The Quotable Bastiat

Supposez, si cela vous amuse, que l'étranger nous inonde de toutes sortes de marchandises utiles, sans nous rien demander; que nos importations sont infinies et nos exportations nulles, je vous défie de me prouver que nous en serons plus pauvres.

"Suppose, if that amuses you, that the foreigner inundates us with all sorts of useful goods, asking nothing in return; that our imports are infinite and our exports, nil; I defy you to prove to me that we should be poorer on that account."

Chapitre VI Sophismes Économiques/Chapter 6, Economic Sophisms

Free Download: "Mind of the Market"

Michael Shermer's book, Mind of the Market, is a thought-provoking look at economics from an evolutionary point of view.

He challenges conservatives and liberals alike to consider evolution as the fundamental process of both the natural world and the world economy.

For the next week or so, you can download a free MP3 of a chapter of Mind of the Market.

I've discussed Shermer's work in previous posts, referenced here.

Laugh, Don't Cry!

Just because creating wealth is morally and materially important doesn't mean that business can't laugh at itself.

Despair, Inc. is a business that makes fun of business. It makes parodies of those motivational posters found in offices large and small.

Some examples:

MEETINGS: None of us is as dumb as all of us.

BLAME: The secret to success is knowing who to blame for your failures.

DREAMS: Dreams are like rainbows. Only idiots chase them.

These posters look great in government offices, too, as the line between business and government gets blurrier. And this tee shirt says it all:

GOVERNMENT: If you think the problems we create are bad, just wait until you see our solutions.

Despair, Inc. joins a select group of humor links in the lower left hand corner of the Bastiat Society's home page. Laugh, don't cry!

Is the Federal Reserve Broken?

George Selgin, of the University of Georgia, has been described as "a scholar's scholar."

In this video, he participates in a panel discussion of the topic, "Is the Federal Reserve System Broken?" The event is sponsored by the Smith Family Foundation.

Other participants include Stephen Axilrod, a former member of the Federal Reserve Board of Governors; Sharyn O'Halloran of Columbia University; and Peter Schiff of Euro-Pacific Capital.

Get full screen video and the embed code here.

Signs of Progress

From Berlin, some encouraging signs of humanity's progress.

Not so long ago, the radical German Left used to labor day and night to justify the Berlin Wall (under construction in the photo), the guard towers, the fences, and the shoot-to-kill orders of the East German worker's paradise.

Now it is reduced to just complaining about the trains.

According to the Financial Times, the radical Left is blaming capitalism for the shutdown of the Berliner S-Bahn commuter railway. Last week, the company that runs the railway withdrew about two-thirds of its cars from service, after a derailment and safety checks showed about 4,000 wheels needed to be replaced.

Ulrich Maurer, the party's chief whip, complained, "The chaos in the Berliner S-Bahn is a lesson in the consequences of capitalism. It is a graphic depiction of where subservience to financial markets' greedy pursuit of profit ultimately leads."

Regretfully, Comrade Maurer missed a superb opportunity to trot out that old chestnut of authoritarian self-justification, "We caused death and suffering when we ran the country, but at least the trains ran on time."

An Optimist's Creed

Here is what you might call an Optimist's Creed, from Steven Horwitz, an economics professor at St. Lawrence University:

"If one thinks about all the bad economic policies and the general growth of the state that has taken place since the early 70s, the fact that life is still so much better in so many ways should lead one to think ... that the Smithian forces of the division of labor and the power of Schumpeterian innovation will indeed continue to conquer the stupidity of the state. No doubt the fight will be a tougher one in the years to come, thanks to the events of the last year, but both history and theory suggest that the combined efforts of humanity coordinated by even restricted markets will still win out over the stumbling and bumbling of the political class."

Miracles, Public and Private

Even as things get better, we find plenty to complain about. Our burden is a happiness that cannot last.

Chronic human discontent encourages a stream of extravagant promises, one miracle cure after another. Sometimes, these promises are small: know the future, find true love, lose weight, grow hair, or get rich quick.

Sometimes, these promises are big; end income inequality, manage climate change, provide quality health care for everyone, or put every child through college.

In principle, big miracle programs are no different than the little miracle products sold in infomercials. Both appeal to our chronic discontent. We are told "This way lies happiness."

The difference is in who pays and for how long. Private miracles are individual expenses and private disappointments. It's easy to deal with that kind of disappointment; just don't buy that promise again.

But everybody pays for the promise of public miracles, and there's no easy way to get out of the deal when it fails to deliver happiness or it costs more than you expected.

We are constantly reminded that we should be wary of miracle products, and rightly so. But we should be doubly wary of miracle programs. If it sounds too good to be true, it probably is.

Words Without a Language

Trying to control the price of health care without a market is like trying control the definition of words without a language.

The Great Recession of 2008 - 2009

Prof. Steve Horwitz puts the current recession into historical perspective and explores the different approaches to recovery. Taped at Evenings at FEE on July 18, 2009 in Irvington, NY.

A few highlights:

* To say that greed caused the housing bubble is like saying that gravity causes plane crashes.

* Interest rates are not the price of money. They are the price of time.

* Printing more money to get out of a recession is like drinking more to avoid a hangover.

* Why did so many financial institutions loan money to people who could not pay it back? FNMA and Freddie had a Congressional requiring that 52% of their financing would be with borrowers with income below the median household income.

* Everybody wants more affordable housing, until they discover what that really means.

* The three major rating services operate as a government-maintained cartel. They don't have any competition, therefore they don't learn.

* Alan Greenspan encouraged financially risky behavior by lowering interest rates when markets misbehaved.

* The recession is the recovery.

* The Obama administration sees every problem in terms of health care, the environment, and education.

Watch the whole presentation here.

Nearly Everything is Made Nearly Everywhere

Another fabulous job by the folks at reason.tv. Bikinis and Boudreaux, a winning combination.

Who was Frédéric Bastiat?

From Cercle Frédéric Bastiat:

Frédéric Bastiat was born in Bayonne in 1801, and died in Rome in 1850. But his family was from a little town called Mugron, where he spent most of his life, and where he has a statue.

Mugron is located to the North-East of Bayonne, in a French Department called "Les Landes". He spent the better part of his last years in Paris, as the editor of Le Journal des Economistes, and from 1848, as a member of Parliament.

As an economist, gifted with a very clear mind and a devastating sense of humor, he renewed the Economic science of his time by developing it from the standpoint of the consumer, i.e. the people. He was the tireless apostle of freedom of exchange and freedom of choice by individuals, without constraints or subsidies. His works are as fresh and relevant today as they were 150 years ago, and his numerous predictions about the evolution of Institutions and Societies have invariably come true.

As a philosopher, he was the precursor of many present day Libertarians, building normative ethics on the foundations of individual liberty and responsibility.

As a local judge, he was a paragon of efficiency and equity.

As a politician with a great foresight, he was an advocate of minimum government, and fought against the indefinite extension of public expenditure. He criticized colonial expeditions and slavery. He argued for the separation of powers, for preventing MPs from being ministers at the same time, and for limiting the number of civil servants in the Assembly. He was for a greater participation of women in politics.

His major writings are "The Law," "Economic Sophisms," "What Is Seen And What Is Not Seen," "Economic Harmonies". They have been translated into many languages.

Business as Usual

"Art is business, business art, -- that is all
Ye know on earth, and all ye need to know."

With apologies to John Keats, the lines above express what everyone in Hollywood privately knows but cannot publicly confess: For all of its posturing, Hollywood is not about art; it's not about meaning; it's not about beauty, and it's certainly not about truth. Hollywood is about business, with more contracts and bottom lines than you'll find in the board room at Wal-Mart.

Hollywood produces a product, movies, like McDonald's produces fast food. That's not a bad thing, at least not until Hollywood tries to get away with an ethical double standard.

Most movies portray business as inseparable from the sins of deception, intimidation, ridicule, mockery, and exploitation. Think bad guy = businessman.

Of course, this is a preposterous mischaracterization of business. According to Thomas Stanley, the best-selling author of The Millionaire Next Door, the average millionaire in the United States owns a small business, not a large corporation; he is married to his first and only wife; he drives a modest car, often a pick-up truck; he shops at Wal-Mart; and he lives in a nice house, but not a mansion. In other words, the average American millionaire is a pretty nice guy, the kind who pays his taxes, mows his lawn, values his customers and his employees, helps his friends, and takes care of his family. Hardly the stuff of villainy.

So where does the evil business caricature come from? Maybe Hollywood mistakes the way it does business for the way everyone else behaves. A guilty man sees the evidence of his crime everywhere.

Consider the legal storm surrounding the hit movie Bruno. Forbes reports,"To nab...unsuspecting interviews, Baron Cohen's production company had reportedly set up four "shell companies" with LA addresses and phone numbers, including Amesbury Chase, Chromium Films, Cold Stream Productions and Coral Blue Productions. Fake Web sites with bogus logos were created for all four of these shell companies, but they have since been taken down."

Shell companies, air-tight contracts, deceptive promises, and large profits. It all sounds like the plot of a John Grisham thriller. But it's just business as usual in Hollywood.

Educating Drivers Everyday

Educating your fellow citizens about important figures in the history of freedom can be as simple as driving around town with a custom license plate.

Have you seen others?

Universal Car Care

The Galen Institute of Alexandria, VA describes itself as "a non-profit research organization devoted exclusively to health policy. We work to promote a more informed public debate over ideas that advance individual freedom, consumer choice, and competition in the health sector."

This video won first place in the Institute's "Do No Harm" video contest. View the other winners here.

A False and Dangerous Conclusion

"Too many people, especially in Europe, equate mistakes made by economists with a failure of economic liberalism. Their logic seems to be that if economists got things wrong, then politicians will do better. That is a false—and dangerous—conclusion."

Economist.com, "What Went Wrong With Economics"

Life, Inc.

It's hard to tell who's the comedian here, Rushkoff or Colbert. Both are over-the-top stereotypes. One of them isn't acting.

Douglas Rushkoff, author of the book Life, Inc., thinks corporations run the world and treat "the planet itself as a bunch of regions to be exploited and conquered rather than to be taken care of." This statement is absurd. If he wasn't so earnest, he'd be funnier than Colbert.

Rushkoff conflates government and corporations. This is a common mistake, especially among those people who want to believe in the goodness of government, but who don't want to trust business. To put it bluntly, these people are blaming the victim for the crime.

Government, not corporations, has always led the way in exploiting and conquering. In those cases where business got involved, it acted as an agent for government, often as a government-mandated monopoly. Such is the case of the early trading companies Rushkoff mentions in this interview.

No Mr. Rushkoff, corporations don't rule the world, but that ambition lurks in the breast of every politician where it is far more dangerous to the human race than any business expansion plan at Starbucks or Wal-mart. For, as H. L. Mencken said, "A good politician is as quite unthinkable as an honest burglar."

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Douglas Rushkoff
www.colbertnation.com
Colbert Report Full Episodes Political Humor Jeff Goldblum

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Infallible Gods and the Humans Who Worship Them

Today's progressives are the intellectual heirs of the socialists of the last century and a half. They are the harshest critics of business, and they are among the most eager to use the power of the state.

Like their forefathers, they have no patience with anyone who displays the slightest doubt that the problems of society can be solved by smart people using vast political power for the greater good. As Dostoevsky said of the socialists of his day in late 19th century Russia, "they believe that a social system that has come out of some mathematical brain is going to organize all humanity at once and make it just and sinless in an instant, quicker than any living process!"

This perennial article of progressive faith requires a willful ignorance of two uncomfortable facts. We might even call them inconvenient truths:

1. No group of individuals is smart enough to run the complex and constantly shifting affairs of an entire nation. The hubris to claim such knowledge is a hallmark of our species; the actual possession of such knowledge is not. Like the ancient shaman who claimed a special knowledge of the supernatural, today's progressive claims a special knowledge of the super state.

2. Humans have a stubborn tendency to pursue their own self-interest. It's not that humans are always opposed to the greater good. It's just that self-interest is a more reliable bet.

The reality of human nature -- always bound by ignorance and regularly motivated by self-interest -- makes it unwise to hand anyone too much power, no matter what they promise to do with it. Like the ring in Tolkien's trilogy, power corrupts all those who use it, even when they begin with pure hearts and a noble purpose.

Socialism is a system fit only for infallible gods and the humans who worship them.

Cap and Trade = Tax and Control

""Cap and trade" is first a massive indirect tax on the American people and hence another source of revenue for Congress. More importantly "cap and trade" is just about the most effective tool for controlling most economic activity short of openly declaring ourselves a communist nation and it's a radical environmentalist's dream come true."

Economist Walter E. Williams.

Elmer Fudd Explains Capitalism

Entertainment both shapes and is shaped by culture. All too often these days, popular entertainment portrays business as unqualified evil. But that has not always been the case. In this short cartoon from the 1950s, Elmer Fudd does a remarkably good job explaining the individual and social benefits of capitalism.