Author Archive for Ryan McMaken

Did the US Provoke the Axis Powers?

758px-The_USS_Arizona_(BB-39)_burning_after_the_Japanese_attack_on_Pearl_Harbor_-_NARA_195617_-_EditIn her latest hit piece on the Mises Institute, WaPo’s Jennifer Rubin quotes a David Weigel hit piece on the Mises Institute in which Weigel attacks David Gordon and Ralph Raico for daring to criticize Winston Churchill.  The occasion for these remarks is a comment made by Rand Paul about American policy before 1941:

“There are times when sanctions have made it worse,” Paul said. “Leading up to World War II, we cut off trade with Japan. That probably caused Japan to react angrily. We also had a blockade on Germany after World War I that probably encouraged some of their anger.”

It’s not my job to defend Rand Paul, but as Weigel notes, these ideas are likely influenced by this article, and this article.

Rubin’s purpose in mentioning it is to imply that merely mentioning established facts about the pro-war behavior of the American regime prior to world War II somehow constitutes sympathy for the Axis powers. Such an assertion is nonsense, of course, since the Japanese and Nazi states are responsible for the actions of the Japanese and Nazi states. Pointing out that Roosevelt’s regime was doing everything it could to provoke a war with the Japanese, on the other hand, simply highlights the barbarity of the American state in putting its own citizens in danger and seeking a conflict that led to the placing of Japanese Americans in concentration camps, and the enslavement of millions of Americans through conscription. Reducing every conflict to a comic-book-like battle between good guys and bad guys, on the other hand, is just the sort of thing that people like Rubin live for.

For those who actually seek a more complete and detailed view of the lead-up to the Second World War, see Robert Higgs’s article based on this video:

I’m Ambivalent on the Bundy Ranch Case

800px-Cattle_near_the_Bruneau_River_in_Elko_County,_Nevada[A follow-up this Mises Daily article.]

I think we can all agree the Feds, in their usual fashion, have employed unwarranted thuggery in their attempts to shut down the Bundy Ranch. Just as the Feds could have arrested David Koresh when he left his compound (which he often did) they instead chose to employ the usual shock-and-awe tactics that are so beloved by federal agents.

Bundy lost his case in federal court, and he lost the appeal, so as Judge Napolitano points out here, the feds could simply have put a lien on the property, but they instead resorted to violence by stealing cattle and knocking around protestors.

As far as the legal case goes, however, it’s pretty clear that Cliven Bundy has unambiguously lost his case as far as federal law goes. Bundy has already made it clear that, at least at some point, he thought the feds had a right to charge management fees, since he did it for many years before stopping twenty years ago.  He has tied his refusal to pay fees not to the fact that the feds own or manage the land, but that it now manages in a way that does not meet his approval. In other words, a government entity that manages the land properly, would deserve payment, according to Bundy’s own account.

Meanwhile, the issue of government ownership itself is not an issue, it seems, since Bundy has declared that he would pay fees if the land were administered by the state of Nevada.

While I delight in the images of  federal troops being thwarted in their recent attempt to bully Bundy and his allies, I’d be more understanding if Bundy were calling for outright privatization rather than what he appears to be calling for: a mere modification of the status quo in which Nevada rather than the US takes control of the land in question. Remember that Bundy only disputes ownership by the federal government. Government ownership in general is apparently fine. Bundy then attempts to base this assertion on his belief that the US government cannot legally own land, which is a sketchy argument at best.

This is a fool’s game, of course, as understood by anyone who realizes that the US Constitution (apart from the Bill of Rights) is not now and (and possibly never has been) designed to actually limit the power of the federal government. (As Rothbard explains here.)

Read More→

Audio: Thornton Explains the Crack-Up Boom

Interviewed by host Alan Butler, Mark Thornton explains why the Crack-Up Boom phase of a fiat money collapse is one of the scariest economic phenomena in human history.

Listen here. 

University of Manchester Crushes Students’ Attempt to Study Austrian Econ

800px-See_No_Evil,_Hear_No_Evil,_Speak_No_EvilFrom The Financial Times:

The international financial crisis has sparked calls for a radical rethink of economics teaching, with critics calling for professors of the dismal science to pay more attention to finance and history. But students from the birthplace of the Industrial Revolution have had their hopes for a course on financial crashes dashed after the University of Manchester refused to put it on next year’s syllabus.

A group of students, the Post-Crash Economics Society, had devised a course – Bubbles, Panics and Crashes: an Introduction to Alternative Theories of Crisis – with the support of some of Manchester’s academic staff, as a module for third-year students at the university, a member of the prestigious Russell Group.

Last week, after months of campaigning and petitioning of fellow students, the economics department rejected it. “We were all very shocked and angry at the decision,” said Joe Earle, a member of the society.

The reading list proposed by the students included articles from so-called Austrian school economists and included papers by staff at the Bank for International Settlements, the so-called central bankers’ bank, who were among the few to warn of the dangers building up in the global financial system before the Lehman Brothers’ collapse.

“If you look at the reading list, it’s not wildly radical – it’s balanced. But in the standard undergraduate course you wouldn’t see any of that. It just goes to show how narrow the curriculum is,” said James Meadway, an economist at the New Economics Foundation think-tank. “There is a complete failure to admit that there’s something fundamentally wrong with economics, and that it led to the crisis being missed in 2008.”

Read the article. 

Entrepreneurship: The Driving Force of the Economy

6717Peter Klein writes in today’s Mises Daily:

Unfortunately, most people see economics as a dry, technical subject that involves poring over charts and graphs and writing equations to describe the “equilibrium” behavior of hypothetical actors. But economics is a logical, deductive, human science about real people acting in the real world, with all the dynamism, unpredictability, and creativity that entails. Markets aren’t static, lifeless mathematical constructs but lively, vigorous spaces where people interact and coordinate. Firms, markets, and industries don’t just come into existence by themselves, they have to be created and operated by real people with real responsibility. These people are entrepreneurs, what Mises called the “driving force” of the market economy. That’s one reason I’m attracted to the “Austrian” approach to economics, which has always placed the entrepreneur at the front and center of production and exchange — not an incidental actor who steps in to introduce novelty then fades into the background as the “normal” market process resumes. Entrepreneurship, as decisive action under uncertain conditions, is at the very heart of a market economy.

Bankers Help Crush Cannabis Businesses

800px-WinonaSavingsBankVaultSince large banks are more or less adjuncts of the federal government that live off the sweat of taxpayers, all the while whining about how tough they have it, who can be surprised that large banks like Wells Fargo have been enthusiastic in their efforts to crush clients who dare do business with legal cannabis merchants? Notes the Denver Post:

The risk made banks, including Wells Fargo, give commercial clients an ultimatum: Drop the marijuana-related tenants of property financed with bank funds, or pay up the entirety of the loan.

“A couple of the bigger banks have a scorched-earth policy, moving immediately to eviction or simply calling the note, with no courtesy to allow them to do anything else,” said Robert Frichtel, a former commercial mortgage broker who is CEO of Advanced Cannabis Solutions in Colorado Springs.

Fortunately, as described in The Post article, smaller sources of capital have moved into the market eager to capitalize on a booming (and legal) industry in Colorado (which I describe here). If the United States had an actual free market economy, huge mismanaged dinosaurs like the big banks would have been liquidated years ago, or at least significantly shrunk in size. Instead, they went to the public trough and stole a couple trillion dollars from the taxpayers. Naturally then, they show no signs of life when it comes to the sort of entrepreneurship necessary to deal with a renewed cannabis industry that, unlike the banking sector, actually strives to provide good service to customers.

Mind you, I understand that the banks are fearful because they are subject to so much federal regulation, and could easily have their charters revoked if they did not play ball. As with so many industries, the feds have the banks over a barrel. But this relationship is made worse by the fact that the fiscal health of banks is reliant not on their customers, but on the cozy cronyism that keeps government favors coming their way. Banks have no interest in pushing back even the slightest bit in the continued regulatory war on drugs through the banking sector because the banks would rather just take money from their customers by force (via the treasury) than have to earn it.

 

Thornton: What’s the Deal With Dope?

(It’s a video of a video, but the audio is very clear.) Hosted by the Loyola University Society for Civic Engagement on 27 March 2014, Mark Thornton appeared as a panelist (via Skype) to discuss some of the intended and unintended consequences of legalizing marijuana.

Thornton provides an excellent summary of the early years of cannabis prohibition (hint: no one but the government seemed to want prohibition) plus a discussion of the many negative effects of prohibition.

Italian Government Cracks Down on Separatists

The latest in the Venetian Secession saga, in which the separatists are now “terrorists”:

The authorities accused the 24 separatists of being involved in “terrorism”, “fabrication of weapons of war” and “subversion of the democratic order”.

The activists were part of a “secessionist group that was planning various initiatives, some of them violent, aimed at pushing for the independence of Veneto and other parts of the national territory of the Italian State,” the paramilitary Carabinieri said.

Apparently, a few separatists made a “makeshift cannon” and a homemade “tank” which, were a grave threat to national security.

More here and here.

The Austrian Paradigm in Environmental Economics

Writes Ed Dolan, the 2014 F.A. Hayek Memorial Lecturer at the Austrian Economics Research Conference:

Today on my blog I posted the second in a two-part series on Austrian environmental economics and emissions trading, based in part on the Hayek lecture I gave at the Mises Institute conference in Auburn last month. I thought that some of the readers of your blogs might be interested in it. I am sure you and your readers will find parts of it controversial, and I would very much like to get a discussion going. Here are the links: Part 1  and Part 2

Prof. Dolan’s AERC lecture is here:

An Economic Interpretation of the Crimean Secession/Annexation

800px-Ялта_Южный_берег_ДДимаAs with the Venetian secession, regions of larger states often secede because they resent being taxed to subsidize other regions of the country. Less often is the case that a region leaves one nation state because it can get more and better subsidies in another nation states. According to Jason Ditz at antiwar.com, however, this is a big factor in Crimea’s decision to leave Ukraine for Russia. And if Ditz’s assertions about Crimea’s poverty and economic dependence are right, we might also extrapolate that Crimea’s poverty could be a reason that true independence was not on the table.

While not quite the same, this phenomenon might be compared to situations in which client states bolt one sphere of influence to join another. The US understands this as well as anyone, since it spends many billions annually in cash or in-kind gifts to cultivate close ties with a variety of brutal dictatorships like those found in Egypt and Saudi Arabia.

But on the Crimean question, Ditz writes:

I love a good argument too, but I think the Crimea situation is less about race, nationalism and the East-West divide than it is economics.

Crimea is dirt poor, even by Ukranian standards, and was intensely dependent on government aid. The regime change brought about a lot of philosophical shifts in government, but the big change from the Crimean perspective was economic in that:

a) Ukraine’s struggling economy is heading further into the ditch, with EU trade ties likely not to make a major difference for years and the loss of Russia trade ties likely to be a quick impact.

b) The IMF bailout came amid intense conditions of austerity, which means Crimea’s subsidies were likely to be on the chopping block .

Whatever else one may say about Russia’s economy, it’s got a lot of money from oil and gas exports, and they were in a position to not only replace the aid Ukraine had been giving Crimea, but to increase it considerably. I’d say you can’t buy that kind of loyalty, but you clearly can.

Interviews on the streets with Crimeans told similar stories, of local retirees expecting their pensions to go from $100 a month under Ukraine to $500 a month under Russia. Similar pay hikes were expected for soldiers who transferred to the Russian military, and they played a big role in the sheer size of the defections.

From Russia’s perspective, it’s also a pretty straightforward economic move. They kept the Yanukovych government close with billions in subsidies and loans for all of Ukraine, and with the regime change removing that option and the Sevastopol base the only real asset Russia needs to keep, it is much easier to just buy Crimea’s accession into the Russian Federation (which will cost Russia billions annually anyhow) than it was to try to get another Yanukovych elected.

Historical claims to the peninsula certainly provided a pretext for the secession/annexation, and are interesting from an academic perspective, but if Ukraine wasn’t broke I don’t think we’d be having this discussion at all.