Great New Lew Rockwell Interview

Great New Lew Rockwell Interview

09/13/2018Ryan McMaken

I've been following Lew Rockwell's work pretty closely for more than 15 years, but there's a lot of good stuff I haven't heard before in this new interview between Tom Woods and Lew. He goes a little more deeply into some of his work with Ron Paul in Congress, and Lew apparently has a new book coming out soon, called Against the Left.

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The Standing Army: A Threat to Peace

7 hours agoAndrew Kern

What, sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty. …Whenever Governments mean to invade the rights and liberties of the people, they always attempt to destroy the militia, in order to raise an army upon their ruins. —Elbridge Gerry, Fifth Vice President of the United States

All too often, government-produced defense is discussed as an ideal — a force that protects people and their rights. Seldom does reality enter the picture. Standing armies, after all, often do not only practice defense.

Once established, a government’s military, its bureaucrats and leaders, as well as laymen all face a different set of incentives. Those with a job related to the military have an incentive to keep their job. In most cases, they probably also desire to see the scope of their power expanded and their pay increased. The support for war then, is the ideal policy for achieving those goals. These incentives may not transform a champion of peace into a war-loving bureaucrat, but they can have effects on the margins. It’s much easier to rationalize a war if your job depends on it.

Changes on the Ground

More interestingly, the average citizen’s incentives change. To see what I mean, let’s take a look at the introduction of the permanent standing army in 19th century America.

Prior to the rise of the U.S. standing army, relations between natives and white settlers were relatively peaceful. It’s not that white settlers always felt warm feelings toward native Americans (or vice versa). Many did not. The reality of fighting one’s own battles, however, entailed significant costs. In an essay entitled " Exchange, Sovereignty, and Indian-Anglo Relations," Jennifer Roback remarks: "Europeans generally acknowledged that the Indians retained possessory rights to their lands. More important, the English recognized the advantage of being on friendly terms with the Indians. Trade with the Indians, especially the fur trade, was profitable. War was costly" “More than is generally appreciated, the contact (between Indians and whites) was even friendly, or at least peaceful.”

Subsidizing War

After the US maintained a permanent army, however, things changed. Most of the disincentives for war disappeared. The monetary costs that maintained the army were spread out over the entire populace and those who demanded the army’s services paid no additional price. Nor did they now need to risk their own life. Frontiersmen could now call upon subsidized troops to do their fighting for them. This had the effect of lowering the threshold for when settlers could justify resorting to violence against their Indian neighbors.

"In Raid or Trade? An Economic Model of Indian-White Relations," the authors accounted for a number of possible contributing factors, such as population change and newly settled land, and concluded the establishment of a standing army during the Mexican War had an independent effect of an increase of almost 12 battles a year. They estimated the buildup of the standing army before and during the Civil War caused an increase of around 25 battles a year.

attles-treaties.jpg

As the quote at the beginning of this piece indicates, the Founding Fathers feared a standing army, and for good reason. While its ideal purpose is to create peace, we do not live in a world of ideals. The actual effects are to lower the costs of war to those who would have it, and to create a special-interest group of bureaucrats and military personnel who have a vested interest in advancing the war machine. As long as the army stands, peace is unlikely to be achieved or long-lasting.

Republished from Antiwar.com with permission of the author.

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Economics is the Most Important Science for the Layman

06/19/2019Gor Mkrtchian

Of all the natural and social sciences, economics1 is the most crucial for the intelligent laity. This is because economic understanding among the public makes the difference between barbarism and a healthy society. While the other sciences are important, they only require a small minority of specialists with a deep understanding of those topics for the fruits of those disciplines to spread throughout society. But good public policy frequently depends on a sound understanding of economics, and thus depends on the public's understanding of it.

When passengers are sitting in coach, flying from the Bahamas to New York, it doesn’t matter whether any of them understand the laws of aerodynamics, or anything about the mechanical engineering of the plane they’re flying in. The successful operation of the plane goes on, so long as a small, specialized group of people understand. When millions of people take their medicine every night, it doesn’t matter whether they understand the chemistry underlying their pills and syrups, so long as a relatively small number of chemists who produced the medicine knew what they were doing. A cruise ship does not get lost at sea on the way to, say, Alaska, based upon the sailing expertise of those playing laser tag on its deck, if the captain and his crew know what they’re doing. A country, on the other hand, is a boat that only floats if those inside it understand how to operate it successfully.

Even a Non-Voting Majority Affects Policy

Accepting the key role of the economic system on a society’s wellbeing, it’s straightforward why representative republics or other forms of democratic government with populations that favor free markets have free markets, and those with populations that favor interventionism have interventionism. Politicians seek election, and if voters en masse really demand certain policies, politicians will pursue those policies. But why should non-democratic states care at all what their populations think? Doesn’t the dictatorship have all of the guns? Can’t they let the people pointlessly pass around their issues of The Austrian while the overlords continue about their business, undisturbed behind their battalions? As Mises stated in Human Action:

In the end the philosophy of the majority prevails. In the long run there cannot be any such thing as an unpopular system of government. The difference between democracy and despotism does not affect the final outcome. It refers only to the method by which the adjustment of the system of government to the ideology held by public opinion is brought about. Unpopular autocrats can only be dethroned by revolutionary upheavals, while unpopular democratic rulers are peacefully ousted in the next election.2

Emphasizing the strength of public opinion in the face of the state’s military might, Dr. Robert Murphy explains:

And if you think that’s naïve, well then if you were right, that means the most totalitarian states where the leader can just have somebody disappeared at night . . . then there they should have free and open internet access, they can let the schools teach whatever they want . . . if anyone gets out of line they just kill them. But no, it’s precisely in those totalitarian societies where they can just kill people at will where they want the most strict control over information.3

Indeed, in virtually every case, the most militarized and totalitarians states, those most willing to use force against their own people, are those most concerned with controlling the education, speech, and thought of their subjects. The reasoning behind such efforts is clear in light of two facts. First, the people are many and the state is few. Second, the constituent agents of the state itself, including members of the police and military, are not immune to infection by dissent, and can come to support regime change. Inverted pyramids of force are built upon the base of opinion. Even if, as Lenin said, one man with a gun can control one hundred without one, opinion can make that one man turn around onto his masters.

In some significant ways, dictatorships and monarchies face even stronger popular opinion constraints than democracies do. While elected officials are typically voted out of office in one piece, strongmen and their loved ones often face grotesque deaths when ousted. Additionally, the understanding among the public that democratic politicians can be voted out peacefully every few years can breed patience until the next election, whereas subjects of strongmen know change won’t come unless and until people take action. Thus, dictators have more personally at stake in the battle over popular opinion than do democratic politicians, and do not have the hope of periodic peaceful regime change to allay unrest among the masses.

Of all of the natural and social sciences, it’s most important that the intelligent layperson have a solid hold of economics, because their understanding of economics will shape the operation of the most powerful organization in every country in the world: the state. “The flowering of human society depends on two factors: the intellectual power of outstanding men to conceive sound social and economic theories, and the ability of these or other men to make these ideologies palatable to the majority.”4

  • 1. Humanities such as theology, philosophy, and history are not included in this claim.
  • 2. Ludwig von Mises, Human Action, The Scholar’s Edition, p. 859.
  • 3. Robert P. Murphy, “Economics of the Stateless Society,” misesmedia, July 28, 2016.
  • 4. Mises, Human Action, p. 860.
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After Draghi, Europe Needs a Hawk To Head the ECB

On November 1, Mario Draghi’s tenure as governorof the European Central Bank (ECB) will expire, and the European Council will appoint a successor for the role. Moreover, it is now known that northern European countries are pushing for replacing Mr. Draghi — widely recognized as a “dove” — with a “hawk” — less accommodating toward the loose monetary policy being demanded by southern European states.  Most especially, Italy.

On the other hand, there are plenty of economic considerations — besides the historical and political ones blaming the alleged excessive (but totally sensible and legitimate) German fear of hyperinflation — which support the northern European preference for a less accommodating governor, and a tighter monetary-policy stance. Let’s look at three of them, which are the most prominent amongst several others:

One: From March 2015 onwards, the Quantitative Easing program (QE, officially known al the Asset Purchasing Programme, APP) implemented by the ECB has been distorting the relative prices of European private and public bonds, delivering a perfect textbook-case of how Cantillon-effects distort the economy. Indeed, for instance, the current difference between the yield of American 10-year government bonds and Italian ones is much lower than the same difference between German 10-year government bonds and American ones, in spite of the total absence of macroeconomic fundamentals to account for this fact. Moreover, as figure 1 and 2 show, the Asset Purchasing Programme has been highly biased towards its public-sector branch (PSPP, Public Sector Purchasing Programme, painted in blue). This also distorts the relative prices of private and public securities, and brings about a crowding-out effect damaging private investments;

ferr1.png

 

Two: From a historical and political perspective, Italy has been blatantly breaching the deals — i.e., the 1992 Maastricht treaty and the 1997 Amsterdam treaty — requiring limits of its public debt over a GDP ratio to the 60% level. In practice, this has reached a historical post-war peak of more than 132%. Hence, it is evident that Italy has been only reaping the benefits stemming from European integration. This includes lower public expenditure for debt-interests (from 12.2% in 1993 to 3.7% in 2018), monetary stability, low inflation, and commercial integration. Of course, northern states are no longer willing to let Italy have everything it wants, and are perfectly aware that Italy has been the country gaining the most in terms of lower interest on its public debt brought about by Mr. Draghi’s monetary policies;

ferr2.png

Three: The central bank has been claiming these inflations are “justified” by the alleged empirical evidence entailed by the Phillips-curve. The central bankers have been lamenting excessively low inflation within the Eurozone, and Mr. Draghi has expanded the Eurozone’s monetary base up to a level equal to 28% (3.217-trillion euros) of its GDP. Meanwhile, the American monetary base has been reduced to a level lower than 17% of American GDP. This, combined with a stable — even though low — growth in the Eurozone, with a macroeconomic outlook close to its full potential (even Italy, the weakest of all European economies, is predicted to have an output gap equal to -0.3% of GDP in 2019 and -0.1% of GDP in 2020, thus practically reaching its full potential output) and the fear of an economic slow-down caused by trade-wars, has convinced north-European politicians that the current monetary-policy stance is no longer what Eurozone — as a whole — needs. (Even Italy, the weakest of all European economies, is predicted to have an output gap equal to -0.3% of GDP in 2019 and -0.1% of GDP in 2020, thus practically reaching its full potential output.)

Lastly — and subsuming the three aforementioned bullet-points — a “hawkish” ECB-governor would be also in the interest of Italy itself. After all, Mr. Draghi’s monetary-policy stance has allowed Italian governments to keep implementing unsustainable fiscal policies without sustaining the associated economical and political costs, such as higher public expenditures for debt-interests and lower bank-lending. The latter is being caused by the huge exposure of Italian commercial banks to Italian sovereign risk.

Ultimately, northern-European savers, the stability of the monetary union and — especially — Italy itself do not need a lovely, charitable and “dovish” mother at the central bank. We need, rather, a stark, strict and “hawkish” tutor.

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Why Private Roads Would Have Fewer Traffic Jams

06/18/2019Gor Mkrtchian

The regular occurrence of traffic jams in major cities is not an immutable fact of urban life. Private roads show us the path out.

A shortage occurs when the price of a scarce good is set below the market-clearing price.1 If the state monopolized milk production, produced a fixed quantity of milk every year, set the price of milk at zero, and distributed it on a first-come first-serve basis, the result would be an anarchic rush to attain as much milk as possible, without consideration for the milk needs of others. A shortage would occur.

The state, for almost all of the highways and streets it controls, has set the price of this essential, scarce good at zero. Traffic jams are a manifestation of shortages in the road supply. Treating a good of which there exists a finite supply as though it existed in infinite abundance (had a price of zero) is incongruent with reality, and we should expect it to cause problems.

Congestion Pricing

If prices were allowed to adjust to demand, the price of using a given highway would increase when more people want to use it and decrease when fewer people want to use it.2 The result would be that people would think twice before driving at a costly time. Those who needed most to use the highway at a time of high demand would be willing to pay the price,3 while those who were willing to wait would adjust their behavior on the margin. When demand and hence prices for roads are highest, more people would go to the close bowling alley instead of the far away movie theatre, the closer restaurant instead of the farther one, or do something at home instead of going for a drive. They would be more cautious to schedule their errands before or after peak hours, instead of during them. As a result, the number of cars driving during peak hours would be reduced, mitigating traffic jams.

Employers would also react to priced roads by altering their employees’ hours. Employers would seek to schedule their workers’ shifts such that their commutes are during cheaper, lower demand hours, lest the employer need to pay higher salaries to offset the inconvenience of more expensive, slower commutes to attract employees of the same quality. The result would be more staggered commute schedules, such that fewer people are driving to or from work at any given time, reducing traffic.

Some businesses like restaurants and movie theaters would not react much, because:

Most restaurants, for example, are busiest during breakfast, lunch, and dinner time, and perhaps, in some cases, after show closings, for late-night meals. In other words, restaurants suffer from congested traffic, a peak load problem, during these times. But, were a restaurant management seriously to propose that its customers stagger their meal times ‘in order to reduce and spread out the rush hour peaks,’ it would be laughed right out of business in a trice. Its competitors would have a field day.4

However, other businesses would be more capable of beginning their employees’ shifts a few hours earlier or later than the bulk of other employers:

. . . if a price reduction is offered for off-peak travel, all employers will be tempted to accede to the wishes of their employees for cheaper travel. The ones who actually give in and reschedule their work forces will tend to be the ones whose employees’ productivity is increased to the least degree by working the same hours as the general labor force.5

The result would be social coordination of road use. Those industries which least need their employees working at a particular time would most strongly react to road prices by scheduling shifts to provide the cheapest commutes. If omnipotent, caring Martians were to dictate to every industry when their employees’ shifts should begin to both maximize workplace productivity and minimize traffic, the result would be the same as under a system of private roads.

Not only would the currently existing roads be rationed according to prices instead of the current free-for-all, the ability to make money from providing roads would lead to the widening of existing roads and the creation of new roads altogether when demand points to new profits to capture, “Privately-owned roads and bridges would have tolls set by supply and demand, just like prices are set in any other market. Infrastructure in need of repair or expansion would get it, whereas wasteful boondoggles would be minimized with private money on the line.”6

Likewise, road owners hoping to lure potential customers to choose their routes instead of rival routes (intra-market competition) or to use their routes more often instead of staying at home and driving less altogether (inter-market competition) would wish to make their roads as safe, uncongested, and attractive as possible. This means wherever currently there is a stop-sign that should be a yield sign, a 45 MPH speed limit that should be a 65 MPH speed limit, a traditional intersection that should be a roundabout, or any other change in road design and rules, private road owners would be driven by self-interest to adjust in order to maximize safety and traffic flow.

Contrast this with the current system under which certain government run intersections are infamous for being dangerous and accident prone. Why do political actors allow these preventable series of tragedies to persist rather than adjusting the designs and/or rules of those intersections? The overseers of government run roads are chosen democratically, rather than by the market. Whereas the private owner of a road bears direct legal and financial responsibility for its safety, mayoral, gubernatorial, and presidential elections, occurring once every four years, seldom depend upon the candidates’ positions on individual intersections or roads:

The dollar vote occurs every day, the ballot box vote only every two or four years. The former may be applied narrowly, to a single product (e.g., the Edsel) while the latter is a ‘package deal,’ an all or none proposition for one candidate or the other. That is, there was no way to register approval of Bush’s policies in areas 1, 3, 5 and 7, and for Clinton in 2, 4, 6, and 8. People were limited to choosing one or the other in the last presidential election.7

Mayor Jones and Governor Smith may go through their entire election campaigns and reigns without giving a thought to death-trap intersections under their jurisdictions that could stop killing people if only some signs or speed-bumps were added. With privatization, each road would have a special caretaker, an owner, whose livelihood and freedom depended on the quality and safety of their product.

Road privatization launches a triple-attack on traffic. First, prices for road use allow coordination in when and how much travelers use particular roads. Second, the road supply is increased through construction of new roads and expansion of existing roads. Third, entrepreneurs seeking to improve their services would optimize the designs and rules of their roads. In severe traffic, how often have our thoughts turned to state-enforced population control, when we just needed to know that keeping the price of a scarce good at zero causes shortages?

  • 1. The market-clearing price is the price at which there is a willing and able buyer for every unit of a good produced, and visa-versa.
  • 2. Uber’s surge pricing works similarly.
  • 3. If roads were privately provided, the state would no longer need to collect taxes to finance roads, and so society could use the money saved in taxes to pay for tolls, or anything else.
  • 4. Walter Block, The Privatization of Roads and Highways, Ludwig von Mises Institute, 2009, p. 60.
  • 5. Ibid., pp. 60-61.
  • 6. Robert P. Murphy, “A Gas Tax Hike is the Wrong Way to Fund Highways,” Mises Wire, 2018.
  • 7. Walter Block, The Privatization of Roads and Highways, Ludwig von Mises Institute, 2009, p. 196.
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How Not To Use Percentages In a News Story

06/18/2019Joakim Book

Using numbers to describe the world is fraught with peril. The problem is not that you can prove anything with statistics (you can’t) or the Mark Twain quip equating statistics with lies, but rather that numbers unaccompanied by correct reference points tend to be very misleading. Hayek’s famous quote where aggregates conceal is merely a subsection of this larger mistake; to report one number (an average, a percentage, a growth statistics) when the correct or more fully elaborated story includes that number in combination with other numbers, is the major concern.

In politics (and the media tasked with covering it), the stakes to portraying numbers in one’s own favor are very high and so we see this mistake all the time. Let me address what may be the most common one: failing to divide by the correct denominator – disguised by the frequent and careless use of percentages.

Normally, claims expressed in percent such as “87.2% of American households have a computer” have straightforward meanings; the word ‘percent’ literally means “by the hundred.” If there were 100 American households, we would know that about 87 of them have a computer. Our brains correctly read “almost all American households”, since 87.2 is the vast majority of 100. If we have some additional information about the number of households (119 million) we can quickly establish that some 104 million households have a computer; the remaining 12.8% (around 15 million or so) don’t, which we know since the groups are mutually exclusive (either your household has a computer or it doesn’t) and that percentages sum to a hundred (87.2+12.8=100). Easy.

Dealing with non-negative numbers such as car-owners, votes, revenues or incomes like this is rarely a problem, and percentages are ideally suited to perform that task; they don’t require the reader to have detailed information about the number of households in order to gauge the meaning of the 87.2% digit. Numbers reported in percent give us a natural reference point: households with computers divided by all households.

This quickly changes when the subset of numbers you’re describing may include negative numbers, such as net job creation or income growth. Since those numbers can occasionally turn negative for even large subsections of a population, the meaning of “percent” is completely lost. The intuition is this: when you include negative numbers in a sample, and take a percentage based on some remaining (positive) number, individual percentages easily sum to more than a hundred.

Here’s an illustration of a hypothetical economy of three people (A, B, and C), whose combined earnings in the first year is $300 (distributed as $50 for A, $100 for B, and $150 for C). In year two, A increased his income to $70 (a 40% increase), B only earned $80 (a 20% reduction) and C’s income went from $150 to $180 (a 20% increase). The total growth of income in our economy was 10% (A+B+C equaled $300 in year one, A+B+C equaled $330 in year two), for a total income gain of $30. If we divide A’s income gain ($20) with the total income gain ($30) we find that two-thirds, or 66.7% of the income gain went to A. If we similarly divide C’s income gain ($30) by the total income gain ($30) we find that a 100% of the year’s income gain went to C. How in the world can C have gotten the entire income gain when we just said that A received two-thirds of it?

 

Year 1

Year 2

Income gain
(%)

Income gain
(dollars)

Income gain
% of total

A

50

70

40%

+20

+66.7%

B

100

80

-20%

-20

-66.7%

C

150

180

20%

+30

+100%

Sum

$300

$330

10%

+30

100%

 

Any data presented this way would quickly raise questions: clearly, there’s something wrong with the statement that A and C together received 166.7% of total income gain. Because B’s negative income gain distorts the picture, the percentages reflecting A’s and C’s share of income gains no longer mean what they usually mean.

What Has Gone Wrong Here?

As made evident in the table, we can quickly see that because A’s income gains in absolute numbers cancel out B’s income gain, any discussion including somebody’s share of income growth is seriously misleading. The shares of income growths only sum to a hundred when we include B’s negative income gain, but if we only care about the top earners – in this case C – we could easily (and erroneously) conclude that all the income gain was captured by the rich.

Let’s use another example to make the mistake even more blatantly obvious. If you remember Mitt Romney’s job creation debate in the run-up to the 2012 election, this is a great illustration of using incorrect denominators. The RNC and the Romney Campaign calculated that the net job loss from January 2009 to March 2012 was 740,000 , but that the net job loss for women during the same period was 683,000. Quick calculations show that women accounted for 92.3% (683,000/740,000=0.923). Of course, we can make this even more absurd by comparing February 2009 to March 2012 instead, where the net job loss was 16,000 jobs. On net, women lost almost half a million jobs during that period, which yields a result of around 3100% of all job losses! The straightforward meaning of “percent” as fraction of a hundred has entirely disappeared.

Because “net job losses” involve jobs created minus jobs lost, dividing the number of jobs lost by women by net job losses is entirely the wrong denominator to use. “Percent” no longer carries the straightforward meanings it usually does, but it still conveys that message to the uninformed reader.

Percentage-Flingers Abound

Sure, anybody with even rudimentary understanding of statistics knows not to use selected percentages when underlying set of numbers can be negative. But the skilled deceiver or the careless fool can still say things like “100% of the income gain between year one and year two went to earner C”, and the reader will interpret “100%” with its usual meaning (“all”). But whenever the full set includes negative numbers, the relevant denominator is no longer 100.

Either through malice or ignorance, economists and media pundits fall into this trap all the time. CNBC reported last year that “in nine states, the income growth of the top 1 percent was half or more of all income growth in that time period.” A few years ago, the inequality Joseph Stiglitz wrote that “all the growth in recent decades — and more — has gone to those at the top”. A recent working paper by Emmanuel Saez — a U.C. Berkeley economist who really should know better — summarized his findings that the “top 1% families captured 49% of total real income growth per family from 2009-2017”. Coming out of the Great Recession, the British Magazine The Economist remarked that “around 95% of the increase in American income since 2009 has gone to the top 1%”. Of course, leftist politicians make these kinds of claims on a regular basis, but they are statistically unsound.

In his successful How Not To Be Wrong, Maths professor Jordan Ellenberg concluded that “the combination of positive and negative allows you, if you’re not careful, to tell a fake story, in which the whole work of job creation in the tradeable sector was done by [a single] industry.”

Reporting percentages when the underlying dataset include negative numbers removes the standard meaning of percent. 90% of something that includes negative numbers no longer means "almost all" or "a very large majority."

Numbers presented alone indeed conceal or mislead the reader; “Always Be Comparing Thy Number” ought to be a statistical commandment. While numbers reported in percentages do provide a useful reference for the reader, dividing by the wrong denominator or involving negative numbers, seriously distorts the story. Be aware when statistical deceivers or careless fools fling percentages around. Sometimes they really shouldn’t.

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A New Interview with John V. Denson

06/17/2019Ryan McMaken

Be sure to check out this new interview with John Denson in C.Jay Engel's new physical print magazine Austro Libertarian. He covers everything from World War One, to 9/11 to Donald Trump.

If you're not familiar with Denson's work, he is the Distinguished Scholar in History and Law here at the Mises Institute. He is also a practicing attorney in Alabama and the editor of two books, The Costs of War and Reassessing the Presidency, and the author of A Century of War: Lincoln, Wilson and Roosevelt.

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In Our Hyper-Political World, Political Ideology Is More Important Than It Should Be

06/17/2019C.Jay Engel

The thesis here is that libertarianism as a political theory only carries the veneer of importance and centrality due to the strength and power of the democratic, administrative state in our time. Everywhere we look, we see the influence and effect of the state as an apparatus that guides and oversees the machinations of modern civilization. We speak not merely of the obvious libertarian issues like taxes and regulation but we see in the modern western state a cultural force. We so often push the idea that politics is downstream from culture, that we have lost the culture and therefore the state has followed the path of destruction.

But as was hinted on the AL editor’s blog, it is far more likely that Paul Gottfried has it right: the state has morphed into something much more sinister and it now leads the culture toward its own ends. The modern administrative state is the creator of culture and culture is now downstream from the state. Gottfried is especially succinct as to his meaning in his short excerpt:

Contrary to an older understanding of culture, what we are referring to is a process of moral and social radicalization. It is a process that didn’t come about unbidden but which powerful, pervasive administrative rule promoted. And the social engineering function of public administration here and elsewhere in the West has been particularly evident since the 1960s, with governmentally encouraged immigration and an accelerating war against discrimination. Presumably, when Hillary Clinton assured a gay rights group that she was addressing last year (October 5, 2015) that she would use the IRS to force recalcitrant religious institutions into endorsing gay marriage, she was not simply responding to a cultural condition. She was working to create one.

We have entered into a full politicization of society; there is nothing that the state-cultural complex does not touch. It guides the way we interact with others, the way we process and interpret events, and the way we think about social norms and basic social units and institutions.

Now then, to bring this back to the thesis: “libertarianism as a political theory only carries the veneer of importance and centrality due to the strength and power of the democratic, administrative, state in our time.” Since the state is everywhere we look, and libertarianism has a set of particular ethical critiques against the state, it seems to follow that libertarianism plays such an important place in our lives.

Stated differently, according to the libertarian doctrine, the initiation of aggression against the body or exterior property of others is a breach of ethically-laden rights; and the state is the most systematic, constant, and egregious violator of the principle. And as the state surrounds our every move, so we see libertarianism as a response to so much of our world.

This creates the illusion that libertarianism plays a fundamental role in society. That political theory itself is of primary importance for a people who wish for a better world, a world that is both more ethical and more free. And from this, we work to create a libertarian political strategy and a libertarian movement as well. And thus, the disease of modern administrative statism, which takes over our minds as the lens through which we find meaning, produces the impulse that one ought to dedicate himself to libertarianism as a path toward social preservation.

But it should be made clear that the only reason libertarianism as such seems to play such a fundamental role in the self-identity and life-meaning of so many in libertarian circles is due to the politicization of society. We live in the administrative state’s world and thus we even put our path toward social improvement strictly in terms of the political. It is not just that the state formally speaking is everywhere we look, it is that there is hardly any longer a culture that is distinct from the state. When Buck Johnson recently asked Paul Gottfried whether the Left or the State was the chief enemy in our time, Gottfried quickly responded: “what’s the difference?”

We Are Not the State

In times past libertarians correctly and properly held firm that “we” are not the state! Society and the state were separate and the state is an artificial entity as compared to society, which is natural. While importantly and profoundly still true, this does not take into account the extent to which the state has replaced natural and spontaneous society with its artificial one. It is true that the natural society is not born out of the state; the state is not the thing that naturally binds together peoples. But as the administrative, democratic state has come of age, it has created its own artificial society which is of course a society of Egalitarian Terror.

Under a free society that is not created by or bound up in the existence of the state, libertarianism plays much more the role of a legal theory, not a political theory. It’s important to remember that libertarianism chiefly speaks wisdom to scenarios of tension and strife between people who want to use scarce resources for their own ends. Libertarianism offers a standard by which we can determine who gets to use which good and in what way.

The role of libertarianism is to help us resolve disputes and arbitrate in situations of conflict. In other words, libertarianism is chiefly a legal theory that of course has political ramifications once society faces the creation of the state as an institutionalization of aggression (or as Murray Rothbard described it, “a band of robbers writ large.”).

Thus, the writer known as "Bionic Mosquito," offers:

I think we might want to stop thinking in such terms [as libertarian movement]. Not to give up on libertarian ideas, as these have a proper and meaningful place in any free society. Instead, to consider that libertarianism – properly defined – is so thin as to not allow any “libertarian” movement to form.

What this means to me is that men are not connected to other men on the basis of libertarianism. Marxist political movements, for instance, purport that classes are held together by their economic status: workers of the world unite. You are neither German nor Russian nor English. You are a worker, or you are a member of the bourgeois.

It is not the same with libertarianism, or at least a meaningful and realistic libertarianism over against the more universal libertarianism . Let me be clear here: libertarianism is only the thing that binds us is we presume the state’s politicized world! The Marxist worldview is at its root political so it makes sense that Marxism as an ideology binds them.

But libertarianism plays a different role in a free (non-politicized) society; it comes to the picture as a set of principles and guidelines by which we can judiciously determine what is criminal and what is legal, what should be responded to with coercion (such as murder or theft), and what should not be responded to with coercion (such as creating goods and services on the market).

In this case, those of us who are beginning to pay particular attention to the rapid and concerning leftist social revolution likely have more in common with each other, outside the bounds of libertarianism as a legal theory. And as the left-libertarians and mainstream libertarians in general either praise these developments as at the culmination of the “libertarian spirit” or at least just watch it all with neutral expressions and ambivalent reaction, they likely have more in common, generally speaking, with the progressive left.

The response to this is so often that “libertarians are connected not by their cultural preferences but by their anti-statism!” But this is only true under a politicized worldview. Putting aside the issue of politics, which presumably all libertarians would eventually want out of the way anyway, there is nothing else that binds us. And thus, our pretending that we are transcendentally bound by our libertarianism is exactly the sort of artificial connections that the state has aimed for!

Men form society not on the basis of a unifying legal theory, but the legal theory is adopted post-society. Libertarianism is a helpful tool in the development of peaceful civilization; it is neither the spring nor the engine from which society flows. Libertarianism as a unifying spirit is only conceivable because we operate in a world that has experienced the imposition of a political society. But perhaps, to presuppose this statist-world moving forward, and to subsequently work toward a bigger libertarian political movement, is to have already made the very mistake that continues to undermine our efforts toward a free society.

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Does the US Need a Rate Cut? No!

06/17/2019Daniel Lacalle

Consumer confidence is high, unemployment is low and Treasuries’ yield is at 2.1%, while credit to the economy and corporate financing are not suffering.

The weakness in core consumer prices in May, which increased by only 0.1 %, was entirely due to lower prices of used vehicles, and core CPI inflation remains within the Fed target, falling from 2.4% in mid-2018 to 2.0% in May. Headline CPI inflation fell to 1.8% in May due to lower energy prices, so there is absolutely no logic in a rate cut. With unemployment at 3.6%and annualized GDP growth expected to remain above 2.3%, demands for a rate cut are only an excuse to keep financial asset prices higher at any cost

There are some elements that point to a slight weakness in the economy but no need for a rate cut.

  • Industrial production rose 0.4% m/m in May while it stalled in other global economies.
  • A strong 0.5% rise in underlying retail sales in May, along with upward revisions to previous months’ gains which means consumption is likely to grow close to 4% annualized in the second quarter.
  • The headline confidence index declined marginally to 97.9 in June, from 100.0, but remains at very high levels.

A rate cut would only fuel the debt bubble further, and leave the Fed with fewer tools to address a slowdown. When so-called “High Yield” means 365 bps for junk bonds of companies close to bankruptcy and Treasuries yield 2.1% there is no reason at all to cut rates. Rather the opposite.

The debt bubble is dangerously inflated and lower rates would only make it worse. The ratio of US corporate debt to GDP, as well as the high-risk loan figure and securitized debt,  have risen to pre-crisis levels.  US deficit is rising because spending soars and the government finds debt cheap and abundant. Government spending rose to $440 billion in May 2019, up 21% from May of 2018. Yes, up 21% from May of 2018. All this despite record revenues. Receipts increased to $232 billion, up 7% from the same month last year.

A rate cut would only create a larger problem in the future. If the already dangerous corporate and sovereign debt bubble grow significantly more, no monetary policy will prevent a debt crisis.

Daniel Lacalle | Fed rate cut less likely than expected

Republished from DLacalle.com
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The Real Tragedy of the Tragic War Hero

06/15/2019Alan Mosley

If you take an hour drive down the I-65 corridor south from Nashville, Tennessee, you’ll find yourself in Columbia. My hometown isn’t quite as sleepy of a southern town as it used to be, much to my chagrin, but it’s still home nonetheless. The county seat of Maury, Columbia does have a handful of claims to fame to save itself from being a complete afterthought. If claiming a title means you get to keep it for all time, then I suppose it’s proper that Columbia still styles itself as the “Mule Capital of the World.” It’s been a century and change since the mule trade featured prominently in Columbia’s economy, but if a former president is still “Mr. President”, then I suppose Columbia is still “Mule Town”.

Don’t think for a second this isn’t an adequate cause for celebration. They’ll be putting on their 179th Annual Mule Day celebration, which is more appropriately titled Mule Days than Mule Day since it stretches nearly a week long, replete with fried foods, music, and even a parade down Main Street. While he wasn’t born there (Pineville, NC gets that honor), Columbia likes to pride itself as being the home of an American president. The James K Polk Home, the final residence of the nation’s 11th executive, sits a couple blocks down from the courthouse. It’s a museum now, among blocks of buildings that would make one think they had traveled back to the 19 th century were it not for a Dairy Queen.

Another notable Columbian is John Harlan Willis, whose name graces a Columbia bridge that crosses the Duck River. Nearly 40 of the 3,503 individuals who have been awarded the Congressional Medal of Honor are natives of Tennessee, and one of them is John Harlan Willis. Willis was born in Columbia in 1921. He graduated from my high school alma mater, Columbia Central, in 1940, only a short 64 years before myself. I remember walking every day by the display case, which contained his portrait. He was a baby-faced young man with a bit of a mischievous grin wearing his dark blue uniform. John wanted to become a doctor, as he was far more inclined to aid the ailing around him than to bring them to any harm. It was no surprise, then, that when the United States entered World War II, he found himself taking up the role of a Pharmacist’s Mate, First Class, in the U.S. Navy. Willis enlisted in 1940, receiving his naval recruit training at Naval Training Station in Norfolk, Virginia, before moving on to his hospital corpsman training at the Norfolk Naval Hospital in Portsmouth. By the onset of 1944, having spent most of the war learning the healing arts rather than combat, Willis was finally transferred to the 3 rd Battalion, 27th Marine Regiment, 5th Marine Division and sent to the Pacific theater. It was on Iwo Jima where, on the last day of February 1945, he would earn the Medal of Honor.

The official citation that accompanies Willis’s Medal of Honor reads like something straight from a Spielberg film. While in the process of aiding a number of his fallen comrades during the fierce fighting near the Japanese-held Hill 362, Willis was struck by shrapnel from a nearby grenade explosion and was ordered to abandon his charges back to the safety of an aid station. After receiving some bandaging for his wounds, but before being given leave to return to action, Willis made his way back to Hill 362 to resume treating marines who were suffering significant casualties. Then, while administering plasma to the wounded, Japanese forces began to litter his position with hand grenades. He picked up the first to land in close proximity and hurled it back at the foes atop the hill. He then grabbed another, and another, until he had returned eight grenades. It was the ninth grenade to come down upon him that he could not return in time; it exploded in his hand, killing him instantly. Inspired by the scene before them, Willis’s companions rallied from their entrenchment and, despite being outnumbered and charging uphill, they launched the attack that would ultimately repulse the enemy. The citation ends with the statement, “His exceptional fortitude and courage in the performance of duty reflect the highest credit upon Willis and the U.S. Naval Service. He gallantly gave his life for his country.”

While Willis was unquestionably selfless and heroic, I’m not so sure about that last assertion. Did John Harlan Willis really give his life for his country? Did he race back to the front, dodging fire and explosions, in order to please his country with his sacrifice, or rather that he could be the difference in his allies returning home safely? Perhaps we can find some answer in this photograph, which shows his widow Winfrey Willis holding her baby boy in one hand and taking her husband’s posthumous medal in the other from the Secretary of the Navy. Does Mrs. Willis look like a woman content to know her husband’s violent death somehow contributed to protecting America from an enemy it provoked in the first place, or rather a physically and emotionally exhausted single mother who would hand the medal right back if it meant little John could be hoisted in the air by his namesake? I tend to think if John were here today, he would tell you that, if indeed his life were destined to be extinguished on Iwo Jima that day, then he wasn’t giving his life for his country, but rather he was giving it to save his brothers in arms.

 John Harlan Willis was laid to rest at Rose Hill Cemetery, just a couple blocks north of the courthouse. He sits today among Civil War soldiers, a handful of congressmen, a senator, and even a NASCAR driver. The hallowed burial ground, the honors, the memorial halls at medical centers, and even the destroyer USS John Willis are a bad trade for a devoted husband and father. He wanted to become a doctor. It might be a stretch to hope that he would have cured cancer had he survived the war, though he would’ve been valued all the same. A man who would brave bullets and shrapnel time and again, practically defenseless, in order to give a wounded man some plasma sounds like someone who would’ve made for an excellent neighbor. But we’ll never know what sort of family the Willis’s could’ve produced, the kind of physician he could’ve become, nor the sort of compassionate presence he could’ve brought to the community. And so the real tragedy of the tragic war hero is not in what they managed to accomplish, but rather in what they were never afforded the chance to.

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Why Attacking Big Business Is Back In Vogue

06/12/2019Tom Chanter

"Progressive" politicians like Bernie Sanders, Alexandria Ocasio-Cortez, and Elizabeth Warren are becoming more fashionable, and it follows that attacking big business is back in vogue. “Political and academic progressives expand their frenzied attacks on ‘wealth’ and on the alleged transgressions of ‘big business,’” writes Dominick Armentano, Professor Emeritus in Economics at the University of Hartford.

What is it about human nature that drives these attacks? Perhaps we must look to Ludwig Von Mises for an answer. But first, we can get a general idea of how the anti-big-business impulse remains so popular by looking at the work of economist Tyler Cowen.

In April, Cowen published his latest book, Big Business: A Love Letter to an American Anti-Hero, documenting how “Most young Americans hold highly critical perspectives on capitalism.” Indeed, the Harvard Kennedy School produced a report on young adults, revealing 51 percent did not support capitalism. Furthermore, 33 percent endorsed socialism as an alternative.

Clearly, that 33 percent is ignorant to the Two Reasons Why Socialism Repeatedly Fails;

1) the impossibility of economic calculation without true market prices, and

2) the lack of an incentive to produce only what consumers actually want.

Nevertheless, support for socialism endures, and we don’t have to look further than our TV screens and Twitter to observe what may be the one of the key points of origin of this critical narrative against big business. Yet this negativity is driven by more than radical rhetoric from the left-wing media. The very nature of media coverage has an effect.

Cowen adds, “Virtually all media outlets have a significant bias toward negative news of all kinds, including news about business. So scandals, corruption, and abuse of workers all receive much more publicity than the normal, everyday massive successes of America’s major corporations. “Corporations had another stellar day producing things and keeping people employed,” just isn’t a great news headline.”

Furthermore, big business is blamed for the failings of big government. We need look no further than the Occupy Wall Street movement. As the angry masses protested on Wall Street, a more appropriate place to fight for freedom was a short walk away: three blocks north of Wall Street at 33 Liberty Street sits a brownstone building — the home of the Federal Reserve.

Yet, there was little interest in addressing the outsized role of the Federal Reserve in manipulating the global economy. This blind spot for the role of the central bank illustrates just how wrongheaded are many leftwing approaches to diagnosing the source of our economic problems. 

Protestors would do well to consult Austrian Business Cycle Theory which helps explain how the stock market crash and economic downturn were attributable not to "big business," but largely to a prior bank credit expansion by the Federal Reserve and the Fed-regulated banking sector.

Yet, anti-capitalist agitprop spreads through social-media like typhus through the Gulags, even though it is private capital and private business which has made social media possible.

This sort of thing is nothing new. As Ludwig Von Mises wrote, “All people, however fanatical they may be in their zeal to disparage and to fight capitalism, implicitly pay homage to it by passionately clamoring for the products it turns out.”

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