Archive for May 2014

The Levellers and Early Libertarian Thought

6766In addition to her shorter piece on the English Levellers, Roberta Modugno has provided this longer, footnoted piece as well, including:

The Levellers were concerned with economic rights and these economic rights were a direct consequence of the right to self-ownership and included individual property rights, freedom to produce, sell, buy and trade, and to do all this without license, monopolies, regulations and arbitrary taxation. That is to say, they advocated a free market economy. The right to trade freely was considered a natural right by Lilburne, or a “native liberty” as in Overton’s Remonstrance.

Arguing from the theoretical supremacy of natural rights, Lilburne rejects any form of regulation of trade. The right to free trade is a birth right: a legal fundamental liberty.


How Inflation Helps Keep the Rich Up and the Poor Down

6767 (1)Guido Hülsmann writes in today’s Mises Daily:

If there is any truth to the socialist caricature of capitalism — an economic system that exploits the poor to the benefit of the rich — then this caricature holds true for a capitalist system strangulated by inflation. The relentless influx of paper money makes the wealthy and powerful richer and more powerful than they would be if they depended exclusively on the voluntary support of their fellow citizens. And because it shields the political and economic establishment of the country from the competition emanating from the rest of society, inflation puts a brake on social mobility. The rich stay rich (longer) and the poor stay poor (longer) than they would in a free society.

Gerald Celente Talks Political Atheism with Jeff Deist

On this week’s edition of Mises Weekends. (Mp3, 25 minutes.) Click here for the YouTube version. Also available at iTunes. 

Gerald Celente is is a trend forecaster, publisher of the Trends Journal, business consultant, and author who makes predictions about the global financial markets and other events of historical importance. Celente has described himself as a “political atheist” and “citizen of the world”. He has appeared as a guest on media outlets such as The Oprah Winfrey Show, The Today Show, Good Morning America, CBS Morning News, The Glenn Beck Show, NBC Nightly News, The Alex Jones Show, Coast to Coast AM and Russia Today.

Lew Rockwell’s New Book Is Up on Amazon

securedownload-1-200x300Lew Rockwell writes:

The Kindle version of my new book, Against the State: An Anarcho-Capitalist Manifesto, is up on Amazon, and it’s only $3.99. Its sales ranking is 39,466, not terrible given the lack of promotion until now, but I’d be grateful for your help in lowering that number! For advocates and enemies of freedom, this topic is of increasing interest and importance. (Coming soon: the paperback.)

On The 128th Anniversary of Randolph Bourne’s Birth

BarrantiRandolphBourneRandolph Bourne, the antiwar intellectual who contended that “war is the health of the state” was born today, May 30, in 1886.

Bourne’s monograph The State, published posthumously, is available here at Bourne authored several other insightful pieces as well, are are collected in the 1964 collection War and the Intellectuals

Wendy McElroy examines Bourne’s legacy here, and Jeff Riggenbach provides additional details :

Randolph Bourne was an American intellectual journalist who flourished for a few years in the second decade of the 20th century — in the Teens, the decade that ran from 1910 to 1920. Bourne wrote mostly for magazines during this period. His byline was particularly familiar to readers of The New Republic — until his radically antiwar views on the eve of the US government’s intervention in World War I got him fired.

He moved over to The Seven Arts, a newly launched magazine with a smaller circulation than The New Republic and one less well suited to Bourne’s particular talents and interests, since its primary focus was the arts, rather than social and political issues. He was able to publish only six antiwar articles in The Seven Arts before its doors were closed by an owner fearful of the Wilson administration and its Sedition Act of 1918, which made it a crime to criticize the Constitution, the government, the military, or the flag.

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The High Cost of Minimum Wages

6765Ben Wiegold writes in today’s Mises Daily:

In this vein, it is prudent to think of minimum wage statutes in the same manner that one thinks of price controls generally: if a given price is forced below the market rate, shortages will occur; if a price is forced above the market rate, unsold surpluses will accumulate. The nuisance of unemployment, then, is to be simply explained as a surplus of labor services, the natural result of minimum wage laws which force wage rates above the market price.

Insofar as concern is expressed for low-income workers — the ones whom minimum wage laws are intended to benefit — it seems rather arbitrary and unwarranted to not be concerned also about those that will lose their jobs.

Inequality and Envy


Henry Hazlitt

Inequality seems to be the prime concern of Right Thinking People everywhere. But almost no one is drawing out the connections between inequality and envy. As Henry Hazlitt wrote in 1972, “[t]here can be little doubt that many egalitarians are motivated at least partly by envy, while still others are motivated, not so much by any envy of their own, as by the fear of it in others, and the wish to appease or satisfy it.” Indeed, contemporary discussions of income and wealth distribution, progressive taxation, the “long-run return to capital,” and the like would greatly benefit from careful study of great works like Helmut Schoeck’s Envy and Bertrand de Jouvenel’s Ethics of Redistribution. Murray Rothbard’s “Freedom, Inequality, Primitivism and the Division of Labor” should be required reading as well.

An important point coming out of this literature is that envy is generally strongest when inequalities are small, rather than large. Huge inequalities of wealth, income, or consumption are considered irrelevant; smaller inequalities are seen as remediable through state action. As noted yesterday by Peter Schiff, consumption inequality is probably far lower today, in Western countries, than in most societies in human history. The average Roman didn’t think often about Crassus, but the average American — part of the global 5% — thinks a lot about the wealthier Americans across town.

As Hazlitt noted, de Tocqueville saw modest inequality as the driving force behind the French Revolution. “The most popular theory of the French Revolution is that it came about because the economic condition of the masses was becoming worse and worse, while the king and the aristocracy remained completely blind to it. But de Tocqueville, one of the most penetrating social observers and historians of his or any other time, put forward an exactly opposite explanation.” Hazlitt quotes the French historian Emile Faguet:

Here is the theory invented by Tocqueville. . . . The lighter a yoke, the more it seems insupportable; what exasperates is not the crushing burden but the impediment; what inspires to revolt is not oppression but humiliation. The French of 1789 were incensed against the nobles because they were almost the equals of the nobles; it is the slight difference that can be appreciated, and what can be appreciated that counts. The eighteenth-century middle class was rich, in a position to fill almost any employment, almost as powerful as the nobility. It was exasperated by this “almost” and stimulated by the proximity of its goal; impatience is always provoked by the final strides.

The surge of interest in inequality among today’s pundit’s and politicians is likely driven by the fact that inequality, in the sense that matters to most people in Western countries, is far lower than its historical average.

Chances Are that You Have No More Expertise in Economics than You Have in Astrophysics

Henri_Julien_Dumont_-_The_AlchemistAlthough the statement is commonly attributed to Mark Twain, his friend Charles Dudley Warner was the one who said, “Everybody complains about the weather, but nobody does anything about it.” Regardless of who said it, the statement was and remains fairly accurate.

In contrast, we might observe, “Everybody complains about the economy, and a great many unfortunately try to do something about it.” Economic policy is the name given to such attempts by government officials, their consultants, and their contractors. For the general public, economic policy is a tragic matter because regardless of what the man in the street may think, the government’s actions almost invariably make economic life worse than it would have been had the policy makers kept their hands off of it.

Despite a gigantic outpouring of talking, writing, and studying, at least 90 percent of this yammering is worthless, and much of it is positively harmful. Look, I’m not going to lie to you: I’m an economist. I’m not bragging about this professional status; it’s simply a fact. If I were a plumber or a carpenter, I’d admit being one just as readily. Now, tens of thousands of other people also say that they are economists, but scarcely any of them is so in more than a nominal sense. They may have a Ph.D. in economics, yet it remains the case that their ideas about economics are no better than your average crackpot’s. The overwhelming part of what people learn in graduate school in economics is mathematical mumbo-jumbo whose substance boils down—if it boils down to anything, rather than simply evaporating—to what F. A. Hayek called the pretense of knowledge. In short, these “experts” are ill-educated fakers. My best guess is that no more than a couple thousand real economists exist in the entire world, and I would not be surprised if my estimate were too high by a thousand.

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Mises Weekends: A New Series of Interviews Hosted by Jeff Deist

Beginning Friday night, Mises Weekends will bring you a new show every week featuring timely interviews and discussions on current trends and events with journalists, scholars, entrepreneurs, and more.


More on Grad School

I appreciate Walter’s useful advice on surviving graduate school as an Austrian economist or libertarian or both. (I’ve also discussed graduate school strategies, and more general career issues, at Mises University; here is a talk from 2010.) I do have one disagreement, however. Walter writes: “Don’t take any part time jobs; don’t be anyone’s research assistant. Don’t be a teaching assistant. Don’t teach any courses. Just study to pass your courses with the best marks possible, and pass your oral or comprehensive exams.”

There are two problems with this. First, it is difficult to get a tenure-track position at a college or university without any teaching experience. I agree with Walter that grad students should not do a lot of teaching, either as primary instructors or teaching assistants, because this interferes with the dissertation. But having some teaching experience, and good student evaluations, can help on the job market.


Second, working as a professor’s research assistant usually leads to a better dissertation. Academic research is difficult and, like other skilled crafts, is often best learned through an apprenticeship model. You cannot learn how to be a good researcher just by listening to lectures and reading articles and books. You learn from experience. By working with a professor — hopefully on an article — you see how the sausage is made. You learn to formulate research questions, to evaluate existing literature, to collect and analyze data if appropriate, to write up results, and to deal with journal editors and reviewers. Moreover, students who don’t already have a dissertation topic can often find one as a spin-off of a professor’s existing project. Of course, grunt work — e.g., entering data into a spreadsheet — should be avoided if possible. But assisting a more experienced researcher is usually the best way to learn the craft.

Janet, Joe, Lou, and the Babe

Babe_Ruth_&_Lou_Gehrig_at_West_Point_1927Our money-printer-in-chief, Janet Yellen, gave the commencement address at NYU’s graduation ceremony in Yankee Stadium. She advised the 8,000 assembled graduates that it is ”an unfortunate myth” that “something called ‘ability’” has much to do with success. (Ability being an innate characteristic, it would of course have been politically incorrect for her to have said otherwise.) Rather Yellen touted “grit,” perseverance, and passion for one’s work as the most important job skills.

Highlighting the importance of perseverance, Yellen stated:

Yankee Stadium is a natural venue for another lesson: You can’t succeed all the time. Even Ruth, Gehrig, and DiMaggio failed most of the time when they stepped to the plate. Finding the right path in life, more often than not, involves some missteps. My Federal Reserve colleagues and I experienced this as we struggled to address a financial crisis that threatened the global economy.

Now it is true that Ruth, Gehrig and DiMaggio were only successful in about one-third of their career at bats. But in its 100-year history the Fed has never succeeded in attaining its stated goal of providing sound money to the U.S. economy and abolishing business cycles. Its missteps have been legion and legendary, and committed in every decade of its existence. It orchestrated massive price inflation during and immediately after World War 1 and the Great Inflation of the 1970s (which began in the mid-1960s). During World War 2, the massive expansion of the money supply that it engineered in conjunction with draconian price controls caused the phenomenon of “repressed inflation” that featured a shortage of goods and coercive government rationing, not to mention the explosion of prices immediately after the war. The asset bubbles that it created in the 1920s, 1980s, 1990s and 2000s all culminated in financial crises and recessions/depressions of greater or lesser length and intensity. Its attempt to “reflate” the economy and prevent prices and wages from adjusting to market conditions after the Great Crash of 1929 was one of the factors that caused an agonizing prolongation of the Great Depression. Currently, we are confronted with signs of incipient bubbles in stocks and real estate as a result of the Bernanke/Yellen regime of quantitative easing and zero interest rate targeting.

Yes, Yellen and her predecessors have shown remarkable perseverance. But they have all persevered in a fool’s errand, which no one has the “ability” to accomplish: trying to centrally plan the supply and value of money. This is why the Fed will continue to bat exactly .000 until its total failure is at last widely recognized and it is dismantled.

Advice for Grad Students

1280px-BibliotecaestantesAt Loyola University, my colleagues and I have been very successful in sending off numerous of our graduating economics majors to graduate school, to get a phd in economics. Here is some advice I offer them, which might be helpful to others as well:

Advice for grad students (some of this advice is personal to me; take what makes sense to you and ignore the rest):

1.Your goal is to get that phd, asap. Don’t let anything interfere with that, if at all possible. If you need money, take out loans, don’t work and let that interfere with your studies.

2.Don’t take any part time jobs; don’t be anyone’s research assistant. Don’t be a teaching assistant. Don’t teach any courses. Just study to pass your courses with the best marks possible, and pass your oral or comprehensive exams.

3.Don’t argue with your professors, certainly not on basic issues. Your job is not to convert them to laissez faire capitalism, to Austrianism, to libertarianism or anything else. It is only to get that phd, asap. Read More→

How Political High Jinks Prevent Private Savings and Investment

400px-Tour_eiffel_at_sunrise_from_the_trocadero[Note: Antoine Clarke at the Cobden Centre explains how political instability in France destroyed the incentive to save, and how the French and Russian states conspired to steal even more.]

“The Death of French Savings, the Russian Bonds Story 1880-1996″

By Antoine Clarke

The following text is from the notes I made of a talk that I gave to the “End of The World Club” at the Institute of Economic Affairs on 18 April 2014.

If there is one feature of human society that makes it successful, it is the capacity that human beings have of choosing to satisfy short-term appetites or to defer gratification. This ability to distinguish between short term and long term interests is at the heart of economics.

But why defer consumption? Why save at all?

One reason is the transmission of wealth from one generation to the next. Another is to ensure security in hard times.

A complaint of American academics about French savings in the 19th century is that they were too conservative. Easy for them to say. Read More→

Austrian Economics and the Firm

FK_2002_coverNicolai Foss and I have worked on many projects together, including our 2012 book Organizing Entrepreneurial Judgment. Foss is an eminent scholar whose expertise ranges from strategic management and entrepreneurship to Austrian capital theory, human resource management, business model innovation, and many other subjects. (Here is his 2012 Hayek Lecture at the AERC.)

One of our earliest collaborations was a 1998 conference in Copenhagen on Austrian economics and the firm. The conference proceedings were published in 2002 by Edward Elgar as Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization. As the blurb says: “While characteristically ‘Austrian’ themes such as entrepreneurship, economic calculation, tacit knowledge and the temporal structure of capital are clearly relevant to the business firm, Austrian economists have said relatively little about management, organization, and strategy. This innovative book features 12 chapters that all seek to advance the understanding of these issues by drawing on Austrian ideas.”

The book is unfortunately rather pricey, but Elgar has just added it to Elgar Online, so that the front matter, introduction, and index are available as free downloads. Some readers will have access to the full text via university or commercial libraries.

The New Skyscraper Curse

6764Mark Thornton writes in today’s Mises Daily:

The confluence of regional skyscraper signals in Europe, North America, and China along with a skyscraper alert for a world economic crisis clearly suggests the possibility of a looming world economic crisis. This pattern would be very much like previous episodes of skyscraper records including the Panic of 1907, the Great Depression, the stagflation of the 1970s, the dot-com bubble, and the housing bubble. In line with these skyscraper-based predictions, a fundamental case can be built around the notion of a looming world economic crisis. Most of the world’s major economies are facing pressing economic difficulties, including the U.S., Europe, Japan, and China. Additionally, central banks have been engaged in a world currency war on a scale that has never been experienced in human history.

Audio: Mark Thornton Explains Nazi Gun Control

Interviewed by host Alan Butler, Mark Thornton discusses gun control in the early days of Nazi Germany.

Audio: The Drug War, ZIRP, Jobs, and More

Interviewed by host Alan Butler, Mark Thornton discusses the failed War on Drugs, and the current state of the U.S. economy.

How Valuable Is a Federal Grant?

5265260921_199021dabf_zSometimes, a federal grant is worthless. The federal government has the ability to attach enough costly provisions to its grants that the net value is less than zero.

A recent case in my home town of Tallahassee illustrates this. The Tallahassee Democrat, May 21, page A1 (sorry, no link because a subscription is required) reports that project organizers who plan to build a $1.5 million homeless shelter have turned down $500,000 in funding because the money was to come from a federal grant. The article said, “…stringent reporting requirements, mandates to exceed prevailing wages and required environmental assessments would have increased the cost and delayed the completion time of the project significantly.”

The bottom line: the project’s developers believed that the costs associated with accepting the federal grant would have exceeded the $500,000 the grant would have given them.

The good news in this case is that the grant wasn’t accepted, so the money wasn’t wasted. But what if the project’s organizers had decided that accepting the grant would have imposed costs of only $400,000 on them? They would take the $500,000, which would have only been worth a net of $100,000 when accounting for all the costs and benefits. In this hypothetical case, the federal government would have taken $500,000 in tax revenues and produced a net value of $100,000 with it.

In this particular case in Tallahassee, the conditions lowered the value of the grant to below zero and it was refused, but in other cases grants are accepted even if they on net provide only a minimal value to recipients. Federal grants forcibly take money from taxpayers to give to grant recipients who value them considerably less than the value of the revenues that finance the grants. Federal grants destroy value. Sometimes they destroy so much value that recipients who are offered grants refuse to take them.


Lew Rockwell On the Tom Woods Show Today

securedownload-1-200x300Lew joins Tom to discuss his forthcoming book, Against the State: An Anarcho-Capitalist Manifesto.

More on the book here. 

Good Riddance to Commencement Speakers

MINOLTA DIGITAL CAMERABecause of their privileged status as subsidized institutions protected from the marketplace, colleges and universities are not sensitive to the desires or needs of their customers. In a normal, marketplace environment, higher education institutions would seek to provide services and offend as few customers as possible, while providing maximum value. The tired custom of commencement speeches, on the other hand, in which high-profile speakers with no particular academic expertise are purchased at great expense, is just the latest example of the disconnect between students and employees of these institutions.

Recent cases of protest against commencement speakers, who were deemed undesirable by some students, produced savage push-back from tenured faculty, administrators, and conservative pundits. The assertion on the part of  these parties was that the customers (the students) who objected to the activities of employees supported by student tuition (the faculty and administration) were necessarily spoiled brats who did not appreciate the wise decisions of their betters. The fact that it was immediately assumed that students should have no say in how their dollars are spent by their colleges exhibits how successful higher education institutions have been in convincing the general population that they are something more than the mere paid consultants and instructors that they are in fact.

Indeed, the commencement speech is one of the more absurd traditions still maintained by higher education institutions today, and it has very little to do with providing an educational experience. Graduation ceremonies overall  mostly exist to stroke the egos of the faculty members and give the institution itself a pat on the back while simultaneously attempting to convert the new alumni into donors. The speeches, we are told, are some sort of once-in-a-lifetime opportunity to hear wisdom form the lips of politicians and perennial government employees like Condoleeza Rice and Christine Lagarde, who are in turn paid handsomely to lecture new graduates about “giving back” to the community, or being yourself, or following your dreams.

As with most everything that occurs as a university, the purpose of the commencement speech is not to provide a service to the students, but to make the institution’s faculty and staff feel important. If an institution can land a celebrity speaker (no matter how blood-soaked or morally bankrupt) to deliver the commencement speech, it will be great for the next fundraising campaign, and if the speaker says something really entertaining, insightful, or controversial, then it might even get the institution on the evening news. The commencement speech serves a public relations function, not an educational one.

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