Liberty vs. Leviathan

Chronicling Liberty's battle against Leviathan

Your dollar

David Breuhan, money manager and author of Spread the Wealth, reminds us in “An Appeal to Reason” of the detriments and immorality of the inflation created by the policies of the Federal Reserve:

Since 1913, it has engaged in a deliberate policy of inflation- an expansion of the money supply that has resulted in precipitously rising prices. Inflation benefits debtors at the expense of creditors. It benefits those with market power who have the ability to increase prices without losing market share. Inflation destroys real capital and overstates profits. It encourages speculation and spending, at the expense of prudence and savings. Inflation discourages ownership and fosters renting, depriving people of private property and liberty. It hurts those on fixed incomes, especially the poor and middle class…

…There is no historical evidence that a nation which relies on the excess creation of money will benefit from long term prosperity. In actuality, the opposite occurs.

… and calls for Congressional action to

  • stop the Fed’s purchasing of Treasury debt
  • prohibit the Fed from setting interest rates
  • eliminate the Fed’s ability to implement inflationary policies

I have my doubts that this will occur but it would be a great first step that has been made more possible by the recent appointment of Ron Paul as Chairman of the Domestic Monetary Policy Subcommittee

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Confirmation

To all my pro-life, tea party, conservative friends:

If there’s any doubt that the GOP establishment takes your energy, concern and vote for granted, look no further than this SPIEGEL Interview with Karl Rove for confirmation.  He makes clear that pro-lifers and liberty minded conservatives are his lessers and fully expects them to be co-opted and to toe the party line.

SPIEGEL: Are you convinced, then, that the Republican Party will be able to integrate the Tea Party without drifting too far to the right?

Rove: Sure. There have been movements like this before — the Civil Rights movement, the anti-war movement, the pro-life movement, the Second Amendment rights movement. All of them popped up, insistent, loud, and relatively unsophisticated. They wanted everything now and for politicians to be with them 100 percent of the time. And after an election or two, people wake up saying, our system produces mostly incremental progress and takes time and compromise. That’s exactly what’s going to happen here. I meet a lot of Tea Partiers as I go around the country, and they are amazing people. Most have never been involved in politics before. This is their first experience, and they have the enthusiasm of people who have never done it before.

SPIEGEL: Is the Tea Party movement a repeat of the Reagan Revolution?

Rove: It’s a little bit different because the Reagan Revolution was driven a lot by the persona of one man, Ronald Reagan, who had an optimistic and sunny view of what the nation could be. It was also a well-organized, coherent, ideologically motivated and conservative revolution. If you look underneath the surface of the Tea Party movement, on the other hand, you will find that it is not sophisticated. It’s not like these people have read the economist Friedrich August von Hayek. Rather, these are people who are deeply concerned about what they see happening to their country, particularly when it comes to spending, deficits, debt and health care.  (Emphasis added.)

Mr. Rove needs to know that people have and still do read Hayek.  Proving you don’t have to be “sophisticated” to appreciate Hayek, it was my first reading of The Road to Serfdom fifteen years ago that opened my eyes to the true nature of politics and, as Walter Williams said about Bastiat, “created order in my thinking about liberty”.  Reading Bastiat‘s The Law brought even more clarity.

To echo Taking Hayek Seriously, Rove is the first person I’ve ever heard to refer to Hayek as Freidrich August von Hayek. Maybe it’s Rove who has never read him.

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Recent Read: Where Keynes Went Wrong

Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Busts, Hunter Lewis

A well done and much needed book. Some reviewers have noted the unconventional layout, and it is, but there’s a method to the madness. Keynes’s General Theory is a difficult read and very disorganized. In his The Failure of the ‘New Economics, Hazlitt critiques Keynes line by line. Lewis on the other hand critiques Keynes by topic. To do so he pulls excerpts from various sections and weaves them into a thread of thought, not an easy task given the material he has to work with but he does an excellent job.

In addition to the tenets of Keynes, Lewis also offers chapters of digression that 1) provide case studies demonstrating how Keynesian economics feeds the growth of government and 2) delve into Keynes’s personal lifestyle and philosophy.

Overall, an excellent explanation and critique of Keynes for anyone wanting to be more familiar with the economic school of thought that’s destroying both the American and global economies.

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Recent Read: RGD

The Return of The Great Depression, Vox Day

This is a book for anyone and everyone wanting to make sense of the economic turmoil of the last two years. At the outset, Day very clearly states that his purpose…

…is merely to consider how, after more than 200 years of refining the science of political economy, we arrived in the present situation, and to reflect upon where we are likely to go next. My hope is that it will provide you, the reader, with a rational context that will help you make more informed decisions as you face the difficult challenges that lie ahead. It will also help you put the economic news reported by the financial media in a more historical perspective.

On each point – how we got here, where we’re going, a rational context and a historical perspective – Day delivers; offering a penetrating analysis of three of the most reported, yet inaccurate, economic statistics (GDP, inflation and unemployment), a devastating critique of Keynesian and Monetarist thought, a clear and concise explanation of the Austrian school and its business cycle theory; then ties it all together in a sobering forecast for the future.

As for his conclusions, frankly, I hope he’s wrong.  Unfortunately, I think he’s right.

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End the Fed

I’m thoroughly enjoying my read of The Return of The Great Depression, authored by Vox Day.  I won’t venture a review yet since I’m not done but it’s safe to say, it’s very well done.  Here’s a bit from a section on the Beast from the Sea, the Federal Reserve.

What the theoretical economists and the practical financiers alike have failed to take into account is that the impossibility of socialist calculation applies to the price of money as well as to the prices of goods and services.  A central banker has no more ability to correctly ascertain the intersection of the collective supply and demand curves for money in a modern economy than the historical communist planner was able to calculate the correct number of shoes required in the now-defunct socialist economies.  The significant point is not that the Federal Reserve’s inability to enforce its target price of money or control the size of the money supply, but its inability to know independent valuations of money set on a dynamic basis by its various buyers and sellers according to their momentary needs.  Lacking this godlike knowledge, its actions will inevitably be incorrect no matter what it does, which necessarily casts serious doubt on the utility of the concept of central banking.

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Spread the Wealth

A new twist on a chilling phrase.

Last night I had the good fortune to attend a book launch for a new book entitled Spread the Wealth, authored by Mr. David R. Breuhan (The title is ingenious, sure to attract many of today’s coercive spreaders and spreadees).  I’ll have more details on the event later.  In the meantime, peruse the site and pick up the book.  Mr. Breuhan offers a prescription for our economic ills.  And you’re part of the medical team.

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Frédéric Bastiat

Sophism is not a word often read or heard by the eyes and ears of the twenty-first century. It is a word, however, we would do well to become more familiar with. At its root lies wisdom, but the Sophists of the fifth century BC damaged that root for all time; so that rather than relating to wisdom, it is now used to indicate a “plausible but fallacious argument”. It is this fallacious meaning that Frédéric Bastiat had in mind when he titled his collection of essays Economic Sophisms (pdf version here). And while the term in modern use can also indicate an intention to deceive, Bastiat mostly thought the best of his intellectual opponents and assumed that they were not the authors, but rather, the victims and unwitting propagators of the deceit inherent in economic fallacies.

Sophisms, praised as the “…best literary defense of free trade available…” is a collection of two different series of essays defending free trade against the economic fallacies of mid nineteenth century France. In the First Series, a collection of twenty-three essays first published together in 1845, Bastiat examines free trade from many different perspectives employing a variety of writing styles. Most of the essays are written in a conversational prose with an occasional one being satire or story. The Second Series of seventeen essays was originally published in 1848. In terms of style this series differs from the first in that over half of the essays are stories, dialogues or satire with only a few being written in prose.

On the first read, the essays in Sophisms may appear to be repetitious. Even Bastiat admits as much when he says that repetition, “…the inherent defect of this little work…” is also “…its principal utility.” There is, in fact, much repetition, but it is intentional.  Bastiat is following the advice of Jean-Baptiste Say, who was a major influence on his economic formation. In his Introduction to A Treatise on Political Economy, Say states:

To obtain a knowledge of the truth, it is not then so necessary to be acquainted with a great number of facts, as with such as are essential, and have a direct and immediate influence; and, above all, to examine them under all their aspects, to be enabled to deduce from them just conclusions, and be assured that the consequences ascribed to them do not in reality proceed from other causes. [Emphasis added]

And indeed, Bastiat does examine the facts under all aspects. In every case, whether the satirical petition to the king to have the right hand of all his subjects cut off or the passionate warning of the perversion of the meaning of words, Bastiat examines the facts of protectionist economic policies and exposes the fallacies upon which the policies are built. In each case he follows more of Say’s advice to “…discover the chain which binds them [facts] together, and always, from observation, establish the existence of the two links at their point of connexion (sic).” In his own Introduction Bastiat echoes Say with an explanation of the complexities of mounting a defense against the simple half-truths of his opponents:

… we cannot limit ourselves to the consideration of a single cause and its immediate effect. We know that this effect itself becomes in its turn a cause. In order to pass judgment on a measure, we must, then, trace it through the whole chain of its effects to its final result. In other words, we are reduced, quite frankly, to an appeal to reason.

Thus his reasons for repetition.

Free trade is the obvious theme of the Sophisms, but it’s addressed through many different fallacies. Some of the fallacies include, imports destroy the country’s wealth; high prices increase the country’s wealth; a favorable balance of trade increases wealth; general welfare is incompatible with justice and peace; economics is based on theory, not real life, and more. His most famous essay in Sophisms, “A Petition”, is a fictitious request for a law to forbid sunlight indoors. To do so would increase jobs and industry including whaling, shipping, agriculture, manufacturing and more. Not a Frenchman would miss out on the prosperity. Of course, the request is absurd, but, as in many of the essays, he uses the absurdity to point out the harm brought to consumers in order to create or protect jobs and industry.

And it is the role of the consumer that is Bastiat’s main point through and through. His mission is to show the reader the many and varied ways that the sophisms bring him harm:

In regard to the question that I have been dealing with, each sophism doubtless has its own phraseology and its particular meaning, but all have a common root: the disregard of men’s interests in their capacity as consumers. To show that this sophism is the starting point for a thousand roads to error is to teach the public to recognize it, to understand it, and to mistrust it under all circumstances.

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Bastiat’s Rebuttal

Besides being a prolific writer on economics, Frédéric Bastiat was also a nineteenth century legislator in France and had experience dealing with situations similar to our own current state of affairs.  From The Law (L.216 – 220)

The claims of these organizers of humanity raise another question which I have often asked them and which, so far as I know, they have never answered: If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? The organizers maintain that society, when left undirected, rushes headlong to its inevitable destruction because the instincts of the people are so perverse. The legislators claim to stop this suicidal course and to give it a saner direction. Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority.

They would be the shepherds over us, their sheep. Certainly such an arrangement presupposes that they are naturally superior to the rest of us. And certainly we are fully justified in demanding from the legislators and organizers proof of this natural superiority.

Please understand that I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law—by force—and to compel us to pay for them with our taxes.

I do not insist that the supporters of these various social schools of thought—the Proudhonists, the Cabetists, the Fourierists, the Universitarists, and the Protectionists—renounce their various ideas. I insist only that they renounce this one idea that they have in common: They need only to give up the idea of forcing us to acquiesce to their groups and series, their socialized projects, their free-credit banks, their Graeco-Roman concept of morality, and their commercial regulations. I ask only that we be permitted to decide upon these plans for ourselves; that we not be forced to accept them, directly or indirectly, if we find them to be contrary to our best interests or repugnant to our consciences.

But these organizers desire access to the tax funds and to the power of the law in order to carry out their plans. In addition to being oppressive and unjust, this desire also implies the fatal supposition that the organizer is infallible and mankind is incompetent. But, again, if persons are incompetent to judge for themselves, then why all this talk about universal suffrage?

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Quote of the day

From MarkkuKoponen, commenting on Vox Day‘s blog, Vox Popoli:

My father seems to think that being angry at government for its incompetence is similar to being angry at bacteria for causing disease.

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Man (Bastiat) on the Street

From a recent Wall Street Journal article, “Is ‘Friending in Your Future?’ Better Pay Your Taxes First”, we learn that tax authorities are starting to use MySpace, Facebook and other social networks to track down those who have managed to hide some of their income from authorities.  No surprise really.  What caught my attention was in the comments.  Michael Yu seems to think like Vice President Joe “we want to take money” Biden, that paying taxes is some sort of patriotic duty.  Echoing the principles found in Frédéric Bastiat‘s The Law, Brian Drake counters, seeing today’s tax system for what it is – theft:

How is that [paying taxes is] any different than me and a friend mugging you on the street, and then when you protest, we take a vote among the 3 of us to determine by democratic principles whether we can rob you or not?

If it’s wrong for one person to steal from another, then it’s wrong for 2 men to steal. It’s also wrong for 10 men to steal from one. It’s also wrong for 299,999,999 men to steal from one man. Democracy doesn’t change truth. Taxation is theft and theft is wrong.

Here’s a straightforward passage from The Law (L64 – L67):

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law—which may be an isolated case—is not abolished immediately, it will spread, multiply, and develop into a system.

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.

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