December 30, 2003

Inflation: The Grand Illusion

Sean Corrigan on the consequences of inflation:

Aside from that particular inefficacy of the inflationary cure, we also have to contend with the other difficulties to which inflation gives rise - among them the invalidation of already faulty entrepreneurial calculation, the disruption of many entrained production processes, and the implicit frustration of contracts between lenders and borrowers, and savers and investors.

Of even more immediate concern is this: While we know a new inflation will build its usual distortions under the veneer of a temporary prosperity (mostly localized among those favored to receive the first use of the new means of payment), we remember also Hayek's point that those dependent on the artificial stimulus of inflation for their continuance will become so addicted to it that they will sicken and die if that inflation slows or is redirected.

To date in this so-called "jobless recovery," US-driven inflation has, in fact, succeeded in leading to more labor being hired. However, to the collectivists' dismay, the new labor is largely in China, where the labor distribution is better adapted to US spenders' needs and where total relative labor costs are substantially lower than they are in the US.

In this, US consumers - sustaining their lifestyles not from sufficient production of exchange value, but by using borrowed money they have not earned - have been exhausting the fruits of others' labor via the consumption of present capital and the alienation of future income. Neither of these trends can be maintained indefinitely in real terms, though they can be monetarily disguised for long enough that the damage can become severe before it is fully recognized.

December 28, 2003

Profits without honor: part III

Thomas Sowell discusses the widespread ignorance of economics and its causes:

In a hugely complex world, there is no way for the average person -- or any person, for that matter -- to be knowledgeable about even half the things that affect their lives. Most of us are necessarily ignorant of many fields, from botany to brain surgery.

We can simply avoid discussing such things and we would not dream of working in those fields or advising those who do. But people who know nothing about economics often voice opinions on the subject nevertheless.

Misconceptions about profits are just one symptom of this lack of understanding of economics. Some people even think that policies based on their uninformed notions should be imposed by the government. But no one would dream of imposing uninformed policies on those engaged in botany or brain surgery.

However, we cannot opt out of economic issues. Every citizen and every official they elect has an affect on the economy. Our only options are to be informed or uninformed when making our choices in the economy or in the voting booth.

Unfortunately, those who are uninformed -- or, worse yet misinformed -- when it comes to economics include the intelligentsia, even when they have Ph.D.s in other fields.

Economics as a profession has some responsibility for this widespread lack of understanding. Highly sophisticated economic analysis can be found in courses on campuses where a majority of the students have no real understanding of something as elementary as supply and demand.

December 25, 2003

Why Christmas Should Be More Commercial

Leonard Peikoff's objectivist perspective on Christmas:

Christmas in America is an exuberant display of human ingenuity, capitalist productivity, and the enjoyment of life. Yet all of these are castigated as "materialistic"; the real meaning of the holiday, we are told, is assorted Nativity tales and altruist injunctions (e.g., love thy neighbor) that no one takes seriously.


All the best customs of Christmas, from carols to trees to spectacular decorations, have their root in pagan ideas and practices. These customs were greatly amplified by American culture, as the product of reason, science, business, worldliness, and egoism, i.e., the pursuit of happiness.
America's tragedy is that its intellectual leaders have typically tried to replace happiness with guilt by insisting that the spiritual meaning of Christmas is religion and self-sacrifice for Tiny Tim or his equivalent. But the spiritual must start with recognizing reality. Life requires reason, selfishness, capitalism; that is what Christmas should celebrate—and really, underneath all the pretense, that is what it does celebrate. It is time to take the Christ out of Christmas, and turn the holiday into a guiltlessly egoistic, pro-reason, this-worldly, commercial celebration.
Why capitalism's a staggering success
(via ibergus)

Interesting article by Denis Dutton:

There is something about capitalism. It is the most wildly successful set of economic arrangements known to history. It thrives on freedom and, indeed, promotes it.

It has done more to increase the standard of living for everyone than any other human device. Anyone doubting its staggering success has only to compare it to the dismal, blood-soaked failures of dictatorial socialism in the 20th century.

Yet capitalism does not inspire love. In most big cities you can generate a mob to trash the local McDonald's, but who would demonstrate in favour of capitalism? History seems to show that even if people think they like freedom and democracy, they are attracted to repressive but more exciting ideas of government.

Heroic military states from those of the Iliad to Napoleon to Hitler have celebrated conquest and prowess. It's a nifty way for any society to acquire wealth - just take it from other people. Systems of despotic kingship also attract in the ways they elevate a glorious dictator, with all the splendour of ceremony that attends royal despotisms. Despots get their wealth by stealing from their own people.

Capitalism is not nearly as sexy. Instead of glorifying conquest or pomp or deifying a leader, its chosen virtues are mundane and boring - thrift, self-reliance, cautious investment, politely serving customers, obeying the law and paying your debts.


Immanuel Kant once remarked that "from the crooked timber of humanity no truly straight thing can be made". Capitalism does not try to straighten the warped wood that we are but adjusts itself to us.

For people in search of a perfect world, that will always seem an unsatisfactory solution. For those who love freedom, it's not a bad thing at all.

December 22, 2003

Greed Makes the World Go 'Round

Radley Balko (The Agitator) on greed:

Perhaps there’s some truth to the axiom that was hammered home to us as kids each time the holidays rolled around -- "’tis better to give than to receive." But if we’re talking about bettering the human condition, it’s better to want than either to give or to receive.

Want and greed are why humanity today is freer, healthier and more comfortable than it’s ever been. Nearly every significant innovation, invention or improvement that man has so far come up with resulted from the innovator, the inventor or the improver’s desire to better his own condition, or, put differently, to get more stuff. It is greed and the want of stuff that drives us to work longer hours, to build better mousetraps, and to take the kinds of risks that shake up the marketplace, and move the whole system forward.

Today, biotech firms are figuring out ways to feed the world’s hungry by producing more food on less land with less water, less nutrients and less need for pesticides. If governments would get out of the way, they’ll probably succeed. But they won’t succeed because they’re good people selflessly working for free to eradicate world hunger; they’ll succeed because the scientists doing the research want the peer recognition, the place in history, and the acclaim and financial rewards that come with figuring out how to do something we already do better. They’ll succeed because the CEOs of those firms want the bonuses, clout, and approval of boards of directors that come with a company’s success.

December 21, 2003

Soros Doubts

According to Bob Novak:

In conversations with political friends, Soros confided he has become alarmed by Dean's recent performance and wonders whether the former Vermont governor is capable of defeating George W. Bush. In one such chat, Soros suggested he is interested in retired Gen. Wesley Clark.

Soros has made clear his visceral opposition to President Bush and his passionate desire to find somebody who can defeat him for a second term. The financier has pledged $10 million to America Coming Together (ACT) and $2.5 million to -- both anti-Bush organizations.

December 17, 2003

The Conservative Cookie Rebellion

Wendy McElroy on affirmative action, political correctness and the "Cookie Rebellion":

Want to buy a cookie? If you are a white male, that'll be $1; for white females, 75 cents; blacks, 25 cents. The price structure is the message.

Through Affirmative Action Bake Sales, conservative groups on campuses across America are satirically and peacefully spotlighting the injustice of AA programs that penalize or benefit students based solely on gender and race.


The sales are intended to spark discussion, not profits. They are in the same genre as guerrilla theater -- an effective counterculture tactic usually associated with the Left -- through which societal assumptions are challenged by acting out scenarios. To the amazed query, "Are you allowed to do this?" one cookie rebel responded, "Admissions officers do it every day." By shifting the context from university policy to baked goods, the assumptions of affirmative action policies are not only challenged as sexist and racist but also revealed as nonsense.

The cookie rebels are doing the one thing political correctness cannot bear: revealing its absurdity and laughing in its face. They are not merely speaking truth to power; they are chuckling at it.
Courts without law

Thomas Sowell attacks the judicial activism of the U.S. Supreme Court:

There is nothing in the Constitution of the United States which authorizes Congress to regulate what is said by whom, or under what conditions, in a political campaign. On the contrary, the Constitution says plainly, "Congress shall make no law" -- no law! -- "abridging the freedom of speech."

The merits or demerits of this particular law, restricting what you can say when, or how much money you can contribute to get your message out, are all beside the point. Just what part of "no law" don't the Supreme Court justices understand?

The sad -- indeed, tragic -- fact is that they understand completely. They just think that this legislation is a good idea and are not going to let the Constitution stand in their way.

Moreover, they know from experience that if they can snow us with huge amounts of pious rhetoric, saying the kinds of things that the mainstream media will echo, that their wilful exercise of power will go unchallenged. In short, the Constitution be damned, we're doing our own thing.

At least the people who engaged in wild west shootouts or lynch mob violence spared us the pretence that they were upholding the Constitution. Whatever horrors these lawless and murderous people might inflict at particular times and places, they never had the power to undermine the very basis of the government of the United States.

December 16, 2003

Free Europe

"Frankfurt, Bremen, Hamburg, Luebeck are large and brilliant, and their impact on the prosperity of Germany is incalculable. Yet, would they remain what they are if they were to lose their independence and be incorporated?"

- Johann Wolfgang von Goethe, Maximen und Reflexionen, 1828
The Nixonian strategy of Al Gore

A very interesting analysis of Gore's decision to endorse Howard Dean, by Pat Buchanan:

Should Dean win, Gore can probably have any position he wants, including secretary of state. Should Dean lose, Gore is positioned to inherit Dean's estate. Should Gore choose to contest the nomination in 2008 with Hillary, he will be running to her left for the nomination. And, as Dean has shown again, the liberal wing of the party is the nominating wing.

But what astonishes is the ruthlessness with which Gore moved, cutting the legs from under his friend and running mate Joe Lieberman. Lieberman had said he would not run in 2004 if Gore ran. Now, Gore has said Howard Dean is a better man for America than the friend he felt should be a heartbeat away from the presidency in 2000.

December 15, 2003

2 cheers for Mr. Blair?

Chirac blames Blair as EU constitution talks collapse

In private, Jacques Chirac, the French president, blamed Britain for not supporting the Franco-German position. Publicly, he indicated that a hard core or "pioneer group" of states would push ahead with European integration regardless of how the new members of the EU behaved.

"It will give an engine, it sets the example," said Mr Chirac. "I think it will allow Europe to go quicker, further, and to work better."

December 14, 2003


Highly recommended: Eursoc, a blog by European anti-EU dissidents.
Don't mention the superstate in Brussels

On the really important, but sadly neglected, issue in the European "constitutional" debate:

There is an elephant in the drawing room. As EU leaders work themselves up about voting weights, numbers of commissioners and other trifles, they are tip-toeing around the enormous fact that the document in front of them will transform the EU, de facto and de jure, into a single state. On the day the constitution enters into force, all previous treaties will be dissolved. The EU will cease to be an association of states bound together by international accords, and instead become a single polity, with its own jurisdiction, legal personality and constitution. It is the most important development in the EU's 47-year history, yet no one wants to discuss it.


This is surely no way to build a new state. Supporters of the EU constitution are fond of invoking the American precedent. Yet it is impossible to imagine the Philadelphia delegates ignoring the question of where the line should be drawn between the federal government and the member states. On the contrary, this was their main preoccupation, with the happy result that most powers were indeed reserved at state level. In the EU, the absence of such a debate has meant that the process "defaulted" to the ultra-centralist vision of the European Commission and Parliament. The result is a constitution that few of the governments much like, and that is further removed than ever from the people. That is Europe's tragedy; and, of course, Britain's, too.
Saddam Hussein Captured Alive Near Tikrit

Saddam was captured Saturday at 8:30 p.m. in a specially prepared "spider hole" in the cellar in the town of Adwar, 10 miles from Tikrit, Lt Col. Ricardo Sanchez said. The hole was six to eight feet deep, camouflaged with bricks and dirt and supplied with an air vent to allow long periods inside.

In the capital, radio stations played celebratory music, residents fired small arms in the air and others drove through the streets, shouting, "They got Saddam! They got Saddam!"


A Governing Council member, Jalal Talabani, told Iran's official news agency, IRNA, that Saddam's detention will bring stability to Iraq.

"With the arrest of Saddam, the source financing terrorists has been destroyed and terrorist attacks will come to an end. Now we can establish a durable stability and security in Iraq," Talabani was quoted as saying.

Even with Saddam captured, it remains to be seen whether a secure and stable Iraq can be established in the current conditions...
Toomey: "Federal spending is out of control"

The federal government is spending far too much money, Congressman Pat Toomey (R-Lehigh) told reporters at the State Capitol during a campaign stop in the mid-state today. Toomey, a conservative third-term U.S. House member, is seeking to unseat liberal Senator Arlen Specter (R-Philadelphia) in the Republican primary election next April.

"Congress must halt the massive expansion of government that has occurred over the past decade and begin the process of reigning in excessive spending," Toomey said. "With the federal government spiraling into deficits, now is the time for Congress to make the difficult decisions we have been putting off for too long."

December 13, 2003

Mel Gibson's Ultimate Hero Movie

An Art Historian's View of "The Passion", by Elizabeth Lev:

In "The Passion of the Christ," Gibson has made the ultimate hero movie. In the opening scene in the Garden of Gethsemane, we see Jesus suffering with the foreknowledge of his imminent passion, pleading to be spared this task. The eerie figure of Satan, who would be distressingly at home in an MTV video, softly tempts and dissuades. "No man can bear this burden," he whispers while Jesus lies prostrate, seemingly helpless on the ground. But Jesus lifts himself up, and with a decisive crack that makes the audience jump, he crushes the head of the serpent Satan has sent to tempt him.

Another classically heroic Gibson moment finds Christ on his knees, crippled under the weight of the cross. His mother runs to comfort him, whereupon he smiles bravely and promises, "See Mother, I make all things new." The camera follows him up as he again shoulders the cross and struggles forward with renewed vigor.

Spurious charges of anti-Semitism have upstaged more important debate regarding the religious and artistic value of this film. The intensity with which Gibson forces us to think about Christ's passion highlights the power of cinema as an art medium, as well as a tool for evangelization.

Personally, perhaps the sweetest note on seeing this movie was that my adolescent hero has become a hero in my adult life, showing courage and vision in professing his belief in Christ's salvific sacrifice against formidable odds. Hats off to Mel.

December 09, 2003

The Golden State, From Red to Black

Some very interesting proposals for fiscal responsability in this article by Donna Arduin, namely this Constitutional spending limit:

Constitutional spending limit. This will require that expenditures in fiscal year 2004-05 cannot exceed revenues. It will truly require the state to live within its means. For the 2005-06 fiscal year, spending growth over the preceding year will match inflation and population growth. This spending limit will also establish a Revenue Stabilization Fund, which will receive any general fund revenue that comes in above the spending limit. This "rainy day" fund could be used--with a two-thirds vote of the Legislature--for the following four purposes: repaying deficit bonds, tax rebates, emergencies declared by the governor, and transfers to the general fund when revenues fall below the spending limit in the future.

This spending limit will allow the governor to declare a fiscal emergency in the event that the director of finance determines that general fund expenditures are projected to either exceed available general fund revenues, or exceed the spending limit. Once a fiscal emergency is declared, the governor is then required to call a special session and submit legislation to reduce expenditures. The Legislature would then have 30 days to enact, by a two-thirds vote in each house, any different package of legislation. But in doing so, the Legislature must make a finding that its package also solves the spending problem identified in the declaration.

December 08, 2003

Massachusetts Supreme Court abolishes capitalism!

Ann Coulter writes about the Massachusetts Supreme Court decision requiring the state to allow gay marriages:

Last week, the Massachusetts Supreme Judicial Court discovered that the state constitution - written in 1780 - requires the state to allow gay marriages. The court gave the legislature six months to rewrite the law to comply with the heretofore unnoticed gay marriage provision in a 223-year-old constitution, leaving countless gay couples a scant six months to select a silverware pattern. Out of respect for my gay male readers, I'll resist the temptation to characterize this ruling as "shoving gay marriage down our throats."

The Massachusetts Constitution was written by John Adams, who was quite religious. It is the most explicitly Christian document since the New Testament, with lots of references to "the great Legislator of the universe." Adams certainly would have been astonished to discover that the constitution he wrote provided for gay marriage - though one can see how a reference to two men marrying might get lost among the minutiae about the common good and "duty of all men in society, publicly and at stated seasons, to worship the Supreme Being, the great Creator and Preserver of the universe."

The main lesson from the court's discovery of the hidden gay-marriage clause is that these judges are in the wrong job. If they can find a right to gay marriage in the Massachusetts Constitution - never before detected by any human being - we need to get them looking for Osama bin Laden. These guys can find anything!

And if we don't get Massachusetts judges out of the country soon, we could start reading headlines like: Mass. Supreme Court Abolishes Capitalism; Gives Legislature 6 months to Nationalize All Industry.
Honoring the rebel

Robert Novak on Rep. Mike Pence, CPAC and Bush's Medicare bill:

Rep. Mike Pence of Indiana, who led conservative rebels against President Bush's Medicare bill, will deliver the keynote address at the 2004 Conservative Political Action Conference (CPAC) in Washington -- an honor accorded to Bush stalwarts the past three years.

Vice President Dick Cheney delivered the keynote in 2003, then-Republican National Chairman Marc Racicot in 2002 and then-Republican National Chairman (and Governor of Virginia) Jim Gilmore in 2001. Next year, CPAC also will honor Pence and 24 other House Republicans who broke party ranks to vote no on Medicare.

A footnote: Eight of nine lobbyists who had confirmed contributions for a Pence fund-raiser canceled when the congressman opposed the president on Medicare. Pence instructed aides not to show him names of the canceled donors.

December 02, 2003

The Bush Betrayal

Washington Post article by David Boaz:

In 2000 George W. Bush campaigned across the country telling voters: "My opponent trusts government. I trust you."

Little wonder that some of his supporters are now wondering which candidate won that election.

Federal spending has increased by 23.7 percent since Bush took office. Education has been further federalized in the No Child Left Behind Act. Bush pulled out all the stops to get Republicans in Congress to create the biggest new entitlement program -- prescription drug coverage under Medicare -- in 40 years.

He pushed an energy bill that my colleague Jerry Taylor described as "three parts corporate welfare and one part cynical politics . . . a smorgasbord of handouts and subsidies for virtually every energy lobby in Washington."

It's a far cry from the less-government, "leave us alone" conservatism of Ronald Reagan.

December 01, 2003

The blogosphere: a kosmos

Interesting "hayekian" essay by Jonathan Wilde:

One of the biggest obstacles to overcome in convincing authoritarians about the benefits of a free society is their inability to accept the fact that order can can be an emergent property of individual action. For them, all facets of life have to have some sort of grand blueprint implemented by expert soverigns. The cannot conceive of the economy, culture, infrastructure, morality, or society itself as a bottom-up result of billions of autonomous individual actions. Yet, the blogosphere is a vivid example of how wrong they are.
Jobs Overseas? Another Attempt to Explain

Lew Rockwell once again debunks popular proteccionist arguments:

Now, is it a problem that American consumers (and businesses that import and sell TVs retail) have access to lower priced TVs than can be made in the US? Not at all. It is great for the buyers of TVs and it is great for the economy in general because this frees up capital and labor to be employed in better projects. To force the situation to be otherwise would imply sheer waste: deliberately raising the price of TVs by restricting supply or taxing non-US TVs. This is precisely the Bush administration policy, and it accomplishes nothing but destruction. It is only putting off the inevitable and taxing people in the process.

Then we come to the question of why it is possible to make TVs more cheaply in China than the US. It is a matter of the widening circles of the division of labor. China finds itself in a stage of economic development that allows it to specialize more and more in manufacturing at the expense of agriculture, even as the less developed nations are specializing more and more in agriculture. While this is taking place, more advanced nations are finding it economically advantageous to specialize in the production of goods and services that require more advanced labor skills and more capital expense.


Now, some people have been drawing attention to the supposed uniqueness of the current moment in international trade, in the following sense. US companies are not just foregoing certain production processes in order to allow them to be done by the Chinese. Instead, US firms are moving their plants to China, not to sell to the Chinese, but in order to re-import their products into the US to sell.

Is this a uniquely troubling situation? Again, not at all. US business owners have observed a profit opportunity and seized it. The alternative is that US business not notice the opportunity and let others get there first. This would hardly be something to celebrate. It is a testament to the acumen of US businessmen that they can go anywhere in the world, take advantage of local economic conditions and then sell to anyone else in the world. It so happens that American consumers are in a great position to buy the best products from everywhere in the world (so long as their government lets them). Thus do we see the end result of American capital producing for Americans in countries especially suited to host the process, while the US itself hosts ever more sophisticated production.


There is no surfeit of wonderful trends in our time, but the progress being made through global trade (progress at home and abroad) is certainly one of them. Leave it to government to try to rob us of the blessings of prosperity and peace that come from trade. And it is no different with trade than with every other area of life. We can permit the market to work or we can hobble it with taxes as it eventually gets its way in the long run. That is our choice. As Professor Shenoy would say, the free market is not perfect, but it is always better than the results that come from any attempt by government to make it better.