Saturday, February 28, 2009

Jours Heureux!

I would like to take a break from analyzing the erosion of freedom and the decline of western civilization to contemplate something beautiful and intriguing - the love affair between Thomas Jefferson and Maria Cosway.

I came across the story while reading Thomas Jefferson: An Intimate History by Fawn Brodie who covers it in detail and in American Sphinx: The Character of Thomas Jefferson by Joseph J. Ellis (I understand the affair was partially the subject of the film "Jefferson in Paris" which I have not seen). I have always been fascinated with Jefferson as so many have. He was brilliant and fundamentally American yet his personal life was complicated - beset with tragedy and conflicts which possess a timeless appeal and a certain mystery to those who study him. The Cosway affair is a prime example.

Jefferson's wife Martha died tragically in 1782 following the birth of their daughter Lucy Elizabeth. In the wake of her death, Jefferson had accepted a diplomatic post as the American Minister to France in 1784 . Ellis writes: "He agreed to accept the diplomatic post in Paris as part of the effort to move past this tragedy and to escape from his memories of Martha at Monticello" "....Family tradition tells the story, he promised his dying wife that he would never remarry. The promise he made to himself undoubtedly had the same effect: He would never expose his soul to such pain again; he would rather be lonely than vulnerable. "

According to Brodie, Jefferson was introduced to Maria Cosway in August 1786, at the "Halle aux Bleds, the big, new noisy Paris grain market... famous for its giant dome-130 feet across-constructed of wooden ribs in such a fashion that the interior was flooded with light." Apparently, Jefferson had to be persuaded to go "thinking that he might at least see architecture worth copying for a market in Richmond..." She continues: "What he saw there, he wrote later to Maria, was 'the most superb thing on earth.' But he was not writing 'of a parcel of sticks and chips put together in pens,' but the lady 'to whom we had been presented.'"

Ellis describes Jefferson's initial reaction to meeting Cosway:

If ever Jefferson encountered the essence of femininity as he imagined it, Cosway personified the ideal perfectly. She was described by contemporaries as "a golden-haired, languishing Anglo-Italian, graceful to affectation, and highly accomplished, especially in music," and the various portraits that survive depict a set of deep blue eyes, a tumble of blond curls, a beguiling blend of hauteur and vulnerability. When these were combined with an almost imperious pouting posture and the soft trace of a foreign accent-Italian was her native language-the total effect was usually devastating on men. Jefferson proved no exception. They met in early August 1786, introduced by the young American artist John Trumbull, who had accepted Jefferson's invitation to join his household in Paris while he worked on his painting "The Declaration of Independence." Within days Jefferson was head over heels in love.

For the next six weeks Jefferson and Cosway were together almost daily, touring every garden, viewing every distinctive building, statue, painting or ancient ruin in Paris, and its environs. For Jefferson, the luxuriant beauty of a work of art activated the same deep pool of passion that a beautiful woman also tapped-aesthetic appreciation and femininity were closely associated primal urges within his soul - and the commingling of Parisian art and architecture with the seductive attractions of a beautiful young woman (Cosway was twenty-seven) generated an explosive combination that left him utterly infatuated. He ignored his diplomatic chores, often dispatching Petit to make his excuses for missed appointments.

In a letter, Jefferson reminisced about a day spent with Cosway:
Oh! my dear friend, how you have revived me by recalling to my mind the transactions of that day! How well I remember them all, and that when I came home at night and looked back to the morning, it seemed to have been a month agone. Go on then, like a kind comforter, and paint to me the day we went to St. Germains. How beautiful was every object! the Port de Neuilly, the hills along the Seine, the rainbows of the machine of Marly, the terras of St. Germains, the chateaux, the gardens, the [statues] of Marly, the pavillon of Lucienne. Recollect too Madrid, Bagatelle, the King's garden, the Dessert. How grand the idea excited by the remains of such a column! The spiral staircase too was beautiful. Every moment was filled with something agreeable. The wheels of time moved on with a rapidity of which those of our carriage gave but a faint idea, and yet in the evening, when one took a retrospect of the day, what a mass of happiness had we travelled over!
Jefferson was truly "head over heels". There was just one problem. Cosway was married. Brodie writes:

Her husband [Richard Cosway] was a small man, shorter even than his wife, invariably dressed with foppish elegance. He was forty-four, close to Jefferson's age, and had been married for only three years. He was bouncy and cheerful; in his wife's words, "toujours riant, toujours gai," but also fulsome and sycophantic. English critics would describe him as "an absurd little coxcomb," "a preposterous little Dresden china manikin." James Northcote dismissed him as "one of those butterfly characters that nobody minded, so that his opinion went for nothing."

"Though he was mocked for his pretentiousness in dress, especially a mulberry silk coat ornamented with strawberries, and was described as having a face like a monkey, Cosway in painting self-portraits not surprisingly showed a handsome man, with no trace in his face either of dandyism, or of the cruelty with which he treated his wife. Everyone in the bohemian London court circle in which they moved knew that Maria was wretchedly unhappy. James Northcote, who said she married out of necessity when her mother's money was exhausted, wrote that "she always despised him." And Jefferson, with the special sensitivity of a man in need of love, must have seen this the first afternoon"

I will not attempt to recount the entire story which you can find in the references, but there is wide disagreement among historians as to what happened that fall. Much of the details are shrouded in mystery. We do know that the affair ended and as Ellis writes:

subsequent correspondence charts the gradual and inevitable cooling of the infatuation. It also bears witness to his urge to transport his palpable feelings for a real woman to a more imaginary region where perfect love could be more easily and safely experienced. In December 1786, still suffering from the wrist injury and the pain of separation, he recalled a magic cap he had read about as a child that enabled its wearer to fly wherever he wished. "I should wish myself with you, and not wish myself away again,"he wrote. "If I cannot be with you in reality, I will in imagination. " He reported his dream of the two of them in Virginia, visiting the Natural Bridge: "I shall meet you there, and visit with you all the grand scenes. I had rather be deceived than live without hope. It is so sweet! It makes us ride so smoothly over the roughness of life.

In October 1786, Jefferson would write a now famous twelve page love letter to Cosway known as "My Head and My Heart", and according to Brodie is what:

Julian Boyd properly calls "one of the notable love letters in the English language." In a contrived though not unusual eighteenth-century conceit, he wrote in the form of a dialogue, with first his Head speaking, and then his Heart. "

The famous letter - according to Brodie an "important window into Jefferson's inner life..." and the "..subject of such divergent and contradictory interpretations" - is linked here. As Brodie eloquently states: "it is less a debate than a searching examination of himself." For example, Jefferson writes:

Deeply practised in the school of affliction, the human heart knows no joy which I have not lost, no sorrow of which I have not drank! Fortune can present no grief of unknown form to me! Who then can so softly bind up the wound of another as he who has felt the same wound himself? But Heaven forbid they should ever know a sorrow!

It turns out that Trumbull painted a miniature of Jefferson and presented it to Cosway which she kept at her home in Lodi, Italy. I was personally compelled to try and find this picture, and apparently, it was presented to the American government by Italy at the bicentennial in 1976 and now resides at the White House. I found a link of the picture here and another which I believe is a copy here. Jefferson kept an engraving of Cosway at Monticello and it still hangs today. Let me leave you with what I consider to be one more treasure from Jefferson's letters to Cosway quoted in Brodie:

...I send you the song I promised. bring me in return its subject, Jours Heureux!

Apparently, the song was from Antonio Sacchini's opera "Dardanus" which premiered in Paris in 1784. The song is:

Jours heureux, espoir enchanteur!
Prix charmant d'un amour si tendre!
Je vais la voir, je vais l'entendre
Je vais retrouver le bonheur!

(Happy days, Enchanting hope!
Charming prize of a love so tender!
I'm going to see her, I'm going to hear her
I'm going to find happiness again!)

(I found a link to the music here which apparently is also on the movie's soundtrack.)

Hopefully, the contemplation of Jefferson's life and the fact that a man like this lived and held the highest office in the land can remind us of the wonderful possibilities of this world and alllow us to "ride" a little more "smoothly over the roughness of life".

Friday, February 27, 2009

Answers to a Reader

After my post, How to Solve the Economic Crisis in 5 minutes, in which I laid out what I would consider to be a laissez faire plan for the federal government, a commenter asked a series of questions that I wish to turn into a full post since it touches on many fundamental issues related to the morality of capitalism. I thank Jen for her comments.

Jen said: I don't understand how this plan translates into prosperity. I have heard the philosophy before ... That if you deregulate everything and take away taxes people and corporations will make decisions that will benefit everyone and the environment , etc.

While it is true that capitalism will lead to prosperity, that is not my fundamental justification for capitalism. Nor does the argument that "people will make decisions that will benefit everyone and the environment" serve as justification. The justification for capitalism is that it is the moral system which I further explain below. Additionally, I'm not sure what you even mean by "decisions" that will benefit the "environment". Whose environment? I do not consider the natural "environment" to be intrinsically valuable, that is, valuable apart from man so I do not understand why you make this distinction. In other words, what would it mean to "help the environment" and why is that important in and of itself, i.e., apart from man?

In order to make my case clearer, let me first define capitalism by referencing a quote from Ayn Rand in the book Capitalism, The Unknown Ideal:
"Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control."

Why is capitalism the moral system? First, I consider the "good" morally to be that which furthers man's life which is a philosophy known as rational egoism or rational self-interest (see Ayn Rand's "The Objectivist Ethics" in The Virtue of Selfishness). My standard of morality is not that "which benefits everyone" which is a utilitarian argument nor is my standard of morality "service to others" or "self-sacrifice" which is completely incompatible with life since if you practiced it consistently you would die. I therefore hold that the good consists of pursuing rational values in pursuit of your own self-interest with the goal of achieving your own happiness.

Notice that capitalism as defined above is based on a consistent defense of man's rights: his right to his life, liberty, property and pursuit of happiness. Without such rights, man would be a slave by definition. Man's nature as a reasoning being necessitates the freedom to think - his nature requires him to produce the products needed to survive so he must be free to keep the products of his labor and trade them freely as he sees fit.

Therefore, if the standard of morality is life and man's nature and survival necessitates individual rights then capitalism, which protects individual rights as per above, is the moral system. Now a consequence of such an approach is that it leads to widespread happiness and prosperity. Why? Because it is a system that at a fundamental level is consistent with man's nature in the same way that since man's nature requires air to breathe if you give him air he will survive, but if you cut it off, he will die. Since man's nature requires food to survive he must eat or starve to death. Since man's life requires the freedom to think and produce, if he is free to do so he will survive and flourish, but if is his rights are abrogated he will perish or at best live a life of miserable subsistence.

Historically, to the extent that men have been left free it has led to widespread human happiness and unprecedented economic growth. To the extent that men are enslaved, the result has been misery, death, and stagnation. The entire history of capitalism demonstrates this beyond a reasonable doubt. It is only necessary to look around us to see that this is true. What complicates matters is that there has never been a pure example of laissez faire capitalism in history in the sense of a system existing that was fully consistent with the above conception of capitalism. The closest thing we have was 19th century America and even this was not a perfect example since slavery was legal, the banking system was at various times under government control, and towards the latter half of the 19th century laws such as the Sherman anti-trust act and others gave massive power to the state to intervene in the economic system on behalf of corrupt businessmen or under the premises of the so-called "progressive" movement. To understand economic history properly, one must abstract out the causes and effects to grasp how freedom in a certain context led to economic prosperity and how violations of men's rights in the form of taxes, regulations or any government interference in the economy wrought disaster. (This is not always easy).

As an aside: note that man's nature also requires that he use the earth in order to survive. To the extent that environmentalists hold that the earth is intrinsically valuable, i.e., valuable apart from man, they must regard man as inherently evil. That is, I hold that since environmentalists widely regard the earth as intrinsically valuable, they necessarily must oppose human progress as any action by man affects the "earth" whether you burn a log in a fire or mine silicon for computer chips. This is why I questioned your statement originally. If one is concerned about man's ability to survive and flourish then he should understand that freedom and private property are necessary pre-conditions for human survival. People have a right to use the earth (at least their property) as they see fit unless their actions violate the rights of others. To consider something valuable apart from human life is a contradiction since the alternative of life or death gives rise to the concept of value in the first place. If one enjoys the sight of trees and forest then they should buy acres of land and do nothing to it. But to violate someone else's right to use their property in way that does not violate anyone's rights (for example, a regulation which stops a property owner from cutting down his own tree) is immoral and unjust.

Jen said: How are the infirm, mentally ill, and the elderly cared and provided for?

People are responsible for themselves and their own lives. It is not the moral duty of anyone to care for another and the state has no right to forcibly expropriate the income of one person and give it to another. Such schemes are vicious abrogations of individual rights and a consequence of the morality of altruism. I hold that policies which expropriate funds from someone who has earned their money in order to give it so someone who has not is a grave injustice. What is the moral justification for pointing a gun at someone and telling them to give their money or else because you deem it to be a worthy cause?

Family members should be legally responsible for supporting minors whether healthy or disabled. If there is no one to take care of an adult or child who is unable physically or mentally to take care of them self he must rely on private charity or organizations. The state could intervene to temporally hold someone who is infirm until a private transition is made possible. Those that feel strongly about such matters are free to donate money or to volunteer to help as much as they see fit. However, more importantly, it is not the "moral duty" of one to help another nor should morality or structure of government be built on such a premise. The vast majority of people are not infirm, mentally ill, or elderly. It is more important to positively assert man's right to his own life and property and understand that those in need of help must ask for voluntary charity.

Keep in mind that only a system which results in massive prosperity and human happiness can lead to benevolence in the sense that one might have the time or money to volunteer to help someone who is the victim of an injustice. Capitalism has led to that kind of wealth and benevolence and is only reason people ask such questions. For example, in the Dark Ages, under the feudal system or under Castro's communism or in Soviet Russia, where misery, poverty, and disease were daily realities, would anyone ask such questions? Virtually everyone was infirm , mentally ill or destitute - except the rulers.

Jen asks: What if the people aren't happy with the environmental practices or employment practices of a corporation? Do they have to sue every time that happens (in the absence of regulation)?

If you don't like a corporation then you are free not to buy their product and not to seek employment from them. If a corporation or individual violates your rights in some way (initiates physical force against you or commits fraud against you) then you would have a legal case against them. However, properly, in a court case you must demonstrate specific harms, that is, you must prove who is being harmed and how the defendant is harming them. If you can't prove this, then you have no right to tell someone else what to do with their property nor do you have the right to prevent two consenting adults from entering into contracts either for exchanging goods and services or employment. What would give you the right to tell others what to do whom you can not prove are harming you?

Under laissez faire capitalism as I described in my post, all property would be privately owned. Therefore, if a corporation dumps dangerous chemicals on your property (which is what I assume you have in mind), then you would have a case to sue them. If the damage took place across property it would be a class action claim. If property is privately owned, no one has an incentive to violate other's property rights just as it is rare that your neighbor comes over to your yard and dumps garbage on your lawn since you can have him arrested or sue.

Jen asks: How do we properly protect our country without revenue from taxes?

Taxes would be voluntary and those who wish to have their property protected would voluntarily contribute money to the government in the same way that people voluntarily insure themselves. I also believe their are ways to raise revenue in the form of user fees and for charging to register contracts with the state. Keep in mind what corporations and individuals would have at stake in a free society especially in the context of the kind of prosperity that capitalism would create. Maintaining a strong military which is the proper function of government would cost very little relative to this prosperity and corporations and individuals would gladly donate and raise money to maintain protection. Such a system would also result in greatly reducing the temptation to engage in military "adventures" like the one we witnessed in Somalia or Bosnia. Since the state would rely on voluntary contributions, Americans could vote with their dollars if they thought the military action was unjustifiable. If we were under an actual threat, I have no doubt the kind of effort that would be mounted to protect our freedom.

Who pays to maintain the national highway system - critical to the continuity of commerce?

Those that use the highways should pay for them. Keep in mind, under the system I proposed, all highways and roads would be privatized so that those who use them would pay for them just as those who eat hamburgers should pay for their hamburgers and those who buy bicycles should pay for the bicycle. As I detailed in my post Government Roads and State Pizza a system of private for profit roads would lead to less shortages (traffic jams), less death (traffic fatalities), less waste (gas and wear on vehicles) and to innovations we can not even imagine. As is always the case, a system of free production, trade and profit is the moral and the practical.

I am open as always to further comments and/or to provide further references to justify or add to my arguments.

Wednesday, February 25, 2009

Treading in Charted Waters

As a friend pointed out, all we hear today is that we are in “uncharted waters” as if something fundamental has changed. We hear that markets are not functioning “normally”, and that the economic crisis facing us is unprecedented. But, has the metaphysical nature of reality changed? Has the nature of man changed? Have the laws of economics changed? I think those laws are functioning just fine[1,2], thank you, as evidenced by the tanking stock market and the exploding gold market. In fact, from a historical, philosophical and economic perspective, we are in highly charted waters. Man's nature as a reasoning being necessitates individual rights and therefore freedom or the protection of individual rights has always led to widespread happiness and prosperity. The systematic abrogration of individual rights by the state has always led to misery and stagnation. This is not new.

As I have said before [1,2], the pragmatist mind does not ask such questions. To the pragmatist, there is no nature of reality, there is no nature of man, and there are no laws of economics. There are only “provisional hypotheses” which can change from day to day. To the pragmatist, everything that occurs in reality is literally unprecedented. This is why Obama routinely tells us that he is “not concerned with ideology but facts” and urges us to act, act, act. It is why he can propose economic policies that a five year old could debunk as contradictory and destructive yet receive high approval ratings from the public and especially the nation’s intellectuals. It is why the government stumbles along from day to day, shooting asinine policies from the hip praying that they somehow “work”. It is why Fed Chairman Bernanke can claim he thinks the recession will be over by year end, as if in the midst of trillions of dollars of debt, government nationalization of the banking system, regulations that make the productive into criminals, strangling environmental policies, confiscatory tax rates on virtually every aspect of existence, suddenly it will just all be “over”. As I have said before, even if we are not in food lines and fighting each other over bread rations, in what sense is this crisis “over” [1,2]? The better question is in what sense are we living as we ought to live?

Practically speaking, what the American colonists faced prior to the American Revolution was much less confiscatory even factoring in that they had no representation in Parliament. I would bet that if Americans today could return to only the taxes and regulations faced by the American colonists we would consider it to be economic heaven, yet the colonists were willing to go to war over the principle of independence. Today, we face trillions of dollars of government confiscation, debasement of the currency, crippling regulations, a virtual monarchy of executive privileges and powers, and blundering foreign “entanglements”, yet Americans largely blame businessmen for the economy and trust the government to increase its power. That is, the American people are suspicious of and even hostile towards producers who freely offer their goods and services on the open market yet largely supportive of the federal government’s policies which expropriate their incomes and property, monopolize industries, debase the currency, and cripple the economic system. In fact, according to Chairman Ben, the problems are just about over! And when the smoke clears, the government will have plenty of time to prosecute even more regulations against the evil businessmen.

What is the difference between an era when men gave their lives rather than pay one cent more to a monarch and an era when men clamor for more regulations and more taxation specifically to pay for reckless government spending (which is the defined purpose of “stimulus”)?

The picture above is the flag designed by Christopher Gadsen during the American Revolution. It represents the essence of the Enlightenment spirit and is a guide to what we need to do if we are to change the world. It is a guide not in the sense that we need people to parrot this slogan but in the sense that what we need to effect is a moral and philosophical revolution.

What motivated the colonists was the Enlightenment spirit. Did every soldier in the field understand Locke’s philosophical argument for natural law and unalienable rights or understand how to structure a representative government? The U.S. constitution was not even passed until 1789 (8 years after the British surrender at Yorktown). . Would soldiers have endured the horrific misery of war and risked their lives in order to reduce their taxes by 3.4% or increase their 401K withholding? The philosophical ideas of the Enlightenment intellectuals created a culture in which reason was revered and individualism flourished. The colonists believed they had the right to their own life and to pursue their own happiness. They rejected the principle of monarchy in favor of self-government. “Give me Liberty or Give me Death” and “Don’t Tread on Me” were not just slogans – they symbolized the American ideology of individualism. Although there were many that did advocate negotiating with England, ultimately, the colonists did not settle for compromise. When Parliament repealed the Townshend Act taxes on all goods but tea, the colonists did not respond by rejoicing in their ability to overcome “bi-partisanship” and “get things done”. They responded with the Boston Tea Party. They were not resigned to negotiate their liberty for a bone thrown to them by the crown. They were motivated morally and understood the long term implications of their actions in principle. It is only through the recognition of the morality of individualism that this country can regain its spirit and end this "crisis" once and for all.

Monday, February 23, 2009

Organized Producers

If you value freedom you probably feel overwhelmed. As the state uses the economic "crisis" resulting from its control of the economy to justify seizing more control of the economy all to the cheers of the nation's bankrupt intellectuals and amid the resigned passivity of its pragmatist businessmen, the sense that the world and civilization itself is spiraling downward is palpable . I swing from trying to maintain a historical perspective ("it's been much worse") to the sense that something fundamentally different is occurring from which there is no return. I swing from the desire to mount an armed assault on Washington (just kidding, Big Brother...just kidding) to a feeling of morbid optimism that this acceleration of economic pain might crystallize the difference between freedom and statism so gravely as to galvanize some sort of grass roots intellectual awakening (see the Chicago Tea Party). Against this catastrophic milieu of accelerating statism and hysterically vacuous post modernism, the rational question is: what can we do?

Being overwhelmed usually stems from an inability to prioritize a set of problems. I once read a saying that "when everything is important, nothing is important." Rather than accept this condition, let's go beyond the relatively vague and overwhelming question: "what can we do?" and focus on more precise questions such as: under the current conditions what type of approach will be most effective, what can we realistically accomplish, what must wait, and what conditions would give rise to different types of action?

In considering the question of "what do we do?", I came across some fascinating Q&A with Ayn Rand in the book, Ayn Rand Answers: The Best of Her Q&A, Edited by Robert Mayhew. Although the context was that Rand was giving these answers in the 1960's or 1970's, her answers are certainly pertinent today. I only quote a few questions and answers below so I recommend getting the book for more details.

Q: What political steps should be taken to achieve your goals?

AR: I do not work for or advocate any new political party. It's much too early for that. But since many of you are Republicans and interested in local politics, I'd say that politics must begin with an idea. You cannot win elections with isolated slogans used once in four years. If anything practical can be done, it is this: Work out a consistent set of principles, and teach it to the people in your party: precinct workers, local candidates, and perhaps national candidates. Teach them the case for capitalism. Demand-morally, proudly, unapologetically-a return to full capitalism.

This cannot be done overnight, so don't be crusaders in the impractical sense of demanding immediate change. But hold out that goal to people. Instead of socialists promising people public support, hold out the promise of freedom, and proceed step-by-step toward it. Formulate a policy of what controls should be repealed first, and what steps could achieve a fully decontrolled economy. But above all, base your program on a full knowledge of the history of, and the case for, capitalism, and a full defense of capitalism against the accusations and misconceptions preached by the left.

Begin in the high schools and colleges, because that is the source of future politicians and men of action. You can achieve nothing in a political election if you neglect the institutions where ideas are formed. Make sure the educational institutions where ideas are formed. Make sure the educational institutions can teach individualism and capitalism. You shouldn't aim for control of the schools; you should support those in your schools who are good, as the leftist support their advocates. Whereas liberals stand by any liberal teacher or writer or columnist, conservatives do not do the same for their own. Conservatives do no show enough interest in ideas and ideological consistency. Develop that consistency. First convince yourself of the case for capitalism, then preach ideology.

Learn to defend you case so that no liberal could answer it. If you compare the state of West Germany to East Germany, you have an object lesson right there - if you know how to present and analyze it. Don't apologize for capitalism. Don't allow it to be denounced as a system of selfish greed. But you cannot do any of this so long as you simultaneously pay lip service to altruism. Learn the morality implied in the Declaration of Independence, document that today isn't quoted enough nor sufficiently understood. The Objectivist ethics is merely the philosophically-worked-out proof of what the Founding Fathers implied in the Declaration.

If you do all of this, you could save the world without the loss of a single American life, because all the totalitarian monsters would collapse. The battle is moral and philosophical. Do not believe in Russia's power; do not believe their threats. They would run, as they twice ran in their war with Finland. Russia is winning strictly by default. The only way to stop her is with a proper anti-altruist, American morality.

Q: Is a major revolution necessary to solve our country's problems, or is the solution to be found piecemeal?
AR: Neither. The major revolution happened in 1776. You don't stage a revolution against a country still following its basic principles. But neither is the solution to fight piecemeal. The only way to fight for a cause is intellectually - that is, philosophically, which is to say in terms of fundamental principles. When you fight in this way, it's as if you're an intellectual wholesaler rather than a retailer. You cover a whole field by means of appropriate principles, instead of fighting piecemeal, which is what activists today are trying-and they're failing.

Q: Could You Comment on the ineptness of political advisers in America? Is it the result of stupidity or malice?
AR: Stupidity, of course. You're flattering them if you think it's malice. They don't know any better, which isn't' a crime. What is a crime is that they don't want to know any better. After all, people in politics are only the last result of the educational and cultural trends in a country. They aren't the cause of anything. They are cashing in on what they've been told, which is exclusively collectivism and statism. They see that it doesn't work, but they're unable to think of what could work. They can't return to capitalism; nobody told them to. [bold mine]
I think there are several important principles implied - most importantly, we need to be principled. Our emphasis should be on proudly advocating a consistent ideology (particularly, the morality of capitalism) and then particular issues can be prioritized as needed. It is not a contradiction to pursue concrete political action and remain principled. It is essential to do both. Advocating for a single issue out of context is useless but if you advocate for particular issues in the context of an overall philosophical framework you can succeed on a massive scale. We can not hope to change everything instantly. We need to focus on particular issues politically while at the same time trying to change the dominant ideology of the universities. I think another important principle is to be careful not to focus exclusively on particular politicians. It certainly is important to understand the politicians for self-protection and to understand the trends in the culture but it is a mistake to think that a particular politician is more of a cause rather than an effect. Another is that a third party is a waste of time. I think we need to change one of the major parties.

With that in mind, you might ask: do we have time for such an approach? Under what conditions do we "take to the streets" so to speak? Despite the profound increase in government intervention into the economy, my personal tipping point gets closer as I hear discussion related to bringing back the “Fairness Doctrine”. As we know, the major media outlets are mostly controlled by leftist cheerleaders sympathetic to statism. However, the “fairness doctrine” represents a direct assault on the freedom of speech and is a major step towards full state control of the media. Without the freedom to think or speak freely, civilization is doomed. We have no chance. Ayn Rand addressed this issue in the Q&A.
Q: You've said it would be proper to revolt if the government established censorship. Has that time come?

Fortunately, not yet, or I couldn't be giving this speech and you couldn't be listening to it. Censorship operates as it did in Nazi Germany and does in Soviet Russia. It's total government-enforced uniformity of opinion, ultimately under penalty of death. We haven't reached that point, and I don't think the government will get away with it here, at least not yet. Even in Russia (where I witnessed the process), after the Communists seized power, they didn't establish total censorship immediately. It took years of gradual steps, each one a trial balloon. They got away with it through smaller encroachments, until they established total censorship. They won't get away with it here, because the basic premises of the American people are still pro-freedom. But basic premises alone won't do any good. We must be aware of the advance of censorship. And if the government begins wholesale suppression, then it's proper to revolt.

Along with "hate speech laws" (as I detailed here), the "Fairness Doctrine" is definitely a "trial balloon" and warrants careful attention. I hold that this should be a major political issue for Objectivists.

Let me add one final point. In Atlas Shrugged, Ayn Rand showed us that evil is not powerful in and of itself. It takes the sanction of the victim. In Atlas Shrugged, the producers go on strike and leave the "looters" to themselves. As we all know, the step preceding a strike is the process of organizing the would be strikers in an effort to change things. I think it is time to organize the producers. What does this mean? It means efforts to be heard not just by newspapers and politicians but especially by the productive – to the corporations, the business owners, the doctors, the engineers - those upon which civilization most depends. Organizing productive people to fight for their ideals is difficult because, well, they are productive. We all are devoted to our careers, our spouses and our families. It’s easier for the left because they are usually unemployed and have a lot of time on their hands.

Fortunately, there are some great organizations already focusing on activism and we can take advantage of the division of labor, i.e., just give them some money and let them do it. First and foremost I advocate supporting:

The Ayn Rand Institute and The Ayn Rand Center for Individual Rights

[update thanks to Burgess Laughlin: here is ARC's "activism" page:]

My friends at SimplyCapitalism and Galileo Blogs put me on to the following activist oriented sites which I recommend checking out but don't know much about them except what I've seen:

The Center for the Advancement of Capitalism


[update: I forgot to mention BB&T charitable grant program that has been funding studies of the morality of capitalism now in over 40 colleges and universities. Hear, Hear, to John Allison and BB&T!]

Please feel free to comment and offer any other suggestions or links.


Friday, February 20, 2009

Dr. Onkar Ghate on Fox

From: ARC Media

Dr. Onkar Ghate, senior fellow at the Ayn Rand Center for Individual Rights, is scheduled to appear on the Glenn Beck Program on Fox News today, Friday, February 20, 2009, at 5 pm Eastern (2 pm Pacific). Dr. Ghate will discuss the erosion of our constitutional republic, and how we can end our slide toward dictatorship.

Wednesday, February 18, 2009

The Barometer of the End

Fundamental philosophy determines the course of societies throughout history. For example, if it is widely held that man is an imperfect, sinner doomed to suffer a hellish subsistence on earth until he finds salvation in the afterlife, you will likely get something like the Dark Ages (or modern Iran). On the other hand, if reason is held in high esteem and the human mind is regarded as fundamentally efficacious, then independent thought, personal autonomy, and individual productive achievement will be revered and an era such as the Enlightenment will result. Although the fundamental laws of economics are immutable, the particular financial system that emerges at any given time is a consequence of the laws governing private property, production, and trade. Since fundamental ideas give rise to these laws, the financial system can be seen as a barometer of a nation’s philosophic health. Powerful empires are usually not defeated by outside forces primarily. They collapse internally first which makes them vulnerable to attack from the outside. Historically, although bad ideas are the root cause, a nation or empire’s economic deterioration is usually associated with the final collapse.

Obviously, treatises can be written about such topics but for some quick historic precedent to place the modern United States into context, consider the following quotes related to Ancient Rome, the French Revolution and Weimar Germany (which preceded the rise of the Nazi’s) which I find very interesting.

What brought about the decline of the empire and the decay of its civilization was the disintegration of this economic interconnectedness, not the barbarian invasions. The alien aggressors merely took advantage of an opportunity which the internal weakness of the empire offered to them. From a military point of view the tribes which invaded the empire in the fourth and fifth centuries were not more formidable than the armies which the legions had easily defeated in earlier times. But the empire had changed. Its economic and social structure was already medieval.

…The showdown came when in the political troubles of the third and fourth centuries the emperors resorted to currency debasement. With the system of maximum prices the practice of debasement completely paralyzed both the production and the marketing of the vital foodstuffs and disintegrated society’s economic organization.

Ludwig Von Mises, Human Action

Not long after the Bank of England was formed in the 1690’s to finance the monarchy, the notorious John Lawurged the establishment of a national bank [in France] to create and increase instruments of credit and the issue of banknotes backed by land, gold, or silver.”

An ambitious Scot, a convicted murderer, a compulsive gambler and a flawed financial genius, John Law was not only responsible for the first true boom and bust in asset prices. He also may be said to have caused, indirectly, the French Revolution by comprehensively blowing the best chance that the ancien regime monarchy had to reform its finances. His story is one of the most astonishing yet least well understood tales of adventure in all financial history. It is also very much a story for our times.

The Ascent of Money, Niall Ferguson

The following quote offers some more detail.

In fact, once the bank earned the people’s trust, it began to issue banknotes far exceeding deposits on hand and to extend loans against deposits. The quantity of bills in circulation increased very rapidly, and as is logical, a significant artificial economic boom resulted. In 1718 the bank was nationalized (becoming the royal bank) and began churning out even more bills and granting more loans. This encouraged stock market speculation in general….By 1720 the absurd proportions of the financial bubble had become clear. Law tried desperately to stabilize the price of the company’s stock and the value of his bank’s paper money: the bank and trading company were merged, company stock was declared legal tender, coins lost part of their weight in an attempt to restore their relationship to bills, etc. However all was in vain and the inflationary bubble burst, bringing financial ruin not only to the bank but also to many French investors who had placed their trust in it and in the trading company. The losses were so heavy and the suffering so immense that for over a hundred years it was even considered a faux pas in France to utter the word “bank”, a term which for a time was synonymous with “fraud.” The ravages of inflation plagued France again a few decades later, as evidenced by the serious monetary chaos during the revolutionary period and the uncontrolled issuance of assignats at the time….

Money, Bank Credit, and Economic Cycles Jesus Huerta De Soto

During the inflationary chaos of the French Revolution, shopkeepers were imprisoned and executed for raising their prices. (see Fiat Money Inflation in France: How It Came, What It Brought, and How It Ended, Andrew Dickson White). Of course, in 1799, Napoleon Bonaparte would install himself as First Consul and later declare himself emperor.

In the wake of World War I, a combination of massive war time debt, reparations bills, reckless spending and a belief by “Germany’s financial elites” that a “runaway currency depreciation would force the Allied powers into revising the reparations settlement, since the effect would be to cheapen German exports relative to American, British and French manufacturers" led Germany to engage in massive hyperinflation.

“By the end of 1923 there were approximately 4.97 x 1020 marks in circulation. Twenty billion mark notes were in everyday use. The annual inflation rate reached peak of 182 billion per cent. Prices were on average 1.26 trillion times higher than they had been in 1913.

Unemployment soared to, at its peak, a quarter of trade union members, with another quarter working short time. Worst of all was the social and psychological trauma caused by the crisis. ‘Inflation is a crowd phenomena in the strictest and most concrete sense of the word, ‘ Elias Canetti later wrote of his experience as a young man in inflation-stricken Frankfurt. ‘[It is] a witches’ Sabbath of devaluation where men and the units of their money have the strongest effects on each other. The one stands for the other, men feeling themselves as bad as their money; and this becomes worse and worse. Together they are all at its mercy and all feel equally worthless.

Worthlessness was the hyperinflation’s principal product. Not only was money rendered worthless; so too were all the forms of wealth and income fixed in terms of the money…

The Ascent of Money, Niall Ferguson

Ferguson quotes John Maynard Keynes:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls…become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than of the proletariat. As the inflation proceeds…all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism become so utterly disordered as to be almost meaningless…

In 1933, Adolph Hitler would become Chancellor of Germany….(Of course, see Leonard Peikoff’s The Ominous Parallels for the intellectual history and philosophical analysis of the rise of Nazism.)

What will be written about the United States?

The Federal Reserve system created in 1913 and other statist economic policies leads to economic collapse called America's Great Depression. The United States outlaws private holding of gold in 1933 but retains dollar convertibility with foreign central banks. Nixon "closes the gold window" in 1971 and the US and rest of world goes to floating currencies. This leads to the massive inflation of the 1970’s along with the emergence of Islamic fundamentalism represented by the takeover of the United States embassy in Tehran. Islamic terrorism on 9/11/2001 coupled with the "dot com" stock bubble caused by an easy money Federal Reserve policy leads to recession followed by massive Federal Reserve inflation in the mid 2000’s leading to another bubble - this time in housing. Economic depression results from the resultant collapse, and under President Obama, the United States turns to even more massive inflation through deficit spending , the nationalization of the banking system, and more statist tax and regulatory policies which strangle innovation and production. As the United States weakens, and European currencies collapse, Iran, the primary middle eastern Islamic theocracy, continues to build nuclear weapons and forges an alliance with Russia. Socialism spreads in South America as Hugo Chavez is voted president for life and forges new military relations with Russia. (Sopranos ending)

Tuesday, February 17, 2009

Brook On Glenn Beck Show

From: ARC Media

Dr. Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, is scheduled to appear on the “Glenn Beck Program” on Fox News today, Tuesday, February 17, 2009, at 2 pm, Pacific time (5 pm Eastern). Dr. Brook will discuss the growth of the government’s power and its crushing effects on the U.S. economy.

Monday, February 16, 2009

The Conservative Response to "Pre-Privatization" Could Make Life "Pre-Historic"

Apparently, the Congress is very busy focusing on the essence of the economic crisis and the implications of nationalizing the banking system:

The word 'nationalization' scares the hell out of people,"Rep. Maxine Waters, D-Calif., said on "This Week."

To combat that, some clever advocates of nationalization have come up with alternative names, including "government receivership" and "pre-privatization."

(I have another one - from now on, if someone gets murdered, let's refer to the victim as "pre-historic".)

Amidst calls for the outright nationalization of the banking system and brazen Orwellian brainstorming by lunatic Democrats, you might think the Republicans would be offering at least some ideological resistance. So what does conservative Republican Lindsey Graham have to say?:

"I would not take off the idea of nationalizing the banks" from the table, Graham, R-S.C., told George Stephanopoulos on ABC's "This Week" program "This idea of nationalizing banks is not comfortable, but I think we have gotten so many toxic assets spread throughout the banking and financial community throughout the world that we're going to have to do something that no one ever envisioned a year ago, no one likes," Graham said. "But, to me, banking and housing are the root cause of this problem. And I'm very much afraid that any program to salvage the bank is going to require the government.."
There you have it - "banking and housing are the root cause" - not government intervention in the economy. If we needed more, this is yet further evidence of total Republican ideological bankruptcy as detailed in a previous post [1] - the Republicratic Party at its finest.

Saturday, February 14, 2009

"Climate Change Delusion"

According to this article:

Last year, an anxious, depressed 17-year-old boy was admitted to the psychiatric unit at the Royal Children's Hospital in Melbourne. He was refusing to drink water. Worried about drought related to climate change, the young man was convinced that if he drank, millions of people would die. The Australian doctors wrote the case up as the first known instance of "climate change delusion."

Well, at least we now have a name for what is afflicting former Vice President Gore.

In 2007, I wrote a post titled Theodicy related to the Virginia Tech massacre and followed up with this. My general point was that if bad philosophy is rampant in a society, the "tails of the distribution" will include more and more psychopathic behavior. In other words, say we had an extremely healthy, rational, society. The "average" person would be productive, happy, etc. Of course, there are always going to be nuts. However, it's likely that the nuts in a prosperous, rational society would be relatively benign. Now imagine a culture that is philosophically and morally bankrupt. Say, it is a culture steeped in nihilism, subjectivism and mysticism. What would the average person be like and what would a "nut" be like in this culture? We do not have to go far to know since we have such a culture. I submit that the "nuts" in this society would be a lot worse than the "nuts" in the healthy society. In other words, it's unlikely that in such a culture you would see madness everywhere, however, the general level of the culture would be bad, and it would certainly manifest itself at the extremes in terms of increasingly disturbing levels of psychosis.

The above is an example of my point. Students are being thoroughly immersed in environmentalist propaganda from a young age. They are taught that nature is intrinsically valuable, i.e., that nature is a value apart from man. Since man's nature requires him to transform nature if he is to survive, this doctrine regards man as inherently evil. This "original sin" concept is the essence of environmentalism which I have discussed many times [1, 2, 3, 4].

Such a philosophy has the same effect on a young mind as any form of religion. In other words, it is doubtful that such a philosophy will lead to complete madness on the part of those exposed to it from a young age. There will be exceptional students who are able to think independently enough to save themselves. The average student will buy into it, and it will affect them on some level, but they will carry on although with some extra burden of guilt and more prone to give in to absurdities like recycling in the same way many mindlessly trudge to church on Sunday's. However, the student who takes these ideas seriously or a student unstable under any conditions will certainly have to fight off some form of psychosis. Just as those indoctrinated into a cult, a religion, or any philosophy which holds that man is evil and that the standard of morality is sacrifice, the budding environmentalist will be racked with guilt, uncertainty, and fear.

If one takes the tenets of environmentalism seriously, every action by any man necessarily impinges on the intrinsic value of nature. The basics of life such as eating, drinking, and shelter require consumption of plants and animals and the procurement of materials drawn from nature. Even the act of exhaling results in the emission of the satanic carbon dioxide gas, not to mention the higher forms of technology which entail the burning of fossil fuels or the fission of atoms in a nuclear power generator. To such a mind, literally every form of human action would have to be regarded as evil. The cumulative emotional effect on such a mind must be devastating and can be observed in this case.

You might say that this man was actually concerned about humans dying and so that contradicts my claim regarding "intrinsic value." However, notice that in the case of religious altruists, they too claim to be concerned about the soul's of non-believers, i.e., they appear to be outwardly concerned about human life. However, they are only concerned in the context that they desire other humans to believe in and sacrifice to God. They are not concerned with human beings per se but with God's exhortation that they spread His message of worship and sacrifce.

Similarly, in the case of environmentalism, the essential message is that man is evil by nature and that he must sacrifice himself to Mother Earth. The alleged concern with human welfare is not real. Anyone concerned with human welfare would recognize that capitalism and technology has led to the greatest human progress in world history and would understand that freedom and human ingenuity enable man to adapt to virtually anything. In this sense, environmentalist "concerns" over man's well being should be regarded as equivalent to the concerns of anti-abortionists who kill doctors or the "concerns" of religious crusaders who barbarically kill non-believers. I am not saying this man was not concerned with human life. I do not really know or care. My point is that the essence of environmentalism is not concern over man's fate. The fact that they are not concerned about man is the real root of the psychosis.

Thursday, February 12, 2009

Warning: Explicitly Evil Material

If this video does not make you want to take it to the streets then nothing will - pure evil

Wednesday, February 11, 2009

New Reality Show, CST: Congressional Show Trials

This week on CST: The Bankers

In last week’s season premier: the government inflated the fiat money supply and underwrote mortgage paper which caused massive price increases and induced malinvestment in housing. As this housing bubble predictably collapsed along with the heavily regulated banks and triggered a severe economic crisis, the Bankers sought taxpayer bailout money under vague, indefinable terms. This week on CST: The Bankers, the Bankers are back in front of Congress to answer more vague questions and to be ridiculed for not having met the undefined standards of the Congress. You’ll hear such questions as “what did you do with the money”, “why isn’t the economy better since we stole money from the taxpayers and gave it to you to give to people?”, and viewer favorite "what about Main Street vs. Wall Street"?. Don’t miss the painful exchanges between amoral pragmatist businessmen who are unable to defend private banking or expose the government fraud and ignorant populist congressmen who castigate the Bankers for having made loans to people who could not afford them while chastising the Bankers for not making “more loans”, demanding that mortgage rates be lower so that people can buy more houses, and clamoring for more “oversight”. The tension builds as no one discusses the fundamental causes of the crisis nor offers any ideas about how to solve it. Don’t miss it!

Also, don’t miss past emmy-award nominated episodes archived at the CST website such as:

CST: Big Oil – Environmental regulations on domestic drilling, refining, and nuclear power, government caused inflation, uncertain government energy policies, and taxes cause a spike in the price of gas prompting a show trial of oil company executives who are accused of “gouging” consumers while being unable to defend their right to make profits for providing energy at low real costs despite government policies designed to stop them

CST: The Big ThreeU.S. automakers burdened with pro-union laws, soaring energy prices, uncertain government energy policies, and regulations forcing r&d of unwanted vehicles come to Congress seeking taxpayer bailouts while the congressmen weigh bribes from lobbyists against the political ramifications of redistributing taxpayer money to subsidize shoddily built products that no one wants

CST: Big Tobacco – The congressmen castigate cigarette makers for harming the public who buy their products willingly

CST: Microsoft – Microsoft dares to make a product that everyone wants and compounds their evil by offering free browser software prompting a Justice department investigation and public censure of the CEO who dared to make things people buy and give away things

Unfortunately, CST: Big Government was cancelled.

How to Solve Economic Crisis in 5 minutes

  • Recognize that the role of government is to protect individual rights including property rights by barring the initiation of physical force and repeal all laws and regulations in violation of this principle including any laws that abridge the freedom of production and trade
  • In accordance with this principle, restrict the federal government to the following activities:
    • The national defense
    • Enforcement of domestic criminal law
    • The court system to resolve disputes
    • Specifically, this would entail cutting all federal government departments except the following:
      • Department of State – foreign relations, treaties, etc.
      • Department of Justice – settle interstate legal disputes and enforce interstate criminal law issues
      • Department of Defense – maintenance of standing military
      • Department of the Interior – administer the federal government’s land and buildings
      • Department of the Treasury – administer finances of federal government
  • Repeal the Federal Reserve Act to eliminate the Federal Reserve System
    • Government’s gold stock made redeemable for US Dollars
    • US Dollars priced in gold at whatever price necessary not to contract present money supply
    • Federal government recognizes gold and silver as legal tender at prevailing market rates
    • Allow private banks to replace the Federal Reserve as depository, loan and clearing institutions
    • Law recognizes the difference between deposit contract and loan contract, i.e., irregular deposits made with banks do not constitute a de facto property transfer whereas a loan does constitute a transfer of property
  • Eliminate all federal taxes and replace with system of voluntary contributions and user fees for government services including fees to uphold contracts, register deeds, etc.
  • Auction off all federal lands (including waterways) and buildings except those needed for the above departments
  • Everything else left to states

I predict that the Dow would triple if not more in one day if this program were announced on CNBC. As well, all foreign currencies would plummet relative to the dollar which would force other countries to follow America's lead and go back on a gold standard.

Note that this plan would lead to widespread prosperity and happiness and does not cost any money.

Tuesday, February 10, 2009

Scary Health Care Provision Hidden in Bill

I posted this at Simply Capitalism.

Do As I Say, Not As I Do

As an individual, let’s say you have no savings, owe more money on your house than it is worth, and have a 50% chance of losing your job in the next 12 months. Would it make more sense to:

a) cut your spending and save more money

b) take out another loan and spend more money

Most individuals realize that (a) is the best option. In other words, when times are difficult, shouldn’t there be a tendency for individuals to cut back and save rather than take on more debt and spend? Duhhhh, right? If that is true for an individual, shouldn’t it be true for your neighbors? If it’s true for your neighbors shouldn’t it be true for your town, city, and country? If that is true, why is the federal government attempting to take more money from taxpayers and investors in order to spend it? Shouldn’t the government be cutting its spending like everyone else? If the government decreased its own spending and took less money from taxpayers, wouldn’t that immediately allow taxpayers to save more money by definition? If the government decreased its borrowing, wouldn’t that free capital up to be invested in private companies that are productive? Additionally, if the government decreased its borrowing, wouldn’t that tend to lower interest rates overall? If this is true, isn’t Obama’s proposal literally the exact opposite of what he should be proposing?

Monday, February 9, 2009

Introducing Simply Capitalism

I was happy to be invited to join a group of excellent bloggers at Simply Capitalism, a new group blog that will focus on economic and business issues from an Objectivist perspective. Please check it out!

Apparently Robbery Is Very Stimulating

Proponents of the “stimulus” plan claim explicitly or implicitly that the government can take other people’s money, spend it, and thereby cause a “stimulating” effect on the economy.

First, I’m not sure what they mean by “stimulating”. Do they mean that prices will rise? But if prices rise, then we all get poorer by definition so it can’t mean that. Will prices go down so that we can all afford more? Not really since spending lots of money on consumer goods rarely results in lower prices. The only cause that results in economic benefit in terms of standard of living is an increase in productivity. Productivity allows you to make more with less effort and therefore increases real wages, i.e., increases what you can purchase with the same amount of work. Is this what they mean by “stimulus”? Do they mean that stealing people’s money and spending it will cause an increase in productivity? I would like a proponent of the stimulus plan to explain exactly how that process will work? Can Obama explain it? Can Nancy Pelosi explain it? Can the Republican’s that back it explain it?

If it is indeed true that the government can rob people of their money, spend it, and the effect will be a net benefit to the victims then why don’t we just legalize robbery? Everyone could steal from everyone else and spend the money they obtain in the theft. We could all be stimulated and cut out the middleman.

Friday, February 6, 2009

Modern Day Okies

For many, the concept of Depression conjures up images of grinding poverty, indigent masses waiting in soup lines, or the Dustbowl Era Okies depicted in Steinbeck’s Grapes of Wrath. Certainly, when we look around today, we do not observe the degree of misery and poverty which existed in the Great Depression of the 1930's. However, the Depression of the 1930's would have seemed mild to those who experienced poverty one hundred or two hundred years earlier. In other words, as mankind progresses the relative level of what constitutes "poverty" changes.

For example, one hundred years ago, poverty might mean living in the street, begging for bread, and being likely to die from any number of contagious or incurable diseases . Today, living in poverty might mean only having a studio apartment, one car, and one television. Rarely, do even the poorest in this country starve, and life saving vaccines are relatively ubiquitous. In the future, if mankind continues to progress, it is likely that "poverty" will have a new definition that is relative to the standards of that time. For example, being poor might consist of having only one space ship, only one vacation home on Mars, and having a life expectancy of only 150.

While it is relatively easy to measure the observed level of rich, middle class, and poor at any given time, what is harder to determine is what could have been absent the economic distortions resulting from government intervention into the economy. Per the "broken window fallacy" [1] it is always easy to see what actually happened as a result of some action but much harder to consider what would have likely happened in the absence of that action.

For example, it is easy to see what resulted from a man's career devoted to deciphering the federal government's tax code and preparing tax returns for individuals and businesses. But, it is much more difficult to consider what would have happened if there were no income tax and that man had devoted his career to medicine, engineering, or banking. It is easy to see what resulted from a man's career as an IRS agent, EPA regulator, or HUD administrator but difficult to determine what would have resulted if his career had been devoted to corporate finance, aviation, or high energy physics. Similarly, it is relatively easy to see what happens to your capital as it is destroyed by inflation and taxes paid into the federal government's budget abyss but relatively difficult to see what would have happened to your capital if it had been invested in the stock or bond market of a free economy liberated from the albatross of taxes, inflation, and regulation. Likewise, it is easy to see how capital poured into government bonds is then wasted but less easy to see how the capital would have been used if it had been invested into corporate bonds or the stock market.

You often hear economists discussing whether we are in a recession or a depression. They attempt to quantitatively measure this by citing GDP statistics, unemployment, etc. and often relate these figures to past recessions or depressions. Just as I argued that unemployment should be measured relative to whether the "job" would exist in a free market [2], I claim that "recession" or "depression" should be measured relative to what our standard of living would likely be in a free market. If we lived in a concentration camp, would we consider an extra ration of bread to be economic "progress"? Would we only say that we were in a recession if the guards decreased our rations for a time? Given the current fantastic potential for technological progress, do we need to see people travelling around in horse led wagons or dying of small pox to consider ourselves in a depression? A lack of economic growth does not need to translate into the same effects as it did in the Great Depression to constitute a depression. All that has to happen for us to be in a recession is that economic growth be less than it would otherwise be in a free economy.

What makes this concept difficult to grasp is the fact that capitalism is so powerful, and despite all of the distortions and impediments erected by the state, even in this "mixed economy" our standard of living continues to go up. This means that our standard of living is an upward sloping line for the most part, however the slope of the line should be much greater - exponentially greater.

Based on this standard, there is no doubt that we are in a massive depression. When compared to what could be and the type of economic progress and standard of living we would experience in a free market we are certainly in a real depression. Right now, I believe we should be flying around in jet cars, colonizing space, and our life expectancy should be into the one hundred's if not higher based on the possibilities of genetic engineering. The fact that many intelligent, hard working people are struggling to afford a home, their utility bills, medical care, and are eating off the McDonald's value menu to save money is an absolute crime. These people are the modern day Okies, and just as the plight of so many was caused by the interventionist Federal Reserve system and the socialist New Deal policies of the 1930's, the modern Okies will continue to suffer due to the interventionist Federal Reserve system and the socialist policies of the 2000's.

Monday, February 2, 2009

Real Unemployment and Our Current Real Depression

The concept of “unemployment” is a fairly important statistic since the number of people that are working is a significant indicator of the overall health of a free economy. Economists often argue over the minutia related to the definition and statistical measurement of “unemployment”, however this “miss the forest for the trees” approach fails to recognize an important conceptual problem with the current way people view unemployment. For example, at the height of Soviet Communism, the communists claimed that there was 0% unemployment. In other words, under communism, by definition everyone “works” for the state so in this sense everyone is employed. In a concentration camp or gulag, one could also make the case that there is 100% employment since every prisoner as well as the guards and the torturers are technically “working”. In a free market economy, this is less of a problem since the state would not own the means of production nor would individuals be de facto prisoners of the state. However, as America drifts more leftward the “prisoner” analogy becomes more significant and necessitates a revised way of measuring unemployment.

My definition of “real” unemployment is someone either not working by the conventional definition as well as anyone employed in an occupation that would not otherwise exist in a free market economy.

For example, according to the government’s current definition of employment, someone employed by the federal government as an environmental or financial regulator would be fully employed. I would argue that this person is unemployed because they are performing a job that would not exist in a free market. Additionally, not only are they unemployed but they should count as perhaps more than 1 unit of unemployment because they are restricting productive activities by virtue of their work as government regulators. This would be similar to counting a guard at a gulag or concentration camp as being unemployed plus counting him as 2 or more units of unemployment by virtue of his criminal abridgment of the rights of law abiding individuals. In this way, anyone working for the federal government that is not engaged in some way in the protection of individual rights such as a criminal law enforcement officer, military personnel, or as part of the judicial system would count as unemployed. This would go for state and municipal “workers” as well. And to the extent that they are directly engaged in the restriction or outright violation of the rights of the productive they should count as more than 1 unit of unemployed.

How would you classify occupations such as teaching which would exist in the free market but are currently monopolized by the state? I would count them as ½ unemployed as a starting point since they are performing a function that would exist in the free market, but since it is run by the government it is inefficient and likely the work force would be at least ½ of what it is now. This is very conservative. They probably should count as ¾ or more unemployed.

It gets more difficult when you consider private business occupations that are related to government intervention in the economy. For example, consider the profession of tax accountant or tax attorney. There are millions of people who devote time to compliance with the government tax code. This includes not only tax accountants and tax attorneys who work for individuals and corporations but also those who write software like Turbotax that is designed to comply with the tax code. These are all unproductive jobs in the sense that they do nothing except comply with arbitrary regulations that should not and would not exist in a free market. In fact, if the government wants to decrease unemployment, couldn’t it just create millions more pages of tax regulations in such a way that nearly the entire country could be “employed” in trying to figure it out? Then it could hire more agents to catch violators and hire more prison guards to watch them in jail thus bringing the unemployment rate to near 0%.

This same principle applies to attorneys engaged in either prosecuting or defending businesses and individuals from regulations or laws that would not exist in a free market. It would also extend directly to the lawmakers themselves who can be likened to the unproductive members of a 17th century European court who do nothing but pass and enforce self-serving or arbitrary laws in order to rob productive citizens of their wealth.

There are also those who are “employed” by lobbyist firms who pay bribes in order to facilitate favorable legislation for their clients, non-profit groups such as Earth First and Greenpeace which promote anti-productive policies, and even university professors who teach classes or write papers that promote the destruction of civilization.

There are literally millions of people and hundreds of millions of man-hours devoted to promoting or complying with arbitrary and counterproductive government rules, regulations, and taxes. This is time spent by often brilliant persons who could be productive in real jobs. For example, this is time that could be spent by these people researching life saving drugs, identifying cheaper energy sources, building faster computers, developing more efficient transportation systems, inventing more efficient methods of producing food, colonizing space, etc. In what sense can we consider people engaged in non-productive occupations to be employed?

Since I don’t get paid to write this stuff, I won’t attempt to calculate it, but I guesstimate that perhaps as much as 50% of the so-called workforce is actually unemployed and it might be as high as 80 to 90%. Consider that people considered the Great Depression to be a depression due to the length of the economic decline as well as statistics such as massive unemployment. Given that our current unemployment rate may be as high as 50% to 90% by my definition, I consider us to be in a massive Depression. In absolute terms, this may seem unreasonable but when compared to what could be and the type of economic progress and standard of living we would experience in a free market we are certainly in a real Depression.