Freedom of Religion
Thursday, November 27, 2008
Freedom of Religion
From “The Pilgrim’s Most Important Discovery” by Robert Sirico, WSJ Nov. 26, 1997
Thankfulness for prosperity is the mark of the season. But as you enjoy the holiday feast tomorrow, remember that only private property makes prosperity possible--a hard lesson the original Pilgrims learned in the years after their arrival in North America.
In 1617, when the Pilgrims decided to leave the Netherlands, they formed a partnership in a joint-stock company with a group of London merchants. The company, John Peirce & Associates, received a grant for a plantation in the Virginia colony, but the Pilgrims missed the mark and landed along the Massachusetts coast instead. According to the terms of the contract, each adult would be given a share in the company, but the earnings would not be divided among the shareholders for seven years. The Pilgrims' sense of collective ownership was already established when they set sail for the New World.
Once they landed in 1620, the Plymouth colony, following the advice of the company, declared all pastures and produce in common and enshrined this principle in law. The result was economic chaos, disease and starvation. After the first winter, half the colonists had died. It was 1623 before private property rights were established in land, and each stockholder was allowed to cultivate food at a profit.
Textbooks typically blame the weather for this disaster. But William Bradford, governor of the colony, who instituted the New World's first privatization, had a different opinion. Faced with a crisis, he wrote in his diary, the colonists "began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery." So Bradford "assigned to every family a parcel of land." "This had very good success for it made all the hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content."
The previous socialist policy, Bradford wrote, had proved the "vanity of that conceit of Plato's . . . that the taking away of property and brining community into a commonwealth would make them happy and flourishing." In fact, socialism "was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort."
It was Bradford's decision to draw clear lines of ownership, far more than a turn in the weather or better production techniques, that allowed for the first plentiful harvest and gave us the first Thanksgiving…
Property is not an ultimate value, but a means to an end. It allows us to make use of our individual talents, to take risks, to be charitable and to imbue our lives with ultimate meaning. It is the foundation of a growing economy, a reward for work, a means of security and a source of order in our lives. By allowing us to make contracts and to share, it deters human conflict and shores up social peace. Without private property, the state pretends to rule on everyone's behalf, always with the same disastrous results.
Tuesday, November 25, 2008
The peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error.
--John Stuart Mill, philosopher and economist (1806-1873)
HT 3 Ring Binder.
Monday, November 24, 2008
If a nation values anything more than freedom, it will lose its freedom; and the irony of it is that if it is comfort or money that it values more, it will lose that, too.
-- W. Somerset Maugham(1874-1965)Source: Strictly Personal, 1941
and from --Thomas Sowell “It’s Priceless” Townhall.com Nov. 18, 2008
Wouldn't it be wonderful to live in a world where there were no prices? If you happened to want a Rolex or a Rolls-Royce, [or gasoline] you could just go get one-- or two if you wanted-- and not have to worry about ugly little things like price tags.
There is such a world. It is the world of political rhetoric. No wonder so many people are attracted to that world. It would be a great place to live.
Or would it?
Costs are not like that. You can ignore them all you want and they still won't go away. While you are enjoying all the goodies that politicians are sending your way, you may notice that your taxes are going up or that the money you earn or the money you have saved won't buy as much as it used to.
Costs that are passed on to businesses can get passed on again to their customers in higher prices. Money that the government prints to spend itself reduces the value of the money in your wallet or in your bank account.
And the costs he doesn't mention: the subversive effects of a growing sense of entitlement, the emergence of a "right" to live at the expense of others, the breeding of envy between producer and consumer, and the nurturing of resentment of those who have more by those who have less. When you disconnect the owning of wealth from the necessity of first earning or producing it, competition shifts away from the voluntary exchange of the market place into the realm of political coercion, thus destoying the means by which other people are a benefit instead of a threat to our lives.
Free trade brings peace and prospeity. "Free goods" require coercion which brings the opposite.
Sunday, November 23, 2008
In a Memorial Day speech at Indianapolis, President Theodore Roosevelt railed that the "predatory man of wealth" was the primary threat to private property in the United States:The book is worth reading for the details of events, but the analysis is incomplete. A better overall understanding of the Panic of 1907 would include a description of the regulatory restrictions in place at the time including the reserve requirements and the effects of their consequent pyramiding within the banking system, severe branching restrictions, and bond-collateral restrictions on currency issuance. (See Salsman, Richard "Bankers as Scapegoats for Government Created Banking Crises in U.S. History" in The Crisis in American Banking, ed. Lawrence H. White, NY University Press, 1993. Briefly reviewed here. For a more technical discussion focusing on the need for and use of currency substitutes, see Horwitz, Steven, "Competitive Currencies, Legal Restrictions, and the Origins of the Fed: Some Evidence from the Panic of 1907" here.)One great problem that we have before us is to preserve the rights of property, and these can only be preserved if we remember that they are in less jeopardy from the Socialist and the Anarchist than from the predatory man of wealth. There can be no halt in the course we have deliberately elected to pursue, the policy of asserting the right of the nation, so far as it has the power, to supervise and control the business use of wealth, especially in the corporate form.
Progressive activism was reflected at the state level as well; various states passed legislation sharply limiting the prices railroads could charge passengers. Business analysts believed these prices yielded revenues below the costs necessary to provide the services, thus inducing downward pressures on stock prices. The Chronicle opined, "What is ailing the railroads and the stock market? ... The underlying cause is the same as it was at the time of the collapse in March, the same, indeed, as it has been for about a year and a half, during all of which period a shrinkage in values has been in progress. Owing to the assaults of those high in authority and adverse legislation both by Congress and the State legislatures, confidence is almost completely gone. No one is willing to buy at what appear like ridiculously low prices because no one can tell what the future may bring forth.
The initial judgment of knowledgeable observers was that the break in stock prices in March 1907 had been sparked by investor fears arising from the Roosevelt administration's aggressive attitude toward railroads and industrial corporations. "For a year we have been foretelling this catastrophe, an assured result of the trials railroad property, railroad men and other large capitalists have been forced to suffer," the Commercial and Chronicle said, commenting on a newly launched investigation E.H. Harriman's Union Pacific railroad. "What has just taken place is not the final scene. Hereafter, if the irritant is continued, as we presume it will be, it will not be so exclusively securities and security-holders that will suffer; all sorts of industrial affairs are sure to get involved.” That irritant, of course, was the president of the United States.
HT TIA Daily
Saturday, November 22, 2008
Every time that we try to lift a problem from our own shoulders, and shift that problem to the hands of the government, to the same extent we are sacrificing the liberties of our people.
-- John F. Kennedy(1917-1963)35th US President
Friday, November 21, 2008
Thursday, November 20, 2008
The ultimate result of shielding men from the effects of folly
is to fill the world with fools.
-- Herbert Spencer(1820-1903) British author, economist, philosopher 1891
Wednesday, November 19, 2008
What makes you feel most alive?
For Morrie, it was other people.
“The most important thing in life is to learn how to give out love, and to let it in.”
“Love each other, or perish.”
“Invest in the human family. Invest in people. Build a little community of those who love you.”
This is good advice. Human relationships are central for me as well. All that I do, read, think about, plan, build, play –all of that would be so much less, so lonely, without people to share it with. Really share it with. Through common values, as well as by appreciating each other’s uniqueness.
Morrie also decries the attention our culture gives to material goods and success at work. His criticism, however, strikes me as somewhat off the mark.
Wealth is constantly under attack, as “materialism,” “greed,” the “means of exploitation,” both of people and of the earth. These attacks seem to ignore the fact that wealth is key to our ability not just to survive, but to thrive as human beings. Where discussions frequently go astray, by wealth’s defenders as often as by its attackers, is the failure to recognize that wealth is not an end in itself. It is simply a means. The purpose of wealth is to serve human life.
Wealth is the means for each individual to transform the physical world into those things which will best serve his life. Material, goods are not the reason we live, work, and trade, but they are an important part of how we live, work, ands trade. Wealth is central to achieving the health, security and energy we need in order to aim higher than mere physical survival. To view wealth as an end in itself, whether to attack it, or pursue it, or to defend it, is to misunderstand the role of wealth in our lives. Wealth, the goods themselves or the money which stands in their place, --these are the tools we use in the service of living.
Wealth makes possible the luxury of focusing beyond our next meal to manifesting our creative capacities. In art, in science, in business, in loving relationships. Wealth frees us from the urgency of the physical requirements of life so we may reach ever greater heights in attending to the spiritual rewards of living.
Wealth allows us options. It still is up to each of us individually to identity and stay focused on what is important. Tuesdays with Morrie is a nice reminder to do just that-- to make my highest values my highest priority.
It is as simple--and as hard--as that.
Tuesday, November 18, 2008
If an American is to amount to anything he must rely upon himself, and not upon the State; he must take pride in his own work, instead of sitting idle to envy the luck of others. He must face life with resolute courage, win victory if he can, and accept defeat if he must, without seeking to place on his fellow man a responsibility which is not theirs.
-- Theodore Roosevelt(1858-1919) 26th US President
Monday, November 17, 2008
"It's been said that when the only tool you have is a hammer, every problem looks like a nail. For politicians, bureaucrats, and many activists, when the only tool you have is coercion, the cause of every problem looks like too much freedom."
from “Too Much Freedom” by Roy Cordato, in The Freeman July/August 2008
Thursday, November 13, 2008
The idea is to give people the means to purchase goods, so as to create the necessary demand for producers to produce. The underlying assumption is that sufficient demand is lacking. Feed the bottom, then watch the economy grow. Trickle-up economics.
This is the dominant economic view today, developed and promoted in the 1930’s by Lord John Maynard Keynes. In Keynes’ theory, the state plays a central role to maximize production, achieve economic stability and assure full employment. In his view, the free market lacks the requisite compensatory mechanisms to achieve these goals. Instead, the state must intervene through the manipulation of taxes and interest rates, and by “investing” in infrastructure and other public projects.
From this point of view, the fundamental problem of economics is a lack of “aggregate demand,” i.e. not enough ability to consume.
But the need to consume is a fact of nature. We are born hungry, naked and poor. The fundamental problem of economics to be solved is not the creation of more need or desire or ability to consume. We are born with a limitless need for wealth. The fundamental problem to be solved is production. Without production, there is nothing to consume. With production, and free market competition, the interaction of supply and demand results in goods and services at affordable prices. Free market prices are the “requisite compensatory mechanism” which Keynes failed to see.
We can not improve the general standard of living simply by boosting consumption. The apparent chicken-and-egg of production and consumption has an essential fulcrum: the productivity of labor. Progress in prosperity is only made by figuring out and applying ways to do more with less. More goods with less effort and/or less material.
Increasing the productivity of labor makes the real cost of goods go down. As labor is valued by how productive it is, through increasing the productivity of labor, you also increase real wages. Cheaper goods and higher wages are the source of true prosperity and progress.
How do you increase the productivity of labor?
Not by handing consumers more spending money through a stimulus package. That approach fails on two accounts. First, consumer spending is a relative dead end. Items are purchased, enjoyed and consumed. Some businesses benefit, but the effect soon peters out, unless the stimulus keeps coming. Since the money has to come from somewhere, without production, this method is unsustainable. Second, where does the stimulus money come from?
Money is simply, stored wealth. To be stored, wealth first must be produced. So money for a government stimulus (or any type of government redistribution) must come from production, either directly via taxation, or indirectly via debasement of the currency (by increasing the national debt or simply printing more paper dollars) which then erodes away the value of our savings. To “invest” in consumer spending, you first have to subtract from funds which could otherwise be invested in improving production through capital investment. The nature of capital investment is to create the means for even greater production, i.e. more wealth. The nature of consumption is the depletion of wealth.
It is true that increased consumer spending will stimulate some increased production, but without the funds to invest in capital improvements (both human and material) the productivity of labor will not increase, or will increase to a diminished amount. With a stimulus package, some jobs will be created. Some people will be able to purchase more goods. However, the same money put towards capital investment would create even more jobs, and the resulting increased productivity would make even more goods affordable to even more people.
The jobs and goods which never materialize because of government redistribution policy is another case of “What is Seen and What Is Not Seen.” It is easy to see the money we are handed, and the immediate effect on spending. It takes more work to understand the hidden cost on future production and spending, because the goods and jobs that are never created is what we do not see.
This theory is supported by experience. As discussed in a recent article in the Wall Street Journal:
The nearby chart shows the arc of tax policy and economic growth across the Bush years. After the dot-com bust, President Bush compromised with Senate Democrats and delayed his marginal-rate income tax cuts in return for immediate tax rebates. The rebates goosed spending for a while but provided no increase in incentives to invest. Only after 2003, when the marginal-rate cuts took effect immediately, combined with cuts in dividend and capital gains rates, did robust growth return. The expansion was healthy until it was overtaken by the housing bust and even resisted recession into this year. Mr. Bush and Congress returned to the rebate formula in February, but a blip in second-quarter growth has now ended as the economy heads into recession.
Production must precede consumption. This is concretely evident in a primitive economy: the food that is not hunted, gathered or grown can not be eaten. The connection is easier to loose sight of in a complex division-of-labor economy, especially one of paper fiat money. As economist Dr. George Resiman explains in “Production vs. Consumption,”
The use of money makes this point somewhat less obvious but no less true. Where money is employed, producers do not exchange goods and services directly, but indirectly. The buyer exchanges money for the goods of a seller. The seller then exchanges the money for the goods of other sellers, and so on. But every buyer in the series must either himself have offered goods and services for sale equivalent to those he purchases, or have obtained his funds from someone else who has done so.
The fact that in a monetary economy everyone measures his benefit by the amount of money he obtains in exchange for his goods or services is interpreted by the consumptionist to imply that the mere spending of money is a virtue and that economic prosperity is to be found through the creation and spending of new and additional money — i.e., by a policy of inflation.
In rebuttal, the productionist argues that for everyone who spends newly created money and thereby obtains goods and services without having produced equivalent goods and services, there must be others who suffer a corresponding loss. Their loss, says the productionist, takes the form either of a depletion of their capital, a diminution of their consumption, or a lack of reward for the added labor they perform — a loss precisely corresponding to the goods and services obtained by the buyers who do not produce.
The destructive effects of redistributionist policies is not just the loss of wealth that it causes, but the violation of the moral principle that each man is an end in himself and must not be coercively turned into the means for another’s end. Reisman continues:
The only economic benefit which one can give to a producer…consists in the exchange of one's own products or services for his products or services. It is by means of what one produces and offers in exchange that one benefits producers, not by means of what one consumes. To the extent that one consumes the products or services of others without offering products or services in exchange, one consumes at their expense. (emphasis mine)
These two opposite views of economic life have consequences far beyond their effects on GDP, unemployment rates and the affordability of goods. They also define our most fundamental social relationship: free men and voluntary trade, or men controlled by the state in a system based on “from each according to their ability to each according to their need.”
Wednesday, November 12, 2008
"Kling on Credit Default Swaps, Counterparty Risk, and the Political Economy of Financial Regulation"
Monday, November 10, 2008
Saturday, November 8, 2008
First, let's establish what laissez-faire capitalism is. Broadly defined, it is an economic system based on private ownership and control over of the means of production. Under laissez-faire capitalism, government activity is restricted to the protection of the individual's rights against fraud, theft and the initiation of physical force.
--Walter Williams, "Capitalism and the Finanacial Crisis"
How can anyone claim that we have tried laissez-faire and it has failed when, as pointed out by Dr. George Resiman,
1) Government spending in the United States currently equals more than forty percent of national income...
2) There are presently fifteen federal cabinet departments, nine of which exist for the very purpose of respectively interfering with...the economic freedom of the individual...
3) The economic interference of today’s cabinet departments is reinforced and amplified by more than one hundred federal agencies and commissions, the most well-known of which include, besides the IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA,CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA...
4) To complete this catalog of government interference and its trampling of any vestige of laissez faire, as of the end of 2007, the last full year for which data are available, the Federal Register contained fully seventy-three thousand pages of detailed government regulations...
5) And, of course, to all of this must be added the further massive apparatus of laws, departments, agencies, and regulations at the state and local level...
(emphases are mine)
In a system of laissez-faire capitalism, government would be prohibited from many of the activities it now not only participates in, but effectively controls. We have never had laissez-faire capitalism, although we were much closer during the explosively productive period of the late 19th century.
Advocates of government management of the economy mistakenly interpret the lack of government regulation and planning as lack of planning and regulation in general. But as Dr. Williams points out:
It is incorrect to say that laissez-faire or free markets are unregulated. There is ruthless regulation, but it's not by government.
The free market coordinates the plans of countless individual planners, implementing its regulatory mechanism through profit and loss, rewarding those who most efficiently provide the goods and services that others demand. Force and fraud are violations of individual rights and are appropriately excluded and punishable by law. All honest, voluntary exchanges are permitted. Government's role is limited to protecting life, liberty and property, and to overseeing strict equality before the law. The free choices of free individuals provide all the regulation which is necessary and morally justifiable.
In a different article, Dr. Williams points out:
Americans demand that Congress spend trillions of dollars on farm subsidies, business bailouts, education subsidies, Social Security, Medicare and prescription drugs and other elements of a welfare state. The problem is that Congress produces nothing. Whatever Congress wishes to give, it has to first take other people's money. Thus, at the root of the welfare state is the immorality of intimidation, threats and coercion backed up with the threat of violence by the agents of the U.S. Congress. In order for Congress to do what some Americans deem as good, it must first do evil. It must do that which if done privately would mean a jail sentence; namely, take the property of one American to give to another.
Judy Shelton, another defender of capitalism, aptly reminds us:
With freedom comes choice; with choice comes responsibility. What is true within one's own life and one's own community should be true for the world at large. Integrity matters, competence counts, and earnest effort finds its reward. The Latin root of the word "credit" -- credere -- means "to believe." There is no better starting point for restoring morality to capitalism.
Or restoring us to the morality which is capitalism.
Free trade. Not government coercion.
Honest trade. Not political corruption.
Personal accountability. Not government bailouts.
Punishment of fraud. Not protection from errors.
Individual rights. Not special interests.
I am for a government rigorously frugal and simple. Were we directed from Washington when to sow, when to reap, we should soon want bread. -- Thomas Jefferson
We need to get back to limited government and individual freedom.
Not just because it works, but because it is right.
Thursday, November 6, 2008
Have the government actions to date been helpful or harmful? How is one supposed to evaluate this mess?
Here's a helpful discussion with Arnold Kling, currently with the Cato Institute, but in the he past has worked both at the Federal Reserve and at Freddie Mac. In the clip, he offers clear explanations of securitization, credit default swaps, the role of Fannie and Freddie in the mortgage market, and much more. His analysis comes across as informed and level-headed, adding some key background and perspective on how we got to where we are. If you are trying to understand what has been happening but have been confused by the jargon or in need of flushing out the historical context, this is a good place to start. To figure out the next best step, we first need to understand how we got here.
Free Will: Financial Apocalypse Explained Recorded: September 26
"Table of Contents":
Arnold (once of Freddie Mac) explains the housing bubble (12:58)
A brief history of Fannie and Freddie (14:14)
Was it really so unlikely that we’d end up in this kind of mess? (05:50)
Is there a method to the bailout madness? (05:14)
Surprise! The US is ruled by a technocratic elite (04:55)
Arnold blasts the Paulson plan as essentially corrupt (09:52)
If you think you have a handle on the basics, then here's a bit more technical discussion between Kling and economist Russ Roberts in a podcast from EconTalk.
Wednesday, November 5, 2008
It is not.
Slavery is wrong, not because one race subjugates another race, but because one individual thinks he owns the life of another individual.
He does not.
We no longer believe in chattel slavery, where one man can own another. But the belief still exists that we, as a community, have a moral claim on the productive labor of our neighbor.
We do not.
Each individual life is sacred. Each one of us is owner of his own life, his own labor, his own property, and only his own. Some believe you can compromise on one part of this trilogy without destroying the whole.
You can not.
Well meaning, thoughtful people confuse majority rule with individual rights. They are not the same. Without the absolute barrier to action drawn by inalienable rights, a majority is merely a mob.
Our country does need a change. We need to rededicate ourselves to the ideals upon which this country was founded: the individual rights of life, liberty and property. We need to apply them with rigorous consistency in every situation, to every individual. That is the meaning of equality before the law.
Freedom based on individual rights is the only path to peace and prosperity. I am saddened that to believe this is to be the new minority.
But this is still the freest country in the world. We are a people that can learn from our mistakes, and act to correct them. We can voice our disagreements and non-violently work to change each other's minds. We can live together, work side by side, and pursue our dreams and ideals, even though we disagree.
Yes, we can.
Tuesday, November 4, 2008
Monday, November 3, 2008
-Abraham Lincoln(1809-1865) 16th US President
"As I would not be a slave, so I would not be a master. This expresses my idea of democracy."
--Beth Haynes, 2008 U.S. Citizen
As I would not be a victim, so I would not be a thief. This expresses my idea of morality.
"Redistribution" is legalized theft.
and from comment to "front page":
"As I would not want my life and freedom controlled by the state, so I would not want the state to control the lives and freedoms of all other men. This expresses my idea of Capitalism."
-- John Dick, 2008 U.S. Citizen
Sunday, November 2, 2008
Analysts have offered a plethora of causes for the current down turn: greedy bankers, the unregulated shadow market, securitization and complex derivatives, predatory lenders, deadbeat borrowers, housing speculators, Fannie and Freddie, the CRA and ACORN, adjustable mortgage rates, low interest rates, preferential tax treatment of mortgage interest, and so on. The large number of “explanations” in and of itself should serve as a signal that the fundamentals are not understood. Clearly, all those listed contributed. Underlying these factors, isn't there a more fundamental primary driver?
Examined more closely, you will see that most of these “causes” simply tell us why this boom-and-bust is in the housing market. They don’t really address why the boom-bubble-bust occurred in the first place. Eight years ago, it was the dot-com bubble. And before that, there was the Asian financial crisis. And what about the recession back in the early 1980’s? Might there be something which could explain the phenomena of bubbles and the business cycle in general? And if we "fix" the housing bubble bust now without identifying the primary cause, what's to prevent another bubble in some other sector in the future?
The best answers look at fundamental principles. We see this in the scientific process which takes an immense number of concrete specifics and integrates them into a law or theory. Like Einstein’s E=mc2. Or the ideal gas law, PV=nRT. Or Dalton’s atomic theory, or Bassi’s germ theory. Each of these took a set of diverse, previously unexplained occurrences and discovered the underlying principle which connected and explained them all. The new, deeper understanding then triggered an explosion of progress, both in further theoretical research and in the efficacy of its application.
To find long-term efficacious solutions to extreme financial volatility, we must understand the fundamental economic principles which are operating. Since the early 1900’s, our banking, financial and monetary policies have been heavily influenced by two major schools of thought: Keynesian economics and monetarism. These theories are flawed. The policies they justified have failed, along with the banks and other businesses which were required to try and exist within their flawed system.
Two key economic principles must be understood in order to untangle the Gordian knot of today’s financial crisis. The first is the difference between commodity and fiat money and the effect they each have on the market. The second is the instability of a mixed economy.
In future posts I will address the role that each of these has played leading up to today’s down turn, and why we won’t have a permanent turn around until we return to a true free market.