The Market Fundamentalist

We need to return to a people who have a healthy disrespect for the
state, and also for a large standing Military..

To this end, conservative William S Lind and libertarian Democrat Gary
Hart have spent years working on military reform. To little avail so
far, because after 9-11 the military has been seen as our Great
Protector, never mind that we are facing a non convential war in two
countries that a conventional military is ill equiped to win. Even their
headquarters, the Pentagon in Washington, was hit by the air pirates.

The Washoe Co. Republican Party Platform calls for a fully equipped
“modern” military. However, as Ron Paul will point out at the Nevada
State Convention, a fully equipped MODERN army needs to be smaller, not
larger.

William S Lind recommends scrapping all Destroyer and some Aircraft
Carriers, making the submarine the backbone of the Navy. Reduce the Air
Force to a Nuclear Strike Force, period.Air strikes create insurgencies,
they do not stop them. Reduce the Military, but leave some Army and
Marine Divisions as Special Ops Units, trained in swift interdiction,
not Nation Building.

Nation Building is now an official part of the US Army Manual. As Padme
said in Star Wars, Revenge of the Sith: “So this is how a Republic dies.
With applause.”

Brendan

The Apogee of Global Warming was 1998, with a very large EL NINO
creating unusually warm Pacific Ocean Currents that caused the
disruption to the wildlife in Eastern Siberia and Western Canada and
Alaska. Robins in Juneau. Melting Ice. Caribou stressed. Etc. Ever
wonder why the Polar Bears are doing just fine around Hudson Bay, but
stressed in the Yukon? Blame it on El Nino.

If you take 1998 as the apogee of global warming, then the last ten
years have been slightly cooler by some measurements. The important
thing is they have not been significantly warmer, despite all that
carbon dioxide from new industrial Giants India and China. If carbon
dioxide is the real cause of global warming, why this ten year cool off?

Either carbon dioxide is NOT the major factor in global warming, or
there is a built in natural mechanism to mitigate excess warming. Both
theories are ready to take over the debate. The sun, not carbon dioxide,
will soon be seen as the main engine of climate change. And, the earth
compensates for excessive temperature change. Cirrius clouds do not stay
still and reflect heat back to Earth. They give way, and excessive heat
is vented, not stored.

There is no tipping point, no great moment when the crisis looms and if
we don’t all go back to the Stone Age technologically, we will all die.
There, there, it’s all right, Jack.

A lot of politicians will have egg on their faces. A lot of scientists
will need to rework their grant proposals. The ONE WORLD GOVERNMENT will
have to find another crusade to create itself with.

And extreme environmentalism will once more be seen as faith based, not
science based.

/”Pessimism is intellectually delicious, even thrilling, but the matter
before us is too serious for mere self-pleasuring. It would be
self-defeating if the environmental movement degenerated into a religion
of gloomy faith. (Faith, ungrounded certainty, is no virtue.)”

Paul Krugman is the Democrats’ court economist.

Trouble is, like the Democrats programs, he is outdated. You see, Krugman is the last of the unreconstructed Keynesians.
Keynes theories died in the late 1970’s when we had high inflation, high unemployment, and high interest rates all at the same time. It was called stagflation, or the “days of malaise”….it did more than the Iranian hostage crisis to get Ronald Reagan elected President in 1980. He simply asked “Are you better off today than you were four years ago?” To which America replied with a resounding NO! More to the point, Keynesian theory predicted that if government “stimulated” the economy, these three indices would NEVER, EVER rise together.

To be fair, it was Jimmy Carter who, belatedly, started Reaganomics. It was actually Carter, not Reagan, who started deregulation of oil distribution, airline tickets and trucking. It was actually Carter who appointed a new FEDERAL RESERVE chairman, Paul Volker, to try to do something about stagflation.

Reagan really just followed through and solidified these initiatives, as well as cut taxes in his first term.

Paul Volker decided to listen to the great libertarian economist of the Chicago School, Milton Friedman, and use HIS ideas to get a grip on inflation. It was inflation (remember, it was the last time, until now, that gold was selling for over $800 an ounce) that was determined to be the main culprit in stagflation. It was decided that the best way to attack the threat of high unemployment was NOT through the Keynesian model of printing more money to stimulate aggregate demand; that the best way to attack the high interest rates was NOT to have the Fed lower rates (which they realized was not possible), but to attack inflation the best way possible–to recognize, as Milton Friedman said, that “inflation is always and everywhere a monetary problem.”

If inflation was indeed a “monetary problem”, the best way to attack inflation was to reduce the supply of money. And this is precisely what the new Fed Chairman, Paul Volker, set out to do.

He stopped the printing presses. He said that the FED will stop or at least slow down the rate of growth of the money stocks. At the same time, they would let the interest rates float, or continue to rise.

And, he and President Reagan through his spokepersons told financial markets and the American people that interest rates and probably unemployment would continue to rise in the short run, but in the long run, the economy would stabilize, and the United States would not be like the banana republics of South America, and would NOT suffer real HYPERINFLATION. He told the American people to be ready for short term pain (even higher interest rates and unemployment) but that both would start to come down in a year or two.

They were right. In the next year interest rates and unemployment moved higher, but with the FED turning off the money supply spigot, eventually the economy righted itself, and we began a twenty five year expansion that hasseen some recessions, but no great depression.

Until now, and 2008.
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(originally in the NATION under a different title , by Peter C Baker)

Waiting for Giuliani
a Play in One Act by William Kristol

* * * *

Two hoboe’s meet by a trash can filled with burning garbage.

PODHORETZ: We are only in the very early stages of what promises to be a very long war–

PIPES: A profound war and long-term war, in which Afghanistan and Iraq are sideshows.

PODHORETZ: Iraq is only the second front to have been opened in that war: the second scene, so to speak, of the first act of a five-act play.

PIPES: I already predicted failure for an American-led military occupation of Iraq in February 1991…. [Podhoretz frowns] But President George W. Bush is right to insist on keeping troops in Iraq.

PODHORETZ: I think Iraq has gone not badly but well, is not a disaster or a crime or a delusion, but what’s more is a noble, necessary effort.

PIPES [apologetic]: Oh, it was a success…. That six-week victory remains a glory of American foreign policy…. The ingratitude of the Iraqis. [He raises his glass and takes a long, mournful swig. A tear wells in his eye.]

PODHORETZ [nodding sympathetically]: We’ve paid an extraordinarily small price by any reasonable historical standard for a huge accomplishment. It’s unseemly to be constantly whining.

PIPES [as the previously welled tear drops to the floor]: Probably those weapons were well hidden; maybe some were latterly destroyed.

PODHORETZ: They were shipped to Syria.

PIPES: They might well still appear.

PODHORETZ: The only reason in my opinion that we’re having as much trouble as we’re having in Iraq is that we’re not getting intelligence…. You can only get that kind of intelligence by squeezing it out of prisoners. Both domestic opposition and the international community, unhappily, are defining torture down. The things they’re calling “torture” now have never been and have no business being considered torture.

PIPES: Is there not something deeply flawed about the US government consistently siding with terrorists?

PODHORETZ: Even a lot of my neoconservative friends have either lost heart and deserted the cause or devoted themselves mostly to bitching about this and that and the other thing and everything else.

[An awkward pause. Both men look at the floor. After a few seconds, Podhoretz suddenly looks up.]

PODHORETZ: Which brings us back to Ahmadinejad.

[Pipes makes a fist, and pumps it furiously in the air.]

PIPES: Ahmadinejad threatens the elimination of the United States as well as Israel.

PODHORETZ: The old American foreign-policy establishment and many others say that these dreams are nothing more than the fantasies of a madman.

PIPES [Leaning in conspiratorially, sweating slightly]: The real story is Giuliani’s fresh start in foreign policy.

PODHORETZ: As far as I can tell there is very little difference in how he sees the war and how I see it.

[Both men jump from their chairs.]

PIPES [sweating slightly]: The war is against radical Islam.

PODHORETZ: I call this new war World War IV.

PIPES [sweating more, and panting]: A profound and long-term war.

PODHORETZ: There’s no alternative to military action.

PIPES: Will we act in time?

PODHORETZ: Even though Hitler in Mein Kampf had explicitly spelled out the goals he was now preparing to pursue, scarcely anyone took him seriously.

[They sit back down, switching seats.]
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Excellent video of union abuse situation with the UAW….interesting point here is that the union tried to get into the workplace by means of a sweetheart deal with the Company that would keep wages low. Anything for dues, I guess. Union videohere.

At Bully’s, the night RAWC met to discuss the State of the Union by GWB:

Russ said that he did not believe in the doctrines of David Ricardo. I asked him if by that he meant the doctrine of comparative advantage.

I then explained that the doctrine of comparative advantage means that if every nation or region concentrated on producing what it does best, then trades for everything else, the people’s wealth would be optimized. If two nations engage in trade, if each nation trades what it produces the best, for what the other nation produces the best, then both nations are better off-and that includes both a wealthier nation and a poorer nation. Under these conditions, both nations will prosper to the maximum.

Remarkably, Ricardo even showed how a very poor nation that does not produce anything better than a wealthy nation can still prosper, and the wealthy nation as well, by trade:

David Ricardo long ago demolished an objection to free international trade. A country can profit from trade if another country can produce more efficiently a good that it wants. In return, it can offer in exchange a good that it makes more efficiently. “But what of the case where one country . . . is worse at producing everything than some other country is? . . . How can it possibly offer the more advanced nation anything in trade?” (p. 64)., Economics for real people, by Gene Callahan.

Ricardo arrived at a remarkable result. He showed that, in the case just indicated, the advanced nation would still find it advantageous to trade. The poorer nation should produce the commodity in which its inefficiency, compared to the advanced country, is least, —this is its comparative advantage.

This means that even if the US, for example, could produce a product better than a poor country like, say Bangledesh, it still would be advantageous for the US to trade with Bangledesh for that product. Assuming that Bangledesh can produce the product better than it produces other products, both the US and Bangledesh will benefit from the trade.

Now I said that this is a natural law, a law that can be expressed mathematically. It is an a priori law, or a law that can be deduced logically, and does not depend on empirical verification. A mathematical equation like 2+2=4 is valid no matter how cold or damp it is outside, or how smart or dumb the student who works it out is, or how greedy or altruistic the computer is….2+2 still equals 4.

Russ disagreed. He says that Ricardo is wrong. But all he can say to support this claim is that Ricardo is wrong because this is merely a hypothetical and people have free will. I am not clear what this means at all. I asked him to send me his argument, but he declined, saying he has a life. OK, so he refuses to say why he thinks that Ricardo’s law of comparative advantage is wrong. But, this is not the first time I heard him say this. He likes to bring this up in conversation, but he expects others to just accept it, without knowing why or how he thinks the law is deficient. I find this attitude from those who argue for more government interference to be more than curious, it is disturbing.

I assume that we can agree that government is force. It issues laws and regulations that force people to act other than they would on their own. It punishes violations with fines, prison sentences, loss of property, even death. The folks in RAWC say that force is a bad thing to use against Iraq and vilify the right for saying it is good. I agree. However, these same folks turn around and justify every government intervention possible in people’s economic lives and say that is a good thing, because people have “free will”. Just how is this use of force morally different from the right’s use of force?

As a libertarian, of course, I believe strongly in free will. But, you can have all the free will in the world, and you still cannot make 2+2=5. There is nothing your will can do to change a mathematical law of nature.

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Yes. I have been slow to write due to the Holidays. I have been more active on Reason Magizine’s Hit and Run Blog, which I recommend, than my own!

I also post emails a lot to www.renopeace.org: the washoeantiwar list.

Now, I hope to catch up and get the Market Fundamentalist rolling again.

I believe in the fundamental rights of individual liberty and private
property. The best way to grow as humans is through individuation, or the development of the individual. A large part, although certainly not the entire part, of human development occurs through peaceful exchange on free markets. Both the right and the left as well as populist mixtures of those ideologies claim that government has the right to intervene in the peacefull affairs of individuals and groups of free individuals in order to force individuals to do what they otherwise would not or abstain from what otherwise they would do to achieve social goals. Insfar as these regulations affect peacefull, voluntary behavior they are both morally wrong and ineffective.

This belief can takes many forms from pure socialism in its communist or fascist manifestation to the so called “mixed economy” or third way.

As a market fundamentalist, I challenge both the right and the ability of government intervention to acheive social goals without
significant negative tradeoffs.

There were a couple of articles written by Libertarian publications praising the South Park phenomena in the last couple of days. Since I am a fan, I thought I would add my voice to the chorus.

The first article was published by Paul Cantor on www.lewrockwell.com and it focuses on the amazing amount of economic knowledge you can glean from watching those potty-mouthed kids. He uses the show to illustrate how some people try to control the free market by using government to restrict entry, and how the invisible hand works (Like invisible gnomes) without anyone, including the actual businessmen, understanding the magic that their everyday actions actually entails.

The second entry was in www.reason.com and it consists of an interview with South Park creators Trey Parker and Matt Stone in Amsterdam by Nick Gillepsie and Jesse Walker. True to Reason’s styly, it focuses mainly on the media culture and censorship issues that the show manages to inform and challenge us with.

All in all, South Park paints a very realistic picture of the modern world seen through the eyes of its radical freedom loving creators. It is a badly needed antidote to the mainstream views that the rest of the boob tube peddles most of the time.

I haven’t remarked on Milton Friedman’s passing in this blog yet. This Sunday I will.

Milton Friedman was an inspiration to me because I saw a libertarian who garnered respect and admiration from the public and mainstream politicians. Ludwig von Mises was a superior economist, but he never even had a full time paying academic position. Murray Rothbard was
more prolific but never as respected. Freidrich Hayek also won the Nobel Prize, but the public did not warm to him as they warmed to Milton Friedman. He was the softer gentler face of the libertarian movement, the kindly wise grandfather who gently admonishes his grandchildren for the errors of their ways while always remaining willing to pitch in and help.

But more than teacher and mentor, Milton got things done. He did more than anyone else to end military conscription. His monetarist ideas inspired Paul Volker to end the stagflation of the late 1970’s by causing the Fed to concentrate on reducing the money supply and let interest rates rise. His idea to create vouchers to allow for school choice has been implemented in several cities and remains the most talked about public education reform.

His unswerving criticism of the War on Drugs marks his courage and libertarian tenacity. Depite his “libertarian centrism” on several issues, such as the Federal Reserve, the gold issue, the existence of the state, foreign interventionism (he kept silent about Gulf War I, and nearly silent about Bush’s war, although in interviews he expressed disapproval), the negative income tax (alas, also now a reality in the guise of the earned income tax credit, otherwise known as Republican welfare) and a few other issues, he remains a shining light of reason illuminating the most important issues of our time.

Milton Friedman, RIP. You will be sorely missed.

The Reno Gazette Journal published an article on Friday 1 Dec (link not found) on how the Democrat’s proposed minimum wage law will not due much to alleviate poverty.

I couldn’t agree more.

The problem is, the article’s reason for that statement is that it is not a large enough increase.

I couldn’t disagree more!

Minimum wage increases don’t help to alleviate poverty because they eliminate jobs, and that reduces productivity. Then other sectors, spurred on by unions, use the new minimum wage law to increase their wages above productivity, further eliminating jobs and reducing productivity.

When jobs are lost, people with low skills must cope by seeking assistance, public or private. Or they turn to crime. When productivity is lost, the law of supply and demand necessitates an increase in prices, causing the poor who are working to do without.

One of the best recent articles on the topic comes from James Ostrowski, “How to Help Low-Wage Workers”.

He explodes several myths about the classic objection to minimum wage laws, that they eliminate jobs. No, the jobs eliminated may not be massive. But, they do tend to affect the people that the left claims to want to help the most–the unskilled poor, very often minorities.
The increase may not result in “layoffs” per se (for the most part). More likely, it will result in fewer job opportunities, jobs lost by attrition, more investment in technology that replaces the need for human workers, and so on. Over time, we hardly notice that the jobs are gone. (He asks, “Whatever happened to movie ushers” as an example of a job that is no longer seen, quite possibly because of minimum wage and other labor regulations.)

The RGJ article did mention one worker complains that “after taxes are taken out, I am left with $23 dollars a day”. Yet, somehow, the author passes over that comment. Obviously, he believes that the tax bite is somehow a sacred given for this poor worker, and the very entity, the government, that takes this money from the meager paycheck is NOT to blame.

The employer, who is trying to make a living by paying the worker what he can afford without going out of business, or without losing the worker to someone who can afford to pay more, is to blame. Curious logic, that.

A better contrast between statist fundamentalism and market fundamentalism would be hard to present the discerning reader.