Arson and Politics

Thomas Sowell, a senior fellow at the Hoover Institution, writes in one of his recent columns, "We don’t look to arsonists to help put out fires but we do look to politicians to help solve financial crises that they played a major role in creating."

Politics had a leading role in creating the current housing crisis, says Sowell. Consider the following:

1. Political pressure forced lenders to loan money to unqualified borrowers.
2. Land use regulations forced up the price of housing, leading borrowers to seek "creative financing."
3. The Federal Reserve pushed interest rates to historic lows, encouraging even more borrowing, bigger loans, and more "creative financing."

Sowell says the housing crisis is more political failure than market failure. But that won't slow don't the political rush for action. "The last thing politicians can do in an election year is nothing. So we can look for all sorts of “solutions” by politicians of both parties. Like most political solutions, these are likely to make matters worse."

The Quotable Frédéric Bastiat

"...we must wait until we have learned by experience -- perhaps cruel experience -- to trust in the state a little less and in mankind a little more."

Say What?

Although there is more than enough evidence that every business person should be skeptical about the academic push to teach business ethics, I offer as Exhibit A. the following paragraph from an article entitled "The Ethics of Governance," by Josef Wieland.

Wieland is the director of the German Business Ethics Network's Centre for Business Ethics. I challenge anyone to read this paragraph through and make any sense of it the first time.

"The elements of governance ethics are the moral resources and behavioral constraints and extensions deriving from organizational rules and values as well as their communication in and via cooperation projects. Accordingly, it is not the notion of action, but of governance which is its point of relfexion. Governance structures are sets or matrices of communicated formal and informal rules and value that constitute the cooperative actor as constraints and furnish him or her with explicit and implicit rules of the game for contractual and organizational relations for the realisation of specific transactions."

Alan Greenspan, in Congressional testimony, could not have said it any better. The only thing more painful than trying to digest such a mass of words must have been the labor required to get it out.

Here is what Wieland is trying to say. "The written rules of ethical behavior in organizations can help promote ethical conduct."

Free at Last!

Good news, Mr. Average American! As of July 16th, you stopped working to pay your taxes and started working for yourself, according to Americans for Tax Reform.

For 2008, the average taxpayer worked for the government the first 197 days of the year, four days longer than last year.

Free at last, free at last!

Source: Americans for Tax Reform, http://www.atf.org/

The Waffle Humpers are Coming!

In his inimitable style, Stephen Colbert comments on international trade and transnational ownership of a vital American industry.

Trust and Wealth

Trust is essential for trade. No trust, no trade, no society, no business, no wealth. You could say trust is the very basis of a prosperous society.

But what is the basis for trust? Why do we trust some people and not others? How do we deal with breaches of trust?

It turns out trust may have a neurochemical basis. An article in Scientific American discusses the possibility that oxytocin, "a hormone recognized for its role in social attachment and facilitation of social interactions, is also important in the formation of trust."

The higher the levels of oxytocin in the brain, the more likely an individual is to trust another person. This could explain why some people trust everyone, indiscriminately, while other people trust no one. It may not be a part of their behavior they can easily control.

Stakeholder Theory Mistakes

Those who lobby for the stakeholder theory of the corporation believe that it is possible for a corporation to ignore its unhappy customers, compromise its accounting standards, produce faulty products, pollute its environment, ignore its competition, and still create value for its shareholders.

They claim this rather remarkable feat is possible under the shareholder theory of the corporation, which elevates shareholder value over the values of all other groups (i.e., "stakeholders") affected by the corporation.

In their attack on the primacy of shareholders, the advocates of the stakeholder theory make three serious errors, mistakes that doom their entire argument. These errors concern the difference between short term and long term shareholder value; the difference between monopolies and competitive corporations; and the reliability of prices.

Is it truly possible to create shareholder value by ignoring unhappy customers, etc? Yes, such an outcome may be possible, but only for a little while. It is impossible to create long term shareholder value with such behaviors, because customers, accountants, employees, communities, and investors all have other choices.

Such an outcome is far more likely -- almost guaranteed -- in situations where people are forcibly deprived of other choices. But we don't call those situations markets. We call them monopolies, and monopolies exist only with the collusion of the state. Only the state has the power to limit competition, set prices, and compel non-shareholders to create value for shareholders.

But such value is not earned; it is extracted from one group for the benefit of another. Governments that create monopolies may create the appearance of a market economy, but in reality those "markets" are centrally planned.

Examine the heart of a planned economy, and you may find the form and substance of a corporation, but you will not find competition. This is the critical distinction that stakeholder theory glosses over. All corporations are not created equal. The more a corporation is protected from competition, the more likely it is to be a mechanism for involuntary wealth transfer, not voluntary wealth creation.

Prices matter as much as competition. Ultimately, shareholder value is just another price. Like all prices, it is sensitive to dynamically changing factors in a complex web of action. Just as the price of any good captures the varied interests of producers, manufacturers, distributors, wholesalers, retailers, and customers, long term shareholder value captures the varied interests of customers, employees, suppliers, communities, shareholders, and even competitors, and it does this better than any other measure of corporate responsibility.

Denying that the purpose of a corporation is to increase long term shareholder value is nothing less than an attack on the reliability of the price system itself. Stakeholder theory elevates other forms of value over the value contained in prices, especially that price we call shareholder value. It is a theory of business that has more in common with price control than with profit and loss.

You Are What You Drive

From the Economist, a review of Cars for Comrades, a survey of the auto industry in the old USSR.

THEY were the butt of jokes in the West. (“How do you double a Lada’s value? Fill up the tank”). Inside the Soviet Union, however, the quantity and quality of the cars it produced epitomised both the system’s failure and the capitalist world’s advantage....

The Lada was an obsolete Fiat, produced at the Togliatti factory south-east of Moscow: bought new, it required extensive repair in order to become roadworthy. Soon after that it would start rusting. Getting it serviced was a nightmarish process involving long waits, the use of personal favours, and unpleasant discoveries (light-fingered mechanics would steal scarce items such as the wing mirrors or windscreen wipers).

Campaign Econ

"Campaign Econ says the American economy is a certain way because Americans think it is. Campaign Econ competes with real economics and often wins..."

Amity Shlaes, in The Washington Post

Aggression or Cooperation

"We start with the biological observation that no individual could survive in a world of scarce resources without a strong measure of self-interest, one that includes at the very least his own family and close associates. That self-interest can manifest itself in one of two ways when dealing with strangers; through either aggression or cooperation."

Richard Epstein, "Coercion vs. Consent," Reason, Vol. 35, No. 10, pp. 40-50.

Banned!

Every law, tax, rule, or regulation of the state is ultimately enforced at the point of a gun. This reality is often ignored by progressives and communitarians, who believe in the positive goodness of coercive state action.

Markets, on the other hand, rely on voluntary behavior. In a market, we don't call coercion a good thing. We call it theft, and we use the state to punish thieves.

Therein lies the difference between the two groups. The first believes it should use the power of the state to improve people's lives, even if it has to act against people's preferences. The second believes it should only use the power of the state to punish those who use force or fraud to get what they want.

Slavery and Tariffs

In The Law, published in 1850, Frédéric Bastiat praised the United States as the nation that had most successfully developed the law as a means of protecting private property from those who would plunder it. He noted only two exceptions: slavery and tariffs.

He wrote,"But even in the United States, there are two issues—and only two—that have always endangered the public peace....What are these two issues? They are slavery and tariffs. These are the only two issues where, contrary to the general spirit of the republic of the United States, law has assumed the character of a plunderer."

Bastiat was prescient. Those were the very issues that would drench the country in blood and nearly tear the United States apart a little more than ten years later in the Civil War.

The Civil War settled the question of slavery. The question of tariffs remains, as dangerous to the public peace as ever.

The Genius of Adam Smith

On July 4th, outside St. Giles' Cathedral in Edinburgh, Professor Vernon Smith of George Mason University unveiled a statue of the Scottish intellectual known as "the father of economics," Adam Smith.

National Post (Canada) columnist Peter Foster noted the occasion by writing that Adam Smith has at long last received the memorial he deserves. All too often demonized as the "father of capitalism" and the exploitation the working class, Foster says Smith "was very much concerned with improving the lot of ordinary people."

Foster wrote, "In The Wealth of Nations, [Smith] pointed to the remarkable social -- and international -- benefits of self-interested interaction through trade and the division of labour. He noted that participants appeared to be guided by an "Invisible Hand" to produce a good that was "no part of their intention." This truism has been the centrepiece of attacks on the capitalist system as motivated by "greed" and "selfishness" and thus morally indefensible. But the merely obvious observation that Smith's famous "butcher, brewer and baker" are serving us primarily in their own interests in no way detracts from the value of that service, nor implies that they are rendered heartless by their business dealings."

While we are reflecting on Adam Smith's legacy, it may be helpful to listen to P.J. O'Rourke's summary of his experiences and insights while reading every word (and there are a lot of them) of The Wealth of Nations.

No Choice is No Fun

Who says television can't deal with serious issues in just sixty seconds?

Too many people assumed this vintage 1980s Wendy's ad was a harsh criticism of Russian women. It should be viewed as a humorous take on what happens to the human spirit when it is not free to choose.

As the announcer says, "Having no choice is no fun."

The New Establishment

From The Economist, evidence that the Old Left has become the New Establishment.

Apparently, the ineradicable youthful urge to rebel against the establishment is moving more and more students toward the Conservative party.

What do young people in the United Kingdom want? Fiscal prudence, low taxes, and secure private property rights have taken the place of drugs, sex and rock and roll.

The Spirit of Rebellion

Although it doesn't capture the eloquence of the original, the lyrics of the 1984 glam rock anthem We're Not Gonna Take It by Twisted Sister capture the spirit of the Declaration of Independence.

At its heart, the Declaration was nothing less than flipping the most powerful monarch in the world the bird.

It might help to think of this cultural reference across the centuries as Thomas Jefferson with makeup, a guitar, and a backup band. Considering the male fashions of the 18th century, that wouldn't be too far off the mark.

You may never think of American history the same way again.

We're Not Gonna Take It (Lyrics)

Oh we're not gonna take it
No, we ain't gonna take it
Oh we're not gonna take it anymore

We've got the right to choose it
There ain't no way we'll lose it
This is our life, this is our song

We'll fight the powers that be just
Don't pick our destiny 'cause
You don't know us, you don't belong

{Refrain}

Oh you're so condescending
Your gall is never ending
We don't want nothin', not a thing from you

Your life is trite and jaded
Boring and confiscated
If that's your best, your best won't do

We're right, we're free, we'll fight, you'll see

For additional shock value, here's the video. Imagine King George III in the role of the father, and you'll see the parallels.

Start a Revolution!

The Declaration of Independence is one of those documents everyone talks about and nobody reads. In the spirit of the 4th of July, I once again offer the meaning of the original document expressed in modern idiom.

Date: July 4, 1776

To: Posterity

CC: Government

From: Second Continental Congress, Philadelphia

Subject: "We're Not Going to Take it, Anymore"

God knows, sometimes a man has to stand on his own two feet. We think that time is now. Let us explain what we're about to do and why. We know you'll understand.

Who do you think should run your God-given life? You, or the government? The answer is as plain as the nose on your face: you should. The government is here to protect your life, not to run it. When it tries to run your life, you have the right to say no. If it gets really pushy, you have the right to tell it to drop dead. Of course, you shouldn't cause big trouble for nothing. It's best to put up with most of the crap in the world. It's not a perfect world and never will be. But when a government keeps insisting that it owns your life and all your stuff too, you have the right to start a revolution.

Well, we're starting one, right here, right now. Here's why. If this list doesn't convince you, nothing will:

1. The government is ignoring its duty to protect us.
2. The government won't allow us to handle all the business that it ignores.
3. The government won't allow us the right to vote on our laws and our taxes.
4. The government has made it difficult for us to protest.
5. The government has stripped all power from any of us who disagree.
6. Power to the people! But until we get this mess straightened out, the government is inviting all kinds of trouble, and we're the ones who are going to have to deal with it.
7. The government refuses to let us live where we want to.
8. The government refuses to let us peacefully settle our own disputes in our own courts.
9. The government insists on treating our judges like its puppets.
10. The government is growing too big, too fast, and it cost too much.
11. We are occupied by the government's army.
12. The government keeps us quiet at the point of a gun.
13. No matter what we say, the government keeps trying to run our lives. For example:
a. There are a lot of soldiers with guns around here
b. These soldiers are killing people, and nobody does a thing.
c. The government won't let us trade with the rest of the world. We can't earn a living.
d. We have to pay taxes, but don't have any say in which ones or how much.
e. Kangaroo courts.
f. Kangaroo justice.
g. The government intimidates innocent people.
h. The government makes up its own rules.
i. The government usurps the power of the people.
j. The government kills innocent people.
k.The government kills more innocent people, and destroys their property.
l. The government kills even more innocent people.
m. The government takes innocent people captive, and forces them to kill other innocent people or be killed.
n. The government encourages Indians to kill innocent people.

It's not our fault that it has come down to this. God knows we've tried to get along. But the government insists on treating us like slaves.

The rest of the civilized world isn't listening to us. We've warned them about what's going on. We've asked for their help, begged for it, really. But they have ignored us, even though we speak the same language and share many family ties. Now we have no choice. Reluctantly, we are forced to call them our friends if they don't fight us, and our enemies if they do.

That's the way we see it. Who are we? We represent the United States of America. We ask the Big Guy upstairs to help us do the right thing for the right reasons. Power to the people! The old government is finished. It doesn't matter anymore. If we want a war, we'll decide that, no one else. If we want peace, we'll decide that, too. It's our business if we want to trade and make money.

As of right now, it's our country. We hope like hell we're right and this thing works.

Sincerely,

[Sign Here]

Communist Humor

On the eve of another celebration of the independence of the United States, it might be educational and fun to consider what life has been like in those places and times where human freedom has not been given the respect it deserves. Any place, for example, that has suffered the cruel joke of communism.

Under communism, life became a grim struggle against a state that was, in turns, malevolent or indifferent. How grim? Consider these jokes from Hammer & Tickle, a collection of humor from behind the Iron Curtain by Ben Lewis.

Some of these jokes would have earned you a trip to a police station; others, a jail term; others would have cost you your life.

“How do you deal with mice in the Kremlin?” “Put up a sign saying ‘collective farm’. Then half the mice will starve and the others will run away.”

“Who built the White Sea canal [Stalin’s single most murderous slave-labour project]?” “The left bank was built by those who told the jokes, and the right bank by those who listened.”

"A flock of sheep approaches the Finnish border in a panic, pleading to be allowed entry. “Beria [Stalin’s secret police chief] has ordered the arrest of all elephants,” they explain. “But you’re not elephants,” reply the Finnish border guards in puzzlement. “Yes, but try explaining that to Beria.”"

Stalin appears to Vladimir Putin in a dream and says: “I have two bits of advice for you: kill your opponents and paint the Kremlin blue.” Putin asks, “Why blue?”

Dumb Laws

Before we ask the government to legislate all the details of our lives, perhaps we should ask how well it has done so far.

The answer: not very well. Check out a new blog series, Dumb Laws, from the Club for Growth.

The Club describes the blog as "a collection of truly dumb laws from across the country that we have sorted by state. For instance, Los Angeles banned the sale of bacon hot dogs. People in Pennsylvania are stirring up another Whiskey Rebellion after Allegheny County passed a beer tax. And the U.S. Senate just had a resolution this week honoring dirt. To learn about more dumb laws, go here."

In South Carolina, where the Bastiat Society is headquartered, the entry reads:

1. State law requires an individual to complete 1,500 hours of instruction to become a cosmetologist. It takes more hours of licensing to become a cosmetologist in SC than it does to become a police officer (396 hours) or carry a concealed weapon (8 hours).

2. Caskets and Stones, a retail funeral store in Greenwood, submitted their license application, paid their fee, were scheduled to go before the Board of Funeral Directors, and were told they could open. But then the Board gave them a “cease and desist” order - essentially telling them to stop selling caskets. The Board fined them $1,500 for “opening before their Board appointment.” They had to pay it before they could get their license.

3. Fortune Tellers are required to obtain a special permit in order to operate in South Carolina.

4. A proposed bill would require high school football and basketball playoff games to have replay for officials to use during these games.

5. Barbering schools are required by law to have at least ten instructional chairs -and those chairs are required by law to be upholstered and finished exactly the same way.

6. In 2003, a bill was introduced that would have required all drinking straws in South Carolina be sold in individual wrappers. The bill almost led to a fist fight on the House floor.

7. The fourth Friday in October in each year is designated by law in public schools as Frances Willard Day, and each public school is required “to prepare and render a suitable program on the day to the end that the children of the state may be taught the evils of intemperance.”

8. Circuses cannot exceed 48 hours at one place in any one year.

9. If a menu or advertisement states “frozen dessert,” it must correctly state the specific frozen dessert that is offered for sale so as not to mislead the consumer.

10. Musical instruments are not allowed to be sold on Sunday.

"Dumb law" is what happens when we rely on legislation to handle the details of a society. Legislation is a blunt instrument, effective for protecting private property rights, but more laughable than helpful when it tries to deal with the fine details of living, things like musical instruments, frozen desserts, and drinking straws.

Best Countries for Business 2008

You could call it "the revenge of the old world;" or you could say it's the ability to reinvent a country; or perhaps the advantages of small and nimble versus big and slow.

Whatever you call it, the United States is no longer the best country in the world for business. According to Forbes magazine, that honor goes to the land of the Danes. With all due respect to Shakespeare, there's nothing rotten in Denmark anymore.

Forbes gives Denmark credit for low inflation, low unemployment, entrepreneurship, lower taxes, innovation and technological savvy.

The United States ranked fourth, just ahead of the United Kingdom and behind Ireland and Finland.

The 2008 Forbes list of the top ten countries for business reads as follows:

1. Denmark
2. Ireland
3. Finland
4. United States
5. United Kingdom
6. Sweden
7. Canada
8. Singapore
9. Hong Kong
10.Estonia

Profits without Honor

"To the economically illiterate, if some company makes a million dollars in profit, this means that their products cost a million dollars more than they would have cost without profits. It never occurs to such people that these products might cost several million dollars more to produce than if they were produced by enterprises operating without the incentives to be efficient created by the prospect of profits."

Thomas Sowell, "Profits without Honor," www.townhall.com, December 23, 2003.

Novelty Sells

The human brain is attracted to novelty, according to Bianca Wittman, a neuroscientist at University College London's Institute of Cognitive Neuroscience.

This may explain why new packaging can stimulate the sales of old products. Or how shiny new politicians can get away with selling the same old ideas.

Read the whole story here.

The Klein Doctrine

In the Wednesday, June 25 Cato Daily Podcast, Johan Norberg takes on Naomi Klein's hatchet job on free markets and Milton Friedman. Norberg calls Klein's thesis that freedom is unpopular, "hopelessly flawed at every level."

Get your own copy of Norberg's report, "The Klein Doctrine: The Rise of Disaster Polemics."

July 2008 Meeting

The Bastiat Society invites you to its next meeting in Charleston, SC on Wednesday, July 2nd.

Matt Kibbe, President of FreedomWorks will be the speaker for the evening. FreedomWorks is a non-profit organization designed to fight for lower taxes, less government and more economic freedom for Americans.

Topic: "Does Big Business Support Free Enterprise?"
Date: Wednesday July 2nd
Time: 5pm Hors d'oeuvres & 6pm Presentation
Location: Imaging Arts Gallery, 175 King Street
RSVP to Megan Rock

As always, guests are welcomed for an evening of hors d'oeuvres and stimulating dialogue.

About the speaker...

Matt Kibbe became President and CEO of FreedomWorks in June 2004. From 1984-2004, the FreedomWorks organization was called Citizens for a Sound Economy (CSE) and previously Matt served as its Executive Vice President from 1996-2004.

Today, as President/CEO, Matt manages FreedomWorks' overall operations and strategy, including public policy development, grassroots operations, and state and federal issue campaigns for the organization. Before joining Citizens for a Sound Economy, Matt served as Chief of Staff and House Budget Committee Associate for U.S. Representative Dan Miller(R-FL) from 1993 to 1996.

Between 1990 and 1993, Mr. Kibbe was Director of Federal Budget Policy for the U.S. Chamber of Commerce. Prior to that, he served as Senior Economist for the Republican National Committee during Lee Atwater's tenure as Chairman. Between 1988 and 1989, Mr. Kibbe was the Managing Editor of Market Process, an academic economics journal published by the Center for the Study of Market Processes at George Mason University. The journal developed Austrian and Public Choice approaches to economic theory, and a free market understanding of political economy.

Mr. Kibbe started his professional career at Citizens for a Sound Economy, serving as a policy analyst between 1986 and 1988. Matt did graduate work in the economics department at George Mason University and received his BA in Economics from Grove City College.

Mr. Kibbe has written extensively on economics, public policy and politics. His writings have appeared in outlets such as USA Today, The Wall Street Journal, The Washington Times, Reason, Market Process and The Journal of Regulation and Social Costs.

Best Books for Business

The Myth of the Robber Barons: A New Look at the Rise of Big Business in America by Burton W. Folsom, Jr. has just been added to the Bastiat Society's list of the Best Books for Business.

In his book, Folsom makes a critical but often overlooked distinction between market entrepreneurs that create wealth and benefit society, and political entrepreneurs that use government to enrich themselves at the expense of society.

Folsom summarizes his theme, "Market entrepreneurs made decisive and unique contributions to American economic development. The political entrepreneurs stifled productivity (through monopolies and pools), corrupted business and politics, and dulled America's competitive edge."

He also makes the point that "in the key industries we have studied, the state failed as an economic developer."

Myth of the Robber Barons joins The Law, Economics in One Lesson, and Can Capitalism Survive? on the Society's list of the best business books.

Burton Folsom is the Charles Kline professor of history and management at Hillsdale College in Michigan.

From Flat World to Free World

Yaron Brook, executive director of the Ayn Rand Institute, published this commentary "From Flat World to Free World" at Forbes.com on June 16. It is a vigorous defense of capitalism as an ideal.

Some excerpts...

"The expanding economic freedom of the past few decades was primarily a response to the bankruptcy of communism and socialism; it was not based on acceptance of capitalism as an ideal. Without such acceptance, recent political advances--despite the economic success they generated--are vulnerable to the new wave of anti-capitalist measures."

"Capitalism will remain the world's punching bag until such time as the profit motive is rescued from moral oblivion."

"For individual rights to prevail in politics, nothing less than a revolution in ethics will be required--a bloodless revolution--not of arms, but of ideas. You'll know that struggle is over when businessmen are finally viewed not as moral pariahs or ciphers but as paragons of virtue, precisely because they pursue profits."

Habits of Highly Effective Countries

From the Atlas Economic Research Foundation...

The report, “Habits of highly Effective Countries, Lessons for South Africa" by Leon Louw ( Law Review Project, South Africa), reveals how developing nations must make radical changes in order to ensure a prosperous future.

“Through statistical analysis of the world’s most and least successful countries we found that, out of hundreds of options, there is a short list of policies associated with winners and losers respectively. This report provides an outline of effective policies that any country seeking growth should adopt,” according to Louw.

A selection of effective habits that the report reveals are:
• Prosperous countries are in the minority and seem exceptional but it is poverty that is the economic miracle: left to their own devices, people appear to trade and manufacture, thus producing wealth spontaneously. Only bad policies can curtail this natural propensity.
• Improving the legal system, from guaranteeing contracts to reducing crime, is a major factor.
• Free trade, leading to more foreign trade. Protectionism is a big favourite with many aid activists and they like to point to South Korea and Japan as successful examples: in those cases, that bad policy was simply outweighed by other good policies.
• There is no evidence that foreign aid, debt relief, subsidies, technical assistance or protectionism have the potential to “make poverty history.” There is plenty of evidence that aid, instead, makes poverty by feeding corruption and sustaining policies that perpetuate poverty and keep the aid money flowing. This study can be adopted to other countries and has the potential to be an extremely effective tool for think tanks in countries across the globe.

To download the full study, please click on Habits of Highly Effective Countries (PDF, 63pp, 1.6 MB)

The Quotable Frédéric Bastiat

"In the sweat of thy face shalt thou eat bread." But everyone wants as much bread and as little sweat as possible.

Petition of the Light Bulb Makers

With echoes of Bastiat's famous essay, "Petition of the Candlemakers" ringing in your head, enjoy Congressman Ted Poe's five minute speech on light bulbs and the constitution.

Resource Independence

Consider this scene: politicians are complaining loudly about the United States' reliance on other countries for an essential input to the nation's economy. They say resource independence is long overdue.

Oil?

No, iron. In the 19th century, cheap iron and steel meant farm tools, pipes, nails and -- most important of all -- railroads for a young and rapidly growing nation. Iron rails were to the American economy then what oil is to it now. Europeans took the place of Arabs.

In 1839, Nicolas Biddle, the former president of the Bank of the United States, complained, "With all the materials for supplying iron in our own lands, the country has been obliged to pay enormous sums to Europeans for this necessary article....This dependence is horrible....This costly humiliation ought to cease forever."

It wasn't until 1846, however, that the first iron rails were produced in America. They came from a most unlikely source. George Selden Scranton, Joseph Scranton and William Henry Scranton set up their iron works in Pennsylvania. They tried to make pig-iron at first, and then nails. Neither product made them any money. To add insult to injury, their work earned them the political and social ill-will of nearby Wilkes-Barre and surrounding farmers. Rather than being welcomed as wealth-creators and innovators, the Scrantons were personae non gratae.

Desperate for a success and on the edge of bankruptcy, the gutsy Scrantons decided to try making iron rails, even though they had never made one before. They were stepping into the ring with the British, the reigning heavyweight champ of rail making. In a classic entrepreneurial move, they managed to win a two-year contract for 12,000 tons of rails for the New York and Erie Railroad.

Now all they needed to know was how to make the product they had agreed to deliver. Amazingly, they figured out how to make the rails, build bthe last furnaces, import the ore and limestone, and to transport the finished rails to the work site. They delivered their final shipment four days before the end of their contract.

The story of the Scrantons contains two lessons. First, politicians have always worried about resource dependence. Today's calls for energy independence are just new words to an old song. Second, entrepreneurial determination, bravado, and desperation, not political favors or high poll numbers, is what the Scrantons used to succeed.

Source: The Myth of the Robber Barons: A New Look at the Rise of Big Business in America by Burton W. Folsom, Jr.

Who Said It?

1. "Every man holds his property subject to the general right of the community to regulate its use to whatever degree the public welfare may require."

2. "All rights are derived from the purposes of the society in which they exist."

3. "True individual freedom can't exist without economic security...the right to a useful and remunerative job...a decent home...good health...and a good education."

4. "In a country where the sole employer is the state, opposition means death by slow starvation. The old principle, 'Who does not work shall not eat,' has been replaced by a new one: 'Who does not obey shall not eat.'"

5. "Property doesn't have rights, and people don't either."

6. "The fundamental principle of Socialism, which would make all possessions public property, is to be utterly rejected because it injures the very ones whom it seeks to help."

7. "The Soviet growth rate generally exceeded that of the United States in the post-World War II period as a whole."

8. "In 1989, per capita income was higher in East Germany than in West Germany."

9. "In 1980, East Germany's GDP per capita was higher than Japan's."

10. "A constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State, or of laissez faire."

Answers:

1. President Theodore Roosevelt, 1910.

2. Justice Louis Brandeis of the Supreme Court of the United States, 1921.

3. President Franklin D. Roosevelt's State of the Union Address, 1944.

4. Leon Trotsky, one of the leaders of the Russian October 1917 Communist Revolution.

5. Nadine Strossen of the NYU School of Law and the ACLU, 1993, pointing out that if people don't have property rights, they don't have any rights.

6. Pope Leo XIII in Rerum Novarum, 1891.

7. America's best-selling economics textbook, 1987.

8. The Statistical Abstract of the United States, 1989.

9. The Statistical Abstract of the United States, 1989.

10. Justice Oliver Wendell Holmes of the Supreme Court of the United States in the 1905 Lochner case, where he wrote a dissenting opinion that property rights -- a mere "economic theory" -- were not protected by the Constitution.

Source: The Noblest Triumph: Property and Prosperity Throughout the Ages, by Tom Bethell

The Private Property Solution

"Normally it is said that if population trends continue, starvation will result, resources will be depleted, and the environment ravaged. But private property solves all these problems. It is in the thinly populated countries, where property is communal by custom or controlled by the state -- Somalia, Ethiopia and Sudan, for example -- that we have seen the worst of famine and environmental destruction. Countries that do not enjoy secure and transferable private property will certainly remain backward, however. That is because human nature is everywhere the same."

From The Noblest Triumph: Property and Prosperity through the Ages, by Tom Bethell

History and Humiliation

Historians used to search through piles of dry facts looking for a grand underlying law of history, one that could shape years, even centuries of human action and make the future as predictable as the sum of two numbers. They failed.

Not only did they fail, but they ended up contributing to some of humanity's darkest chapters. Fascism and Communism were both products of the attempt to create a "science of history."

Perhaps historians have finally learned that history is simply the record of the way people react to their surroundings. Any apparent cycles in history have less to do with predictable laws and more to do with universal human nature. Consider how three once proud and mighty civilizations responded after suffering a humiliating military defeat.

From the 8th century AD to the middle of the 13th, the Arab world enjoyed the world's most successful civilization. It was the center of learning, art, commerce and religious tolerance. Over the next eight hundred years, it suffered one stunning defeat after another, first at the hands of the Mongols, then at the hands of European colonial powers, and finally at the hands of the tiny state of Israel, carved out of Arab land and created by the Western powers.

How did Arab civilization respond? It institutionalized violence, xenophobia, and racism.

In the late 19th and early 20th century, many Western intellectuals pointed to the new German state as an example of a progressive, scientific government. Then came its crushing defeat in WWI and the humiliating Treaty of Versailles.

How did Germany respond? It elected Adolph Hitler.

In 1820, China was the largest economy in the world. Trade with Britain left the British with a huge trade deficit, and the British decided to solve that problem by selling Indian opium in China.

The Chinese responded with their own version of the Boston Tea Party: they sank some of the British ships. Britain retaliated with the First Opium War, which ended in a humiliating Chinese defeat. The Chinese army was simply no match for modern weapons.

China tried to rebel again, and it lost the Second Opium War. Over the next forty years, two more Chinese rebellions were unsuccessful, leaving China at Britain's mercy.

Then came the Japanese, a nation China had long considered inferior, but one that had made the decision to modernize its industry and military after its own string of European colonial humiliations. After the end of WWII and the end of its own civil war, China finally regained control of its destiny under the Communist leader Mao Tse Tung, "the Great Helmsman," who promised to restore China to its greatness with a planned economy. It didn't work.

After the death of Mao, Deng Xiao Peng abandoned a planned economy in favor of old-fashioned capitalism with a Chinese twist. He said, "I don't care if the cat is black or white, only that it catches mice."

Deng was a pragmatist, not an ideologue like Hitler or Mao, nor a zealot bent on revenge like Osama Bin Laden. Deng correctly reasoned that the best way to recover from China's humiliation at the hands of the West was to unleash the talent, energy, and self-interest of the Chinese people. Make money, not war.

In two of the three cases, the desire for revenge led to war and more suffering. In one, the desire for respect led to a dramatic increase in wealth and peaceful world trade.

Both desires reside in all human hearts. The question for all of us is, which one shall we satisfy?

"Give Me Liberty"

The picture below is of an engraved stone on the exterior base of the Chicago Tribune Tower on Michigan Avenue. It is a quotation from Areopagitica by John Milton (1608-1674), one of the most famous arguments for freedom of speech.

Although some say Milton composed his tract in response to the severe criticism he received for his publications arguing in favor of the freedom get a divorce, his plea for freedom of speech still resonates today, especially when we attempt to discuss the most contentious issues of our day: global warming, globalization, health care, wealth creation, wealth distribution, and the social responsibilities of business.

The Ghost of 1969

In 1969, the United States enacted the Alternative Minimum Tax (AMT). The AMT was a rapid-fire political response to a newspaper story that 155 high income individuals legally paid no income taxes.

Since 1969, the US has had not one, but two income tax codes: the regular tax and the AMT. A taxpayer has to calculate his or her income taxes twice, and pay the greater of the two taxes.

The AMT was built and deployed to catch just a handful of people. These people were not criminals. They had complied with the law as it was. They were just very good at legally avoiding the income tax.

In 1969, they discovered that their success had made them a political target. But the target was small, and no one else cared. Today, that target is much bigger.

According to Ira Weiss of the University of Chicago, the AMT will affect 30% of American taxpayers this year. These taxpayers will find themselves in a Kafkaesque world of English language sentences that make no sense. These modern taxpayers are paying the price for the class warfare, envy and political expediency of 30 years ago. If ever there was a case for why we should be cautious before letting the government fight all our fights, right all our wrongs (both real and imagined), and pander to our most selfish instincts, the AMT is it.

Crusading for justice, the government created greater injustice. In the name of fairness, it destroyed what is fair. In the name of the people, it loots the property of an ever larger number.

The ghost of 1969 haunts us today, no longer imaginable as the face of justice. We can see it for what it really is.

George Will on Government

According to George Will, conservatives understand that the government's job is to deliver the mail, defend the shores, and get out of the way.

And, in a priceless quip, the lungs are not the seat of wisdom.

The Flat Tax,

The US tax code is horribly complex, needlessly wasteful, socially unfair and economically destructive.

What's the alternative? Around the world, some of the fastest growing small economies owe their prosperity to a flat tax. In this video, Dan Mitchell of the Cato Institute presents a quick survey of the global flat tax revolution.

The Quotable Frédéric Bastiat

"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe."

The Ministry of Happiness

In his book The Moral Economy of Labor, Dartmouth professor James Bernard Murphy argues that business, as it is currently practiced, is an obstacle to human happiness. His solution is to reorganize everything, from the division of labor to ownership and control.

Who should spearhead the grand redesign of our economy? Why, a government agency, of course. Murphy writes:

"Government should be concerned with the distribution of meaningful work not because of a putative right to such work but simply because meaningful work is so fundamental to human happiness and well-being. How should government go about the business of enhancing the opportunities for self-realization in work? The obstacles to self-realization are so deeply rooted in the institutions of our economy that only profound changes in the ownership and control of industry can create the opportunity for greater access to meaningful work. Government can play a significant though indirect role supporting institutional change in our economy -- change that might well be desirable even apart from its role in helping to create meaningful jobs."

He should just call it what he wants it to be: The Ministry of Happiness.

This is a prime example of the intellectual threat to business. This is not the scribbling of some isolated philosopher. He teaches students at one of the most prestigious colleges in the world. His ideas influence the teaching of business and business ethics in many more universities around the world.

Here, a man who has never run a business presumes to recreate not just one business, but the whole social order.

A Threat to Freedom

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

Nobel Laureate James Buchanan on Change

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

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

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

Wasting Money

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

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

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

June 2008 Meeting

"Beyond Incentives Matter: Ideas and Institutions in the New Economics of Politics"

Professor Ed Lopez
Wednesday, June 4th

Imaging Arts Gallery

175 King Street

Charleston, SC

843-577-7501

5:00 pm Reception 6:00 pm Speaker

RSVP to Megan Rock

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

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

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

About the Speaker:

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

Human Dignity

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

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

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

Two excerpts:

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

And:

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

Tolstoy on Wealth and Justice

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

The text is from Literature Network.

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

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

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

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

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

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

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

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

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

"But who is to define what is proportionate?"

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

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

"I can't say."

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"And where are you going to sleep?"

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

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

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

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

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

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

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

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

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

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

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

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

The Edifice Complex

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



From Reason.tv

Hayek's Liberalism

From Philosophy Bites...

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

Listen to Chandran Kukathas on Hayek's Liberalism

Central Planning

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

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

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

An excerpt:

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

Read the rest here

Check out an interview with Kealey here

The Race

Generation E(ntrepreneur)

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

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

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

The Quotable Frédéric Bastiat

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

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

How Should We Think About Climate Change?

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

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

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

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

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

More Lomborg...

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

Bastiat in The Online Library of Liberty

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

Here is the Library's introduction to Bastiat:

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

To Serve Mankind

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

Henderson on Corporate Social Responsibility

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

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

Pirate Treasure

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

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

An excerpt from a review in the Boston Globe:

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

Science as High Priest

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

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

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

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

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

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