The Crimes of Communism

From the Acton Institute...

Professor Yuri N. Maltsev, former member of a senior team of Soviet economists that worked on President Gorbachev's reforms package of perestroika, discusses the reversal of liberalized reforms in Vladimir Putin’s Russia and the variety of ways in which communism oppresses people, especially religion.

Listen to it here.

Rich and Hardworking

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

An excerpt:

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

Myths Christians Believe About Wealth and Poverty

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

Acton summarizes his lecture below:

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

Listen to his lecture here.

Lower Prices

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

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

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

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

The Exaggerated Language of Politics

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

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

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

Frying a Small Fish

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

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

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

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

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

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

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

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

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

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

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

When People Become Numbers

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

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

The Island of the Worker's Paradise

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

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

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

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

Castro's Book Club

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

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

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

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

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

Business As a Creative Act

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

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

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

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

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

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

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

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

What Do You Know?

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

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

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

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

Some of the findings:

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

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

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

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

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

Here are a few of the questions on free enterprise:

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

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

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

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

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

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

Epstein on Property Rights, Zoning and Kelo

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

Listen to it here.

A Humane Skepticism

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

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

October Meeting of the Bastiat Society

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

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

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

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

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

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

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

DATE: Wednesday, October 3

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

TIME: 5 pm reception, 6 pm speaker

RSVP: Stephanie Whitener

"The Stuff of Thought"

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

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

The Literature of Capitalism

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

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

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

Pulitzer Prize Winner to Speak at Clemson

"WHY AMERICA WANTS TO PROMOTE DEMOCRACY AROUND THE WORLD"

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

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

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

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

Public Transportation

Private enterprise is famous for delivering a reliable consumer experience.

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

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

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

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

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

Bjorn Lomborg

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

The Once Mighty

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

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

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

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