Rothbard's Man, Economy, and State: a Memoir

Rothbard's Man, Economy, and State: a Memoir

04/13/2018Gary North

In October 1962, I was given a lifetime advantage: a copy of Murray Rothbard’s Man, Economy, and State. In the language of journalism, it was hot off the presses. It had just been published. I was sent a copy by F. A. Harper, known as Baldy, who was not bald. At the time, he ran the Institute for Humane Studies. Until early that year, he had managed the William Voker Fund. The Volker Fund had put up the money that subsidized the publication of Rothbard’s book. It was published by Van Nostrand, a small but respectable mainstream publishing house located in Princeton, New Jersey. Van Nostrand was also the publisher of a series of books that had been financed by the Volker Fund over the previous two years.

I was in my final year of college as an undergraduate. I had written to Harper the previous year about some questions I had about Ludwig von Mises’ Human Action (Yale University Press, 1949). Harper responded in a letter. I still have the fragments of that letter. For some unknown reason, I cut off the introduction to the letter, which would have had the date on it. I suspect this was in the summer of 1961.

By 1962, Harper was serving as my part-time mentor. I did not fully understand this at the time. In November 1961, he paid for me to fly to Burlingame, California, in order to spend a few hours with him. This was one of the turning points in my life, although I did not know this at the time. He gave me a copy of Israel Kirzner’s book, The Economic Point of View, which had been published by Van Nostrand in 1960. I wrote this on the front page: “presented by F. A. Harper November, 1961.” He was recruiting me. I have been grateful for this ever since. When he sent me Man, Economy and State, he was still in the process of recruiting me.

Within a few months after my visit, Harper was fired by the man who controlled the Volker Fund, Harold Luhnow, the nephew of William Volker, who died in 1947. Luhnow took over the management of the Fund in 1947. He shifted its focus from charitable activities in Kansas City, Missouri to financing the remnants of classical liberalism. In early 1962, he replaced Harper with Ivan Bierly, who had received his Ph.D. under Harper at Cornell years before. The Volcker Fund was renamed “The Center for American Studies.” That shift turned out to be crucial in my career. Bierly hired a new staff. One of the people he hired was R. J. Rushdoony. I wrote to him in the spring of 1962. I met him when he lectured for two weeks at a summer seminar sponsored by the Intercollegiate Society of Individualists. Rushdoony continued to recruit me in my senior year. He brought me to work for the Center as a summer intern in 1963, and I lived at his home. I spent the whole summer reading the basic texts of Austrian School economics, including Man, Economy, and State.

ACADEMIC GUILDS

Rothbard’s book was a masterpiece, both conceptually and rhetorically -- the art of persuasion. He had a rigorously systematic mind. He also had a stupendous memory regarding materials he had read, which he demonstrated in the book’s footnotes. He had an unmatched ability to write clearly. I mentioned this in my article in the 1988 Festschrift for Rothbard, Man, Economy, and Liberty. In my article, “Why Murray Rothbard Will Never win the Nobel Prize,” I said that he wrote much too clearly to win it.

Mises was a clear writer. But in Human Action, he offered fewer footnotes than Man, Economy, and State. He also did not use the paraphernalia of modern economics. There are no equations and no graphs in anything Mises ever wrote. The famous supply and demand scissors are absent in his books. In terms of presentation, Rothbard in Man, Economy, and State was far closer to the mainstream academic community than Mises was. But he was not close to the mainstream community with respect to the content of what he wrote. He was an academic pariah in 1962, and he remained a pariah all his life. He shared this position with Mises.

This was not a liability in the long run. One of the important points made by Thomas Kuhn’s paradigm-shifting book, The Structure of Scientific Revolutions, also published in 1962, was this: major shifts in the worldview of intellectuals are usually generated from either the fringes of an academic guild or from outside the academic guild. If they are generated from inside, they are generated from young men who are reacting against the outlook of the guild. They are on its fringes. The other source of change in perception comes from brilliant outsiders who are in no way under the authority of a particular academic guild.

Mises was funded from outside of academia. New York University paid him no salary for a quarter of a century. He retired in 1969. He may have been the oldest professor in the nation. The money to pay his salary had been put up by rich friends of Mises, most notably Lawrence Fertig, who was on the board of New York University. He donated through the Foundation for Economic Education after its founding by Leonard E. Read in 1946. The Volker Fund also put up money for Mises and Hayek at the University of Chicago. The Volker Fund had put Rothbard on its payroll, mainly to review books, beginning in the mid-1950's. Rothbard was not on any university or academic payroll in 1962. Only after the demise of the Center for American Studies in 1964 did he get his first teaching position, which was at Brooklyn Polytechnic Institute. The school did not offer an economics major. He taught budding engineers. He was on the fringes.

Mises and Rothbard were outsiders. That was their great advantage. This was not clear to me in 1963, but after I read Kuhn’s book in 1968, I understood. The economics guild had no control over either of them. Neither of them published in professional journals. Rothbard had published a few essays, but after 1960 he never bothered again. He made a wise decision. He did not have to conform to what any editor believed.

CLARITY AS A STANDARD

I have always appreciated clarity of exposition. In 1963, as today, I was of the opinion that an author had two primary responsibilities: accuracy and clarity. Persuasion is in third place. Rothbard was tremendous at all three. In this sense, he became my literary model. To the extent that I am known for my writing, I gained this skill more from Rothbard than anybody else.

In 1966, I took a graduate seminar on the American Revolution from Douglass Adair. He had been the editor of The William and Mary Quarterly. He had personally transformed it from a journal that published regional memorabilia into the premier journal of colonial history. He told us that he always used this criterion for screening manuscripts. If an article did not stand on its own merits without the footnotes, he would not publish it. He said that the footnotes were important to validate the thesis, but if the article was heavily dependent on the footnotes to make its point, it was not worth publishing. That impressed me at the time. I see in retrospect that everything scholarly/academic that Rothbard ever wrote would have qualified for publication in terms of Adair’s rule.

Adair made another observation. He said that every scholar would benefit from a year of editing a scholarly journal in his field. Why? Because he would discover how few of his colleagues have the ability to write clearly.

Rothbard had a huge advantage over his peers. He was the master of clarity in the field of economics. He was even more clear than Hazlitt. As a friend of Hazlitt's, I guarantee you that Hazlitt would have been the first to admit this. He was a humble man. For a man who achieved so much, he was an astoundingly humble man. He had an enormous respect for Rothbard.

F. A. Hayek was a clear writer, but as he admitted, he was not a systematic thinker. He divided schools of thought into two groups: systematizers and puzzlers. Hayek called himself a puzzler. In economic thought, this is clearly seen in Austrian School economics from the beginning. Carl Menger and Eugen Böhm-Bawerk were systematizers. Friederich Wieser was a puzzler. Not many people have ever read Wieser. Puzzlers are harder to read than systematizers.

Hayek gained attention in the English-speaking academic world beginning in the early 1930's. Mises was not well-known in academia outside of Austria. Hayek is still the best known Austrian School economist. He won the Nobel Prize in 1974. But Hayek never wrote a treatise on economics.

Henry Hazlitt was a clear writer. He was rhetorically gifted. He had the ability to sustain long, complex arguments, as he demonstrated in his refutation of Keynes, The Failure of the “New Economics.” It was published in 1959. We never see it footnoted in any scholarly journal. There are few people who have ever read it. Hundreds of thousands of people have read his little masterpiece, Economics in One Lesson (1946), but he wrote it in just a few months, and it is not systematic in the way that treatises are supposed to be. It was not meant to be a treatise. It was meant to be a popular book that introduced people to free-market principles. It succeeded. Nothing that Hazlitt ever wrote was a comprehensive treatise.

In 1949, the world of economic theory was waiting for a clear, comprehensive, systematic treatise.

PIECES OF THE ECONOMIC PUZZLE

Most of the pieces of the economic puzzle had been lying around in an unorganized pile ever since Adam Smith's Wealth of Nations (1776). They had been refined and trimmed by Carl Menger in 1871 in his Principles of Economics. The British economist Alfred Marshall in 1890 attempted to put the pieces together in his Principles of Economics, but as is true of so many British thinkers, he was something of a puzzler, not a systematizer. The British intellectual tradition is inductivist, not deductivist. It does not begin with first principles. The pieces in his textbook did not fit together well because they were not systematically based on methodological individualism in the way that Human Action is.

I will now make an admission. It was not until just a few years ago that I recognized what should have been screamingly obvious to me and everybody else. Human Action was the first comprehensive treatise on economics. This may seem like a preposterous statement, but if you look back over the books on economics prior to Human Action, there is no book that starts at the beginning – the acting individual – and develops a comprehensive theory of all aspects of the market process in terms of just a few principles, which Mises called axioms and corollaries. No other economist called them axioms and corollaries. That was what made Mises unique.

Rothbard was an a priorist (deductivist) in epistemology, just as Mises was. In 1962, this made a grand total of two economists. In Man, Economy, and State, Rothbard laid out the chapters of the book in a systematic fashion. From Chapter 2 on, each chapter is a development of the previous chapter. This is what a prioristsare supposed to do. They start with axioms, and they develop the axioms, point by point. Mises had done the same thing in Human Action. Rothbard did it with greater precision. He also did it with greater clarity.

The first person to understand the uniqueness and comprehensive nature of Human Action was Rothbard. He saw this in 1949. This gave him an edge over all of his contemporaries. That is why Man, Economy, and State, which took him over a decade to write, was so important to my generation of budding economists. He systematized what was already a systematic introduction to economic theory. He made it easier for us to grasp the importance of what Mises had done.

Mises put together pieces of the puzzle. Rothbard took that completed puzzle and made it more palatable for younger economists who wanted to see graphs. Fortunately, he never used an equation. That would have sullied the product.

Rothbard never claimed uniqueness for his book. He fully understood that it was a derivative product. But as an introductory treatise that uses the paraphernalia of the modern economic textbook, Rothbard’s book is more serviceable than Mises’s book. In 1962, the enormous volume of his footnotes represented a survey of almost everything that had been published in the journals over the last 50 years. I have never seen anything like it. Admittedly, this dates the book. But that was inevitable, given Rothbard’s strategy. He wanted to introduce the basics of Austrian economic thought, and he wanted it within a framework of the sweep of economic opinion as of 1960 or thereabouts.

CONCLUSION

I don’t know if younger scholars read Man, Economy, and State before they read Human Action. In retrospect, I’m not sure whether I finished Man, Economy and State before I finished Human Action. I do know that I read quite a bit of Human Action in 1961. I wrote to Harper about the book in 1961. But I don’t remember if I read the whole book before the summer of 1963. I had finished both books by late August 1963. But there is no question in my mind that Rothbard opened the categories of economics more clearly to me than Mises had done. Rothbard’s literary style and his approach to economics was exactly what I needed in 1963. His book gave me an edge on my contemporaries. It shaped my work dramatically both in graduate school and subsequently. I even wrote a term paper for a course in apologetics – the philosophical defense of Christianity – on Rothbard’s epistemology. That was in 1964.

If someone has never read any economics, and he wants to start at the top, I recommend that he read Human Action first. But if he is in graduate school as an economics major, he probably would be wise to read Man, Economy and State first. If you like supply and demand graphs, read Rothbard’s book first. If you don’t like graphs, read Mises first.

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Block: How I Profess My Libertarianism to My Students

03/19/2019Walter Block

I am a professor (I teach economics at Loyola University New Orleans). In my view, this means I should profess something. I would be bland and uninteresting to my students if all I did was offer them all sides of every controversial issue in an even-handed way, so that none of them even had a clue as to where I stood on any topic. Of course, I would be derelict in my duty if I only offered my own viewpoint. As John Stuart Mill says in his “On Liberty” (paraphrase) “if you only know your own side of an argument, you don’t even know that, since all views are contrasted with all others.”

I thus feel obligated to acquaint my students with a plethora of viewpoints.

So, what do I profess? Austrian economics and libertarian political economy. I offer to my students all sides of an issue, but within five minutes of my first lecture they can readily discern precisely where I stand.

Read the full article at Real Clear Markets.

Walter Block
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Just Sayin'

A Blockchain Study Finds 0.00% Blockchain Success Rate . The study reported also reported 0 vendor call backs when asked for evidence of implementation.

Though Blockchain has been touted as the answer to everything, a study of 43 solutions advanced in the international development sector has found exactly no evidence of success.

Three practitioners including erstwhile blockchain enthusiast John Burg, a Fellow at the US Agency for International Development (USAID), looked at instances of the distributed crypto ledger being used in a wide range of situations by NGOs, contractors and agencies. But they drew a complete blank.

"We found a proliferation of press releases, white papers, and persuasively written articles," Burg et al wrote on Thursday. "However, we found no documentation or evidence of the results blockchain was purported to have achieved in these claims. We also did not find lessons learned or practical insights, as are available for other technologies in development."

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Noah Smith Wants Harvard to Abandon Its Devotion to "Libertarian" Economic Theory. Really.

03/15/2019Troy Vincent

Let's talk about Econ 101, scientism and modern economics.

At Bloomberg, Noah Smith argues that Greg Mankiw's Principles of Economics textbook is out of date because academic economists are more concerned with empirics and wealth inequality.

Furthermore, Smith pushes the view that economic theory itself is outdated. Not only because academic economists no longer study it or care about it, but supposedly because empirics have proven the laws of economics to be out of touch with reality.

He purports that Mankiw proposes theoretical insights that are skewed against redistribution because of his "libertarian political slant." This just seems to be another way of saying that it avoided most Keynesian mathematics and empiricism and focused on the foundational theory.

Many libertarians derive their views on economics from the Austrians. It's worth noting that Mankiw admittedly never read any Austrian economists in undergrad or grad school and only first read Hayek and added a note on Hayek to the 4th edition of his text in the mid-to-late 2000's. If you're conflating politics with economics, Mankiw is far from an Austrian or Austro-libertarian.

Smith neither addresses Mises' a priori defense of economic theory, or praxeology, nor Hayek's criticism of the scientism of the social sciences.

Smith also doesn't address the obvious: economic incentives explain the rise in empiricism in academia. And the politicization of the economy and growth in government explains why the economics professions have shifted politically left and focused their efforts on income distribution.

Smith states that new empirical methods prove that the assumption that economic actors are perfectly rational is false and uses this insight to disparage economists and libertarians relying on insights derived from the foundations of economics.

Disparaging Mankiw's lessons as skewed by libertarian thought ignores the fundamentals of Austro-libertarian economics. Mises did not rely on a view of perfect rationality to arrive at economic conclusions or to confirm the laws of economics. As Mises stated in Theory and History:

The sciences of human action starts from the fact that man purposefully aims at ends he has chosen. It is precisely this that all brands of positivism, behaviorism, and panphysicalism want either to deny altogether or to pass over in silence.

I will conclude with Mises' address to this very debate:

Economic statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification and falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. They are a necessary requirement of any intellectual grasp of historical events.

While Mankiw is no Austrian, we should not let Smith dictate the discussion or get away with wrongly conflating various economic and political views given that he's completely ignoring long-standing economic explanations that address his criticism of foundational economic insights.

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Recession Will Turn Debt Into Junk

03/15/2019Doug French

Diane Swonk says the 20,000 payroll number for February was a head fake. She blamed bad weather, the government shutdown, and other gobbledygook to explain away the 160,000 job miss for the year’s shortest month.

According to Michael Snyder, in a piece posted on Zerohedge.com,

The U.S. economy is growing at a 0.3 percent annualized rate in the first quarter , based on data on domestic construction spending in December released on Monday, the Atlanta Federal Reserve’s GDPNow forecast model showed.

Mr. Snyder lists 18 data points on his blog “ The Economic Collapse ” supporting the idea that an economic winter is coming.


#1 Farm loan delinquencies just hit the highest level that we have seen in 9 years .

#2 We just learned that U.S. exports declined by 4 billion dollars during the month of December.

#3 J.C. Penney just announced that they will be closing another 24 stores .

#4 Victoria’s Secret has just announced plans to close 53 stores .

#5 On Thursday, Gap announced that it will be closing 230 stores over the next two years.

#6 Payless ShoeSource has declared bankruptcy and is closing all 2,100 stores .

#7 Tesla is also closing all of their physical sales locations and will now only sell vehicles online.

#8 PepsiCo has started laying off workers and has committed to “millions of dollars in severance pay” .

#9 The Baltic Dry Index has dropped to the lowest level in more than two years .

#10 This is the worst slump for core U.S. factory orders in three years .

#11 We just witnessed the largest decline in the Philly Fed Business Index in more than 7 years .

#12 In January, sales of existing homes fell 8.9 percent from a year earlier. That was the third month in a row that we have seen a decline of at least 8 percent. This is an absolutely catastrophic trend for the real estate industry.

#13 U.S. housing starts were down 11.2 percent in December compared to the previous month.

#14 Compared to a year earlier, home sales in southern California were down 17 percent in January.

#15 In December, home sales in Sacramento County fell a whopping 22.5 percent compared to a year earlier.

#16 Pending home sales in the United States have now fallen on a year over year basis for 13 months in a row .

#17 More than 166 billion dollars in student loan debt is now “seriously delinquent” . That is an all-time record.

#18 More than 7 million Americans are behind on their auto loan payments. That is also a new all-time record, and it is far higher than anything that we witnessed during the last recession.

None of this has kept individuals, companies and governments from ramping up debt levels. Leverage abounds, everywhere. Grant’s Interest rate Observer writes, “companies are tapping credit lines to compensate for shortfalls in cash flow.”

Defining a zombie company as one failing to generate cash flow to cover interest expense for three consecutive years, Grant’s points out that 128 companies in the S&P 1500, fit the description. The percentage of living dead has increased over the past 12 months, ending January 31st, from 12.4 percent of the broad index to 13.6 per cent.

Money manager Jeff Gundlach told Grant Williams on Real Vision ,

the economic data continues to deteriorate. And we're starting to see reversals and unemployment claims now rising on a four week moving average basis. We're starting to see earnings estimates collapsing, margin estimates collapsing, sales dropping. You see housing is negative, Surprise indices-- confidence is deteriorating. None of these things are at the alarm-bell recession, but they're getting fairly close.


Gundlach and Williams spoke about the 800 pound elephant in the room, the U.S. government’s off balance sheet obligations. “123 Trillion, six times GDP. If we wanted to fund our liabilities, the 123 trillion-- over the next 60 years, we'd have to put 10% of our GDP aside, from negative 7 today to plus 10,” Gundlach quipped.

After reflecting on investors buying AAA-rated mortgage-backed bonds back in 2005, believing they were playing it safe, Gundlach said,

Well, we have similar-- maybe not as egregious-- but it's an echo of a rating problem in the bond market right now, in the corporate bond market, where the corporate bond market has exploded in size. It's more than double where it was 10 or 12 years ago, and a lot of it is, I think, overrated. There was a report by Morgan Stanley Research that suggested that fully, fully 45% of parts of the corporate bond market would be rated junk right now, if you use leverage ratios alone. Now, they use more than leverage ratios.


There's other variables that go into rating. But the leverage ratio seems to be really important.

Right now the ratings agencies are buying what debt issuers are selling —a rosy future. But with recession clouds gathering, Gundlach figures,

there's not going to be any working towards a better place. And so all of those bonds potentially could be downgraded into a junk status. And as we all know, when a triple-B-rated corporate bond crosses the line into junk status, the price goes down. It doesn't go up. So you can find people that have poured into corporate bonds-- that includes corporate pension plans-- which thought that they had a clever idea of matching up their liabilities, which are discounted by the single-A long corporate rate, and so let's match them with assets that are corporate bonds, so they move together.

As I wrote a couple weeks ago, when debt turns to junk, ETFs and institutional holders will desperately be looking to sell at any price. “So will they sell?” Gundlach wonders rhetorically. “I think the answer is yes. And so if you have a misrated market, and it goes into a downgrade problem, you get tremendous forced selling. And that's what happened in '08 with the securitized market, and this time, I think it's the corporate bond market's turn.”

MacroMavens Stephanie Pomboy echos Gundlach’s view,

In 2007, the lie was that you could take a cornucopia of crap, package it together, & somehow make it AAA. This time, the lie is that you can take a bunch of bonds that trade by appointment, lump them together in an ETF, & magically make them liquid.

So, with this storm brewing, the Fed’s committee to save the world has started its roadshow.

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How Many Economists Still Get Subjective Value Wrong

03/14/2019Per Bylund

Subjective value is not objective. Sounds obvious, but the distinction is lost on most — scholars and practitioners alike.

People seem to think subjective value is simply a person's 'willingness to pay' a price. Well, it's not. Subjective value cannot be expressed in dollars and cents, because that would simply mean subjective value is an expression in terms of objective market purchasing power.

If value is subjective, however, that purchasing power too is subjectively valued, in terms of what subjective value it can provide (through the actual goods and services the money can purchase). And, in any market-like setting, willingness to give up purchasing power for a good only indicates that the person subjectively values that purchasing power (however it is appreciated by him/her) less than the value expected from the good that can be purchased.

Willingness to pay, expressed in the dollars and cents that in turn can command goods and services, only means the buyer expects to be better off from going through with the exchange. In terms of value theory, there may be no connection between the value of that which is forgone and that which is gained in return, other than them being valued differently (the former higher than the latter). 

Scholars should know better than to confuse these things, but they're obviously quite confused. 

Instead of thinking about the meaning of what they say, they adopt a practical shorthand used to get a dollar amount on a customer's valuation. This makes some sense from a practitioner's perspective, where a customer's willingness to pay for one's good is a rough estimate of what money price could potentially be charged for the good. 

It's not accurate, however, which is why entrepreneurship models suggest that entrepreneurs should make sure to charge a price lower than customer's stated willingness to pay (if it can at all be trusted). 

Also, the actual willingness to pay depends on offering the actual good along with the argument for why it would be valuable for the customer to have/buy it.

In a different time and place, and with different messaging, this 'willingness' changes both with how the good is subjectively appraised and with the other opportunities available to the customer. I might value a hamburger, but I value a hot dog more

Consequently, if there are hot dogs my willingness to pay for hamburgers is practically zero; if there are no hot dogs in sight, my willingness to pay for hamburgers may be significant. See how this works?

One's willingness to pay is not about the [subjective] value of the good itself (that is, the satisfaction experienced, or in any case expected), but is contingent on alternatives available. Practitioners who are careful can gain insights from willingness-to-pay estimations. But it is still a very blunt tool, since what actually matters is the subjective valuation of a good and the subjective valuation of alternative goods (the comparison/tradeoff). 

That scholars equate subjective valuation with objective money prices should be considered severe professional misconduct. For those who are in the business of thinking carefully about things, there is no place for conflating things. 

Or, as in this case, mistaking (interpreting, really) subjective value for being objective. This is inexcusable and should disqualify you from the academy.

Originally published on Twitter @PerBylund

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College Admissions Scandal: More Meddling by the Feds

03/13/2019Peter G. Klein

As with the federal investigation into college basketball recruiting, the college admissions scandal announced yesterday seems to fall into FBI jurisdiction only because of the overly broad mail and wire fraud statutes and federal racketeering laws — which make every tort or contract violation into a federal crime. Put differently, if rich parents bribed Yale or Stanford to take their kids, this is between those schools and their employees who took bribes, the kids and parents who lied on their applications, and possibly the other kids who attended (or were denied admission) around that time. Why is the US taxpayer funding this investigation?

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Bipartisan Attacks on the Second Amendment

03/12/2019Ron Paul

A nationwide system of gun registration could be a step toward national gun confiscation. However, antigun bureaucrats need not go that far to use the expanded background check system to abuse the rights of gun owners. Gun owners could find themselves subject to surveillance and even harassment, such as more intensive screening by the Transportation Security Administration, because they own “too many” firearms.

Republican control of the White House and the Senate does not mean our gun rights are safe. Republicans have a long history of supporting gun control. After the 1999 Columbine shooting, many Republicans, including many who campaigned as being pro-Second Amendment, eagerly cooperated with then-President Bill Clinton on gun control. Some supposedly pro-gun Republicans also tried to pass “compromise” gun control legislation after the Sandy Hook shooting.

Neoconservative Senator Marco Rubio has introduced legislation that uses tax dollars to bribe states to adopt red flag laws. Red flag laws allow government to violate an individual’s Second Amendment rights based on nothing more than a report that the individual could become violent. Red flag laws can allow an individual’s guns to be taken away without due process simply because an estranged spouse, angry neighbor, or disgruntled coworker tells police the individual threatened him or otherwise made him feel unsafe.

President Trump has joined Rubio in wanting the government to, in Trump’s words, “take the guns first, go through due process second.” During his confirmation hearing, President Trump’s new Attorney General William Barr expressed support for red flag laws. California Senator and leading gun control advocate Dianne Feinstein has expressed interest in working with Barr to deprive gun owners of due process. It would not be surprising to see left-wing authoritarians like Feinstein work with right-wing authoritarians like Barr and Rubio on “compromise” legislation containing both a national red flag law and expanded background checks.

My years in Congress taught me that few politicians can be counted on to protect our liberties. Most politicians must be pressured to stand up for freedom by informed and involved pro-liberty citizens That is why those of us who understand the benefits of liberty must remain vigilant against any attempt to erode respect for our rights, especially the right to defend ourselves against private crime and public tyranny.

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Jeff Deist Joins TV Azteca to Discuss Free Markets and Liberty

03/12/2019Jeff Deist

During a recent trip to Mexico City, Jeff Deist was able to join Sergio Sarmiento of TV Azteca's adn40 for a great discussion on the meaning of liberty and the power of markets.

The interview is available here.

The Mises  Institute  been excited to increase our reach in the Spanish speaking world in recent years thanks to trips like this, as well our growing library of Spanish-language translations available at Mises.org/es.

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Notes on Fed Chair Jerome Powell's 60 Minutes Non-Interview

03/12/2019Jeff Deist

Jerome Powell, Chairman of the Federal Reserve Board of Governors, appeared on the TV magazine 60 Minutes last night. If you're craving empty calories, watch it here. The whole interview was an exercise in banal pleasantries, not to mention deadly dull. It's what we've come to expect from Fed Chairs, nothing to see here, move along...

But financial twitter, including our friend Danielle DiMartino Booth, was not impressed:

Screenshot 2019-03-12 at 9.25.34 AM.png

Granted, this was 60 Minutes and not Bloomberg or the Wall Street Journal. It was a puffball interview. But is it too much to ask the man who holds tremendous sway over our financial well-being to give the American people a substantive primetime interview? Go back and listen to presidential debates thirty years ago, or old Firing Line shows. We weren't always subjected to dumbed down cartoon versions of policy issues. If Americans can't—or won't—understand the basics of central banking, we really do have bigger problems than unaccountable technocrats at the central bank.

A few notes:

First, it's apparent Mr. Powell has developed his own brand of non-speak. For all his talk of a more transparent Fed, he's still a lawyer who uses language carefully to the point of obfuscation. He's not as opaque and wordy as Alan Greenspan, who could issue forth for several minutes without saying anything comprehensible. He's not as stiff or suspicious as the always-guarded Ben Bernanke. No, Powell sounds more like Chance the Gardener in Being There: monotone assurances that "growth will be healthy," the U.S. economy is "in a good place," and the Fed must be "patient" when assessing interest rates. 

Second, reporters do a uniquely bad job covering the Fed. We don't know much about Scott Pelley at 60 Minutes, but his idea of a tough question was whether Trump had the power to fire a Fed Chair (he finally got Powell to squeak "No" after a bit of dissembling about legal consensus). Where were the questions about quantitative easing, the most radical monetary policy in human history? How about the Fed's enormous balance sheet, and whether in fact it will be unwound? Can money and credit simply be created without harm to the economy? Can the U.S. federal government continue to service its debt if interest rates rise into the historically average 5-10% range? Is inflation really as low as Chairman Powell claims, or do grocery shoppers know better? How about the moral hazards involved with reinflating equity and housing markets? Or why not just a homespun question about how elderly savers are expected to manage when money market and CD rates are below 3%? 

These are all simple, essential questions which would help Americans gain a sense of Mr. Powell's confidence in the big picture. 60 Minutes could have enjoyed a rare scoop, bringing the vital but critically under-examined topic of monetary policy to a big audience. But instead we got to hear Powell's views on the opioid crisis and immigration, and his soft murmurs about muted inflation. What a wasted opportunity.  

Finally, we've heard versions of the "cautiously optimistic" mantra so many times it begins to sound like a sedative. Alan Greenspan said it in the late 90's and then stocks blew up. Ben Bernanke saw nothing particularly untoward in U.S. housing markets in 2007. Janet Yellen believes we won't have another financial crisis "in our lifetimes" (she's in her 70s...). And now Jay Powell "sees no reason" the economy can't keep chugging along (even though he recently backpedaled on rate hikes and aggressively tapering the Fed's swollen balance sheet). And of course that's true until it isn't.

The lesson here is plain for all who will see it: booms and busts are engineered and created by central banks, not by some mysterious manifestations of markets themselves. They can be traced back to expansionary monetary policies in the past. in 2019 we're going on ten years of boom, one of the longest in American history. If things go south, as they did in 2008, the Fed has far fewer tools at its disposal—and the world has far more debt. As Professor Per Bylund reminds us, central bankers ought to spend more time learning what causes bubbles instead of scrambling to figure out what burst them after the fact.

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Bovard: Ethiopia Crash of Boeing 737 Max Might Be Latest Example of Backfiring Safety Efforts

03/12/2019James Bovard

Another Boeing 737 crashed Sunday in Ethiopia, killing all 157 aboard. This is the second crash of the new Boeing model Max 8 since October. Investigators have only begun sorting out this tragedy but some experts suggest that the plane’s automated safety software may have prevented the pilot from preventing the fatal plunge.

If software and sensors designed to prevent crashes actually increased the risk of catastrophe, then the Boeing accidents are another reminder that safety policies can have unintended fatal consequences.

Unfortunately, policymakers routinely ignore the unforeseen costs of well-intended safety efforts. For instance, the Transportation Security Administration, seeking to make air travel perfectly safe from terrorists in the months after 9/11, spawned airport checkpoint regimes that are so intrusive that many Americans choose to drive instead.  A Cornell University study estimated that TSA’s heavy-handed policies helped boost traffic fatalities by at least 1,200 additional deaths.

A Business Week analysis noted, “To make flying as dangerous as using a car, a four-plane disaster on the scale of 9/11 would have to occur every month, according to an analysis published in the American Scientist.…People switching from air to road transportation in the aftermath of the 9/11 attacks led to an increase of 242 driving fatalities per month — which means that a lot more people died on the roads as an indirect result of 9/11 than died from being on the planes that terrible day.”

Read the full article at USA Today

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