatly exceeded the cost of the homes built on the land...

Politicians have also been a key factor behind pushing lenders to lend to borrowers with lower prospects of being able to repay their loans.

The Community Reinvestment Act lets politicians pressure lenders to lend to people they might not lend to otherwise — and the same politicians are quick to cry “exploitation” when the interest charged to high-risk borrowers reflects that risk."

The usual result of a political attempt to engineer a specific economic result is a new economic problem. The bigger the attempt, the bigger the problem.

How Business Builds Civilization

1. It promotes a universal language and international community
2. It promotes the tolerance of other races, religions and customs
3. It creates the wealth that funds culture, worship, education and public policy
4. It satisfies the demands of all the population, not just the wealthiest and most powerful

Other ideas?

A Poor Man's Capital

Running a successful business is the best way to escape poverty. Unfortunately, government is often the primary obstacle to starting and running a business.

Parth Shah, from the Centre for Civil Society in India, gives a stunning example of how law and regulation makes the poor even poorer.

The Delhi Municipal Corporation has a law regulating rickshaws. The law requires every rickshaw operator to own the rickshaw. He cannot lease or loan it to another. Any owner found leasing or loaning his rickshaw will have his property confiscated and destroyed.

The result of this law is the destruction of the poor man's capital. The rich man's capital in India can operate 24 hours a day, seven days a week. But a poor rickshaw operator can only use his capital, i.e., his rickshaw, while he has the strength to drive it.

Shah says that laws like this are prime examples of the law of unintended consequences. The original intent may have been to help rickshaw owners. The result is great harm.

Finally, Shah says there are some laws in India that were never intended to be enforced. Rather, they were designed to enrich public officials. Shah estimates that government officials collect 10 million rupees per month from the poorest of the poor as bribes to avoid prosecution for "violating" these laws.

Cherchez la femme

Scientists have found a new explanation for conspicuous acts of charity. Or perhaps it's the same old explanation with scientific validation.

After "priming" male subjects with romantic notions (you'll have to read the article to get the details on just how they did this), researchers "found that when requests for benevolence were financial, rather than time-consuming, romantically primed men were happy to chip in extravagantly. Giving money to charity is thus more akin to conspicuous consumption than it is to blatant benevolence. The primed men were also willing (or at least said they were willing) to act heroically as well as spend—but only if the action suggested was life-threatening."

Is it possible that men seek a reputation for benevolence and heroism for the same reason they seek success in business? As Alexandre Dumas wrote in 1854, Il y a une femme dans toute les affaires; aussitôt qu'on me fait un rapport, je dis: 'Cherchez la femme'. Translated into English this reads: "There is a woman in every case; as soon as they bring me a report, I say, 'Look for the woman'."

Chad Waldorff at August Meeting

This familiar sign on King Street in Charleston welcomed members to the August meeting of the Bastiat Society...

Chad Waldorff, Chairman of the South Carolina Club for Growth, gave a presentation on his organization's efforts to put sound economic thinking into state politics...

The crowd was nearly standing-room-only...

Trust, Trade and Fairness

In the magazine Scientific American Mind , an article asks the question "Is Greed Good?" It concludes "economists are finding that social concerns often trump selfishness in financial decision making, a view that helps to explain why tens of millions of people send money to strangers they find on the Internet."

Rather than reduce each and every transaction to a rational calculation of self-interest, humans appear culturally and genetically disposed to trust and trade, under some standard of fairness. You can sum up the results by saying human nature uses the rule "Trust someone until they give you a good reason not to. Then punish them accordingly."

Equilibrium, RIP

The idea of a system in equilibrium has been central to the economic thought of the last hundred years. From economics, it has spilled over into many business plans. Today, it's quite popular to talk about "balance" in product lines, personnel, or budgets.

Economists borrowed the idea of equilibrium from the physical sciences, where it had been quite useful. Unfortunately, economic systems are not equilibrium systems.

New research reveals economic systems are open-ended systems. They never achieve equilibrium. In the words of one researcher, if an economic system ever did achieve equilibrium, it would mean the death of everything in it.

Living things change, and then they change the world around them. Like it or not, the mere fact of our presence will change the world. Our actions will change it even more. The world is forever out of balance.

Rather than spend precious time and money attempting the impossible task of holding any system together in a stable equilibrium, we should recognize the challenges and opportunities of change. This includes not just economic systems, but all human social institutions, from culture to commerce.