Why Presidents Want You Scared

Why Presidents Want You Scared

10/31/2018James Bovard

The media is railing about Trump for fearmongering ahead of the midterm elections.  Like this never happened before?  Like this is not the job description of modern politicians? Like Obama, George W. Bush, and Clinton did not fearmonger whenever they could profit by spooking Americans?  Trump is continuing a tradition that was firmly established by Woodrow Wilson.  Fearmongering is simply another proof of the rascality of the political class – and another reason why their power should be minimized. Here’s a 2011 piece I wrote on the topic, excerpted in part from Attention Deficit Democracy.

Fear-Mongering and Servitude

In his 1776 essay, “Thoughts on Government,” John Adams observed, “Fear is the foundation of most governments; but it is so sordid and brutal a passion, and renders men in whose breasts it predominates so stupid and miserable, that Americans will not be likely to approve of any political institution which is founded on it.” The Founding Fathers hoped the American people would possess the virtues and strength to perpetuate liberty. Unfortunately, politicians over the past century have used trick after trick to send Americans scurrying to politicians to protect them.

President Woodrow Wilson pulled America into World War I based on bogus idealism and real fear-mongering. Evocations of fighting for universal freedom were quickly followed by bans on sauerkraut, beer, and teaching German in government schools. H. L. Mencken observed in 1918: “The whole aim of practical politics is to keep the populace alarmed and hence, clamorous to be led to safety—by menacing it with an endless series of hobgoblins, all of them imaginary.” In Mencken’s time he was often considered cynical. Subsequent developments have proven Mencken to be a prophet.

The Democratic Party relied heavily on the fear card in the 1920 presidential race. On the eve of the November vote that year Democratic presidential candidate James Cox declared: “Every traitor in America will vote tomorrow for Warren G. Harding!” Cox’s warning sought to stir memories of the “red raids” conducted in 1919 and 1920 by Attorney General A. Mitchell Palmer, during which thousands of anarchists, communists, and suspect foreigners were summarily jailed and in many cases deported. The American people rejected Cox and embraced Warren Harding’s promise of a “return to normalcy.”

President Franklin Roosevelt put “freedom from fear” atop the American political agenda in his 1941 State of the Union address. But FDR’s political legacy—especially Social Security—has institutionalized fear-mongering in presidential and congressional races. Democrats perennially portray Republicans as planning to yank life support from struggling seniors.

For almost 50 years American politicians have used television ads to spur dread, most famously in the 1964 “Daisy” ad for Lyndon Johnson’s campaign. The ad showed a young girl, in the words of Jim Rutenberg in the New York Times, “picking the petals off a daisy before the screen was overwhelmed by a nuclear explosion and then a mushroom cloud and Mr. Johnson declared, ‘These are the stakes.’” The ad did not specifically claim that Barry Goldwater, the Republican nominee, would annihilate the human race, but the subtle hint wafted through. Though this ad only aired once, it instantly became a legend.

Whipping up fear was the flipside of President Bill Clinton’s “feeling your pain” political style. Clinton fanned people’s fear of guns, militias, and life without medical insurance. At the same time, the Clinton administration stretched the power of government on all fronts—from concocting new prerogatives to confiscate private property to championing FBI agents’ right to shoot innocent Americans to bankrolling the militarization of local police forces. Clinton was the Nanny State champion incarnate, teaching Americans to look to government for relief from every peril of daily life—from unpasteurized cider to leaky basements. As long as the President seemed to care about average Americans, his abuses were largely forgotten. (The 1996 Republican presidential candidate, Sen. Bob Dole, also promised to provide voters with “freedom from fear” via untying “the hands of the police.”)

Fear and Bush

The 2004 race was the most fear-mongering presidential campaign in modern American history. In his acceptance speech at the Republican National Convention, George W. Bush referred to terror or terrorism 16 times. Bush reelection campaign television ads showed firemen carrying a flag-draped corpse from the rubble at Ground Zero in New York and a pack of wolves coming to attack home viewers as an announcer warned that “weakness attracts those who are waiting to do America harm.” (One commentator suggested that the ad’s message was that voters would be eaten by wolves if John Kerry won.) Just before Election Day a senior GOP strategist told the New York Daily News that “anything that makes people nervous about their personal safety helps Bush.” People who saw terrorism as the biggest issue in the 2004 election voted for Bush by a 6 to 1 margin. Moises Naim, editor of Foreign Policy, observed that the Bush campaign was “using the fear factor almost exclusively. This is a highly researched decision with all the tools of public opinion management. It’s nothing but a reflection that it works.”

Bogus terror alerts might have made the difference in the 2004 election. Robb Willer of the Sociology and Small Groups Laboratory at Cornell University examined the relationship between 26 government-issued terror warnings reported in the Washington Post and Bush’s approval ratings. “Each terror warning from the previous week corresponded to a 2.75 point increase in the percentage of Americans expressing approval for President Bush,” Willer concluded. Bush beat Kerry by 2.4 percentage points in the popular vote. Former Homeland Security chief Tom Ridge later admitted that many of the 2004 alerts were unjustified. The Cornell study also found a “halo effect”: Americans’ approval of Bush’s handling of the economy also rose immediately after the announcement of new terror warnings, Willer reported. Apparently the more terrorists were allegedly poised to attack America, the better job Bush was doing.

Voters in 2004 could choose whether they would be killed by terrorists if they voted for Kerry or whether they would be left destitute and tossed out in the street if they voted for Bush. Boston University professor Tobe Berkovitz commented to the Washington Post: “It’s not surprising that both campaigns are looking for the leverage point: scaring the hell out of the American public about what would happen if the other guy wins.” But the more an election is about fear, the more the winner will presume to be entitled to all the power he claims to need to combat the threat.


In his 2005 State of the Union address Bush declared: “We will pass along to our children all the freedoms we enjoy. And chief among them is freedom from fear.” The Founding Fathers would have derided the notion of politicians giving citizens “freedom from fear.” And they would have denounced the notion that this new-fangled freedom is superior to the freedoms the U.S. government had pledged to respect for more than 200 years.

After promising freedom from fear, a politician can always invoke polls showing widespread fears to justify seizing new power. The natural result of making freedom from fear the highest freedom is that any policy that reduces fear can be portrayed as pro-freedom. Bush claimed that to keep Americans safe he had to suspend habeas corpus and detain any suspected terrorist in perpetuity based solely on his unproven assertions. Bush authorized the CIA to use waterboarding and other methods of torture on detainees. He ordered the National Security Agency to launch a massive illegal wiretapping program that eavesdropped on thousands of Americans’ phone calls and emails without warrants. Yet Bush remained a great champion of freedom—at least in the eyes of his supporters.

The political mass production of insecurity is a dominant trait of our age. The easiest way for rulers to destroy the leashes the Constitution imposed on them is to make voters think they must choose: “We can obey the Constitution or we can prevent you from all being killed. What is it going to be?”

Rising fear can also undermine the freedom of speech that is a bulwark against government abuse. To the extent people desperately cling to faith in the leader to save them from all perils, they develop an intolerance to anyone who points out government follies or falsehoods. The Bush 2004 reelection campaign did all it could to fan such intolerance. Stumping around the nation for Bush, former New York City police commissioner Bernie Kerik told audiences in the final months of the campaign: “Political criticism is our enemy’s best friend.” As criticism is suppressed government becomes more incorrigible. Eventually the mistakes that could have been corrected cheaply early on become catastrophic national failures.

Fear and Obama

President Obama has picked up the fear-mongering relay baton with his attempts to frighten Americans about health care, global warming, economic collapse, and government shutdowns. Obama has also invoked the fear card to sanctify bombing bad guys anywhere and everywhere.

Government fear-mongering creates a downward politico-psychological spiral. The more fearful people become, the more gullible they will be. British philosopher John Stuart Mill warned in 1842: “Persons of timid character are the more predisposed to believe any statement, the more it is calculated to alarm them.” It is almost irrelevant whether 10 or 20 or 30 percent of the citizenry can see through government’s fraudulent warnings. In a democracy, as long as enough people can be frightened, all people can be ruled.

In the same way that some battered wives cling to their abusive husbands, the more debacles the government causes, the more some voters cling to rulers. The craving for a protector drops an iron curtain around the mind, preventing a person from accepting evidence that would shred his political security blanket. In the days after the 9/11 attacks polls showed a doubling in the number of people who trusted government to “do the right thing.” The media fanned this blind faith—as if trust in government was the high road to public safety. The Bush administration exploited the trust to unleash itself at home and abroad, and the nation is still paying the costs of its post-9/11 infatuation with government.

Bogus fears can produce real servitude. The Founding Fathers expected the American people to bravely stand up for their rights if their rulers trampled the law. Citizens cannot cower on cue without forfeiting any possibility of keeping government on a leash. If America is to have a rebirth of liberty, it must begin with a rebirth of courage.

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The Statist (and Senseless) Agenda of Kamala Harris

It seems like every Democrat in the country plans to run against Trump in 2020 and presumably all of them will feel compelled to issue manifestos outlining their policy agendas.

Which gives me lots of material for my daily column. I’ve previously written about statist initiatives from Bernie Sanders and bizarre ideas put forth by Elizabeth Warren.

Today, let’s review the two big ideas that have been unveiled by Kamala Harris, the Senator from California who just announced her bid for the White House.

We’ll start with her idea to create a federal subsidy for rent payments. I wrote about this new handout last year, and warned that it would enrich landlords (much as tuition subsidies enrich colleges and health subsidies enrich providers).

Here’s some of what Professor Tyler Cowen wrote for Bloomberg about the proposal.

One of the worst tendencies in American politics is to restrict supply and subsidize demand. …The likely result of such policies is high and rising prices, restricted access and often poor quality. If you limit the number of homes and apartments, for example, but give buyers subsidies, that is a formula for exorbitant prices. That is what makes early accounts of Senator Kamala Harris’s economic plans so disappointing. …Consider Harris’s embrace of subsidies for renters, as reflected by her recent sponsorship of the Rent Relief Act of 2018. Given the high price of housing in many parts of the U.S., it is easy to see why the idea might have appeal. But the best and most sustainable way of producing cheaper housing is to build more homes and apartments. The resulting increase in supply will cause prices to fall… That is basic supply and demand, with supply doing the active work. The Harris bill, in contrast, calls for tax credits to renters. …There is an obvious problem with this approach. If you subsidize renters, that will push up the price of apartments. Furthermore, economic logic suggests that big rent increases are most likely in those cases where the supply of apartments is relatively fixed, a basic principle of what is called “tax incidence theory.” In sum, most of the gains from this policy would go to landlords, not renters.

In other words, this is a perfect plan for a politician who understands “public choice” theory.

Ordinary voters think they’re getting a freebie, but the benefits actually go to those with political influence and power.

Now let’s look at her $2.7 trillion tax cut. I believe that people should be allowed to keep the lion’s share of any money they earn, so my gut instinct is to cheer.

But it’s always good to be skeptical when a politician is offering something that sounds too good to be true.

Kyle Pomerlau of the Tax Foundation has done the heavy lifting and looked closely at the details. He has a thorough explanation of her plan and its likely impact.

The “LIFT the Middle-Class Act” (LIFT) would create a new refundable tax credit available to low- and middle-income taxpayers. …LIFT would provide a refundable credit that would match a maximum of $3,000 in earned income ($6,000 for married couples filing jointly). …The credit would begin to phase out for single taxpayers starting at $30,000 of adjusted gross income (AGI) and $80,000 for single taxpayers with children, and begin phasing out for married taxpayers at $60,000 of AGI. The phaseout rate for all taxpayers would be 15 percent. …LIFT’s impact on the economy is primarily through its effect on the labor force. LIFT phases in from the first dollar of earned income to the maximum credit of $3,000 per tax filer. It then phases out starting at different levels of income, depending on a tax filer’s marital status and whether they have children. These phase-ins and phaseouts create implicit marginal subsidies and tax rates that impact individuals’ incentive to work.

At the risk of oversimplifying, Harris is proposing a new version of the earned income credit.

And that means some taxpayers get subsidized for working and some taxpayers get penalized.

For taxpayers in the credit phaseout range, tax liability would increase by 15 cents for each additional dollar earned. This means that these taxpayers would face an additional implicit marginal tax rate of 15 percent, which would reduce these taxpayers’ incentive to work additional hours. In contrast, taxpayers in the phase-in range of the credit would get $1 for each additional $1 of income they earn. As such, these taxpayers would benefit from an effective marginal subsidy rate, or negative marginal tax rate, of 100 percent. A negative tax rate of 100 percent would increase the incentive for these taxpayers to work additional hours.

Kyle crunches the numbers to determine the overall economic impact.

While the positive labor force effects of the phase-in of the credit could offset the negative effect of the phaseout, we find that, on net, the size of the total labor force would shrink under this policy. This is primarily due to the large number of taxpayers that would fall in the phaseout range of the credit relative to the number of individuals that would benefit from the phase-in. …We estimate that the credit…would reduce economic output by 0.7 percent and result in about 825,906 fewer full-time equivalent jobs.

Here’s the relevant table from the Tax Foundation’s report.

Jan-22-19-TF-Table.jpg

This is remarkable. It would seem impossible to design a $2.7 trillion tax cut that actually hurts the economy, but Sen. Harris has succeeded in that dubious achievement.

For all intents and purposes, she has figured out how to have an anti-supply-side tax cut.

And there are two other problems that deserve attention.

  • First, as noted in Kyle’s paper, the tax cut is “refundable.” This means that money goes to people who don’t pay taxes. In other words, it is government spending being laundered through the tax code. So Harris claims to be cutting taxes, but part of what she’s doing is expanding redistribution and making government bigger (and encouraging more fraud).
  • Second, Harris is very cagey about how the numbers work in her proposal. Does she want the tax cuts (and new spending) financed by more borrowing? By printing money? By offsetting class-warfare tax increases? Some combination of the three? Whatever the answer, the negative economic damage will be substantially higher if financing costs are included.

Considering the poor design and upside-down economics of the rent subsidy scheme and the new tax credit, the bottom line is rather obvious: Kamala Harris wants to buy votes, and she has decided that it is okay to hurt the economy in hopes of achieving her political ambitions.

No wonder she fits in so well in Washington!

Originally published at International Liberty
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Debt and Deficits: They’re Unsustainable

01/21/2019Robert L. Luddy

[Editors note: Mr. Luddy will be giving the Henry Hazlitt lecture at this year's Austrian Economics Research Conference. Click here to learn more.]

The most important issue facing America today is the national debt and increasing federal deficits. Our national debt now exceeds yearly gross domestic product (GDP).

The U.S is the wealthiest country in the world, but our government has the largest spending deficits and national debt in recorded history.

The budget deficit in FY 2018 was $800 billion, but the debt increased by $1,300 trillion, and is now $21,500 trillion dollars. Government accounting (oxymoron) allows for spending and loans outside of the budget. The practice of underreporting deficits is fraud and is not legal in the private market.

Note the US Debt Clock (here).

In simple terms, the national debt consistently increases more than the federal deficit, which will cause a devaluation of the dollar and eventually, a major financial crisis.

In FY 2019, the federal budget projects the following:

  • Total revenue $3,422 trillion or 17% of GDP
  • Total spending $4,407 trillion or 21% of GDP

In the best of times, regardless of tax rates, the federal revenue rarely exceeds 18% of GDP. This means based on projected spending, we cannot grow or tax our way out of the deficit because spending is projected at 22% of GDP.

To balance the federal budget in FY 2019, it would be necessary to cut all spending by 22%.

Read the full article at The American Spectator 

 

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Fire the Fed?

01/21/2019Ron Paul

President Trump’s frustration with the Federal Reserve’s (minuscule) interest rate increases that he blames for the downturn in the stock market has reportedly led him to inquire if he has the authority to remove Fed Chairman Jerome Powell. Chairman Powell has stated that he would not comply with a presidential request for his resignation, meaning President Trump would have to fire Powell if Trump was serious about removing him.

The law creating the Federal Reserve gives the president power to remove members of the Federal Reserve Board — including the chairman — “for cause.” The law is silent on what does, and does not, constitute a justifiable cause for removal. So, President Trump may be able to fire Powell for not tailoring monetary policy to the president’s liking.

By firing Powell, President Trump would once and for all dispel the myth that the Federal Reserve is free from political interference. All modern presidents have tried to influence the Federal Reserve’s policies. Is Trump’s threatening to fire Powell worse than President Lyndon Johnson shoving a Fed chairman against a wall after the Federal Reserve increased interest rates? Or worse than President Carter “promoting” an uncooperative Fed chairman to Treasury secretary?

Yet, until President Trump began attacking the Fed on Twitter, the only individuals expressing concerns about political interference with the Federal Reserve in recent years were those claiming the Audit the Fed bill politicizes monetary policy. The truth is that the audit bill, which was recently reintroduced in the House of Representatives by Rep. Thomas Massie (R-KY) and will soon be reintroduced in the Senate by Sen. Rand Paul (R-KY), does not in any way expand Congress’ authority over the Fed. The bill simply authorizes the General Accountability Office to perform a full audit of the Fed’s conduct of monetary policy, including the Fed’s dealings with Wall Street and foreign central banks and governments.

Many Audit he Fed supporters have no desire to give Congress or the president authority over any aspect of monetary policy, including the ability to set interest rates. Interest rates are the price of money. Like all prices, interest rates should be set by the market, not by central planners. It is amazing that even many economists who generally support free markets and oppose central planning support allowing a government-created central bank to influence something as fundamental as the price of money.

Those who claim that auditing the Fed will jeopardize the economy are implicitly saying that the current system is flawed. After all, how stable can a system be if it is threatened by transparency?

Auditing the Fed is supported by nearly 75 percent of Americans. In Congress, the bill has been supported not just by conservatives and libertarians, but by progressives in Congress like Dennis Kucinich, Bernie Sanders, and Peter DeFazio. President Trump championed auditing the Federal Reserve during his 2016 campaign. But, despite his recent criticism of the Fed, he has not promoted the legislation since his election.

As the US economy falls into another Federal Reserve-caused economic downturn, support for auditing the Fed will grow among Americans of all political ideologies. Congress and the president can and must come together to tear down the wall of secrecy around the central bank. Auditing the Fed is the first step in changing the monetary policy that has created a debt-and-bubble-based economy; facilitated the rise of the welfare-warfare state; and burdened Americans with a hidden, constantly increasing, and regressive inflation tax.

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Peter Klein and Nicolai Foss on Managers in Flat Business Structures

01/18/2019Mises Institute

The online magazine Aeon currently features an outstanding article from our scholars Peter Klein and Nicolai Foss on the trend toward "bossless" business structures. Far from being redundant middlemen, they argue, good managers are needed more than ever even in firms that aspire to flat, decentralized, and democratic organization. 

Klein and Foss challenge the idea that managers will become obsolete, replaced by self-directed and super connected knowledge workers:

This movement is gaining steam for a couple of reasons. First, the bossless-company model arguably captures some tendencies, however inaccurately. Second, it is very much part of the 21st-century Zeitgeist in its emphasis on personal development, resilience and fulfilment through empowering employees, and decentralised and democratic decision processes. There is also a strong moralistic and political undertone to the narrative; in Private Government (2017), the philosopher Elizabeth Anderson argues that firms are effectively totalitarian states, enjoying rights and privileges that would be unconstitutional for ordinary states to impose on their citizens. The historian Caitlin Rosenthal has argued that the factory system, hierarchy and managerial authority are partly derived from the slave system. What can be more morally defensible than getting rid of the remnants of slavery?

Unfortunately, the bossless-company narrative is dead wrong. It misunderstands the nature of management, which isn’t going away, and it is based on questionable evidence. Given these fundamental defects, this narrative is potentially harmful to managers, students and policymakers.

Are the benefits of technology in assembling and organizing modern firms oversold?

While technological miracles such as the internet, cheap and reliable wireless communication, Moore’s law, miniaturisation and information markets have induced sweeping changes in manufacturing, retail, transportation and communication, the laws of economics are still the laws of economics. And human nature hasn’t changed. The basic problem of management and business – how to assemble, organise and motivate groups of people and resources to produce goods and services that consumers want – is still the same. Since the industrial revolution, entrepreneurs have been organising extremely complex activities in firms that are neither completely centralised nor completely flat. Imagine the complexity involved in operating a national railroad, a steel mill or an automobile assembly plant in the 19th and early 20th centuries. These were all ‘knowledge-based activities’ and were conducted in teams organised in various structures. Are things so different today?

Their conclusion:

In short, today’s business landscape features exciting developments in information technology, networking and collaboration that have led to new forms of organisation, production and distribution. Far from making management obsolete, however, these changes make good management more important than ever. The shift from management as direction to management as making and enforcing the rules is slowly entering the management literature and the business-school curriculum. That’s a paradigm shift worth embracing.

 This is a must-read article for anyone interested in the very hot topic of business management in the 21st century.

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March and Simon: Early Socialist Calculation Revisionists

01/17/2019Nicolai J. Foss

It is now commonly recognized that the majority of the economics profession for about four decades held an erroneous view of the nature of the “socialist calculation debate.” In particular, the nature of the arguments put forward by Mises and Hayek were misconstrued.

Revisionism took off in the mid 1980s with the work of Peter Murrell (e.g., here) and Don Lavoie (e.g., here). From a mainstream perspective, Murrell argued that the Austrians had developed sophisticated insights in property rights economics and the agency problem and had applied these insights to the problem of socialist calculation. Lavoie highlighted the distintive Austrian knowledge argument in the calculation debate, in particular emphasizing Hayek’s contribution. A bit later, Salerno and others emphasized the distinctiveness of Mises’ contribution. Thus, whereas Mises stressed the need for a distributed process of entrepreneurial judgment in the context of a private ownership economy characterized by uncertainty, Hayek put more of an emphasis on the impossibility under socialism of harnessing and processing massive amounts of knowledge, particularly under dynamic conditions.

Between the 2nd Wold War and these works, there are four decades in which the dominant opinion held that the Austrians had been thoroughly defeated by the formal demonstration, particularly in Oskar Lange’s work, of the possibility of combining socialism and efficient allocation. A pertinent question is whether there were (non-Austrian) dissenters from this dominant view. To those well steeped in libertarian social theory, names such as Trygve Hoff and G. Warren Nutter come to mind. But apart from these, it would appear that it is not until the mid 1980s that the distinctiveness of the Austrian arguments in the calculation debate concerning knowledge becomes recognized.

However, an early contribution, unknown to most economists, that fully recognized the distinctiveness of the Austrian arguments, is the 1958 book Organizations by James G. March and Herbert A Simon, a book that many would regard as the seminal contribution to organizational theory and a milestone in the evolution of organizational theory (I have heard organization theory scholars remark that all org theory in the last five decades is just variations over March & Simon themes).

The discussion of the socialist calculation debate takes place in the final chapter, “Planning and Innovation in Organizations,” the main purpose of which is to “… contrast the concept of rationality that has been employed in economics and statistics with a theory of rationality that takes account of the limits on the power, speed, and capacity of human cognitive faculties” (1958: 172) — in other words, bounded rationality.

This theme is taken through a number of variations, one of which is the theory of planning, understood as both “national planning and intrafirm planning” (p. 200). March and Simon (1958: 201) argue that even if motivational problems can be solved, there are still planning (coordination) problems remaining. They note, echoing Hayek (1945), that if one person or group of persons possessed “… all the relevant information connecting possible courses of action with the utilities resulting therefrom, he or they could discover which course of action was best for the organization” (p. 201). An alternative is to make use of the price mechanism, for example, through the Barone/Lange idea of consistent marginal cost pricing throughout the organization. March and Simon note a number of difficulties with this proposal, such as the requirement that externalities be absent. More seriously, perhaps, they note that it is not clear how to make a choice between the alternatives of central planning and pricing, since modern welfare economics, including the Lange/Barone proposal, does not give any positive reason for preferring the one to the other.

This is where the Austrian arguments in the socialist calculation debate enter the scene. These are placed under the heading “The principle of bounded rationality” (p. 203), and, accordingly, March and Simon note that the “… argument of von Mises and Hayek (we will use the latter’s version) depends crucially on the limits of information available to humans and their abilities to use information in their computations.” In other words, Hayek argues that “given realistic limits on human planning capacity” (italics removed) a decentralized system will work better than a centralized one.

Thus, March and Simon present a sympathetic reading of the Austrian — mainly Hayekian — positions in the socialist calculation debate. In the context of Organizations, March and Simon also criticize the “Robbinsian” characterization of decision-making in mainstream economics (to use Kirzner’s terms) – that is, the given’ness of means and ends — and they stress that the understanding of behavior should be broadened to include the process of discovering choice alternatives. These two observations are related, for it is arguably exactly because March and Simon are critical of the conceptualization of behavior in mainstream theory that they are so appreciative of the Austrian positions in the calculation debate.

[Reprinted from Organization and Markets.]

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The Austrian School at the European Parliament

01/16/2019Max Rangeley

Last year we at the European branch of the Ludwig von Mises Institute (Europe) organised the first ever Austrian school event in the European Parliament. Member of the European Parliament Amjad Bashir — a great supporter of free enterprise within the Parliament — kindly sponsored the event, which was set up to coincide with the release of one of the best books on the Austrian school in recent years, Banking and Monetary Policy from the Perspective of Austrian Economics.

range1.png

As well as me, the other two speakers were Member of the European Parliament Professor Joachim Starbatty MEP, and Brendan Brown, Chief Economist of Mitsubishi Bank, arguably the largest bank in the world by assets other than China’s state banks. While there have been other pro-enterprise and free market events in the European Parliament, they have all neglected the “money issue” so far, at least as those within the Austrian school would see it. Professor Starbatty MEP gave an eloquent outline of the Austrian business cycle theory, while Brendan Brown brought Austrian principles to bear on current issues in the banking sector. I decided to speak about the current bubble and how this can be explained with Austrian concepts. This event also reinforces the place of the Ludwig von Mises Institute (Europe) as one of the premier think tanks in Europe; within a few months we have published a defining textbook and introduced the Austrian school within the European Parliament itself.

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In my experience, more and more free market thinkers are tending towards the Austrian School, and it is the farce of years of zero percent interest rates that has achieved this. When the current Super Bubble bursts, we must be prepared to provide answers to how this bubble was created as many will blame the “free market” and demand the government “take action”.

Below you can see my speech in which I outlined how central banks’ policies of zero percent interest rates and quantitative easing have created the largest bubble in all of human history. The West has had a Faustian Pact with the central banking system for an entire generation, with each recession being responded to by creating an even larger debt bubble with ever lower interest rates -- and of course ever worse debt dependency.

Max Rangeley Speech in the European Parliament on the Coming Economic Collapse

The book “Banking and Monetary Policy from the Perspective of Austrian Economics” is published by Springer, one of the best academic publishers. The Ludwig von Mises Institute (Europe) did the excellent work of gathering contributors for the book, which includes Jesus Huerta de Soto, Walter Block, Guido Hulsmann and Gunther Schnabl as well as other great contemporary Austrian School thinkers. Annette Godart-van der Kroon, President of LvMI-Europe, edited the book. If you are a student or lecturer see if you can persuade your institution to get a copy.

Let’s hope the trend can continue with policy-makers taking an interest in the Austrian School. We have to be patient in explaining some of these issues, but more and more minds are open to explanations for how central banks distort the economy.

Incidentally, two days later I also gave a speech at the “Future of Money Conference” at the Frankfurt School of Finance and Management. People from the Bank of England, European Central Bank and Swedish Riksbank among others were discussing how money will develop over the next generation, including so-called Central Bank Digital Currencies (CBDCs, of which you will no doubt hear more over the coming years). I had the pleasure of hearing William White, former chief monetary economist at the Bank for International Settlements and Chief Economist at the OECD, give a terrific speech about the bubble created by radical monetary policy. Bill has had distinct Austrian tendencies during his time at the top of the global monetary establishment, citing Hayek and others in his work.

The intellectual tectonic plates within economics are shifting, and the Austrian School is well placed to provide explanations for the coming bursting of the Super Bubble.

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Ryan McMaken on National Parks on the Lions of Liberty Podcast

01/16/2019Mises Institute

On the Lions of Liberty podcast, Marc Clair and Ryan McMaken discuss the government shutdown and the need to decentralize the national parks:

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Joe Salerno on "The Truth About F.A. Hayek"

01/16/2019Mises Institute

Joe Salerno recently joined Tom Woods to discuss the legacy of F.A. Hayek.  From the site:

F.A. Hayek, illustrious member of the Austrian School of economics, won the Nobel Prize in 1974, and wrote prolifically on both economic and non-economic topics. He has been a source of controversy within libertarian circles because of some aspects of his work. Joe Salerno helps us sort everything out about this central figure. Read the original article at TomWoods.com.

The Truth About F.A. Hayek

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Are There Libertarians in Slovakia?

01/16/2019Atilla Sulker

Last summer, I had the pleasure of meeting Dr. Jozef Martiniak at the 2018 Mises University. Dr. Martiniak came to Auburn all the way from Slovakia and he had many great stories to tell about his experience growing up in a Cold War era Czechoslovakia. My conversations with Dr. Martiniak not only revealed an interesting story from the perspective of someone who experienced socialism firsthand, but it also sparked my interest in the politics of Slovakia. He mentioned that there was a libertarian oriented party in Slovakia, and so in this article, I endeavor to examine the movement in Slovakia, analyzing its scope, significance, and authenticity.

The main vessel of Slovak libertarianism nowadays is the political party “Freedom and Solidarity” (SaS). Economist Richard Sulík founded the party in 2009, himself being the mastermind of the Slovakian flat tax. In February of that year, the 10,000 required signatures for the establishment of the party were collected. Sulík was elected chairman.

According to their website, the party claims to run on a platform free of the typical populist propaganda loaded with catchy slogans. It also claims to be run by experts from various different fields, rather than “ideologists”.

The party is also centered around offering specific solutions in which the amount of money required to fund proposed programs is laid out, rather than putting out “unrealistic promises”. It also asserts that the armed forces must have clearly defined objectives. This sort of reform effort in pursuit of creating a government that has clearly defined objectives puts too much trust in the state, something that is inherently very tough to reform.

Though SaS never explicitly claims to be anchored in the chief tenets of libertarianism, the non-aggression principle and property rights, it puts heavy emphasis on the free will and individualism. The party draws a connection between individual freedom and the individual’s happiness. From this, the party asserts that it is against economic intervention.

The party emphasizes a more consequentialist argument regarding the effects of freedom on the collective population.

One interesting thing I learned through my conversations with Dr. Martiniak was that the “passion” that is present in many libertarians in America was not present in Slovakia. Rather the form of libertarianism in SaS is more so “contra the state” instead of a true moral, Rothbardian form.

SaS lists the promotion of “basic solidarity” as one of its keys tenets in Article II of its charter. This sort of concept is manifested in the “euro-realist” stance of the party. The party sees the European Union as an idea with great potential, but also one that demands significant reform as of now. The party also asserts however, that is seeks to curb the bureaucracy and regulations enforced by the EU. Its perception of the EU however, is one that is flawed. SaS believes that the EU should be kept for its promotion of the ideas of free trade and free movement of people, but in regards to this, a classic Bob Murphy argument comes into play.

In his article “But Wouldn't Warlords Take Over?”, Murphy comes to the conclusion that if a society based on small government can be set up and maintained peacefully, these same peace seeking individuals should be able to live together peacefully without a government. In the same way, if member countries of the EU really want free trade and movement, why would there be the need for a political union such as the EU? Even if the EU were to be reformed, it would gradually centralize power over time due to its inherent nature to do so.

In an article published by The Telegraph, Louise Armitstead describes the sentiment of party founded Richard Sulík. Sulík is often criticized by others for being a nationalist, but Armitstead articulates that he is rather “the hero of all discontented Europeans”. This certainly demonstrates the growing resentment in Europe for government. It underscores the borderless nature of freedom, its universal application. It is not something that remains contained within a single country, but spreads. It is not tied to nationalism.

In my humble opinion, the efforts of SaS do not effectively line up with libertarianism in the way that I see it. Sure, the party is pro-market, anti-centralization, pro-civil liberties, etc., but at the same time, due to the fact that it is not grounded in property rights and the NAP, its attempts become blurred. This is why it is so important that any attempt at libertarianism be grounded in these axioms, otherwise the message strays from being genuine. SaS embodies the more “pragmatic libertarianism” present in those such as Gary Johnson, rather than genuine Misesian or Rothbardian aesthetic.

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Media Accuses Rand Paul of Hypocrisy for Visiting Canadian Hospital: Turns Out It's a Private Hospital

01/14/2019Tho Bishop

Kentucky Senator Rand Paul recently announced he was receiving hernia surgery as a result of being blindsided in an attack from his neighbor. While a senator undergoing common surgery is of questionable newsworthiness, one may expect that the reminder that the Senator is still suffering from the 2017 incident as cause for sympathy. Instead, major media outlets decided to try to use the news as an example of hypocrisy on the part of Paul due to the fact he is receiving treatment at a Canadian hospital.

As published in USA Today:

Kentucky Sen. Rand Paul, one of the fiercest political critics of socialized medicine, will travel to Canada later this month to get hernia surgery....

He is scheduled to have the outpatient operation at the Shouldice Hernia Hospital in Thornhill, Ontario during the week of Jan. 21, according to documents from Paul's civil lawsuit against Boucher filed in Warren Circuit Court....

Paul, a Republican, often argues for private market solutions to American's health care woes.

In Canada, medical care is publicly funded and universally provided through the country's Provincial Ministry of Health, and everyone receives the same level of care.

Paul has called universal health care and nationalized options "slavery."

Of course, if the author had decided to do a two second internet search for “Shouldice Hernia Hospital,” they would have found that it is one of few private hospitals that were grandfathered in prior to the government’s takeover of Canadian healthcare.

Oops.

Of course, the same media outlets that jumped to cry "hypocrisy" at Senator Paul are also guilty of ignoring the very real consequences of Canada’s socialist healthcare system. For example, patients dying due to a lack of access to basic medical supplies such as hospital beds

For more on the disaster of Canada's socialized healthcare system, check out this series by (Canadian author) Lee Friday:

1. The Myth They Used to Pass Canada's Universal Healthcare

2. Universal Health Care in Canada: A Colossal Government Failure

3. The Solution to Canada’s Failed Universal Health Care System: Consumer and Physician Freedom

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