L.A. Liberty

A Libertarian in Leftywood


“Jon Stewart is very, very afraid of of us, apparently. Several emailers have written to inform me that Stewart did a small hit/smear job on Judge Andrew Napolitano on The Daily Show last night. The ‘hit’ was about how the Judge [said] that the U.S. probably could have ended slavery the same way that New York, Massachusetts, New Hampshire, Maine, New Jersey, Illinois, Pennsylvania, and all the other Northern states did, as well as the British empire, Spanish empire, the French, Danes, Dutch, Swedes, and others during the nineteenth century, namely, peacefully. (See Jim Powell, Greatest Emancipations: How the West Ended Slavery; and Joanne Pope Melish, Disowning Slavery: Gradual Emancipation and Race in New England, 1780-1860). No, no, said Stewart and pals, 750,000 dead Americans , more than double that number maimed for life, and the total destruction of the voluntary union of the founders was the only way to go. Southerners, six percent of whom owned slaves, ‘were willing to die to preserve slavery’ announced the renowned historian Jon Stewart. The Great Oz (er, I mean, The Great Abe) did what was necessary said the great historical sage and his cast of clowns.”

Thomas J. DiLorenzo (via eltigrechico)

LTMC: Notwithstanding the merits of this argument, Napolitano did a pretty poor job making his case.  Many of the things he said were demonstrably false.  He claimed that Lincoln never tried compensated emancipation.  That’s wrong.  He also claimed that the civil war was not necessarily about slavery.  This is a line of thinking that has long been discredited by the historical record.  The vice president of the Confederacy expressly mentioned slavery as a justification for the new Government in his 1861 Cornerstone Speech.  The cessation declarations of numerous southern states mentioned it.  The Constitution of the Confederate States of America expressly mentions it.  Most people who were alive at the time also understood this to be the case.  As Charles Sumner stated in a speech on the floor of the U.S. senate in 1860:

[T]here are two apparent rudiments to this war. One is Slavery and the other is State Rights. But the latter is only a cover for the former. If Slavery were out of the way there would be no trouble from State Rights.

Historians are basically on the same page here.  As Princeton Historian James McPherson notes:

Scholars today are mostly of one mind about why South Carolina seceded and what caused the war. But Americans, even a century and a half later, still deeply disagree with each other and historians, many of them embracing a Civil War story about self-government and “states’ rights” that reveals more about America in 2010 than what actually occurred in the 1860s.

There are other reasons to hate Abraham Lincoln—like the suppression of freedom of the press and the suspension of Habeas Corpus.  I would definitely agree that he gets more credit than he deserves.  But Napolitano completely butchered the facts on this one.  I’m sure there’s a more resilient case to be made that the civil war was unnecessary. But Napolitano failed to make it.

1. Re: compensated emancipation: 

DiLorenzo has noted: “Lincoln did pay lip service to various compensated emancipation plans, and he even proposed a compensated emancipation bill (combined with colonization) in 1862. But the man whom historians would later describe as one of the master politicians of all time failed to use his legendary political skills and rhetorical gifts to accomplish what every other country in the world where slavery had once existed had done; end it peacefully, without resort to warfare.”

Furthermore, slavery was in decline not just throughout the world but even in the states: “Slavery was already in sharp decline in the border states and the upper South generally, mostly for economic reasons … there is evidence that there was growing political support within the border states for gradual, peaceful emancipation that would have ended slavery there.”

2. Re: civil war was necessarily about slavery:

You point to Alexander Stephens’ speech as evidence that the civil war was necessarily about slavery, but (1) his speech was about secession not war, and (2) slavery was one of a number of elements of that speech. You also point to the Confederate constitution, but again it was only one element among many others (just as in the U.S. constitution - which included important recognitions of freedom alongside an approval of slavery). There is no doubt that it was a contributing factor in the call to secession, perhaps a key factor - and no one denies its deplorable nature. But it was not the reason for war.

In fact, Lincoln himself said so in his letter to Horace Greely (August 22, 1862):

"If there be those who would not save the Union, unless they could at the same time save slavery, I do not agree with them. If there be those who would not save the Union unless they could at the same time destroy slavery, I do not agree with them. My paramount object in this struggle is to save the Union, and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that. What I do about slavery, and the colored race, I do because I believe it helps to save the Union; and what I forbear, I forbear because I do not believe it would help to save the Union.”

His only concern was to “save the union.”  

In his first inaugural address, Lincoln’s very first order of business was to firmly reiterate his defense of the “right” of southerners to own slaves:

Apprehension seems to exist among the people of the Southern States that by the accession of a Republican Administration their property and their peace and personal security are to be endangered. There has never been any reasonable cause for such apprehension. Indeed, the most ample evidence to the contrary has all the while existed and been open to their inspection. It is found in nearly all the published speeches of him who now addresses you. I do but quote from one of those speeches when I declare that—

I have no purpose, directly or indirectly, to interfere with the institution of slavery in the States where it exists. I believe I have no lawful right to do so, and I have no inclination to do so.

Those who nominated and elected me did so with full knowledge that I had made this and many similar declarations and had never recanted them; and more than this, they placed in the platform for my acceptance, and as a law to themselves and to me, the clear and emphatic resolution which I now read:

Resolved, That the maintenance inviolate of the rights of the States, and especially the right of each State to order and control its own domestic institutions according to its own judgment exclusively, is essential to that balance of power on which the perfection and endurance of our political fabric depend; and we denounce the lawless invasion by armed force of the soil of any State or Territory, no matter what pretext, as among the gravest of crimes.

I now reiterate these sentiments, and in doing so I only press upon the public attention the most conclusive evidence of which the case is susceptible that the property, peace, and security of no section are to be in any wise endangered by the now incoming Administration”

He even went so far as to claim no objection to the Corwin Amendment - a proposed amendment that would have made the question of slavery a state issue of which the federal government could not interfere with - being made “express and irrevocable law”:

I understand a proposed amendment to the Constitution—which amendment, however, I have not seen—has passed Congress, to the effect that the Federal Government shall never interfere with the domestic institutions of the States, including that of persons held to service….holding such a provision to now be implied constitutional law, I have no objection to its being made express and irrevocable.

Yet, he was already discussing war with regards to keeping the union together - arguing to let differences in this question of slavery slide so as to not divide it:

One section of our country believes slavery is right and ought to be extended, while the other believes it is wrong and ought not to be extended. This is the only substantial dispute. The fugitive-slave clause of the Constitution and the law for the suppression of the foreign slave trade are each as well enforced, perhaps, as any law can ever be in a community where the moral sense of the people imperfectly supports the law itself. The great body of the people abide by the dry legal obligation in both cases, and a few break over in each. This, I think, can not be perfectly cured, and it would be worse in both cases after the separation of the sections than before. The foreign slave trade, now imperfectly suppressed, would be ultimately revived without restriction in one section, while fugitive slaves, now only partially surrendered, would not be surrendered at all by the other.

Physically speaking, we can not separate. We can not remove our respective sections from each other nor build an impassable wall between them. A husband and wife may be divorced and go out of the presence and beyond the reach of each other, but the different parts of our country can not do this. They can not but remain face to face, and intercourse, either amicable or hostile, must continue between them. Is it possible, then, to make that intercourse more advantageous or more satisfactory after separation than before? Can aliens make treaties easier than friends can make laws? Can treaties be more faithfully enforced between aliens than laws can among friends? Suppose you go to war, you can not fight always; and when, after much loss on both sides and no gain on either, you cease fighting, the identical old questions, as to terms of intercourse, are again upon you.

And while many southerners believed in the superiority of the white race, so did many northerners - including Lincoln himself who said in his debate with Stephen Douglas in 1858:

“I as much as any man want the superior position to belong to the white race.”

So “state’s rights” was not a cover for preserving slavery per the popular narrative that Sumner suggested, it was ending slavery that was a cover for fighting a war.

3. Re: a more resilient case to be made that the civil war was unnecessary:

The case, to me, is obvious. Take the above Lincoln letter to Greely and replace “Union” with “marriage” - substituting one form of voluntary human association with another. Is a man justified in beating his wife to keep her from leaving him if her reasons are deplorable? Are marriages expected to exist “in perpetuity”?

Further, how would a voluntary association among one group of people be seen as legitimate in forcing subsequent generations into irrevocable association? Lysander Spooner, the great slavery abolitionist, made the case both against the war and in favor of consent in 1867:

On the part of the North, the war was carried on, not to liberate slaves, but by a government that had always perverted and violated the Constitution, to keep the slaves in bondage; and was still willing to do so, if the slaveholders could be thereby induced to stay in the Union.

The principle, on which the war was waged by the North, was simply this: That men may rightfully be compelled to submit to, and support, a government that they do not want; and that resistance, on their part, makes them traitors and criminals.

No principle, that is possible to be named, can be more self-evidently false than this; or more self-evidently fatal to all political freedom. Yet it triumphed in the field, and is now assumed to be established. If it really be established, the number of slaves, instead of having been diminished by the war, has been greatly increased; for a man, thus subjected to a government that he does not want, is a slave. And there is no difference, in principle —- but only in degree —- between political and chattel slavery. The former, no less than the latter, denies a man’s ownership of himself and the products of his labor; and [*iv] asserts that other men may own him, and dispose of him and his property, for their uses, and at their pleasure.

Previous to the war, there were some grounds for saying that —- in theory, at least, if not in practice —- our government was a free one; that it rested on consent. But nothing of that kind can be said now, if the principle on which the war was carried on by the North, is irrevocably established. …

The principle that the majority have a right to rule the minority, practically resolves all government into a mere contest between two bodies of men, as to which of them shall be masters, and which of them slaves; a contest, that —- however bloody —- can, in the nature of things, never be finally closed, so long as man refuses to be a slave. …

The number who actually consented to the Constitution of the United States, at the first, was very small. Considered as the act of the whole people, the adoption of the Constitution was the merest farce and imposture, binding upon nobody.

The women, children, and blacks, of course, were not asked to give their consent. In addition to this, there were, in nearly or quite all the States, property qualifications that excluded probable one half, two thirds, or perhaps even three fourths, of the white male adults from the right of suffrage. And of those who were allowed that right, we know not how many exercised it.

Furthermore, those who originally agreed to the Constitution, could thereby bind nobody that should come after them. They could contract for nobody but themselves. They had no more [*5] natural right or power to make political contracts, binding upon succeeding generations, than they had to make marriage or business contracts binding upon them.

Still further. Even those who actually voted for the adoption of the Constitution, did not pledge their faith for any specific time; since no specific time was named, in the Constitution, during which the association should continue. It was, therefore, merely an association during pleasure; even as between the original parties to it. Still less, if possible, has it been any thing more than a merely voluntary association, during pleasure, between the succeeding generations, who have never gone through, as their fathers did, with so much even as any outward formality of adopting it, or of pledging their faith to support it. Such portions of them as pleased, and as the States permitted to vote, have only done enough, by voting and paying taxes, (and unlawfully and tyrannically extorting taxes from others,) to keep the government in operation for the time being. And this, in the view of the Constitution, they have done voluntarily, and because it was for their interest, or pleasure, and not because they were under any pledge or obligation to do it. Any one man, or any number of men, have had a perfect right, at any time, to refuse his or their further support; and nobody could rightfully object to his or their withdrawal.

In any case, even if ending slavery was the object, preserving the union as it existed prior to southern secession was, at best, unnecessary - even if allowing the natural death of slavery was considered not immediate enough.

Naturally, force - even lethal force - is justified against a violent aggressor. There are few greater aggressions than that of slavery. Ergo, slaves were justified in using lethal force to end the aggression from those who considered themselves their masters. Furthermore, the principle is well established that others may come to aid a victim of aggression from his or her aggressor. In short, it would be completely justified for a slave, or a non-slave in the aid of a slave, to kill a slave owner.

So even accepting that armed force targeted against slave owners is justified, it does not follow that (1) full scale war (with, in addition to the expected destruction and waste, the ugliness that comes with war such as civilian deaths, collateral damage, razing towns, and raping women, etc. - perpetuated by the ostensible emancipators) was necessary since such action was unnecessary everywhere else in the world, including places with far greater and long-standing histories of employing slave labor. It also does not follow that (2) the re-establishment of the union was a necessary next step. Even if war broke out as a consequence of northerners assisting in the escape and emancipation of slaves, it still did not necessitate hundreds of thousands dead and the conquest and re-absorption of southern states. 

It is unfortunate that this must be stated, but considering the usual replies: None of this should be interpreted as support of slavery whatsoever, nor support for the Confederacy. I have no sympathy for slave-owners or states of any kind. I am anti-slavery for the same reasons I am anti-war and anti-state. Every human being is sovereign in his or her own peaceful affairs, and ultimately it is consent that is the foundation of a civilized society. As such, what I support is the fundamental freedom of association: the ability of one to interact with another using his or her person or property in any peaceful, consensual manner the interacting parties choose. Not only is this just, it is also the most effective means for disparate individuals with subjective preferences - different desires, wants, histories, cultures, families, talents, disabilities, worries, concerns, allergies, principles, fears, goals, tastes, vices, etc. - to achieve our varied ends. Secession, thus, is a natural extension of this right.


“Hristos Doucouliagos and T. D. Stanley (2009) conducted a meta-study of 64 minimum-wage studies published between 1972 and 2007 measuring the impact of minimum wages on teenage employment in the United States. When they graphed every employment estimate contained in these studies (over 1,000 in total), weighting each estimate by its statistical precision, they found that the most precise estimates were heavily clustered at or near zero employment effects (see Figure 1). Doucouliagos and Stanley’s results held through an extensive set of checks, including limiting the analysis to what study authors’ viewed as their best (usually of many) estimates of the employment impacts, controlling for possible correlation of estimates within each study, and controlling for possible correlation of estimates by each author involved in multiple studies. Doucouliagos and Stanley concluded that their results “…corroborate [Card and Krueger’s] overall finding of an insignificant employment effect (both practically and statistically) from minimum-wage raises.””

John Schmitt: Why Does the Minimum Wage Have No Discernible Effect on Employment? (2013)

Somewhere in the basement of the Mises Institute, a dark ritual is being performed in an attempt to make this study spontaneously combust in a ball of flame.

First, understanding the negative consequences of minimum wage laws is not some Austrian-exclusive “belief.” It’s universally accepted Economics 101, as even legendary Keynesians Paul SamuelsonJim Tobin, and [economist] Paul Krugman will tell you (not to mention non-Austrian Milton Friedman). It is, literally, the basic and immutable law of supply and demand: as prices rise, quantity demanded - ceteris paribus - decreases, which in turn results in excess supply (or a glut). When the supply is labor, we call that glut “unemployment.”

The flaws in Card and Krueger’s analysis have long been addressed, so instead how about I offer a major two-decade meta-study of my own?  

In fact, there are countless studies and analyses we can offer each other. And we know that numbers can be interpreted and manipulated in any number of ways. The economic profession is far from free of ideologues. 

Plus, there is the real understanding that the complexities of economies - that is the complexities of varied, independently acting individuals with subjective preferences, goals, and histories making decisions regarding scarce resources - cannot be distilled to one changed variable. And as such, because there is always time between when a minimum wage is proposed and when it takes effect, its impact can be all but hidden as employers take different actions leading up to the new minimum wage than simply waiting for the new wage to take affect and firing everyone then. Furthermore, compensation is not merely pay: workplace comforts, vacation days, overtime hours, and other benefits could be affected without employers resorting to firings. So when Doucouliagos and Stanley note, “we only include those estimates which are elasticities [of employment with respect to the minimum wage] or can be converted to elasticities” as a means to filter the various studies, they are not observing the larger picture. Indeed, the larger picture can be nearly impossible to observe if employers had enough time to adjust their practices before the wage took affect.

And despite all that, the best Doucouliagos and Stanley can offer is “[after adjustments,] little or no evidence of a negative association between minimum wages and employment remains.” 

Still, if we cannot settle this matter with empiricism (since the analyzed individuals aren’t fungible, and we’ll both nonetheless offer those studies which confirm our biases), then we must turn to reason.

To that end, the following questions demand answers:

  • How can increasing the price on gasoline and cigarettes (through taxation) be publicized as methods to curbing their use, but the same does not hold with regards to the price of labor?
  • If people are more willing to purchase things during a sale, why wouldn’t the opposite - less likely to purchase things after price increases - be true?
  • If raising the price on something does not affect the quantity demanded, then why not raise it higher?
  • How is an arbitrary price set by diktat an improvement over the emergent price from free individuals interacting and making mutually beneficial decisions for themselves? 
  • Why would any employer hire someone who is not as productive as their wage, and who therefore represents a loss?
  • If a 3% “cut” on a budget increase (facilitated on non-consensual funding) is - per state-supportive individuals on the left - difficult to overcome, why are employers expected to adjust to a 24% increase in costs for their lowest-skilled/marginally-productive workers (precluding consensual exchanges)? 
  • If legislation was passed that required a minimum of $10 when giving money to panhandlers, would said panhandlers be better off? 
  • If you saw a desperate woman looking for work to keep her children fed - with poor language skills and a lack of education making her an unattractive employee at the minimum wage level - offer to clean houses at below the minimum wage, would you personally threaten her potential employer with violence for making such an agreement? Would you personally intervene and keep her unemployed and unable to provide for her family? And if you wouldn’t do so personally, why would using a surrogate - government - be any different?
  • Why have minimum wages historically and throughout the world been supported by racists hoping to keep minorities from employment?
  • Why was the last year that the black employment rate was lower than the white unemployment rate also the last year there was no minimum wage law?
  • If those businesses that cater to poorer communities tend to hire minimum wage earners to keep prices affordable to the clientele in their area, then who would most be harmed by increasing prices as a result of a minimum wage increase?
  • If employers have a monopsony, then why do most people (about 95% of all hourly wage earners) earn more than the minimum wage?
  • If employers have a monopsony that in turn pays their workers less than their worth, then why don’t you start your own business that offers these low-skilled workers more? You’d clearly attract the labor and, if your monopsony model is correct, there is more than enough room for profit. And doing so would effectively break the monopsony stronghold. Win-win-win.
  • If someone wants to work at a job he or she may not be qualified for but compensates for this by offering a lower wage in order to gain experience, training, and an opportunity to advance, and someone is willing to hire that person, what gives you the right to intervene?

Unfortunately, the only ritual being performed is the sacrifice of the well-being of low-wage workers (teenagers and minorities in particular) at the bloody altar of good intentions.



Is quite compelling, according to Sally Satel:

On Oct. 2, the U.S. Department of Health and Human Services proposed a new rule that would…[designate] a specific form of bone marrow — circulating bone-marrow stem cells derived from blood — as a kind of donation that, under the 1984 National Organ Transplant Act, cannot be compensated. If this rule goes into effect (the public comment period ends today), anyone who pays another person for donating these cells would be subject to as much as five years in prison and a $50,000 fine.

Here’s why it’s a bad thing:

altruism has proven insufficient to motivate enough people to give marrow and, as a result, people die… Each year, 2,000 to 3,000 Americans in need of marrow transplants die waiting for a match. Altruism is a virtue, but clearly it is not a dependable motive for marrow donation.

Satel notes earlier in the article:

Locating a marrow donor is often a needle-in-a-haystack affair. The odds that two random individuals will have the same tissue type are less than 1 in 10,000, and the chances are much lower for blacks. Among the precious few potential donors who are matched, nearly half don’t follow through with the actual donation. Too often, patients don’t survive the time it takes to hunt for another donor.

Allowing compensation for donations could enlarge the pool of potential donors and increase the likelihood that compatible donors will follow through. So the [recent] ruling by a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit [authorizing compensation for donors] was promising news for the 12,000 people with cancer and blood diseases currently looking for a marrow donor.

I can see two potential problems: the first is that people might donate bone marrow out of economic desperation, and this feels wrong to us at first glance.  But is it really?  Particularly when both parties benefit so readily from it?  Indeed, given the risks of bone marrow donation, don’t donors deserve to be compensated?  This is an objection which could be readily met by setting a threshold for compensated donations, to ensure that donors are compensation fairly for their donation.

The second problem is a more difficult one.  There is potential that for-profit donations may eventually crowd out uncompensated donations, since why would any stranger do for free what they can get paid to do instead?  Particularly when they’re making such an essential sacrifice—their own body?

At the end of the day though, I think the balance of equities weighs in favor of allowing for-profit donations.  I have enough faith in the goodness of people that crowding out will be minimal.  If someone walked up to me tomorrow and said I could save someone’s life with a bone marrow transplant, but that they couldn’t afford to pay me, I like to think that my decision would not be based on the lack of compensation.  Meanwhile, some people may be more likely to donate if they know their risks will be well compensated.  Allowing for-profit donations seems to be the better side of the argument, from my point of view.

I of course agree with your conclusion, but you overstate the concerns.

To your first “potential problem”: “people might donate bone marrow out of economic desperation.” Your solution is government (ostensibly; you don’t specify but the implication is there) “setting a threshold for compensated donations” to ensure “fairness.” As in pretty much every other instance of “fairness” being set from without, whatever is decided would be completely arbitrary. If two people negotiate on a price and willfully agree, then the price is fair. Either one owns oneself and thus controls his or her body, or he/she doesn’t.

Some may conclude that “economic desperation” would lead people to accept prices that seem unreasonable. You do not want people to be taken advantage of, and I grant that is a noble concern. But if for-profit organ donation is made legal - that is, if the state does not interfere in the consensual exchange of free individuals - then the market for organs will function like like all other markets. As I often note, the laws of supply and demand are immutable. Does anyone doubt that there will likely be more people in need of organs (marrow, in this instance) than those willing to endure the painful procedure to give it away? Thus, there will be competition for marrow. This drives the price up. And as the price rises, it will incentivize ever more people to enter the market and offer their marrow. This increases supply! More marrow will be available to sick people in need. As the supply increases, then, the price again lowers as it trends toward equilibrium. This means greater access to the sick. All good things.

Furthermore, because caring people like you would still exist, non-profits would no doubt emerge to help offset the costs for organs and offer minimum prices at what the non-profits and their sponsors seem fair - further assuaging concerns of individuals being taken advantage of. And those same non-profit or altruistic organizations could turn around and offer those purchased organs at a discount to individuals who, for example, may qualify as financially “at-need.”

As to your second “potential problem”: “for-profit donations may eventually crowd out uncompensated donations.” To address this, we must look at the matter in a different way.

Would you agree that, while very helpful and important, organ donation is not the most essential factor for our survival, yes? After all, only a small percentage of the overall population needs an organ transplant, whereas every human requires food, clean water, shelter, medicine, other forms of healthcare, etc. But we can acknowledge that it would be foolish to think in terms of the for-profit farmer “crowding out” the one who donates his labor with only the thanks of strangers as his reward. And most would agree that it would be irresponsible to suggest that doctors not be compensated for their years of dedication and sacrifice and training and expertise and labor and risks, yes? Thankfully, slavery has mostly been outlawed in this country. So why would the selling of organs - a much more painful and dangerous process than plucking a carrot from the ground - be different?

As illustrated above, selling organs would create incentive for people to offer theirs. The greater the need and the smaller the supply, the greater the price offered. The greater the price offered, the more people willing to exchange. Then, as now, most people with compatible family members will still receive donations from them. But those unfortunate souls without compatible family members will have more life-saving options available to them.

Allowing free people to buy and sell bone marrow is the only humane option. Not only does it represent a more just and civilized society (no state introducing threats of violence into the consensual decisions of free people), but it also means that no longer will so many people die every year hopelessly waiting for a matching donor.

And in that, I am very glad we can agree.

“Look at the difference: In 1977 I bought a small house in Portland Oregon for $24,000. At the time I was earning $5 per hour working at a large auto parts store. I owned a 4 year old Chevy Nova that cost $1,500. Now, 36 years later that same job pays $8 an hour, that same house costs $185,000 and a 4 year old Chevy costs $10,000. Wages haven’t kept up with expenses at all. And, I should point out that that $5 an hour job in 1977 was union and included heath benefits.”

an anonymous online commenter on the current economy. (via alchemy)

LTMC: When I was working at a gas station, I had an old-timer come in and tell that he used to make $2/hour at a factory job when he was in his late 20’s.  He said he could feed his whole family for the night by buying a 24-cut pizza for $2.  Fast forward to my gas station job, where I was making $8/hour, but a 24-cut pizza in my town costs closer to $20—2.5 times more on a dollar-for-dollar basis.  He said he had no idea how I even survived on what I was making (I was insured through college at the time, but had no savings, and relied on family for large expenses).

This is what people mean when they talk about income inequality.  The reason wages have not kept pace with expenses is because the nation’s previous method of wage redistribution—union representation—has declined substantially.  Wage increases have subsequently been absorbed on an increasingly larger basis by corporate entities and the top 1% of earners.  Strong unions used to serve as a soft redistribution mechanism to help ensure that increases in prosperity were shared equally.  A critical mass of union representation in the labor force has always had derivative wage benefits in the non-union labor market.  That critical mass no longer exists, however.  Consequently, the decline of union labor has led to a concurrent decline in wages relative to expenses, because there’s no longer an institutional mechanism for redistribution of earnings increases in the economy.  The critical mass of union representation is gone, and nothing has taken its place.

First, income inequality has nothing to do with poverty or well-being. People in, say, Beverly Hills may have large discrepancies (“inequalities”) in income but they are all fairly wealthy. And people in, say, some slum in Bolivia may have no income inequality but they are all equally poor. Indeed, the poor in the United States are wealthy compared to the poor in Africa. Relative wealth is absolutely meaningless. It falsely presumes that wealth cannot be created and that trade is zero sum. How wealthy my neighbor may be does not necessarily affect me unless I, frankly, allow envy to interfere with my happiness. 

Second, the most relevant manner in which union representation has anything to do with “income inequality” is insofar as unions price out marginal workers from jobs through their government protections against “scabs” and their support for minimum wages. Unions have not been the great protector of the worker that the left makes them out to be.

There are many reasons why someone might conclude that most were better off in 1977 than today.

Regulations - ostensibly required for matters of safety and protecting the environment - have increased the costs of automobiles dramatically. Cars cannot simply be made as cheaply as they once were, and those that might be more affordable elsewhere are made more expensive due to protectionist import tariffs or outright bans. Furthermore, advances in technology have equipped cars in ways unthinkable years ago. That used mid-70’s Chevy Nova had none of the safety and luxury and comfort features standard in cars today. Those airbags, radios, and power windows aren’t free to produce, after all. Ergo, comparing the price of a cheap car in 1977 and a cheap car in 2013 is not comparing like goods. Instead, the 1977 Nova may have more in common with a brand new, barebones Tata from India which, if not for government/EPA interference prohibiting its import into the United States, would cost the American consumer about $3,000. And, adjusted for inflation, that $3000 today is much less than than the $1500 spent on the used Nova in 1977. 

(Not to mention the disaster that was “Cash for Clunkers,” which paid people to destroy useful thingsdid nothing to help the economy, and only lowered the supply of cheap, used cars.)

Housing is made more expensive mostly because of goosed demand facilitated by easy credit from government agencies and lowered lending standards facilitated by government decree. The housing bubble is decades in the making (though it really began its meteoric climb in the 1990s), and the recent correction didn’t come anywhere near correcting since the same activities that led to the bubble are mostly still in effect. A dramatic decrease in lending standards put people into homes that they could not afford, creating an increase in demand that drove the costs of owning a home upward. 

Russ Roberts, in his paper “Gambling with Other People’s Money,” details the entire process of perverted incentives in the housing market that incentivized buyers to purchase more and bigger homes while protecting investors from the risks of making such loans - all which led to dramatic increases in housing prices, most of which are still artificially overvalued today. (Also relevant are Woods’ MeltdownSowell’s Housing Boom and Bust, and Norberg’s Financial Fiasco)

Furthermore, government involvement in education has steadily pushed prices of education upward while simultaneously devaluing the marketability of said education. Graduates, thus, begin their careers with a large amount of debt which affects their ability to save. The attempts to make education as market agnostic as possible has also led people into majors with little practical utility (while diminishing the prevalence of trade schools), further harming their employability in the marketplace.

And with minimum wages pushing individuals to enter the workforce much later than they once did, said individuals are thus that much behind in their ability to advance in their careers and move past the point in which a minimum wage would be relevant to them. (See here, here, here, here, and here for more on why the minimum wage is terrible for the economy in general, and marginal workers specifically.)

But the true culprit in devaluing the purchasing power of the dollar is the Federal Reserve.

This is why comparisons of prices and wages must always be “inflation-adjusted.” The minimum wage today ($7.25) is over three times what it was in 1977 ($2.30). Adjusted for inflation, however, it is actually 18% less. In other words, it is inflation that makes the income less valuable. But most people don’t understand what inflation is, and they just take it as a given.

On the contrary, economy-wide price inflation is a product of monetary inflation - that is, an expansion of the money supply.

At the start of 1977, M1 (total stock of monetary assets in the economy) was $306.9 billion. Today, M1 is $2.6 trillion. That’s an increase of 847%. Every dollar added, thus, makes every dollar in existence that much less valuable.

The post I shared yesterday explained this well:

Strictly speaking, inflation is what happens when a government central bank — in our case the Fed — increases the supply of money and credit out of thin air. When these increase and the supply of goods does not, prices will generally rise — that is, the value of the dollar will fall — and it will take more money to buy things than previously. That’s common sense. If people have more money to spend, not because they produced and sold more goods, but only because the central bank printed it, prices will rise with the rising demand. Generally, a rise in prices is called (price) inflation, but it’s actually just the consequence of (monetary) inflation.

When the value of the dollar falls, our incomes fall, even if wages are nominally unchanged. With price inflation, one hundred dollars buys less today than it did last year. Or, to put our monetary history in perspective, what five dollars bought in 1914, when the Fed first opened its doors, today costs about one hundred dollars. A wage increase might make up some lost ground, but people on fixed incomes don’t get wage increases, so they’re out of luck. Also, prices typically rise faster than wages during an inflationary period. …

Because Fed-created money enters the economy at particular points (through banks and bond dealers), a select few people get it sooner than the rest of us. Those who are thus privileged are able to buy at the old, lower prices, while the rest of us don’t see the money until prices have risen. That is an implicit tax and transfer.

And the problem isn’t simply a rising price level. Relative prices are what provide entrepreneurs and investors the information required for rational economic calculation and service to consumers. Inflation changes relative prices. Thus, it distorts the price system and, in turn, the multidimensional economic structure. That means any stimulus is unsustainable because the inflationary policy will eventually end and unemployment must follow as the inflation-induced errors are revealed.

Inflation serves the governing class. Honest, hardworking people should abhor it.

On top of everything, the state keeps about half of what every person earns through social security, medicare, income taxes, sales taxes, etc.

Which brings us to the common thread amongst all these impediments: the state.

The state is what makes goods artificially expensive. The state makes employees much more expensive for an employer to hire than what the employee will ultimately be paid (I’ll have a post on this soon). The state devalues the purchasing power of every dollar we hold.

Now, I absolutely grant that many rich have gotten richer at a higher pace than the rest of us for some years now. While not necessarily a problem in and of itself, it is the truth - and a symptom of a larger issue: this is precisely because of the generous benefits afforded them by the leviathan state the left views as the savior of the common man.

And, again, the Federal Reserve is the biggest facilitator of this massive theft from the common man to the wealthy and connected: that’s the state’s true redistribution of wealth. Expecting the state to be otherwise is pure naiveté. 

So long as there are centers of power, those with means will aim to wield that power or work it in their favor. And there’s no greater power than the state’s monopoly on force. The state, therefore, will always serve the interests of the connected few above the masses.

As I’ve noted:

If government cannot impose taxes or offer tax breaks, impose tariffs or offer subsidies, impose regulations or offer liability protections, impose fees and licensing or offer interest-free loans, impose wage and price controls or offer bailouts - then what good is it for a corporation [or the rich] to control the government? 

It is the state that is zero-sum. What it gives it must first take, and the givers and takers are usually decided by the connected.

The state is no friend to the poor, nor - as I’ve hopefully shown - no friend to the common man. Turning to monopolized authority to centrally plan people out of poverty and hardship only leads to more poverty and hardship.

(Source: han-nara, via letterstomycountry)

I am goddamn…tired of self-government being run on automatic pilot — of gangs of five, or eight, or 22, meeting in secret, wise old bone-worshippers, and deciding things that, a decade later, get murderous religious whack-jobs flying airplanes in to buildings. Because what gets decided in secret gets played out in public, always. (Recall the famous Doonesebury cartoon in which the two Cambodian peasants are asked about the “secret bombing” of their country. “It wasn’t secret,” one of them says. “I said, ‘Look, here come the bombers.’”) You people jack around with some people on the other side of the planet and, pretty soon, I’m picking pieces of a Starbucks out of my hair, if I’m lucky.

Just tell me what is being done in my name.

Tell me what is being done in my name and I can decide on the level of my own complicity. Tell me what is being done in my name and I can decide that I don’t want to be complicit at all. Tell me what is being done in my name and I can be a citizen, in full, of a self-governing political commonwealth. That’s your job. That’s what those three words, and that great comma, are about. Don’t tell me it’s for my own good. I’m not 12. I know what is for my own good. Don’t tell me to trust you. That ship sailed long ago. Goddammit, tell me.

Tell me what is being done in my name.

And I’ll decide if it should continue or not.


Charles P. Pierce (via letterstomycountry)

While I reject the premise of “self-government” as Pierce presents it (in which he conflates the Constitution as a document that ensures such a construct), his is a solid point that is often glossed over.

Indeed, it is a point I made two weeks ago in response to LTMC, squashed, and jeffmiller as they considered such leaks as possible treason or unnecessary since some acts could be inferred:

"[I]f a government which ostensibly represents a people commits an act of aggression, it must (at the very least) do so with the people’s consent - which cannot be done when the people themselves are unaware that said actions are taking place.”


“U.S. intelligence agents have been hacking computer networks around the world for years, apparently targeting fat data pipes that push immense amounts of data around the Internet, NSA leaker Edward Snowden told the South China Morning Post on Wednesday. Among some 61,000 reported targets of the National Security Agency, Snowden said, are thousands of computers in China — which U.S. officials have increasingly criticized as the source of thousands of attacks on U.S. military and commercial networks. China has denied such attacks.”

NSA hacks China, leaker Snowden claims - CNN.com

Snowden just jumped the shark.  It’s commendable to let Americans know that they’ve been lied to by their leaders with respect to domestic surveillance.  It’s something closer to treason to let a foreign power know our government has breaking into their computer systems.  I suspect Snowden thinks that these revelations will help him avoid extradition—that the Chinese government will protect him in gratitude for these disclosures.  But if his goal was to change American domestic policy, he’s just made that change far less likely.  A good portion of the American public was with him; now they won’t be.  I find this incredibly sad.  And I feel bad for Snowden, because he’s made a huge miscalculation that’s going to haunt him for the rest of his life.

(via jeffmiller)

I think Jeff has the right of it. I can respect the whistleblower who releases specific information in a targeted manner. As that looks less and less targeted, he looks less and less like the whistleblower and more and more like the guy who should never have been given a security clearance.

(via squashed)

I have to reluctantly agree that Snowden has jumped the shark.  By stating publicly that the NSA is spying on foreign countries, Snowden isn’t necessarily revealing anything we couldn’t reasonably infer was already happening.  Nonetheless, Snowden is revealing precisely the type of information that his critics can now credibly claim will endanger American lives.  And this time, they won’t be entirely wrong.  Allegations like this could cause an international incident that will disrupt the relative diplomatic detenté that has existed between the U.S. and China for the past two decades.  That is something that actually could put lives at risk.  

Furthermore, and more regrettably, all critics of the PRISM program will now be vicariously discredited, despite the genuinely horrifying and outrageous implications of its existence.  Snowden has crossed over from the realm of courageous truth-teller to actions that constitute actual, legitimate treason, and all of his supporters and peers who are opposed to government secrecy are the worse off for it.

First, I find “treason” to often simply be a victimless crime; when it is not, there are already crimes with which individuals can be charged. Just laws protect life, liberty, and property of the individual and are thus against the initiation of aggression; they are axiomatic consequences of self-ownership - “laws against theft, assault, battery, murder, slavery, rape, fraud, trespass, destruction of property, and the threats thereof.” Treason simply does not fit. I side with Lysander Spooner in this regard.

Second, we must understand what this exposed activity precisely is. The nomenclature already suggests that hacking is aggression (cyber-attacks, cyber-war, cyber-terrorism, etc.). Therefore, if a government which ostensibly represents a people commits an act of aggression, it must (at the very least) do so with the people’s consent - which cannot be done when the people themselves are unaware that said actions are taking place. Furthermore, to be a morally justified act of aggression, it must be defensive. If these cyber-activities are legitimately defensive then the people must be made aware of the actions that precipitated them and of course that a response would be made. This way, the people can come out in favor or against such a response (putting aside that the political process in place is illegitimate and, by its very nature, ultimately ill-equipped to gauge the people’s response and mobilize/react accordingly).

Let’s consider these actions outside the realm of the digital. If Snowden had leaked that the U.S. was secretly committing physical acts of aggression against another country - say a covert bombing campaign - without U.S. citizens being aware, there is no doubt that civil libertarians (like LTMC and jeffmiller above) would find reason for concern. They would demand to know what provoked such actions, if the reaction was proper, what steps were being taken to minimize collateral damage, if the actions were worth the risk, if there were better alternatives that would induce less blowback, etc.

The gentlemen above may be correct that Snowden has made a grave miscalculation and are likely correct that public opinion may turn against him after this leak. It’s a shame, but it’s probably true that this latest leak may serve to bolster support for the state’s ability to keep secrets  (particularly from neo-cons and unprincipled Obama supportersas well as potentially function to discredit those of us with genuine concern about a powerful and unaccountable government’s actions.

I, however, still think Snowden’s leaks are commendable. If we are to take the stance that exposing secret U.S. actions against foreign nations is wrong because it’s treasonous to inform a foreign power of U.S. government activities against them, then this gives the U.S. cover to commit atrocities so long as they are secret. (Where would the likes of Bradley Manning and Julian Assange fit in this conversation?) And if the counter is that only morally unjustified acts are apt for leaking, then we are left allowing a small handful of potential leakers to make judgements as to what may or may not be morally reprehensible instead of allowing the very public, who the actions are said to represent, judge for themselves. In this circuitous scenario, a leaker could choose to leak only the most grave of offenses so as to not risk losing the public’s protection and in so doing leave countless injustices in the dark (as well as leave himself unable to know beforehand what actions the public would find acceptable).

I think the proper response is in educating the public that essentially all government leaks are welcome (though I might accept that there are scenarios in which a warning before leaking may be justified so as to minimize harm).

To me, Bradley Manning and Edward Snowden are and remain heroes.

Last 15 Rhinos Shot In Mozambique For Their Horns →



Property Means Preservation

When there is a profit incentive - either by farming Rhinos or by maintaining a tourist or hunting reserve - an endangered species becomes more secure. This is the same profit motive that kept the bee population strong enough to keep food costs low despite millions upon millions of wild bees dying a few years ago. Counter to the common narrative, private property conserves resources precisely because it becomes in the owners’ best interests to do so.


David Frum makes an important point that often gets lost in the rhetoric of who “contributes” to society and who doesn’t:

America is not a society divided between “makers” and “takers.” Instead, almost all of us proceed through a life cycle where we sometimes make and sometimes take as we pass from schooling to employment to retirement.

Receiving is not the same as taking.

You’re falling for that politicalprof trap (herehere, and here) of disregarding the primacy of consent. Though I suppose you must accept the initiation of aggression if you are to believe that the state is a legitimate agent of the people’s goodwill.

The Truth About Diocletian and Inflation →



… Currency reforms of the sort Diocletian undertook still happen sometimes in the modern era, but they almost always go in the other direction. When a country has in the recent past suffered a bout of serious inflation that’s just come to an end, sometimes the government will choose to put an asterix on the new regime by basically striking a zero or two off the old currency. So in 1960, France introduced a New Franc and announced that one New Franc was worth 100 Old Francs, and that 1 Franc Coin of the old vintage could stay in circulation as one New Centime. You could describe the impact of that switch as a giant one-off deflation, but that’s a pretty misleading way to think about it.

Yeah, that is a pretty misleading way to think about it. So why suggest it as “going in the other direction”? Coming up with a “new” currency with new denominations is not necessarily any less inflationary if the effect is still the same. If the U.S. government prints brand new money out of thin air, it doesn’t matter if they print five Dollarinos worth $1,000 each or simply five thousand dollars.

Read more

I’m not sure I follow your objection.  The French monetary exchange didn’t involve just printing new money per se.  Under the traditional definition of inflation (an increase in the money supply), the French deflated their currency.  The old centime pieces were never circulated widely, and fell out of use under the new system.  So under the exchange that took place, the total amount of practically usable legal tender was reduced. …

But it is. They created new money. They didn’t first extract existing currency to then replace it with the new. As I said, creating a new currency isn’t necessarily any less inflationary, particularly if it’s additive. And of course the old centime pieces were increasingly less circulated because their value was exceedingly low in relation to the new money added to the economy, especially since they were no longer being minted to keep up with the volume demanded to keep up with inflating prices. (This phenomenon of one under-valued currency being drawn out of circulation by an artificially over-valued one is known as Gresham’s Law.) When actual inflation becomes price inflation, there is a point in which the velocity of the lowest denominations, especially when said denominations become a smaller percentage of the overall currency, tends to slow down as such denominations become more cumbersome and less practical to use.

… I linked to Yglesias’s article because Ron Paul accused Krugman of supporting the economic policies of Emperor Diocletian.  Krugman rejected that accusation, and I think the article demonstrates that Paul was being overwrought: I don’t believe I’ve ever heard Krugman calling for an overnight 100% doubling of the exchange value of the currency, which is what Diocletian did when he issued his final currency Edict.  I think we can both agree that such a policy decision would be catastrophic and ruinous.  …

This is only a matter of degrees. The point Ron Paul was making (and that I would agree with) is that Krugman’s preferred “tools” and “methods” are, essentially, the same as Diocletian - they only disagree in speed, as it were. One may advocate stabbing someone in the abdomen quickly, and the other may advocate a much more gentle stabbing. But the stabbee would rightly protest to both knives through his gut.


[I had to redact much of letterstomycountry’s argument as I only had time for a quick rebuttal of his main points. Please click here if you wish to see his argument in full.]

The Truth About Diocletian and Inflation →

… Currency reforms of the sort Diocletian undertook still happen sometimes in the modern era, but they almost always go in the other direction. When a country has in the recent past suffered a bout of serious inflation that’s just come to an end, sometimes the government will choose to put an asterix on the new regime by basically striking a zero or two off the old currency. So in 1960, France introduced a New Franc and announced that one New Franc was worth 100 Old Francs, and that 1 Franc Coin of the old vintage could stay in circulation as one New Centime. You could describe the impact of that switch as a giant one-off deflation, but that’s a pretty misleading way to think about it.

Yeah, that is a pretty misleading way to think about it. So why suggest it as “going in the other direction”? Coming up with a “new” currency with new denominations is not necessarily any less inflationary if the effect is still the same. If the U.S. government prints brand new money out of thin air, it doesn’t matter if they print five Dollarinos worth $1,000 each or simply five thousand dollars.

And if I regularly took 2-3% of someone’s wealth - just took it of my own volition - would that person call such activity “normal” and “non-ruinous”? Would they consider themselves having achieved “prosperity” as a result? This is what the piece above suggests with regards to ostensibly mild inflation.

Further, the piece above mentions the Roman civil wars but shrugs aside as somehow less of an issue that the reason the wars were particularly adverse to the economy (aside from the fact that, contra to Keynesians, wars are eo ipso destruction of wealth - something the piece above at least seems to acknowledge) was because Rome funded the wars and empire through not only excessive taxation but the debasement of the currency leading to hyperinflation. Money itself was destroyed - and every non-barter transaction used money.

The contortions Keynesians must place themselves in just to defend their philosophy is amazing.

(Source: letterstomycountry)


Apparently the TSA Can’t Decide:

A 7-year-old girl with cerebral palsy was targeted by the TSA this week when her crutches and leg braces set off the airport screeners at JFK. Dina Frank’s parents claim the screening agents were particularly aggressive during an initial patdown of their daughter. They say the TSA then caused the family to miss their flight by requiring Dina to return to the screening area for additional inspection after they’d already been released to their gate.

“They’re harassing people,” said Dina’s father, Dr. Johsua Frank. “This is totally misguided policy. Yes, I understand that TSA is in charge of national security and there’s all these threats. For her to be singled out, it’s crazy.”

TSA Cares, a program specifically designed to assist airline passengers with disabilities, was launched in December.


To be serious for a moment: this is the problem with the TSA.  The mission of the TSA is such that they have to treat even the most unlikely, sympathetic passengers as potential threats.  So-called terrorists in Iraq have gone so far as to plant remote-controlled explosives on mentally disabled suicide bombers.  Is it really such a stretch to believe that they would do the same with a physically disabled individual, adult or child, to accomplish the same task?  When TSA performs these kinds of searches, it is doing exactly what it is designed to do.

This is the choice that America is faced with: we can either to choose to live free of these invasive procedures, and live with the risk of a terrorist attack succeeding, or live prostrate and humiliated by our own government everyday so that we can fool ourselves into thinking we’re safe.  And make no mistake: we are fooling ourselves if we think this form of security theater makes us safe.

So one must ask themselves: do you want to live in an America where strangers feel up disabled 7-year old girls to check them for bombs?  Or are you willing to live with the relatively low probability threat of another terrorist attack occurring?  I’ll take my chances with the lightning, thank you. 

False choice. Just because there isn’t a government agency performing security duties doesn’t mean we’d be less safe. In fact, in many ways we’d be more safe. Plus, airlines would be able to cater to both the most paranoid and least willing to be violated alike.

None of us are any safer because my 19-month old daughter’s diaper was checked for explosives.

The TSA must be abolished, and responsibility of security must be returned to the airlines and airports, where there is greater accountability and incentive for safety, efficiency, and customer service. An airline that fails to take appropriate safety precautions to the satisfaction of customers will not do well. Same with airlines that treat their customers like cattle to be groped and ogled. 


“You present a cake to your family. Is it fairer to: a) give everybody a slice of [equal] size, or b) make everybody fight with broadswords, so they all have [equality of] opportunity to win the entire cake for themselves?”

Comments, Slacktivist: Jason DeParle on Mothers and Their Children

I would give them equal slices of cake and broadswords.  But that’s just me.

While certainly a nice sentiment, it’s foolish to extend the dynamic of a family - with its close relationships, genetic bonds, emotional entanglements, and shared experiences - to the world at large. The world at large is not party to my private decisions like my family is. They don’t have the vested interest in my well-being like my family does. They wouldn’t be there when I got a flat tire, or the stomach flu, or to hear my gripes about that unpleasant co-worker - and they needn’t be. The world at large needn’t be forced to make sacrifices for my well-being. And, in turn, the world at large needn’t be forced to suffer the consequences of my mistakes. They shouldn’t have to bail me out because I made bad investments with my time and resources.

I take offense I find it repulsive when people try to dilute the love of my actual family by rhetorically lumping the rest of humanity with them. If I buy a cake for my family, I’ll distribute it in whatever way makes me and my family most happy - even excluding myself from taking a slice. How dare anyone try to make me treat strangers the way I treat my daughters in order to justify their redistributive whims.

If someone wants to treat the world like his family - for religious, or ecological, or for any selfish reason, really - nobody is stopping him. But no one should be forced to do so. No one should be threatened with violence and rape cages if they don’t relinquish portions of his or her life in ways central planners (and their cronies) demand. And that’s exactly what DeParle is arguing.

As Bastiat said, “True charity does not begin with the robbery of taxation…” 

Charity is not charitable, it is not noble, when it is forcedWhen you make giving compulsory, also known as taking, you can no longer claim the moral high ground - especially considering the unintended consequences of government welfare, not least of which is causing the “unable” and “unwilling” difficult to distinguish.


A much-needed shake-up of Tumblr #Politics editors has taken place today, less than a day after I post this documenting another editor’s (Ryking) penchant for vile behavior (and echoing Jeff Miller’s offer to resign if Ryking would do the same), and a petition to remove the same editor was circulated (and received thousands of signatures in only a matter of hours). 

Clearly, the Tumblr staff has acknowledged the problem… though Tumblr seems to have taken the throw-the-baby-out-with-the-bathwater approach, as almost all editors have been replaced. Hopefully this means that the quality of the #Politics tag will improve as most of the bigger offenders are no longer editors. 

The composition of the current crop of editors is improved, but certainly not ideal. Letterstomycountry happily remains. Although we disagree philosophically on certain issues, he tends to be fair and smart. Professor Ari Kohen could hopefully be a good addition. Our past misunderstandings and disagreements aside, he certainly has the capacity to at least keep the posts relevant. Huskerred is another welcome addition who has evolved over the last year or so to become quite the thoughtful and considerate blogger. However, as far as I can tell, he is the only editor who is neither a leftist/Democrat or corporate (statist) media. Further, every single editor is sympathetic and supportive to the state at least in some form or another. In fact, there don’t seem to be any actual (economic) libertarians or anarchists represented. And as an anarcho-capitalist, I may have been the first, but hopefully I’m not the last completely anti-statist editor of the tag.

Also, motherjones, who was part of the original batch of editors, has returned for a second go. 

I think the tag would be more interesting and better served if individual bloggers - and not media entities - with a greater variety of political perspectives were editors. 

In any case, I look forward to fewer posts like these making their way onto the #Politics tag and hope that the political discourse among us becomes much more civil.

… In the end, I see and hear in this SOTU many of the same jingoistic platitudes that I can no longer suffer from my elected leaders. Interspliced with the inspiring calls to action, and the seemingly courageous policy suggestions, are carefully selected and curated phrases that are intentionally ambiguous, euphemistic, or lacking in concrete definition; but which nonetheless create vague positive mental images and emotional thrusts that carry little impetus and are hard to disagree with.
And as I end this, Barack Obama has mentioned how he killed Bin Laden again, just to get those few extra votes. He is currently milking the story for everything it’s worth. I really don’t see anything different about this from Rudy Guliani using 9/11 as a patriotic crutch to prop up his political prospects. This is not the Hope and Change I voted for in 2008. It’s unrepentant political Jingoism at its worst.


Letters To My Country: SOTU Commentary #3

letterstomycountry and I disagree greatly on the proper role of government (indeed on its sheer necessity and legitimacy)… but I must commend him for his honest and thoughtful take here. 


Yes, I am with Hayek (though it wouldn’t be a competing fiat currency paradigm), and actually, I responded to you in May on this very subject not only expressing my disagreement with Milton Friedman (in which I wrote: ”Free banking > gold (commodities) standard > fiat currency.”), but I also posted a video of Hayek himself disputing Friedman’s monetarism. 

Additionally, I said in a previous post (about education, incidentally): “a gold standard would be far superior to the fiat currency of Federal Reserve banking but still inferior to free banking.”

I’ve also, in another instance, explained that, as an Austrian, I disagree with Milton Friedman on monetary policy.

Still, I can agree with Friedman that in a sense, a gold standard would be “a government-fixed price for gold” - but only in relation to the government’s currency. Gold, as a proven asset and historically and independently recognized money, would - just as it does now with completely fiat currency - have a real price, or value, in relation to commodities and other products. And, since on a gold standard any changes in convertibility rates (the aforementioned ‘standard’) must be declared, inflation becomes far more visible and open - unlike our current system in which the fed’s secret circulation of brand new currency constitutes an “invisible tax.” As such, the general populace would be more cognizant of the strength of its currency. And, as Jim Grant explained, a gold standard is the “people’s system - if you didn’t like the currency, you could exchange your paper for gold and that sent a message.” So this, in turn, would put some pressure on the government to maintain said strength in order to keep domestic investments from heading toward greater stability elsewhere. 

And without fiat currency fostering malinvestments, the speculative bubbles and booms that ultimately lead to busts and crashes would be smaller, less widespread, and more easily responded to. This is because, to quote Stephen Horwitz, “expansionary monetary policy cannot cure recessions, it is their cause.” 

Also, 2011 Nobel Laureate Tom Sargent explained, a government on a gold standard is much more likely to keep balanced budgets (after all, inflation hurts creditors and helps debtors). As Ludwig von Mises said, sound money is “an instrument for the protection of civil liberties against despotic inroads on the part of governments.” 

On fiat currency, the gold standard, and Milton Friedman, here’s Murray Rothbard:

[F]iat currency is inherently the money of absolute statism. Money is the central commodity, the nerve center, as it were, of the modern market economy, and any system that vests the absolute control of that commodity in the hands of the State is hopelessly incompatible with a free-market economy or, ultimately, with individual liberty itself.

Yet, Milton Friedman is a radical advocate of cutting all current ties*, however weak, with gold, and going onto a total and absolute fiat dollar standard, with all control vested in the Federal Reserve System. Of course, Friedman would then advise the Fed to use that absolute power wisely, but no libertarian worth the name can have anything but contempt for the very idea of vesting coercive power in any group and then hoping that such group will not use its power to the utmost. The reasons that Friedman is totally blind to the tyrannical and despotic implications of his fiat money scheme is, once again, the arbitrary Chicagoite separation between the micro and the macro, the vain, chimerical hope that we can have totalitarian control of the macro sphere while the “free market” is preserved in the micro. It should be clear by now that this kind of a truncated, Chicagoite micro-“free market” is “free” only in the most mocking and ironic sense: it is far more the Orwellian “freedom” of “Freedom is Slavery.”

*[this was written before Nixon ended Bretton Woods and the gold-exchange standard altogether]

Ron Paul’s The Case for Gold further explains the merits of a gold standard in a more cogent and thorough way than I ever could.

So a gold standard would be drastically, dramatically superior to our current system. But because a gold standard would still maintain even a small element of governmental control, it would nonetheless be inferior to free banking (which would, in most instances, be based on gold).

Hayek explains:

The gold standard requires a constant observation by government of certain rules which include an occasional restriction of the total circulation which will cause local or national recession, and no government can nowadays do it when both the public and, I am afraid, all those Keynesian economists who have been trained in the last thirty years, will argue that it is more important to increase the quantity of money than to maintain the gold standard. …

[T]he gold standard is a partly effective mechanism to make governments do what they ought to do in their control of money, and the only mechanism which has been tolerably effective in the case of a monopolist who can do with the money whatever he likes. Otherwise gold is not really necessary to secure a good currency. I think it is entirely possible for private enterprise to issue a token money which the public will learn to expect to preserve its value, provided both the issuer and the public understand that the demand for this money will depend on the issuer being forced to keep its value constant; because if he did not do so, the people would at once cease to use his money and shift to some other kind.

And Hayek’s masterpiece “The Denationalisation of Money,” which you mention, is crucial reading with regards to the dangers of central banking and the merits of free banking. 

With free banking, individuals - not a monopoly currency with its crony banking system - hold the power. As I’ve said, “Imperfect man will never find economic perfection, but by vesting control of economic decisions into fewer hands as central banking does (no matter how intelligent or well-meaning those hands may be), the economy becomes less pliable and self-healing. … [Financial and monetary] risks are better responded to and contained - and thus minimized - when control is dispersed among all individuals making mutually beneficial exchanges as opposed to being concentrated in a coterie of politicians and plutocrats.

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