Friday, November 28, 2008

Inspiring Exhibition

I recently had the great pleasure of viewing the traveling exhibition Life, Liberty, and the Pursuit of Happiness: American Art from The Yale University Art Gallery currently at the Speed Art Museum at the University of Louisville. This is the first time many of these pieces have traveled outside of New Haven for an exhibition. If you have a chance to see this, I highly recommend it.

The highlight has to be John Trumbull's eight iconic Revolutionary War paintings which he donated to Yale in 1831. Four of these paintings, The Declaration of Independence, The Surrender of Lord Cornwallis, The Resignation of Washington and the The Surrender of General Burgoyne at Saratoga hang in the Capital Rotunda in Washington, D.C. and are life size replicas of the originals on display in this exhibition. I did not know that Trumbull was directly involved in the Revolution as Washington's second aide-de-camp, Major General Horatio Gates's deputy adjutant general, and a member of the Jay Treaty Commission. He witnessed first hand The Battle of Bunker Hill, and apparently, after British agent Major John André was hanged as a spy in America, Trumbull, as an officer of similar rank, was imprisoned for seven months in London. In addition to being a first hand participant, Trumbull's stated vision was to create a series of paintings "in which should be preserved as far as possible, faithful portraits of those who had been conspicuous actors in the various scenes, whether civil or military, as well as accurate details of the dress, manners, arms & costumes of the times", and he spent years traveling to either meet with or find renderings of the signers so that he could accurately portray them. Knowing about the artist's extraordinary life and understanding his extreme dedication to precision makes viewing the detail of each face in The Declaration of Independence even more awe-inspiring.

There is much more in this exhibition which contains more than 200 "extraordinary objects" which "illustrate the sweep of the American experience from Plymouth Rock to the Gilded Age." Besides Trumbull, my personal favorites were several paintings by Thomas Eakins and one by Robert Walter Weir. Eakins's painting The Veteran (1885) is a portrait of George Reynolds, a Medal of Honor recipient from the Civil War, and is one of the most haunting portraits I have ever seen. In virtually every Civil War photo or portrait I have seen, each person seems to have the same look - the look of someone who has witnessed unmitigated hell. The Veteran captures this in a way that even a photo can not. My other Eakins' favorites in the exhibition were Portrait of Maud Cook (1895) and Dr. Agnew. Weir's The Microscope portrays the founder of microscopy in America, Jacob Whitman Bailey, showing the device to his children in a scene that is remarkably styled and that evokes a sense of the nineteenth century spirit.

Hope you get to enjoy this.

Thursday, November 27, 2008

ARC on Gordon Liddy Show

I'm late but link to podcast here on TOS: ARC on Gordon Liddy

RadioAmerica’s G. GORDON LIDDY is devoting a SPECIAL BROADCAST of his nationally syndicated three-hour talk radio show to Ayn Rand, her philosophy, and understanding the current state of events through the lens of Objectivism.

Thanks to Thrutch

Wednesday, November 26, 2008

Where's Grover Cleveland When You Need Him?

The decade of the 1880's, which saw falling prices and exploding productivity, real wages and gross domestic product, was one of the most prosperous in our history. Not coincidentally, this prosperity occurred following passage of the Specie Resumption Act which forced the government to redeem paper money for gold starting in 1879. This act was passed in reaction to the inflation caused by the irredeemable "greenbacks" issued by the federal government during the Civil War.

In 1890, under political pressure from farmers and western mining interests, the government passed the
Sherman Silver Purchase Act which increased the amount of silver that the federal government had agreed to buy each month under the Bland-Allison Act of 1878 and also forced the government into redeeming silver at parity to gold (or in some legally fixed non-market rate) which overvalued silver relative to gold.

So guess what people did? They took their silver certificates (currency which the government issued in exchange for the actual silver) and redeemed them for the more valuable gold which caused a massive run on the Treasury's gold stock. This essentially bankrupted the United States and forced the government to issue bonds in exchange for gold which was depleted almost instantly in a reoccuring cycle.

The situation is described in the 1922 novel The Driver by Garet Garret:

All other business having come to a stop while this matter was at an impasse, a truce was effected in this wise by law: Gold should remain paramount nominally, but the Treasury should buy each month a great quantity of silver bullion, turn it into white money, force the white money into circulation and then keep it equal to gold in value. Now, the amount of precious metal in a silver dollar was worth only half as much as the amount of precious metal in a gold dollar. Yet Congress decreed that gold and silver dollars should be interchangeable and put upon the Treasury a mandate to keep them equal in value. How? By what magic? Why, by the magic of a phrase. The phrase was: "It is the established policy of the United States to maintain the two metals at a parity with each other by law."

Naive trust in the power of words to command reality is found in all mass delusion.

The Coxeyites were laughed at for thinking that prosperity could be created by phrases written in the form of law. Congress thought the same thing. It supposed that the economic distress in the country could be cured by making fifty cents' worth of silver equal to one hundred cents' worth of gold, and that this miracle of parity could be achieved by decree.

Anyone would know what to expect. The gold people ran with white dollars to the Treasury and exchanged them for gold and either hoarded the gold or sold it in Europe. In this way the government's gold fund was continually depleted, and this was disastrous because its credit, the nation's credit in the world at large, rested on that gold fund. It sold bonds to buy more gold, but no matter how fast it got more gold into the Treasury even faster came people with white money to be redeemed in money the color of red inclining to yellow, and all the time the Treasury was obliged by law to buy each month a great quantity of silver bullion and turn it into white money, so that the supply of white money to be exchanged for gold was inexhaustible.

Needless to say, this boondoggle was mostly responsible for the Panic of 1893 and repealing the law that caused it was essential. In today's day and age, the cause of this disaster, namely, the government program, would not be identified as the cause nor would the cause per se even be considered relevant. No doubt, the government would pass a new law that would effect more controls and even greater disaster. Well, not to give the 19th century too much credit since they were dumb enough to have passed this law, but it is almost shocking to see the speech printed below by President Grover Cleveland in which he both identifies the cause of the disaster as government intervention and demands its immediate repeal. (Cleveland inherited the mess caused primarily by the previous Republican administration. Cleveland was a Democrat which in those days meant he advocated limited government and sound money whereas the Republicans advocated big government, protectionism and soft money.) This may have been the last time excepting Prohibition that the federal government actually repealed a law...

Try to imagine a modern politician giving the following speech. (I have bolded some of the best passages.)

President Cleveland Message on the Repeal of the Sherman Silver Purchase Act
(August 8, 1893)

The existence of an alarming and extraordinary business situation, involving the welfare and prosperity of all our people, has constrained me to call together in extra session the people's representatives in Congress, to the end that through a wise and patriotic exercise of the legislative duty, with which they solely are charged, present evils may be mitigated and dangers threatening the future may be averted.

Our unfortunate financial plight is not the result of untoward events nor of conditions related to our natural resources, nor is it traceable to any of the afflictions which frequently check national growth and prosperity. With plenteous crops, with abundant promise of remunerative production and manufacture, with unusual invitation to safe investment, and with satisfactory assurance to business enterprise, suddenly financial distrust and fear have sprung up on every side. . . . Values supposed to be fixed are fast becoming conjectural, and loss and failure have invaded every branch of business.

I believe these things are principally chargeable to Congressional legislation touching the purchase and coinage of silver by the General Government.

This legislation is embodied in a statute passed on the 14th day of July, 1890, which was the culmination of much agitation on the subject involved, and which may be considered a truce, after a long struggle, between the advocates of free silver coinage and those intending to be more conservative.

This law provides that in payment for the 4,500,000 ounces of silver bullion which the Secretary of the Treasury is commanded to purchase monthly there shall be issued Treasury notes redeemable on demand in gold or silver coin, at the discretion of the Secretary of the Treasury, and that said notes may be reissued. It is, however, declared in the act to be "the established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio or such ratio as may be provided by law."

This declaration so controls the action of the Secretary of the Treasury as to prevent his exercising the discretion nominally vested in him if by such action the parity between gold and silver may be disturbed. Manifestly a refusal by the Secretary to pay these Treasury notes in gold if demanded would necessarily result in their discredit and depreciation as obligations payable only in silver, and would destroy the parity between the two metals by establishing a discrimination in favor of gold.

The policy necessarily adopted of paying these notes in gold has not spared the gold reserve of $100,000,000 long ago set aside by the Government for the redemption of other notes, for this fund has already been subjected to the payment of new obligations amounting to about $150,000,000 on account of silver purchases, and has as a consequence for the first time since its creation been encroached upon.

We have thus made the depletion of our gold easy and have tempted other and more appreciative nations to add it to their stock. .

Unless Government bonds are to be constantly issued and sold to replenish our exhausted gold, only to be again exhausted, it is apparent that the operation of the silver-purchase law now in force leads in the direction of the entire substitution of silver for the gold in the Government Treasury, and that this must be followed by the payment of all Government obligations in depreciated silver.

At this stage gold and silver must part company and the Government must fail in its established policy to maintain the two metals on a parity with each other. Given over to the exclusive use of a currency greatly depreciated according to the standard of the commercial world, we could no longer claim a place among nations of the first class, nor could our Government claim a performance of its obligation, so far as such an obligation has been imposed upon it, to provide for the use of the people the best and safest money.

If, as many of its friends claim, silver ought to occupy a larger place in our currency and the currency of the world through general international cooperation and agreement, it is obvious that the United States will not be in a position to gain a hearing in favor of such an arrangement so long as we are willing to continue our attempt to accomplish the result single-handed. .

The people of the United States are entitled to a sound and stable currency and to money recognized as such on every exchange and in every market of the world. Their Government has no right to injure them by financial experiments opposed to the policy and practice of other civilized states, nor is it justified in permitting an exaggerated and unreasonable reliance on our national strength and ability to jeopardize the soundness of the people's money.

This matter rises above the plane of party politics. It vitally concerns every business and calling and enters every household in the land. There is one important aspect of the subject which especially should never be overlooked. At times like the present, when the evils of unsound finance threaten us, the speculator may anticipate a harvest gathered from the misfortune of others, the capitalist may protect himself by hoarding or may even find profit in the fluctuations of values; but the wage earner-the first to be injured by a depreciated currency and the last to receive the benefit of its correction-is practically defenseless. He relies for work upon the ventures of confident and contented capital. This failing him, his condition is without alleviation, for he can neither prey on the misfortunes of others nor hoard his labor. .

It is of the utmost importance that such relief as Congress can afford in the existing situation be afforded at once. The maxim "He gives twice who gives quickly" is directly applicable. It may be true that the embarrassments from which the business of the country is suffering arise as much from evils apprehended as from those actually existing. We may hope, too, that calm counsels will prevail, and that neither the capitalists nor the wage earners will give way to unreasoning panic and sacrifice their property or their interests under the influence of exaggerated fears. Nevertheless, every day's delay in removing one of the plain and principal causes of the present state of things enlarges the mischief already done and increases the responsibility of the Government for its existence. Whatever else the people have a right to expect from Congress, they may certainly demand that legislation condemned by the ordeal of three years' disastrous experience shall be removed from the statute books as soon as their representatives can legitimately deal with it.

It was my purpose to summon Congress in special session early in the coming September, that we might enter promptly upon the work of tariff reform, which the true interests of the country clearly demand, which so large a majority of the people, as shown by their stiffrages, desire and expect, and to the accomplishment of which every effort of the present Administration is pledged. But while tariff reform has lost nothing of its immediate and permanent importance and must in the near future engage the attention of Congress, it has seemed to me that the financial condition of the country should at once and before all other subjects be considered by your honorable body.

I earnestly recommend the prompt repeal of the provisions of the act passed July 14, 1890, authorizing the purchase of silver bullion, and that other legislative action may put beyond all doubt or mistake the intention and the ability of the Government to fulfill its pecuniary obligations in money universally recognized by all civilized countries.

Tuesday, November 25, 2008

Having Your Restraint and Spending Too

This was an actual headline today:

Obama Promotes Fiscal Restraint, Big Spending
President-elect Barack Obama wants to project fiscal restraint even as his economic team assembles a massive recovery package that could cost several hundred billion dollars.

WHAT? It is amazing that this passes as a serious news article in today's world. Expert, Leonard Burman, director of the nonpartisan Tax Policy Center adds:

"What's good about the appointments that Obama has made is that it suggests, in ways that his campaign never did, that he really understands this."

I am glad he does.

Thursday, November 20, 2008

Oh, By the Way

In a previous post Maybe It's The Sun - Impossible, I discussed the fact that scientists apparently do not clearly understand the role of the sun on earth's climate:

I submit that if climate scientists are still at the point of saying things like "I think the main question is, how does the sun [in general] act on climate? What are the processes that are going on in the Earth's atmosphere?" then perhaps we should have some skepticism as to the validity of their computer models which extrapolate their current understanding and attempt to predict the weather over the next 100 years!

Well, here is yet another example of why we should be skeptical of computer climate models. According to a recent Cornell study published in Nature Geosciences:

A detailed analysis of black carbon -- the residue of burned organic matter -- in computer climate models suggests that those models may be overestimating global warming predictions.

Then comes this little nugget:

By entering realistic estimates of stocks of black carbon in soil from two Australian savannas into a computer model that calculates carbon dioxide release from soil, the researchers found that carbon dioxide emissions from soils were reduced by about 20 percent over 100 years, as compared with simulations that did not take black carbon's long shelf life into account

The findings are significant because soils are by far the world's largest source of carbon dioxide, producing 10 times more carbon dioxide each year than all the carbon dioxide emissions from human activities combined. Small changes in how carbon emissions from soils are estimated, therefore, can have a large impact.

"We know from measurements that climate change today is worse than people have predicted," said Lehmann. "But this particular aspect, black carbon's stability in soil, if incorporated in climate models, would actually decrease climate predictions."

So, apparently, scientists do not clearly understand the relationship of the earth's climate to both the sun (which I suspect might have something to do with heating) and "soils" which allegedly has 10 times the effect of human emissions (of course, besides these little problems, they have it down). But, didn't Apostle Al et al tell us that it was indisputable that humans are causing global warming (or excuse me "climate change")? Weren't us skeptics castigated as "global warming deniers", and weren't we warned that based on these models it was necessary to wreck half the world's economy in order to stop the satanic carbon emissions from roasting us to death?

Monday, November 17, 2008

Schiff Outstanding

This video clip is pretty self-explanatory. Hats off to Peter Schiff. He demonstrates the power of thinking in principle and of understanding economic fundamentals as opposed to the mindlessness of the shills who pass as "experts" on most of these business and political shows.

Friday, November 14, 2008

With Friends Like This, Who Needs Enemies?

In an article entitled "Bush Warns Against 'Too Much' Government in Markets" I expected (well not really) to hear Bush's argument as to why we shouldn't have too much government in markets.
President George W. Bush today urged leaders of the world's biggest economies not to abandon free- market capitalism as they seek an escape from the financial crisis, calling it the ``best system'' for delivering growth.

``History has shown that the greater threat to economic prosperity is not too little government involvement in the market, but too much,'' Bush said. ``Our aim should not be more government, it should be smarter government.''
Ok, but the "smarter government" idea is already scaring me. So what is Bush's "free market" plan?
Bush today said the G-20 leaders will consider pushing common standards for accounting, improving oversight of financial-market instruments such as credit default swaps and better protecting investors against fraud. He said ways will be sought to coordinate market regulations across borders and to hand emerging markets more power within the International Monetary Fund and World Bank.

``The answer is not to try to reinvent that system,'' Bush said. ``It is to fix the problems we face, make the reforms we need, and move forward with the free market system.''

...For all his defense of markets, Bush this year extended the reach of government by backing bailouts of American International Group Inc., Bear Stearns Cos., Fannie Mae and Freddie Mac. His administration is also implementing a $700 billion financial rescue program which U.S. Treasury Secretary Henry Paulson yesterday shifted toward relieving pressure on consumer credit, scrapping an effort to buy devalued mortgage assets.
In other words, the "free market" plan pushed by the arch capitalist conservative Bush consists of internationally coordinated regulation (excuse me, "oversight"), bailouts of banks and insurance companies, bailouts of government sponsored mortgage underwriters Fannie Mae and Freddie Mac, a $700 Billion "financial rescue program", and more "power" for emerging markets in the International Monetary Fund and World Bank which are global clearinghouses of tax payer funds that get doled out to governments who can't steal their own people's money because they don't have any. Of couse, this is all taking place in countries who all have central banks that regulate each countries respective financial "system" and which can create money out of thin air which was supposed to create more "stability" than that evil gold standard.

What is the "socialist" plan?

Tuesday, November 11, 2008

Why Republicans Keep Failing

After being handed the Congress in 1994 and the presidency for eight years, the Republicans have been soundly defeated. Of course, Republican futility is not a recent phenomena. The Republicans have been unable to retain a majority in Congress for more than a few years at a time for a hundred years. As I said in my last post, if there is any good to come out of this it is that it will force yet another rethink of their "philosophy" although it is unlikely they will fundamentally change for the same reasons that make them futile in the first place.

So why do the Republicans keep losing? Many reasons will likely be offered in the wake of this defeat. Some might argue that even when Republicans gain power, they do not implement policies consistent with their allegedly free market rhetoric, and, in fact, they act more like Democrats than Democrats. Some might say that they are unable to inspire the public to follow them and unable to articulately defend their ideas from opponents who, for example, charge them with supporting the "wealthy" at the expense of the poor and middle class. Some say the party is split between religious conservatives, who focus on less immediate social issues like abortion, gay marriage, or "family values", and the "economic conservatives", who support limited government intervention in the market. Some say they are unprincipled Washington whores corrupted by the "process". Of course, all of these charges are true but, in my view, they are symptoms of a more fundamental cause - not the primary cause. If you want a clue as to why the Republicans not only continually lose elections but seem unable to implement their supposed ideology when they do have power consider the answers to the following questions related to observed facts in our culture:

Why do popular "super heroes" need "super powers"?

On "The Simpsons", why do the writers portray the Republican Party of Springfield as surreptitiously meeting in an underground cave?

Why are Republicans like Cheney, Rove, and Rumsfeld popularly portrayed as nefarious ogres scheming in dark smoky rooms while a liberal like Bill Clinton, who raped his subordinates and sold military secrets to the Chinese, is celebrated as a suave ladies' man and Obama, who cavorts with communists and terrorists, is portrayed as an affable idealist?

Why are businessmen vilified as miserly scrooges who refuse to dole out money to the poor (see, uh, "Scrooge" in A Christmas Carol or "Mr. Potter" in "It's A Wonderful Life") yet now are vilified for doling out money to the poor (i.e., lending to uncreditworthy customers)?

Why are the laws, rules of evidence, and the presumption of innocence strictly enforced when it comes to murders and rapists but businessmen are subjected to undefined, arbitrary laws and regulations and saddled with mountains of compliance related filings and wanton regulatory investigations under the presumption that they are guilty until proven innocent?

How come quacks like Al Gore and a terrorists like Yasser Arafat receive Nobel Peace Prize's while great business heroes like Carnegie and Rockefeller are smeared as "Robber Barons"?

How can someone like Mother Teresa be sainted for keeping poor people poor while brilliant businessmen who create untold wealth like Bill Gates, Michael Milken, and Martha Stewart are put on trial?

Why is it that despite the massive body of empirical and theoretical evidence demonstrating that free markets lead to untold prosperity, whenever a crisis occurs as a result of departures from capitalism, i.e. from government intervention in the economy, everyone in the world (including the conservatives) declares that capitalism has failed and more controls need to be implemented?

Is there an underlying theme that explains all of the above?

First, the question related to capitalism taking the blame for socialism has been of particular interest lately. Dr. George Reisman wrote a brilliant post entitled The Myth that Laissez Faire Is Responsible for Our Financial Crisis refuting from an economics perspective the absurd claim that "laissez faire" is to blame for the recent crisis. As Dr. Reisman states:

Today, they continue to play the same game. Always it is laissez faire that they denounce, and whose alleged failures they claim need to be overcome with yet more government regulations and controls. Today, the massive interventions not only of the New Deal, but also of the Fair Deal, the New Frontier, the Great Society, and of all the administrations since, have been added to the very major interventions that existed even in the 1920s and to which Hoover very substantially added. And yet we still allegedly have laissez faire. It seems that so long as anyone manages to move or even breathe without being under the control of the government, laissez faire allegedly continues to exist, which serves to make necessary yet still more government controls.

The logical stopping point of this process is that one day everyone will end up being shackled to a wall, or at the very least being compelled to do something comparable to living in a zip code that matches his social security number. Then the government will know who everyone is, where he is, and that he can do nothing whatever without its approval and permission. And then the world will be safe from anyone attempting to do anything that benefits him and thereby allegedly harms others. At that point, the world will enjoy all the prosperity that comes from total paralysis.

Also, recently Alan Greenspan made headlines by claiming that much to his surprise his "free market ideology" contains a "flaw". Naturally, despite the fact that for over 20 years Greenspan presided over the nationalized banking system which literally controls the MONEY supply, he is considered an advocate of "laissez faire". Alex Epstein and Yaron Brook wrote an excellent op-ed entitled The Maestro and the Market which refutes the claim that Greenspan is an advocate of capitalism.

Greenspan is entitled to change his mind, of course; but it is intellectually dishonest to pretend that the market he manipulated for 20 years was genuinely free. And those questioning Greenspan’s actions as Fed chief should not be asking him what he didn’t do to prevent the financial crisis; they should be asking what he did do to cause the crisis by using his enormous power to reward irrational behavior. They should ask him how he can deny that his inflationary printing press, along with the housing welfare state, created the false promise of ever-increasing home values that was at the root of all the market irrationality--from “flipping” houses endlessly for fun and profit to interest-only “liar loans” for poor people to Wall Street’s slicing, dicing, and gambling on dubious mortgage contracts.

Nothing good can come, intellectually or politically, from blaming our problems on something that didn’t exist--whether the mythical free market of the housing boom or Greenspan’s mythical free-market ideology. Americans need to understand Greenspan’s true nature as the bureaucrat manipulating the market so that we can investigate the government controls that are the real cause of the present mess, and save ourselves from disasters caused by an even less free market in the future.

So, despite the obvious absurdity of the argument that capitalism is to blame for the current crisis (or any of hundreds of past crises caused by government intervention in the economy), the fact is that people readily accept the claim that capitalism has failed and that more government is the solution. Again, what explains this? In other words, despite the fact that capitalism leads to prosperity and happiness, despite the fact that reality and reason are on the side of freedom, limited government, property rights, justice and capitalism it is a fact that virtually everyone seems to agree that more government control is needed, that businessmen are somehow to blame and must be throttled by more regulation, and that the only way out of this latest financial crisis is through some magical elixir of Fed "injections", "stimulus" and bailouts. Republicans, far from pointing to government intervention in the economy as the cause of the present crisis, have been at the front of the charge for more regulation.

The answer to this fundamental question was the topic of Yaron Brook's recent talk at the National Press Club, Capitalism Without Guilt: The Case for Moral Freedom. See also Ayn Rand's discussing the failure of conservatism in 1961.

The cause of capitalism's demise both now and historically is philosophical not practical. Capitalism is rightly associated with profit making and self-interest. Since self-interest is regarded as morally evil, it is accepted as almost uncontroversial that the state needs to intervene to protect "society" from rapacious businessmen that left to their own devices would maim, slaughter and kill in the quest for profits. The issue of the morality of capitalism and therefore the morality of self-interest is the fundamental theme which provide the answers to all of the above questions and which explains why conservatives can not properly defend capitalism. In her essay, "The Inverted Moral Priorities" (1974), Ayn Rand describes a "televised summit on inflation" that had been attended by the nation's leaders to deal with the then national crisis:

Acting as if need conferred on their clients a special privilege superseding reality - as if the needy had rights denied to the rest of mankind - they flaunted the consumption oriented, range-of-the-moment , hand-to-mouth mentality that sees economics in terms of hunger, not of production, seeks "fairness" in terms of equalizing the hunger, and stands ready to devour the rest of the country (this country, where - according to their own leaders - poverty is not absolute, but "relative").

Why did the reputable politicians, the economists, the businessmen keep silent in the face of outrageous abuse? Why did they allow the deadly, illiterate nonsense to proliferate without opposition? Why did they listen respectfully, apologetically, "compassionately", and promise more help to egalitarian savages? There is only one power that could paralyze the country's leaders, a power more potent than the power of money, of professional knowledge, even of political force: the power of morality. This is was what the inverted morality of altruism accomplished. This was the kind of moral cowardice, intellectual disintegration, professional dishonesty, and patriotic default it led to in practice, at a time of national emergency.

There is a group of economists who deserved it : the so-called "conservatives" who claim that economics has nothing to do with morality.

In other words, as long as capitalism is regarded as "practical but immoral" or a "necessary evil" then we will continue to lose freedom. Man's nature as an individual reasoning being necessitates individual rights if he is to live properly. This is a fact of human existence and why rights are "inalienable" not a gift bestowed upon us by a benevolent state. Properly, capitalism is simply the economic system that results from consistently upholding rights, i.e., the right to think and own property. Logically, if living successfully is the goal then capitalism is morally good.

Attempts to justify capitalism in any other way is not only futile but antithetical to the fight for capitalism. It is only under the "inverted" and twisted morality of altruism that a system consistent with man's nature which leads to large scale happiness and prosperity could be regarded as morally evil. For example, as Ayn Rand points out in the clip, the attempt to justify capitalism by reference to religion or "faith" concedes that capitalism can not be justified logically. It concedes that individual rights, property, free trade, and justice can not be defended rationally but only by reference to mysticism.

This is why the Republicans fail.

The Republicans overtly promote "free markets" and pro American foreign policy without understanding why this is morally right. Capitalism is rightly associated with profit making and self-interest. If you attempt to justify self-interest on the grounds of altruism (uh, self-sacrifice) you will be perceived as unconvincing and hypocritical. In the mind of the public, how can people who pompously uphold "family values" or religious altruism, on the one hand, support selfishness, greed, and profit making on the other? They can not uphold both consistently. The perception of hypocrisy explains why the Republicans are perceived as shadow lurking accomplices for their Big Business buddies. Their acceptance of the morality of altruism also explains why, in reality, when it comes to policy, the Republicans can not actually implement free market programs or execute all out war on our military enemies. It explains why the are unprincipled, because, under altruism, they can not act on principle without acting like Democrats. The Democrats do not suffer from this contradiction. The Democrats support government intervention in the economy which is consistent with the popular notion that business is selfish and evil. They overtly oppose self-interested military action on the grounds that it is self-interested. They are viewed as "idealistic" and "well-intentioned" albeit "impractical" (or simply "flawed" to the extent that they are personally despicable).

America has been drifting towards statism since its founding. The only way to stop the procession is to understand why freedom and capitalism is the moral system and to proudly and unapologetically defend it.

(Incidentally, if you want my specific answer about the super hero question see my post http://dougreich.blogspot.com/2007/01/why-super-heroes-need-super-powers.html)

Monday, November 3, 2008

Voting for Our Masters: The 2008 Election

I am not a Federalist, because I never submitted the whole system of my opinions to the creed of any party of men whatever.... Such an addiction is the last degradation of a free and moral agent. If I could not go to heaven but with a party, I would not go there at all.

-Thomas Jefferson, Letter to Francis Hopkinson, 1789

The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive....I like a little rebellion now and then. It is like a storm in the atmosphere.

-Thomas Jefferson, Letter to Abigail Adams, 1787

If the happiness of the mass of the people can be secured at the expense of a little tempest now and then or even of a little blood, it will be a precious purchase.

-Thomas Jefferson, Letter to Ezra Stiles, 1786

What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure.

Thomas Jefferson, Letter to William Stephens Smith, 1787

If you are having trouble deciding who to vote for in this election you are sane. The reason it is problematic is that logically there is no right answer to the question "who is the best candidate?". The question of McCain or Obama is much like the question "would you rather be blind or deaf?", i.e., the choice is a false alternative. This is a point well made by Craig Biddle in his op-ed 2008 Presidential Elections: McBama vs. America. My main analysis of the two candidates were contained in two previous posts The Pragmatist Fascist vs. The Principled Fascist and The Religious Left, but I have a couple of added points regarding what to do given this analysis.

First, if Obama was a "normal" democrat of the Kerry, Dukakis variety this would be much more clear cut, i.e., I would gladly vote for either of those two morons. The Republicans have been a total disaster and deserve to be roundly defeated. They have not done anything they promised to do and judging by McCain's campaign commercials in which he castigates greedy Wall Street and Big Oil we can not even count on the proverbial empty rhetoric advocating capitalism or America's foreign policy interests. Some of the largest government interventions have taken place under the Republicans, viz., the Patriot Act, Sarbanes-Oxley, the handicapped act (whatever they called it), the nationalization of the banking system, etc. The tragedy is that they are deemed to be pro-capitalist so that whatever they do is considered to be instances of "capitalism". Thus, for example, we hear that the financial crisis is the result of the "laissez-faire" policies of the Bush administration. See George Reisman's latest post for a brilliantly thorough rebuttal of this ridiculous claim.

So, why isn't Obama a "normal" democrat? My answer is that he is charismatic and religious as I explained in my previous post The Pragmatist Fascist vs. The Principled Fascist and The Religious Left. In the first post I said:

In other words, since the pragmatist rejects principle on principle, he [Obama] must accept the prevailing views of others. And what is the prevailing view? It is altruism, collectivism and America's current system: the mixed economy. This is what accounts for Obama's unoriginality politically and why he says that he is "predisposed to a certain set of policies." He literally has nothing to new to offer accept the same worn out platitudes and policies of the Left. The political system necessitated by such a philosophy is fascism. If one upholds self-sacrifice ethically, he must desire a dictator or in Obama's words a "manager" to enforce these sacrifices to be made as most will not voluntarily give up their life, liberty and property.

I believe the danger of Obama lies more in his charisma, but why is he charismatic? His articulately altruistic message resonates with the prevailing culture's acceptance of sacrifice as a virtue. In this sense, America is like Wiemar Germany during the rise of the Nazi's. It is a philosophically bankrupt culture begging for a dictator to come and tell it what to do.

Although Obama is a pragmatist philosophically his default ideology is liberation theology which I also described in the linked posts. Liberation theology fuses christian altruism with the political ideals of Marxism. Although socialism as a political ideal is dead, the underlying philosophy of altruism (particularly in a culture steeped in religious altruism) in the hands of a young, articulate opportunist is dangerous. Just as Objectivists were warning of the dangers of religious altruism dominating the right and subverting any rational defense of capitalism on the part of Republicans, religion of the leftist variety must be also be feared practically. The combination of altruism, collectivism, and mysticism in Weimar Germany were the philosophical preconditions which led to the rise of the Nazi's. Obama gives these philosphical conditions an articulate charismatic voice.

My view generally is let the Democrats have religion, altruism, Marxism and ultimately fascism in the form of Obama. Let them take their rightful place as the Party of Big Government. Secondly, a resounding defeat of the Republicans may force a revolution in the party and fall out in the top leadership (although I doubt it). Thus, on the one hand, I support defeating the Republicans but think Obama is an extremely dangerous candidate especially in light of the fact that if Republicans get demolished the Senate may be filibuster proof which would open the door to socialist mayhem.

Therefore, my recommendation is abstention. I think the ideal outcome would be literally not to have any American vote in the election as a massive demonstration of frustration with the motley collection of intellectual derelicts before us. If I were forced to vote, I think that Obama will win and Democrats will have substantial majorities in both houses, so I would most likely vote Republican congressionally to at least slow down the coming leftist onslaught.

In the meantime, fight for the right ideas in the universities so that in 4,8, or maybe even 20 years we can start going in the right direction and the choice will not be between a book burner, a "maverick", a left wing fascist, and a man literally made of ham. At that point, maybe the raging debate will be about how fast to abolish Social Security and which government agency needs to be closed first. And let us hope, that by our efforts we can refresh "the tree of liberty"without the "blood of patriots and tyrants."

Saturday, November 1, 2008

The Philosopher Stone

There is nothing new to be discovered about the operation of paper money. There is no new invention possible for making it "as good as gold," no new device conceivable for making it elastic, no difficulty connected with it which has not been experienced, no phenomenon of its development for which we have not abundant analogies...Each new issue will produce, only for a time, ease and apparent prosperity , to be followed in a few years by a new crisis and new distress, then a new issue, and so on over again. Reform will then be no longer possible, and we must run the course to its end, in which the paper disappears as ignominiously as the continental notes.

-William Graham Sumner, A History of American Currency, 1873

This bill came out of the hands of the Administration ostensibly for the purpose of correcting the diseased state of our paper currency, by restraining and curtailing the over issue of banking paper; and yet it came prepared to inflict upon us the same evil; being itself nothing more than simply a paper-making machine....The disease, it is said, under which the people labor, is the banking fever the States; and this is to be cured by giving them the banking fever of the United States.

-Senator William H. Wells, Annals of Congress, 1816. as quoted in The Mystery of Banking by Murray N. Rothbard


“The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.”

-Thomas Jefferson, Letter to John W. Eppes, 1813


Amidst the justifiable media hysteria and the predictably impetuous actions of ignorant politicians you might be tempted to believe the current financial crisis is in some way unprecedented. You would be wrong. As the above quotes indicate, the current "crisis" is wholly precedented.

I must admit that I had bought into the notion that the curse of paper money is a relatively new phenomena at least as opposed to the relative stability of some form of 19th century gold standard. What I have discovered in just a brief review of the history of money and banking in the United States is that this country has been plagued by paper money since its inception (and even before in the colonial period), although, it is certainly much worse now than it was. (In fact, I believe the extent of government intervention in banking and the debasement of the currency is in direct proportion to the intellectual demise of Western civilization. This implies that the intellectual demise began earlier than I even thought.)

I will not attempt to even sketch the history here although I am happy to list some references for anyone that is interested. Suffice to say that all of the financial "panics" and "crises" of the 19th century which bear remarkable similarity to our modern crises were the result of temporary departures from gold. The main point I want to make in this post is philosophical more than economic. In fact, the point is that the economics of paper money, inflation, and the boom bust cycle have been understood for two hundred years and certainly well understood for over one hundred years. More fundamentally, the idea that wealth can not be artificially obtained, i.e, that value can not be created without effort is certainly a concept that has been understood at least since the principle of conservation of energy was discovered in the 19th century. Perhaps not surprisingly, before this principle was understood at least on a scientific basis, alchemy was widely practiced throughout the civilized world. One of the Holy Grail's of alchemy was the so-called philosopher stone:
The philosopher's stone is a legendary substance, supposedly capable of turning inexpensive metals into gold; it was also sometimes believed to be an elixir of life, useful for rejuvenation and possibly for achieving immortality. For a long time, it was the most sought-after goal in Western alchemy. In the view of spiritual alchemy, making the philosopher's stone would bring enlightenment upon the maker and conclude the Great Work.

Seriously, what is the difference in principle between belief in a "philosopher stone" and the belief that fiat money, i.e., money not redeemable in precious metals or anything other than itself which can be created virtually out of thin air, has value above its worth in paper? This belief is utterly absurd and is equivalent philosophically to the belief that lead can be turned to gold or that one can turn water into wine or a river into milk, etc. Yet, this belief is the basis for the entire modern banking system!!

Here, yet again, we see a principle to which I have referred frequently in this blog. I'm referring to Ayn Rand's principle that all evil at root is caused by attempts to violate the law of identity or to cheat reality. For example, in a previous post, Wishing for Non-A, I used this principle to explain that the desire for socialized medicine or "universal health care" is at root simply a wish that medicine were free, i.e, that doctors do not require payment for their service and that drug companies can magically continue to find life saving cures.

In the present context, the principle is even more obvious. Wealth must be produced. Prosperity is the result of productivity. In other words, people actually have to do work to make hamburgers, i-pods, automobiles, artificial hearts, air conditioners, and the like. As people become more productive, i.e, able to make more things with less effort, the value of an hour of work increases, i.e., you can buy more stuff with your labor. Productivity is what creates real wealth and increases real wages. Capital investment through savings is what fuels ingenuity and productivity.

Printing paper with fancy ink and stamping a 10 or 20 on it does not create these things nor does it make anyone more productive. However, the process of creating fake money destroys capital in myriad ways and creates the boom bust cycle as has been well documented on this site. Is it surprising that an attempt at faking reality has destructive consequences? Does lying, cheating, and stealing have destructive consequences?

The Federal Reserve system is a legalized counterfeiting operation. Such a system enables the federal government to spend without limit and to pass the tab on in the form of price increases and the reduction of real wages. This system allows the government and the American people to temporarily indulge in the illusion that they can have their cake and eat it too. Do you want Social Security and Medicare? Sure we can pay for it and lower your taxes. Do you want a Space Shuttle? Sure, we can pay for it, lower your taxes, and not increase interest rates. Do you want to spread democracy in the Middle East? Sure, we can pay for it, lower your taxes, not increase interest rates, and retain the value of the dollar. How about foreign aid to Africa, education, national parks, highways, libraries, Bill Clinton's limousine, Al Gore's private jet, arts funding, midnight basketball, museums, subsidies to farmers, college loans, housing subsidies, public radio and TV, aid to hurricane victims, aid to victims of victims, aid to victims of farmer's college loans, etc. etc. SURE, in the short run we can afford it. Well, we are now all living through the long run.

And what is the response of the American people to this extravagant fraud? If you stop spending I will be mad since we must help the farmers and the students and the Africans. But, if you raise my taxes to pay for this I will be mad. And if you have to borrow it that is fine, but don't allow interest rates to increase or I will be mad. And if you have to print the money that's fine, but if the price of gas, milk, food, cars, houses, stamps, art, sport's tickets, and evening gowns all go up then I will be mad. Intellectually bankrupt academics provide ivory tower justifications for this nonsense and power lusting politicians gleefully enable the fantasy.

The issue of whether we should abolish the Federal Reserve system and return to a gold standard is not an arcane economics debate over the best way to "allocate scarce resources" as some modern economics textbook might have you believe. It is an issue of reality vs. fantasy, civilization vs. chaos, or life vs. death. Fundamentally, capitalism is a system of justice, i.e., a system in which each person is rewarded to the extent of their productivity. Money is simply a medium of exchange that must be something real. To be forced to exchange anything of value for a piece of paper (backed only by the government's ability to expropriate money from taxpayers in the future) is a monumental injustice and an evasion of reality that would make die-hard believers in the philosopher stone blush. Here is a simple explanation by someone who clearly understood the issue:

Today, people are beginning to understand that the government’s account is overdrawn, that a piece of paper is not the equivalent of a gold coin, or an automobile, or a loaf of bread—and that if you attempt to falsify monetary values, you do not achieve abundance, you merely debase the currency and go bankrupt.

Ayn Rand, “Moral Inflation,” The Ayn Rand Letter, III, 12, 1.