Liberty and Power

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  • One More Time: Consumption Spending HAS Already Recovered

    by Robert Higgs

     Commentators and pundits, some of whom ought to know better, continue to harp on the idea that the recession persists because consumers are not spending. Every Keynesian seems to believe that because consumers are in a dreadful funk, only government stimulus spending can rescue the moribund economy, given (to them, at least) that investors will not spend more because the Fed, having already driven interest rates to extraordinarily low levels, cannot use conventional policies to drive them any lower and thereby elicit more investment spending.

    People, please look at the data. They are conveniently available to one and all at the website maintained by the Commerce Department’s Bureau of Economic Analysis, the outfit that generates the national income and product accounts for the United States.

    According to these data, real personal consumption expenditure recovered from its recession decline by the fourth quarter of 2010.


  • It Makes One's Head Spin

    by Sheldon Richman

     

    President Obama’s jobs program calls for cuts in both sides of the payroll tax. That tax finances Social Security and Medicare. Social Security and Medicare are already taking in less money than they need to pay retirees. So they will have to cash in more of the Treasury IOUs left behind when previous surpluses were used to finance general expenditures. But the Treasury is also already running a trillion-dollar-plus deficit. So it will have to borrow more in the capital markets in order to pay back the Social Security and Medicare funds. Unless Obama makes up the lost revenue by changing the tax code. But then money will be withdrawn from the economy in the form of higher taxes so it can be put back into the economy through the payroll-tax cut. Somehow that’s supposed to stimulate the economy.

    Got all that? There’ll be a quiz later.


  • Ron Paul & Immigration: A Speculative Theory

    by Sheldon Richman

    Ron Paul’s position on what I’ll call unauthorized immigration—or immigration sans government permission--is indeed strange. He calls for “secure borders” but opposes employer sanctions, Real ID, and a border wall (which he says could be used to keep people in as well as out). He also minimizes the importance of unauthorized immigration by saying it wouldn’t be such an issue if the economy were healthy (people are worried about jobs now) and the welfare state didn’t exist.

    That odd mix leads me to wonder if Ron Paul is actually for open borders but doesn’t want to say it. (He was for open borders when he was the Libertarian Party nominee for president in 1988.) True, there are arguments against my speculation. His website says, “A nation without borders is no nation at all,” he’s against birthright citizenship, and he opposes amnesty, which it claims “will only encourage more law-breaking.” (I oppose amnesty too. There’s no need to forgive people for doing what they have a perfect right to do.)

    But can one really be against unauthorized immigration if one opposes steps that seem necessary to even begin to stop it? Who wills the end, wills the means, it is said.


  • Labor Day: Not What You Think

    by Sheldon Richman

    Thaddeus Russell, author of A Renegade History of the United States, has the lowdown on Labor Day here. It's not what you think. Clue: President Grover Cleveland, who sent the military to Illinois, over objection of the governor, to break the Pullman strike, signed the bill. (Several workers were killed "at the hands of the U.S. military and U.S. Marshals."
    [Cleveland] and its sponsors intended it not as a celebration of leisure but as a promotion of the great American work ethic. Work, they believed, was the highest calling in life, and Labor Day was a reminder to get back to it.

  • Regime Uncertainty: Pirrong Debunks the Keynesian Debunking

    by Robert Higgs

    As the idea of regime uncertainty has gained ground in recent years as a partial explanation of the economy’s failure to recover quickly and fully, economists and others invested in Keynesian thinking have begun to strike back. One such Keynesian debunking of regime uncertainty was offered recently by Gary Burtless and seemingly endorsed by Mark Thoma. Now, Craig Pirrong, an economist at the University of Houston, has debunked Burtless’s arguments.

    Pirrong uses options pricing theory to show why the Keynesians are missing the point of the regime uncertainty concept and why, even on their own terms, their arguments for disregarding regime uncertainty and simply pumping up aggregate demand are wrong.

    To adapt a familiar saying:  first they ignore you, then they ridicule you, then they embrace the idea and claim that they had it first. We are now passing through Stage II.


  • Yankee, Go Home!

    by Robert Higgs

    After the Japanese government surrendered to the Americans and their allies in 1945, the U.S. military occupied the Japanese home islands and ruled the nation for several years. In due course, however, Japan’s situation was normalized, and, moreover, in 1946 the Japanese adopted a new constitution that renounced war as an instrument of national policy:

    CHAPTER II: RENUNCIATION OF WARArticle 9:

    Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes. 2) In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.

    At that point, Japan no longer represented a threat, or even a potential threat, to the United States, apart from the threat that developed later that the Japanese would sell American consumers superior automobiles and consumer electronics, among other things.


  • One Man’s Waste Is Another Man’s Bonanza

    by Robert Higgs

    In a recently released report, the Commission on Wartime Contracting concludes that waste and fraud have consumed at least $31 billion and perhaps as much as $60 billion of the $190 billion or so that the U.S. government has expended in grants and contracts with private individuals and companies for work in Iraq and Afghanistan since fiscal 2002.  According to an article in the Richmond Times-Dispatch, “The report faults poor decision making, vague requirements and a lack of training as the chief causes and says that the waste and fraud could have been avoided with better oversight and safeguards.”

    To which I am inclined to respond, not bloody likely.

    Think about it: $30 billion is a helluva lot of money. At my current rate of earning, I will have to work more than 300,000 years to earn this amount—and it’s entirely possible that I will not last that long. Of course, what is called “fraud and waste” is not a sum of money that simply evaporated in the hot desert sun. Aside from the small amount literally lost, every dollar of this sum ended up in someone’s pocket.


  • Michael Lind’s False Alternative

    by Sheldon Richman

    Michael Lind writes at Salon.com: “Having denounced liberals as crypto communists for half a century during the Cold War, the American right now routinely accuses the center-left of being fascist.” Lind goes on to wonder why “American conservatives and libertarians” have avoided discussion of their own “heroes” who seem to have been soft on fascists. He specifically mentions Ludwig von Mises’s remarks about the Italian Fascists in the 1920s (in his book Liberalism) and F. A. Hayek’s and Milton Friedman’s alleged approval of Augusto Pinochet’s “free market” dictatorship in Chile.


  • Op-ed: Federal Reserve Grabs New Powers

    by Sheldon Richman

      While inflation hawks understandably keep a close watch on the Federal Reserve’s money-creation activities, an equally worrisome Fed activity is taking place right under their noses. Under cover of addressing the financial crisis and recession, the Fed has become the central allocator of credit.

     

    As San Jose State University economics professor Jeffrey Rogers Hummel points out in The Independent Review (Spring 2011), Fed chairman Ben Bernanke “has so expanded the Fed’s discretionary actions beyond merely controlling the money stock that it has become a gigantic, financial central planner.... [T]he Fed that emerged from the crisis is no longer the same as the Fed before the crisis.”

     

    Read the full op-ed, "Federal Reserve Grabs New Powers." 


  • Part of an Original Crowd

    by Roderick T. Long

    Sheldon has a nice post on why proper individualism is not atomistic – wherein he cites Aristotle, Spencer, and … me!

    In related news, I’ve argued elsewhere that it is the least atomistic forms of individualism that have the strongest claim to be called radical individualism.


  • Part of an Original Crowd

    by Roderick T. Long

     Sheldon has a nice post on why proper individualism is not atomistic – wherein he cites Aristotle, Spencer, and … me!

    In related news, I’ve argued elsewhere that it is the least atomistic forms of individualism that have the strongest claim to be called radical individualism.


  • Constitutionally Impaired?

    by Roderick T. Long

     

    I agree with most of what Walter Williams says here, so let me churlishly focus on the bit I disagree with:

    You might say, “Williams, while there are gray areas in the Constitution, the U.S. Supreme Court would never brazenly rule against clear constitutional prohibitions!” That’s nonsense. The first clause of Article 1, Section 10 mandates that “No State shall … pass any … Law impairing the Obligation of Contracts.” During the Great Depression, the U.S. Supreme Court upheld a Minnesota law that restricted the ability of banks to foreclose on overdue mortgages, thereby impairing contracts made between lender and borrower.


  • Government Stimulus: Polishing the Rotten Apples

    by Robert Higgs

    Once upon a time in a land far, far away, there was a country famous for its apples. In fact, it produced nothing but apples and so was called Appleonia. The people ate many apples in many different ways: raw apples, baked apples, apple pies, apple fritters, and candied apples, to name just a few. They found lots of different ways to use their apples, even as fuel.

    But Appleonians didn’t consume all of their apples. They saved lots and lots of apples for their seeds so they could enlarge their orchards and grow more and more. For hundreds of years, the Appleonians consumed lots of apples and made their orchards bigger and bigger. Everyone in Appleonia worked in the apple business and prospered.

    It turned out though that not every place in Appleonia was perfect for growing apples. Some areas were filled with worms that just loved apples. Little by little, the worms began to infest the orchards.


  • The Berlin Wall

    by Ralph Raico

     Since there are numerous mentions of the anniversary of the Berlin wall I thought I'd share my experiences. In 1961 I was an exchange student in Paris and decided to go to see the wall for myself. (Berlin in December was the coldest I have ever been.) Passing through Checkpoint Charlie I  entered Communist territory for the first time. It was as I'd expected: the universal hopeless shabbiness of the city and the people. I spoke with as many as I could. No one criticized the regime, of course. One old man said, gratefully, "Sie geben uns alles was wir brauchen." (They give us everything we need.) I maliciously asked another man where THEIR Kurfürstendamm, the Fifth Avenue of West Berlin, was. He replied, abashed, "Well, we don't have anything EXACTLY like that." I visited a few bookstores, noting the endless shelves of works by Marx, Lenin, and the then East German leader, Ulbricht. I was hoping that they might have Mises's Socialism, misled by the title, but they weren't fools—they knew their enemy. I had a crummy lunch at one of their elite restaurants, and decided to go back.


  • What if the Americans Had Established Six Nations, Rather than One?

    by Robert Higgs


    Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague.

    In the standard U.S. history course in high schools and universities, students are usually taught that until the Spanish-American War, the United States had followed for the most part the advice of Washington and Jefferson to steer clear of foreign entanglements.  Americans had devoted themselves overwhelmingly to building their civilization here at home, whereas from 1898 onward, they began to “look outward” and to embrace the “large policy” of national greatness and foreign empire favored by such leading figures as Henry Cabot Lodge, John Hay, and Theodore Roosevelt.  This way of dividing U.S. history into two epochs–before and after the onset of overseas imperialism–is fundamentally misleading.


  • Ron Paul Exposes Media Bias

    by Mark Brady

    And that's the left-leaning and politically correct Guardian newspaper in London! Paul Harris explains why "[t]he Texan libertarian won't win the GOP nomination, but we lose by treating him as a pariah for asking hard questions of America."

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