An Emergency Psychology

Here's another lesson of history we should consider in our present crisis.

How did a small number of Southern slave owners convince a larger population of non-slave owners to go along with the act of secession that started the American Civil War?

One historian concluded that "the secessionists succeeded less because of the intrinsic popularity of their program than because of the extreme skill with which they utilized an emergency psychology."

In other words, beware ambitious men who speak of emergencies as "an opportunity to do things that you think you could not do before."

The Burden of Freedom

We often hear that our government must do something to protect people who have been injured by the brutal world of free market competition, especially the poor.

What we don't know is that this argument has been used before, to justify the ultimate social safety net. We called it slavery.

In 1854, the antebellum slavery apologist George Fitzhugh published Sociology of the South or The Failure of Free Society.

Fitzhugh argued slavery was preferable to free society, especially for the poor. He wrote, "The dissociation of labor and disintegration of society, which liberty and free competition occasion, is especially injurious to the poorer class; for besides the labor necessary to support the family, the poor man is burdened with the care of finding a home, and procuring employment, and attending to all domestic wants and concerns. Slavery relieves our slaves of these cares altogether, and slavery is a form, and the very best form, of socialism."

When does freedom become a burden? When does relief become slavery?

Judicial Compassion and Empathy

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

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

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

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

Powerful and Secure

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

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

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

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

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

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

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

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

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

The Bastiat Prize for Online Journalism

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

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

Get the full details of this year's competition at: www.bastiatprize.org.

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

Corporate Sellouts

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

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

From "Corporate Sellouts" in The American Spectator.

Corporate Sanction

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

Leave the Economists at Home

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

A Good Explanation

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

Niall Ferguson writing in the New York Times

USA, Double A Credit

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

From The Economist.

The Briefing Book

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

The Great Ethanol Scam

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

From Business Week.

A New Foundation

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

Higher taxes

More regulation

Attacks on business

Illegal takings

Limits on compensation

A brewing trade war with Canada

Mexico

and Europe.

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

Obama Attacks Business

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

Read the rest here.

The Stand Up Economist

Stand-Up Economist Yoram Bauman: 

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

A Savior-Based Economy

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

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

An Assault on Business

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

Thus Ended Capitalism

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



View more capitalist humor at the official Dilbert website.

State and Corporation

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

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

*****

"The essence of capitalism is the inviolability of individual rights, including the right to use or invest wealth as one chooses and the right to associate with others for any purpose and under any mutually acceptable terms of association."

*****

"Investment without control is not an evil if the owners freely consent to that relationship. Rather, it is an example of what has been called 'capitalist acts between consenting adults.'"

*****

"Anyone whose professed goal is to give shareholders the widest possible range of choices would be unable to conceive of or to create the stock exchange system that spontaneously evolved over the past century. Far from being the antithesis of free choice and continuous accountability, the publicly traded giant corporation is the highest embodiment and expression of those ideals."

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

It Cannot Happen Here

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

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

From The Road to Serfdom.  View an illustrated version here.

No Shame

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

May 2009 Meeting

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

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

View a pdf of the Report here.

The Secret to Economic Development

The secret to economic development in one sentence:

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

Friedrich Hayek, 1960
Quoted by economist William Easterly

Property Without Law? You Must be Joking!

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

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

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

Read a synopsis of the study here.

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

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

Just Say Non

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

A Simple Cloud

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

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

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

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

The Grasping Class

In these days of bailout and stimulus, it may be instructive to revisit the words of H. L. Mencken, written the last time the nation faced such challenges, and written about the industry most prominently demanding federal aid: farming.

"No more grasping, selfish and dishonest mammal, indeed, is known to students of the Anthropoidea. When the going is good for him he robs the rest of us up to the extreme limit of our endurance; when the going is bad be comes bawling for help out of the public till. Has anyone ever heard of a farmer making any sacrifice of his own interests, however slight, to the common good? Has anyone ever heard of a farmer practising or advocating any political idea that was not absolutely self-seeking–that was not, in fact, deliberately designed to loot the rest of us to his gain? Greenbackism, free silver, the government guarantee of prices, bonuses, all the complex fiscal imbecilities of the cow State John Baptists–these are the contributions of the virtuous husbandmen to American political theory. There has never been a time, in good seasons or bad, when his hands were not itching for more; there has never been a time when he was not ready to support any charlatan, however grotesque, who promised to get it for him. Only one issue ever fetches him, and that is the issue of his own profit. He must be promised something definite and valuable, to be paid to him alone, or he is off after some other mountebank. He simply cannot imagine himself as a citizen of a commonwealth, in duty bound to give as well as take; he can imagine himself only as getting all and giving nothing."

The Innovator and the Manager

What is the difference between an entrepreneur and a manager?

The innovator, the person who creates new ideas or ways of dealing with old problems (in business the entrepreneur), is by his very nature a destabilizing force. He initiates a process of change he doesn’t fully understand, and whose consequences he is utterly incapable of foreseeing in their entirety.

Management institutionalizes a successful innovation, the discovery of the entrepreneur, and in so doing, gives it an efficient, orderly, and useful life. But ultimately, management is the deathwatch of any successful entrepreneurial idea. Management, lacking its own creative instinct, wants to keep the entrepreneurial idea revenue-producing for as long as possible, usually through three phases: initial success and rapid growth, market dominance and slower growth, contracting markets and obsolescence. It is during the last phase that management is most likely to turn to the political process to protect the entrepreneurial revenue, now unable to earn its keep in open competition with other ideas. Political intervention can stabilize obsolescent ideas for years, even decades. But that stability only makes the inevitable adjustment more painful, as more and more capital and labor is drawn into an industry that only appears healthy, but is in fact, doomed.

The Detroit of Higher Learning

"Graduate education is the Detroit of higher learning. Most graduate programs in American universities produce a product for which there is no market (candidates for teaching positions that do not exist) and develop skills for which there is diminishing demand (research in subfields within subfields and publication in journals read by no one other than a few like-minded colleagues), all at a rapidly rising cost (sometimes well over $100,000 in student loans)."

Professor Mark C. Taylor of Columbia University, writing in the New York Times.

An Exodus of Talent

Composer Andrew Lloyd Webber writes in the UK Daily Mail: "The last thing this country needs is a pirate raid on the wealth creators who still dare navigate our stormy waters...

And don't lynch me as a rich b*****d flying a kite for his own cause - I really fear an exodus of talent."

The Declaration of Cumaná

Capitalism: (n) a system of social organization based on private property, prices, and profits; responsible for the global economic crisis, climate change, the food crisis and the energy crisis; a threat to end life and the planet precisely in the year 2030.

Source: The Declaration of Cumaná, April 2009

Happiness is Controlling the Lives of Others

Richard Epstein, of the University of Chicago, recently talked about the burgeoning economic research on happiness. He said that happiness has become a code word for controlling the lives of others.

Some highlights:

* "The standard economic model of human behavior is "Cooperation yes, aggression no."

* "Happiness research is designed to undercut the standard form of market calculus."

* "Researchers who find little connection between either income or wealth on the one hand and happiness on the other have failed to take account of the short-run trade offs people make to get wealth."

* "There is a part of the happiness literature that is designed to make everyone mutually miserable."

* "The conclusion is that, if the empirical studes show that there is only a weak correlation between happiness and wealth, it's okay to take away the wealth because it doesn't make the people who had it less happy."

* "Researchers on happiness fail to account for the kind of behavior that says, "I'll be miserable for five years as long as you make me rich."

Listen to the rest here.

Fraud, Waste, and Great Material for Comedy

The bank bailout/stimulus news starts to turn ugly. But out of the dross of fraud and government waste, a talented few can spin the gold of comedy.

First, the special inspector general assigned to monitor the bailout program warns that the program is so complex and loosely organized that it is open to fraud.

Second, tiny and remote John Murtha Airport gets $200 million in taxpayer dollars. Surprise, it is named after a member of Congress. 

These stories remind me of a recent episode of South Park, where Stan tries to return a margarita mixer his father bought on credit. Stan goes all the way to Washington DC, where he learns how bailout decisions are made according to a careful, precise, and rational process.

Watch that process here and tell me, is it life imitating art or vice versa?

The End of Poverty

Coming soon to a theater near you, a new anti-capitalist documentary everyone will be talking about: The End of Poverty.

The trailer:


Prepare yourself by reading Tyler Cowen's scathing review in The American Interest.  An excerpt:

"In this movie, the causes of poverty are oppression and oppression alone. There is no recognition that poverty is the natural or default state of mankind and that a special set of conditions must come together for wealth to be produced. There is no discussion of what this formula for wealth might be. There is no recognition that the wealth of the West lies upon any foundations other than those of theft, exploitation and the oppression of literal or virtual colonies."

Kudlow: "Backdoor Nationalization"

Larry Kudlow writes, "Are we moving away from democratic capitalism, and toward some sort of corporatist state-directed economy?"

Read the rest here.

Anger's Aweigh

Colbert says granting vigilantes the right to shoot pirates on the high seas is the free market at its best.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Anger's Aweigh
colbertnation.com
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Are You a Terrorist?

You may already be a terrorist and not even know it!

Why not become a Certified Possible Terrorist -- CPT --(trademark designation pending)?

Impress your friends. Remove all doubt. Take the test now!

Via Reason magazine where you can take the test and print your very own certificate.

Here are the questions you should be prepared to answer:

* Have you ever rejected federal authority in favor of state or local authority?

* Do you worry about infringements on Constitutional guarantees to an individual's right to bear arms?

* Do you find yourself sometimes agreeing with Rep. Ron Paul (R-Texas) or Libertarian Party presidential candidate Bob Barr?

* Have you ever displayed or looked at a Gadsden flag (the one featuring a coiled snake and the logo "Don't Tread on Me")?

The Path of Prices

What drives individual economic behavior? While there are many inputs, prices are the primary markers on the path of individual economic decision-making. The sum of such individual behavior is the emergent phenomenon we call the economy.

The economy is not something that happens to people, like an earthquake or a storm. It is something that emerges from people, as they react to the prices around them.

The quality of an economy is ultimately traced back to the quality of its prices. Bad prices equal bad decisions equal a bad economy. Reliable prices equal reliable decisions equal a reliable economy.

Much of the mess we see in the world today is the result of bad prices, or more accurately, prices that are distorted. The price of a loan, for example, became extraordinarily low after September 11, 2001 when the US central bank cut its interest rates. Businesses and individuals rushed to lever up their balance sheets, to buy more stuff with borrowed money. That sent the signal to business that people wanted to buy more stuff, so business had to produce more. That meant more jobs, more plant and equipment, more distribution, more marketing, more advertising, etc.

In other words, distorted prices lead everyone down the wrong path. Distorted prices led consumers to make bad consumer decisions and businesses to make bad business decisions. The economy is not in trouble because of careless lenders, careless borrowers, or greed. It's in trouble because individuals acted in good faith and used bad prices.

This is not to argue that prices are an infallible guide to behavior. They're not. They flicker and fluctuate with frustrating frequency in even healthiest economy. Prices reflect the variable and uncertain nature of our existence. Indeed, in a world where so many things change so quickly, the price system is the only way we can convert a uselessly complex network of interactions into bits of actually useful information.

Like the economy itself, prices are an emergent phenomenon. We get into trouble when we try to set prices rather than relying on the prices that emerge from the peaceful, mutually beneficial behavior of individuals.

Capitalism Down, But Not Out

Rasmussen reports...

53% of Americans say capitalism is better than socialism.

20% say socialism is better than capitalism.

27% can't say which is better.

Adults under thirty are divided roughly into thirds, with a slightly greater number favoring capitalism.

Adults over thirty strongly favor capitalism.

A Mooted New Scheme

An editorial from the FT of London...

"Frédéric Bastiat, the great economic journalist, wrote in 1850 that although breaking a shopkeeper’s window seemed to generate economic activity, all it really did was enrich glaziers. Shattering shop-fronts does not raise aggregate demand. The British government has yet to learn this lesson. A mooted new scheme to pay consumers up to £2,000 if they have an old car broken up and replaced with a new one would be a wasteful, distortionary subsidy to automakers."

Read the rest here.

The Madoff Stimulus Plan

The Chinese government is the largest foreign investor in the debt of the United States government. Economist Thomas Sowell points out that the United States government and Bernie Madoff have something in common: both took advantage of the investors who trusted them.

Sowell writes:

"The Chinese are no fools. They know that all this unbridled spending — even when it is called “investment” — means that inflation is coming. That in turn means that the dollars with which U.S. government bonds will be paid off will be worth a lot less than the dollars with which the bonds were bought.

Governments around the world have played this game for centuries, robbing those who trusted them enough to buy their bonds. Like Bernard Madoff, they call it “investment.”"

Perhaps we shouldn't send Madoff to jail, after all. It sounds like there might be a place in this Administration for a man with his kind of talent.

Reckless and Bold

If reckless spending got us into this mess, can bold spending get us out?

Approximately 2.40 minutes. Narrated by Nick Gillespie; sponsored by Americans for Prosperity, the Heritage Foundation, and Reason.tv.

State of Ignorance

"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a "dismal science." But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."

Economist Murray Rothbard, 1970

The Neo-Populists

Ira Stoll, writing in the Wall Street Journal, worries that the state of the economy "may trigger a new outbreak of anti-Semitism."

President Bill Clinton's secretary of labor, Robert Reich, warns that, "History shows how effective demagogic ravings can be when a public is stressed economically." Reich says Jews, along with gays and blacks, could become victims of populist rage.

I think not. Stoll and Reich are focused on yesterday's brand of populism, one formulated when Jews, gays, and blacks stood outside the political power structure. Now that the halls of power contain a black President, Jewish Presidential advisors, and gay Congressmen, it's hard to imagine that these powerful people would turn their power into rage against the groups they represent.

No, populism has changed; or rather its target has. Populists can no longer count on racist or religious attacks to gain political advantage. If a populist wants to get anywhere today, he must phrase his attack in terms of income and occupation. Only then can he can sound like a social progressive and not a social reactionary.

That done, his field of attack is wide open.

State of Fear and Violence

Author and economist Robert Higgs recently spent three hours on C-Span. A few choice comments:

"Nothing works better for a politician than making people afraid."

"Governments have always relied on fear to keep subjects in line."

"Most of what the government has come to do over time doesn't even fit into the category of public goods."

"The US has more than 87,000 separate governments, more than 60,000 with the power to tax."

"Don't just stand there. Undo something."

"We desperately need to reduce the size, scope, and power of government."

"Government is not what it purports to be. It represents itself as everybody's friend or everybody's savior."

"The social safety net [which some people say has been shredded] has never been denser than it is today."

"When you add up all the elements of military spending [not explicitly in the defense budget]...you can approximately double the DOD total."

"If you think that's it's bad without government...just imagine what happens when you place enormous power in the the hands of government officials."

"Governments have killed 200 millions of their own citizens, not counting those killed in wars."

"Whenever we resort to government, we're resorting to a gun."

"The government's way is the violent way."

"Greed does not cause bubbles. Greed is a social constant. [It] doesn't fluctuate. What does fluctuate is government policies."

"The idea that we are bailing out big institutions by basically stealing from the taxpayers is wrong, and I denounce it."

"I would like to see everything deregulated. Because then everyone would have an incentive to be more careful...Every time the government regulates something, it creates a false sense of security."

"If we got rid of all the risks, the world would be a nightmare."

"I have little faith in the ability [of cost benefit analysis] to divert government from what it's really trying to do, which is help its friends, hurt its enemies, and line somebody's pockets."

"I'm opposed to anyone using government power to feather his nest."

"Government purports to help the little guy...but it is beholden to special interest groups...The way to get rid of that problem is to take power away from government."

"Government is organized coercion...it is like a loaded gun lying there waiting for someone to pick it up and use it for illicit purposes."

"To my recollection, no corporation forces anyone to buy its product...corporations have only as much power as they wield through government. Corporations didn't run the Holocaust. Corporations weren't running Pol Pot's regime. Corporations weren't running Stalinist Russia...only governments have the means and often, sad to say, the incentive to carry out great crimes."

"It's a big mistake for people to fear corporations as such. They're not dangerous. What's dangerous is the corporation allied with and making use of government force."

"I call it the military-industrial-congressional complex."

"Some people have a lot more income than others for altogether legitimate reasons...the grotesque thing would be if we all had the same income."

"If you exert enough force, you can bring about equality, but you'll also create a hell on earth."

"A lot of the government actions to help poor people are frauds."

"War and prosperity were not linked, not even in World War II."

"Poor people don't run governments...Governments are captured by people who have knowledge, money, or connections."

"Limited government is extremely rare and short-lived."

Presidential Address

Part humor, part scary truth, Saturday Night Live portrays the President's economic plan.

A notable excerpt, "Let me assure you that in the days ahead my administration intends to do to every industry in this country exactly what we are doing to the auto industry."

Stopping Trade Makes Things Worse

As the pace of global trade slows, a new generation of protectionists emerge. Protectionism is not just inefficient; it is dangerous. This video from the Atlas Economic Research Foundation tells the story well.

You can sign a petition for free trade at Freedom to Trade.

Travel to Cuba

Headline in the Wall Street Journal: "U. S. to Lift Some Cuba Travel Curbs." 
Makes sense, doesn't it, now that there is so little difference between the two governments?

The Political Allocation of Credit

Stuart Vareny, a host on the Fox Business Channel, writes in the Wall Street Journal...

"Our prosperity has never been based on the political allocation of credit -- until now.

Which brings me to the Pay for Performance Act, just passed by the House. This is an outstanding example of class warfare. I'm an Englishman. We invented class warfare, and I know it when I see it. This legislation allows the administration to dictate pay for anyone working in any company that takes a dime of TARP money. This is a whip with which to thrash the unpopular bankers, a tool to advance the Obama administration's goal of controlling the financial system.

After 35 years in America, I never thought I would see this. I still can't quite believe we will sit by as this crisis is used to hand control of our economy over to government. But here we are, on the brink. Clearly, I have been naive."

Séquestrations

In France, four executives have been kidnapped in the last month by union workers demanding jobs, better severance packages, or that old chestnut of the labor movement, justice.

The New York Times reports, "So far, no one has been hurt in the “séquestrations,” as the French refer to the hostage-taking. The unions, and most French people, have refused to condemn the actions, saying it is understandable, if not defensible, that people faced with the loss of their livelihoods would take such risks."

What justice is there in violence directed at innocent people? What would the French people say of a boss who kidnapped his workers, even if he treated his hostages to meals of "mussels and French Fries" while in captivity? Has justice in France become two different sets of laws for two different sets of people?

The conclusion is obvious. The French are playing a new variation on an old and unhealthy theme. It is the same theme played against the Jews in Europe, the Chinese in Southeast Asia, or African-Americans in the Deep South during the Jim Crow Era: violence is acceptable -- even laudable -- so long as it is limited to unpopular members of society. 

Blame the Greedy Rich

The Economist warns of rising resentment of the rich. The comments section includes some ripe invective and occasionally struggling English:

* "Those who you call wealth producers I call parasites. What they do is shuffle money around and draw interest and fees actually reducing the capital that can be used for production."

* "Have you ever watched a "Laissez-Fairest" play Monopoly? "It" takes 99% of the money in the bank for itself and gives 1% to everyone else."

* "The riches cannot think for themselves, they are too greedy to see beyond their noses. They have become a parasitic burden for the society. Time to shake the shoulders of the world is near."

* "The rich are untouchable because they own the politicians. Its extreme capitalism of the worst kind for the mass of the population and salmon and champagne socialism for the rich....and their lackeys."

* "No wonder we normal people have a sense of revolt against them. They look more like gangsters robbing banks than bank employees."

* "The rich have always felt entitled to loose the poor's money as they so fit, this only a continuation of history."

* "A few stones falling or a few heads rolling seem to extract a disproportionate sympathy from The Economist."

* "They are more deserving of the Guillotines than the French Nobility in 1790s, and by a very wide margin at that."

* "But for those Modern Day Robber Barons & Thieves, to escape with a PUNCH in the Face & getting Knocked Out (KO'd) is being Mercifull, and a small price to pay for their Transgressions & Theft!!!!!

Back in the day of the "French Revolution" it would've been: "Off with their Heads"!!!!!!

Now it's up to us, the almost OLD so-called ADULTS. We must insure that there's not only Reform (as the article espouses) but Punishment as well."

* "The sad, ugly reality is that 1% of a special breed of humanoids control & own over 90% of the global wealth: a heinous tribe who abuse, mis-use & treat the rest of humanity as disposable pawns, to be utilised any-which-way-they-can, to further their insatiable selfish desires & amass even more wealth for themselves!

* "We've seen what the rich do, they buy the government and use it to run the country their way. Tax the greed right out of the system."

* They control Newspapers, Think Tanks, companies ... almost all our live. They are the ones with the resources to finance bright intelectuals just for inventing ideologies that justify their position in society as deserved or at least necessary."

* "I think the average people are clearly showing a lot of restrain, because as I see it the place of "the lords of the universe" is on the street light posts, hanged by their fat necks.*

Here is my modest contribution to the "discussion":

"May I respectfully remind your readers of what happened in Europe the last time Social Progressives went on a witch hunt for a prosperous but politically unpopular minority?"

The Auto Warranty of Last Resort

I've checked the Constitution, and there's nothing there about the federal government's role as the auto warranty of last resort, but greater legal minds than mine have found it there anyway.

And here's what it will mean...

Rehabilitating Smoot Hawley

Uh oh. The New York Times has allocated some of its precious space to an economist trying to rehabilitate the Smoot Hawley Tariff Act.

"The Smoot-Hawley Tariff Act got a bad rap in the Great Depression, an economist argues. Temporary protectionism can be a good thing, he says, giving businesses and workforces time to adjust to downturns."

When intellectuals provide the cover for populist politicians, can more trouble be far behind?

TARP in Pictures

A picture is worth a thousand words...
The TARP, in Pictures

Publish at Scribd or explore others: Humor Creative Writing tarp

Leeson on the Recession

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



Visit his blog, The Public Choice Capitalist.

White People with Blue Eyes

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

Brazil’s President Luiz Inácio Lula da Silva

A More Reliable Partner

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

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

Jonah Goldberg, "Big Bedfellows," NRO

April Monthly Meeting

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

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

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

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

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

Please R.S.V.P to April Herrea

Conservatory of the Human Spirit

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

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

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

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

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

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

Devalued PM of a Devalued Government

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

Blood Frenzy

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

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

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

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

The People Behind Things

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

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

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

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

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

The Market Economy

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

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

Is Rand Relevant?

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

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

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

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

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

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

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

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

Economic Arson

Joe Nocera writes in the New York Times...

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

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

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

The End of America?

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

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

The Law, Perverted

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

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

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

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

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

Growth and Decay

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

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

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

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

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

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

Rand Illusion by Colbert

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

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

With that caveat, enjoy...

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

The Word - Rand Illusion

Colbert Report Full Episodes
Political Humor

Rap Battle
NASA Name Contest

Signs of Sanity

As a result of political bullying...

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

We finally get signs of sanity...

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

Read the rest in the NY Times.

Least Surprising Headline of the Year

Stimulus Package Attracts Con Artists

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

Listen to the NPR story here.

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

Tell a Story

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

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

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

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

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

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

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

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

Obamanomics

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

Lew Rockwell, "Beating Back Obamanomics"

Birds of a Feather

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

Where else? Washington, DC.

Three reasons why:

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

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

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

Who is John Galt?

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

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

Everything's Amazing, Nobody's Happy

Think the foundations of capitalism are shattered?

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

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

The Totalitarian State

"[T]he theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under the conditions of free competition and a large measure of laissez-faire."

John Maynard Keynes, in the forward to the 1936 German edition of his General Theory.

Bailout Hearings

"Satire is fascinating stuff. It's deadly serious, and when politics begin to break down, there is a drift towards satire, because it's the only thing that makes any sense."

British artist Ben Nicholson (1894 - 1982)

Today's Dilbert is not to be missed! View it below, or click here.

Seeking Status

Arnold Kling, at EconLog, writes...

"Market-oriented economists are accused of merely crafting an elaborate rationale for extreme status competition among the rich. I think there may be a grain of truth to this.

I feel the same way about economists who trumpet market failure and support strengthening government. On some level, they are merely crafting an elaborate rationale for extreme status competition among politicians."

Read the rest here.

The Chicago Tea Party

Rick Santelli gets stirred up on CNBC:

"Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they're driving '54 Chevys -- maybe the last great car to come out of Detroit!"

Later in the video, he calls for a "Chicago Tea Party."

Watch the whole thing here...

A Free Market Career

From Reason magazine's Hit and Run...

Interested in a job that will allow you to gain valuable management skills while working to advance liberty? The Koch Associate Program is a very selective, competitively paid career opportunity for talented young professionals who are interested in working with free-market non-profits such as think tanks and grassroots organizations. During the year-long program, each Associate works in a full-time position with a market-oriented think-tank or policy organization, while also receiving valuable management training in a seminar setting one day out of each week at the Charles G. Koch Charitable Foundation. Visit www.cgkfoundation.org/associate-program for more information.

Bailing Out the Big Three

From reason.tv...