About This Blog

Ludwig von Mises (1881-1973) was the greatest economist of my time. His greatest works can be accessed here at no charge.

Mises believed that property, freedom and peace are and should be the hallmarks of a satisfying and prosperous society. I agree. Mises proved beyond a shadow of a doubt that the prospect for general and individual prosperity is maximized, indeed, is only possible, if the principle of private property reigns supreme. What's yours is yours. What's mine is mine. When the line between yours and mine is smudged, the door to conflict opens. Without freedom (individual liberty of action) the principle of private property is neutered and the free market, which is the child of property and freedom and the mother of prosperity and satisfaction, cannot exist. Peace is the goal of a prosperous and satisfying society of free individuals, not peace which is purchased by submission to the enemies of property and freedom, but peace which results from the unyielding defense of these principles against all who challenge them.

In this blog I measure American society against the metrics of property, freedom and peace.

Friday, April 22, 2011

Sherman: On Mind and Method

Ladies and gentlemen, Sherman wants to get a word in edgewise. I opened the door by linking to the excellent article: "Mises On Mind and Method" by Daniel James Sanchez. So I can hardly deny my loquacious alter ego friend a fair chance to compete. As anyone familiar with Sherman Broder can testify, competition is the man's middle name. Moreover, once the man gets on a roll, its hard to stop him anyway, let alone resist his logical charm. So here goes, but, as usual, buyer beware. If you're not familiar with Broder's style and substance, be forewarned and pay close attention. As always, I am not responsible for any consequence the reader suffers or claims to suffer as a result of actually succumbing to Sherman's charismatic way with words:

ON MIND AND METHOD, by Sherman Broder (excerpted from the book: "LOVE IS BARTER, by Sherman Broder")*
When a human being releases his rabbit of happiness and gives chase, he is constrained by reality to run in the expanding universe along a particular course and position in space and time. His rabbit, however, as a creature of the human mind, does not move in space and time. Thus, it is literally impossible for a human being to actually capture his rabbit of happiness. The best a human being can do is to act to achieve his most satisfactory course and position in the space and time of reality relative to the imaginary motion of his dream rabbit.

If his dream rabbit moves in an imaginary universe which is absolutely incompatible with the reality of our expanding universe, then that dreamer can never be satisfied. If his dream rabbit moves in an imaginary universe compatible with ours, but the dreamer’s own locomotion is incompatible with the reality of our expanding universe, then that dreamer as well can never be satisfied.  

Reality sustains love and human life. A human being who loses touch with reality will sooner than later lose both his love and his life. For example, if the energy of the expanding universe did not condense into pink elephants, no amount of searching or contemplation can alter that fact. If a dreamer’s idea of happiness is to ride a pink elephant, then he will fail in love, he will never be happy (unless, of course, he is able to create a pink elephant by his own action, or to achieve happiness in the very impossibility of his search).

Fortunately for the human race, reality is sensate. In other words, the motion of the expanding universe and the course and position in space and time of animate and inanimate beings in the universe are sensate. In other words, reality can be perceived by means of the human senses.

However, motion is relative. Although individual human beings can sense motion, each human being perceives motion relative to his own course and position in space and time. Therefore, human beings are able to comprehend a particular sensed motion differently. Thus, no two human beings witness an accident exactly similarly. No two artists paint a portrait or a landscape exactly the same. The particular brush strokes of a particular artist can be imitated, but can never be exactly reproduced.

If a human observer in our expanding universe could observe motion, per se, he would observe that motion is not differentiable by any dimension. However, human observers cannot observe motion per se. Human observers cannot separate motion from the being that is moving. Still, connecting motion to a particular being will not in itself allow the human observer to directly perceive differentiated motion. Without differentiation, motion will still appear random. In order to differentiate any observed motion in space and time human beings require the imaginative and conceptual ability of their human mind. They require thought.

Concepts are human thoughts that attempt to classify and categorize observations. Conceptualization is human thought that differentiates random motion in order to make sense of it. Conceptualization is a human mind’s abstract attempt to distinguish and categorize the random motions of observed elements in space and time in order to comprehend them, i.e., have knowledge of them and, thus, perfectly predict their future movements.

Human beings strive to comprehend reality in order to predict reality and to act in reality. The ability to successfully predict motion in our expanding universe, i.e., the course and position in space and time of various elements of stuff in the universe, is essential to successful human action, i.e., to love.

Our human minds conceive the composite and relative motions of stuff in our expanding universe as three dimensions of motion which are distinguishable, categorical and predictable. These three dimensions of motion are: the Concatenate, the Locomotive and the Active. Animals are constrained to swim in the first two dimensions. Human beings are constrained to swim in all three.

Concatenate motion is the motion of inanimate beings (energy, matter and light). The Concatenate motion of inanimate beings is determined, directly or indirectly, by the original Big Bang-motion. Therefore, Concatenate motion is regular, consistent and constant.

If all the stuff of our expanding universe were inanimate, all the motion in our universe would be concatenate and, therefore, absolutely and perfectly predictable. There would be regularity and consistency in the unfolding of all events. The motion imparted to all inanimate stuff at the moment of the Big Bang would determine the course of all stuff and its position in space and time until the end of space and time. This would be true even if the course and position of elements of this original stuff of the universe happened to intersect and collide. The resultant relative positions of these elements in time and space after intersection and collision as compared to before would be different, but regular, predictable and consistent with the motion of the expanding universe. The combined total of the Concatenate motion of all elements after intersection and collision as compared to before would be exactly the same.

Locomotive motion is the motion of animate beings (plants, animals and humans). The Locomotive motion of animate beings is determined, directly or indirectly, by the animate beings themselves. Therefore, Locomotive motion is irregular, inconsistent and inconstant.

If all the stuff of the expanding universe were animate, all the motion in our universe would be imperfectly predictable. Although the motion imparted to all animate stuff would be locomotion and each animate being would determine its own course and position in space and time until the end of time, the instincts and nervous systems of each animate being would strive to keep their motion in concert with the original Big Bang-motion of the expanding universe. This would be true even if the course and position of individual animate beings intersected and inter-reacted. The resultant relative positions of each animate being in space and time after intersection and inter-reaction as compared to before would be different, irregular, unpredictable and inconsistent. However, the combined total of the Locomotive motion of all animate beings after intersection and inter-reaction as compared to before would tend to be in concert with the general flow of space and time in the expanding universe and in concert with the specific nature of the nervous systems and instincts within each species of animate being.

Active motion is the motion of human beings. The Active motion of human beings is determined, directly or indirectly, by human beings themselves, each seeking their own happiness. Therefore, Active motion is irregular, inconsistent and inconstant.

If all the stuff of the expanding universe were human, all the motion in our universe would be perfectly unpredictable. There would be no regularity or consistency in the unfolding of events. The motion imparted to all human stuff would be locomotion and each human element of stuff would determine his own course and position in space and time based on his individual pursuit of his unique rabbit of happiness until the end of time. This would be true even if the course and position of individual human elements intersected and interacted. The resultant relative positions of each human element in space and time after intersection and interaction as compared to before would be different, irregular, and inconsistent. Thus, the resultant relative positions of each human being in space and time after intersection and interaction as compared to before would be different and perfectly unpredictable. The combined total of Active motion of all human elements after intersection and interaction as compared to before might even be nil.

Knowledge of a particular element of creation is information about that element which perfectly predicts its course and position in space and time as it moves through our expanding universe. Human beings who have knowledge are smart. Human beings who don’t have knowledge are stupid.

Knowledge is either Subjective or Objective. Subjective knowledge is private and unique, knowable only to each specific and individual human mind by means of autistic action. Subjective knowledge is observation, experience and apprehension of a particular motion considered solely from the point of view of each individual human being. Subjective knowledge is the motion of a particular being considered and predicted by a particular human mind. Whether that consideration and prediction is correct or incorrect, i.e., in concert with that being’s real course and position in space and time or contrary to it, is impossible to say. Only the evidence of space and time can say for certain.   

Objective knowledge is knowledge that has been verified as correct by the evidence of space and time to the best of our human ability by means of cooperative action. Objective knowledge is public and common, knowable by all human individuals. Objective knowledge is observation, experience and conception of a particular motion considered from an imaginary point of view common to all human beings. Objective knowledge is our common human perception of reality itself, our best conceptualization of the course and position of what exists in space and time outside of our subjective human minds. 

Human beings acquire subjective knowledge by means of introspection, which is a particular human being considering and examining his own thoughts and observations exclusively from his own point of view. Human beings acquire objective knowledge by means of extrospection, which is a particular human being observing and examining space and time exclusively from the point of view of an imaginary, archetypal, unbiased human mind.

Meditation is the method of introspection. Meditation is a private system of solitary reflection on one’s own thoughts. There are no universal rules of meditation. Meditation has no corollaries. Logic is the method of extrospection. Logic is a uniform and standard public system of ratiocination, which allows each individual human mind to conceptualize observations of motion in space or time in a universally consistent way. Logic assumes that what is true of a category of elements in space and time must be true of each particular element in that category.

Thus, if we observe a “blue” element, then we can infer a category of “blueness” in which each observable element must be blue. Conversely, if the category of “blueness” is true, then we can infer that every observable element in that category must be “blue.”

Logic has two corollaries: inductive reasoning and deductive reasoning. Inductive reasoning is inference from the particular to the general. Inductive reasoning is inferring what is true of a conceptualized category of existents from our observations of what is true of particular specimens of that category. Inductive reasoning is the method of the natural sciences.

Deductive reasoning is inference from the general to the specific. Deductive reasoning is inferring what is true of existent specimens of a particular category from what is true of the conceptualized category. Deductive reasoning is the method of the analytical sciences.

Because the motion of particular inanimate elements in space and time is Concatenate, i.e., regular, consistent, constant and perfectly predictable, we can observe these particular inanimate elements, use inductive reasoning and infer categories of Concatenate motion and theories which predict with certainty the true course and position of these elements in space and time.

Because the motion of particular animate elements in space and time is Locomotive, i.e., irregular, inconsistent, inconstant and imperfectly predictable, we cannot use inductive reasoning to predict with certainty the true course and position of individual animate elements in space and time. However, because the Locomotive motion of plants and animals is initiated and controlled by species-specific nervous systems, instincts and genetic instruction, we can use inductive reasoning to predict with certainty the true course and position of species of plants and animals in space and time.

However, because the motion of particular human elements in space and time is Active, i.e., irregular, inconsistent, inconstant and unpredictable, we cannot use inductive reasoning to predict with certainty the true course and position in space and time of either human individuals in particular or of societies of humans or of the human species in general. We can only conceive of a category of Active motion which we assume is self-evident and true. We can only use deductive reasoning and infer deductions from that category which would, if our categorical assumption of action is in fact true, predict with certainty the true course and position of a particular human being, given his particular version of happiness sought.

Understanding of a particular element of creation is subjective knowledge, i.e., information about that element which generally and imperfectly predicts its course and position in space and time as it moves through our expanding universe. Because we are each human, we each experience what it is like to be human. Therefore, we have subjective knowledge of ourselves and our human nature. We can use this knowledge to predict with certainty our own actions in a particular circumstance. However, we cannot use this knowledge to perfectly predict how another human being would act in an exactly similar circumstance. We can only speculate, based on our own action, how that human being would likely act. Since subjective knowledge of human nature does not perfectly predict the future course and position of human individuals in space and time, we must consider our subjective knowledge of human nature as merely an “understanding.”  

Wisdom is an astute understanding of human nature. Wisdom understands human happiness relative to the means appropriate to achieving it. A human being who has wisdom is wise. A human being who lacks wisdom is foolish.

Foolishness is loving a happiness that cannot be achieved. Fools remain hopelessly unhappy unless they obtain wisdom.

Both smart men and fools have knowledge enough to achieve happiness. However, a smart man is not constrained to use his knowledge wisely, and a fool uses his knowledge to love unwisely. Stupid men do not have knowledge enough to achieve happiness. Their only hope for achieving happiness is to find a smart teacher and acquire the knowledge necessary and appropriate to achieve their dream of happiness. However, even a knowledgeable man must learn more. He must strive to be wise, or his knowledge goes for naught. Relatively few knowledgeable men strive to become wise. Knowledge of this fact is the most important gift a teacher can bestow. Knowing the difference between knowledge and wisdom is a student’s reward for learning from a wise teacher.

Wise men nearly always have great knowledge about many things, but men who have great knowledge about many things are not necessarily wise. A man who has knowledge of many things, but remains a fool is the most dangerous man on earth. He is most likely to believe his knowledge of many things enables him to achieve a course or position in space and time which is impossible. He is most likely to believe his knowledge of many things makes him a superior human being. He is most likely to coerce others to follow him down his path to impossibility. He is most likely to cause grave harm or death to those human beings who passively submit to his leadership or blindly follow it.

A man who has little or no knowledge and no wisdom at all is a tragic figure because he is unable to be happy and unlikely to survive. He is the cannon fodder of smart fools.

[NOTE: "LOVE IS BARTER, by Sherman Broder" will be available for general purchase when Sherman gets around to publishing it. Sorry, it's just the way he operates. He has been, after all, kind enough to make available this excerpt as a gift to me and this blog. Just don't reproduce it without permission. I can tell you from experience, the man has a damn army of lawyers and won't hesitate to turn them loose on you. Besides, what chance would you have in court when the plaintiff is the world's richest man?] 

"Mises on Mind and Method," by Daniel James Sanchez

By a happy coincidence, a gentleman by the name of Daniel James Sanchez wrote a Daily Article, titled “Mises on Mind and Method,” which was posted yesterday on the Ludwig von Mises Institute website. The annotated article, which covers the same general ground as my post below on Method (except Mr. Sanchez’ article is a far more thorough and academic disquisition on the subject) is excellent. I recommend it to anyone interested in clarity of thought.
I hope the discussion on Method permanently expands to include more and more economic and political commentators. (Paul Krugman comes to mind. The subject is not easy, but then few easy pastimes are worth pursuing. Besides, Krugman was presented a Nobel Prize, so surely he is able to follow the argument.)
We live in a complex, diversified society. The key to making such a society work for all who are in it is a crystal clear understanding of how it is that we know what we know. Ronald Reagan is quoted as saying: “Well, the trouble with our liberal friends is not that they're ignorant; it's just that they know so much that isn't so.” I've heard many progressives repeat the same sentiment aimed at their conservative friends.
I continue to believe that there are well-intentioned fellow citizens (Ellen Brown comes to mind) who are sincere in their recommendations aimed at helping us all attain more prosperity and satisfaction in life. However, a faulty understanding of basic epistemological method guides these well-meaning individuals down the wrong fork in the road to knowledge. As a result, they make errors. In time they become ideological crusaders, unable or unwilling to consider other paths, or to see and accept the error in their own reasoning.
Read Mr. Sanchez’ article, but glance at the reader comments. Note how many commentators refuse to accept the most fundamental points of the article only because they are, obviously, emotionally attached to another, easier or favorite method of thinking. If logic and discursive reasoning can’t be the ultimate arbiter of our disputes, we in this society are doomed to mindless and wasteful conflict from now until doomsday.
For myself, I can’t understand how anyone could read the Sanchez article and disagree with it. The logic is clear and straightforward. The case, as I said in my essay, is unassailable. Yet, individuals can’t accept its truth because it doesn’t conform to the way they’re used to thinking about things, or it just doesn’t appeal to their egalitarian outlook, or it just doesn’t “feel” right “for them.” This is not the way adults and reasonable people settle their disagreements, and if we can’t even agree on the basics – the ultimate ground rules for thinking and for the process of accumulating knowledge, what hope is there for continued mutual cooperative action in society?
It would be helpful to me personally and to society in general if some honest individual, who disagrees with Mises, Sanchez and me, could contribute productively to the discussion and make the case against the Method we describe by pointing out exactly where and how our arguments go wrong, are illogical or fallacious. (Paul? Ellen?) In the interest of mutual cooperation and peace, why not give it a shot?  

Thursday, April 21, 2011

Ellen Brown: A Word About Method

When I was in college a lecturing professor conducted a profound laboratory experiment. Placed on the table in front of him were two one-liter beakers of different colored liquids which were different chemicals, the identity of which I can’t recall. The professor proceeded to pour both one-liter beakers into a single two-liter beaker. To my astonishment, the pouring filled the two-liter beaker to a mark a half-liter short of the brim!
Now we all know that one plus one is two. Therefore, logic tells us, that one liter plus one liter must equal two liters. But not in this case. What is the lesson we can learn from this experiment?
That one plus one is not two?
That experiment trumps abstract theory?
That mathematics is a failed science?
No. If I tried to argue that these are the lessons to be drawn from the professor’s experiment, you would laugh and stop reading. You would know that there must be something else going on, some chemical reaction that masks the abstract, mathematical principle you know must be true: That one plus one is necessarily two!
Like mathematics, economics is an abstract, deductive science. Just as mathematics starts with a self-evidently true premise, i.e., "like things" are quantifiable, and deduces from this premise arithmetical conclusions which must be true as well and apply to all "like things" (if the deductive process is without error), so economics starts with the self-evidently true premise that man acts with purpose, that he strives to obtain particular ends by utilizing means available to him.

The truth of this premise of human action is unassailable and is obviously applicable to all human individuals, for to argue against it is self-contradictory in that argumentation itself is a purposeful action, i.e., seeking the goal of refutation by using the means of argument.

All economic conclusions about human action (the scarcity of means, the interplay of supply and demand, the principle of marginal utility, etc. etc.)  are deduced from this single premise, and, so long as this original premise is true and so long as the deductive process is without error, these conclusions must necessarily be true as well and must necessarily apply to every instance of human action.
The natural sciences -- physics, chemistry, biology, botany and the like -- are differentiated from mathematics and economics by their method. The natural sciences are inductive, a process of reasoning which infers general conclusions from specific observations of particular individuals in a set of "like things." These general conclusions must be true of and applicable to all "like things" in the entire set.

Indeed, the principle of falsification holds that, if any future experimental observations contradict the general conclusion, then that general conclusion is falsified, i.e., proved untrue. Thus, all general conclusions arrived at by the process of inductive reasoning are tentative. 
The method of the natural scientist (called the "scientific method") works only because in Nature there is, as Ludwig von Mises puts it, a “regular concatenation of various observable entities and attributes.” If there were no regularity in Nature, that is, if each atom, each chemical, each bird, each rock and each ounce of water had a mind of its own, i.e., could set goals and could use the means available to it to achieve those goals, then observing the behavior of a solitary rock or an individual ounce of water could tell the scientist nothing about what is generally true of the behavior of all rocks and all water. Controlled experiments in the laboratory would be a useless and futile exercise.  
Of course it is obvious that each individual human being does have a mind of his own. Thus, observing how a particular, individual human being (or a particular group of human beings) acts in a particular situation or circumstance can tell the observing "scientist" nothing about how all human beings would act in the same particular situation or circumstance. Moreover, individual human beings act in the context of history and complex society. No experiment imaginable could study a particular action made by a particular individual at a particular time in history, isolate all possible variables that played in that individual's decision to take that action and ascribe a particular cause or effect to that action.
Yet, this is exactly what Ellen Brown attempts to do.  She isolates a particular moment in the history of a particular culture, analyzes the "facts" available with regard to the actions of particular individuals in that culture relative to their use of money, observes (or, more correctly, speculates) that those particular actions caused certain effects in that culture and concludes that those same actions would cause the same effects in all cultures at any time.

So, she examines the historical record of the grain-banking system of ancient Sumer, the pre-war credit policies of Nazi Germany, the public banking history of North Dakota and the monetary and banking policies of modern Japan. In short, she uses the method of the natural sciences to infer general conclusions about human action, conclusions which she assumes are true and unalterable over the ages.
What Brown fails to realize is that with regard to the actions of human beings there is no "regular concatenation" of events. The actions of individuals in the past occurred in a specific, one-of-a-kind context of that particular culture in that particular day and age. She cannot possibly know all the variables that influenced the decision-making and the actions of various individuals in ancient Sumer, Nazi Germany or even in modern day North Dakota or Japan. And even if she could know these variables and the specific nature of the effects and influences these individual actions had on other individual actors in the culture, she could not possibly duplicate that exact set of variables in some other locale or some other time. All her attempts to do so are foolish. Her historical observations are interesting if they happen to coincide with the truths of deductive economics, and they are totally irrelevant when they contradict these truths.
The only science capable of explaining and predicting human action with regard to the division of labor, direct exchange, indirect exchange, fractional reserve banking, credit expansion, capital formation, capital consumption, deflation and inflation is deductive economics. In fact, it is deductive economic reasoning that makes sense of past economic data. However, it cannot be the other way around; the data from a past time or culture cannot make a certain economic policy of today reasonable. 
Just as a professor's demonstration in a college lecture hall fails to refute the logic of mathematics and the deductive truth that one plus one must be two, so the existence of a communal grainery in ancient Sumer fails to refute the logic of economics and the deductive truths inherent in the premise of purposeful human action.
When historical or experimental economic data appear at first to contradict these abstract truths, the deductive economist assumes that something else must be going on, that something else must be masking the effects of economic principles he knows to be true, as surely as he knows that one plus one must equal two.

Note: For a complete and unabridged discussion of the deductive method of economics vs the inductive method of the natural sciences, see Ludwig von Mises' The Ultimate Foundation of Economic Science. The online version is available free of charge by following the link provided.          

Tuesday, April 19, 2011

It depends on what the definition of "is" is...

President Obama's Press Secretary is a bald-faced liar.

The proof?

This from The Moral Liberal:

"White House Press Secretary Jay Carney said that back in 2008 Obama, meant the president should not abuse signing statements–not that he was against ever using signing statements.

He never said he was opposed to all signing statements,” Carney told reporters on Monday. “We’ve pointed to numerous statements in the campaign where he made clear that every president must maintain the right, of course, must maintain the right, to have signing statements, to raise constitutional concerns or objections about the laws passed by Congress that he signs into law.”

What EXACTLY did the President say in 2008? This:

“That's not part of his power, but this is part of the whole theory of George Bush that he can make laws as he's going along. I disagree with that. I taught the Constitution for 10 years. I believe in the Constitution, and I will obey the Constitution of the United States. We're not going to use signing statements as a way of doing an end-run around Congress.”

For anyone who needs to see before they can believe, the video is below.

On June 26, 2009 Obama issued a signing statement after signing into law  HR 2346. On April 15, 2009 Obama issued a signing statement after signing into law the FY2011 budget bill.

Definitive proof. Not only did Obama break a campaign promise, but his spokesperson and mouthpiece lied about it.

Why does the mainstream media allow the Obama administration to get away with things like this?

More importantly, why do the American people?

Saturday, April 16, 2011

Ellen Hodgson Brown

Ellen Hodgson Brown is an American attorney and writer. She is prolific. Her most famous and "best selling" book is Web of Debt. Amazon's website summarizes the book as follows: 

"This book exposes important, often obscured truths about our money system and our economic past and future. Our money is not what we have been led to believe. The creation of money has been privatized -- taken over by a private money cartel. It is all done by sleight of hand, concealed by economic double-speak. "Web of Debt" unravels the deception and presents a crystal clear picture of the financial abyss towards which we are heading, pointing out all the signposts. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation's, you should read this book."
Brown's theories of money and public banking are popular reading at politically progressive websites like The Huffington Post. She has also drawn some interest among libertarians, most notably at the website The Daily Bell, the editors of which sum up their opinion as follows:
"The bottom line with all of this has to do with whether people want free-market money or money issued out by the state. Given governments' recent track records, we wonder why anyone would want to set up yet a new bureaucracy."
Brown attracts attention among politically diverse audiences because her monetary and banking theories are decidedly anti-establishment. She appeals to progressives because she opposes private banking conglomerates, whom she credits with creating money and debt for the sole benefit of themselves and their cronies. She recommends nationalizing the Federal Reserve and establishing publicly owned State banks. Money, she says, could then be created by a public entity and the money supply managed for the public good. Brown appeals to certain libertarians because they share her distrust (to put it mildly) of the Federal Reserve. Of course, libertarians consider the Federal Reserve only technically a private institution. Brown's populist theories also appeal to members of the Tea Party for reasons that are obvious.

What I find most interesting about Ellen Brown is that her monetary and banking theories are based not on economic theory but on monetary history and banking practice. She is apt to quote Ben Franklin, Abraham Lincoln, Henry Ford and various board members of the Federal Reserve instead of Murray Rothbard, Fredrich Hayek, Ludwig von Mises or even John Maynard Keynes. She uses the monetary history of ancient Sumeria to justify her recommendation for public banking rather than rational, theoretical argumentation. In fact, she seems to avoid economic theory like the plague.

Since economics is an analytical, not an historical science, why should we concern ourselves with her monetary writings? Because, as America sinks deeper and deeper into fiscal and monetary crisis, politicians will eventually find themselves caught between a rock and hard place, between a mountainous debt crisis on the one hand and runaway inflation on the other. Conventional fiscal and monetary policies will provide them no way out. In such a predicament, the political skunks are likely to turn to populist solutions in an attempt to save their skins. Ellen Brown's proposals fit the bill. Why? Because Brown claims her proposed policies can make the debt crisis disappear virtually overnight with no resulting inflation. What politician could resist such a easy and convenient panacea?

So now is the time to debunk Ellen Brown's fiscal and monetary policy proposals with dispassionate, rational economic argumentation. I will do so over the next few posts to this blog. I will, of course, also concentrate on the effect Brown's proposals would have on the classical liberal values of property, freedom and peace.

Friday, April 15, 2011

Rodney King and Barack Obama

On May 1, 1992, as Los Angeles burned, Rodney King stepped before the TV cameras and made the following rambling appeal to his rampaging neighbors:

"People, I just want to say . . . can we all get along? Can we get along? Can we stop making it horrible for the older people and the kids? . . . We've got enough smog here in Los Angeles, let alone to deal with the setting of these fires and things. It's just not right. It's not right, and it's not going to change anything. We'll get our justice. They've won the battle but they haven't won the war. We will have our day in court and that's all we want. . . . I'm neutral. I love everybody. I love people of color. . . . I'm not like they're . . . making me out to be. We've got to quit. We've got to quit. . . I can understand the first upset in for the first two hours after the verdict, but to go on, to keep going on like this, and to see a the security guard shot on the ground, it's just not right. It's just not right because those people will never go home to their families again. And I mean, please, we can get along here. We all can get along. We've just got to, just got to. We're all stuck here for awhile. . . . Let's try to work it out. Let's try to work it out."

King's emotional statement is posted on YouTube here.
King's speech was moving and sincere, but ultimately pathetic. Why? Because King attempted to persuade looters, thugs and murderers to love each other, to just "get along" and "work it out." He didn't understand the contradiction inherent in what he was asking.
Barack Obama's speech to students at George Washington University last Wednesday was riddled with the same nonsense. When a society blurs the line between "what is yours" and "what is mine," property in that society disappears and, consequently, so does freedom and peace. Such a society is organized on the very principle of war: taking what you want from the other guy by beating his brains out, or at least threatening to do so.
Isn't it obvious that war is not a peaceable pasttime? Sure, war is started cordially and reverently by august bodies of harmless-looking, half-senile politicans. But wars always end in death and destruction for those individuals who actually fight in them or are caught up in them. This is not mere opinion. As any rational human being can attest, this is fact.   
Americans are odd fellows. They organize their society on the same basis as war, i.e., on the principle of conking Peter on the head and robbing him in order to pay Paul, and then they expect Peter and Paul to get along famously together after the assault and robbery. Is any idea more absurd?
Obama plays the statesman. He is young, vigorous and mentally astute. Certainly, his vision of society is one based on peace and goodwill, not war. Yet, Wednesday he proposed a plan to fund $-trillions of dollars worth of "key investments in our future" by imposing new and confiscatory tax increases on the American public. Obama's progressive allies claim that his plan really does not amount to Paul declaring economic war on Peter. They insist taxes really are not theft.
In my book any exchange of property between individuals that is not mutually voluntary is theft. I grant that when we agree to live in society, in order to take advantage of the economic miracle of the division of labor, we must agree to certain ground rules that govern our behavior toward each another. We must agree, for instance, not to kill each other with impunity. We must also agree not to take from one another willy-nilly. Think about it. What real advantage would a society offer an individual if murder and theft were not taboo?
Still, we in society make allowances for certain types of killing and stealing which we regard as justified. Killing another in self-defense, for instance, is not taboo in many societies. Taking from another by means of taxation is not taboo in American society. However, the more exceptions made to the rule, the fuzzier the line becomes between killing and murder, taking and theft. How the exceptions are determined also makes a significant difference.
Contrary to what many believe, in American society property is not sacred. If Americans don't fork over their annual property taxes, their city government will legally confiscate their home. If Americans don't cough up their annual income taxes, the IRS will seize their wages, take their property and put them in jail. Moreover, the level of these property and income taxes is not written in stone, and it is the level of these taxes which determines how likely it is that Americans will lose their property to government bureaucrats or keep it for themselves.
In America the level of taxes is determined by duly elected politicians acting on behalf of their constituents. There is no Constitutional protection that guarantees a proper level of taxes. Politicians can hike the level of taxes as high as they want so long as a majority of politicians agrees and so long as their constituents tolerate the hike. I ask you, dear reader, how secure is your right to property when the next gang of politicians to win election is legally able to raise the level of taxes to extreme levels, say 100%? I contend that under such a system you have no right to property at all because the line between "what is mine" and "what is theirs" is blurred beyond recognition.
Imagine a society in which the next elected band of political cutthroats had the power not only to hike taxes to whatever level it liked, but also was able to kill whomever it wished, legally, and with impunity. Imagine Saddam Hussein's Iraq or Kim Jong-il's North Korea, if your imagination requires a tangible example. Americans -- I trust-- would not tolerate such a system of legalized murder, yet they tolerate their system of legalized theft by taxation.
Progressives will object again, saying that Obama is proposing to steal only from the rich who can more than afford the loss of property. Moreover, as Obama said in his speech, the rich don't care if they're taxed to death. "I believe most wealthy Americans would agree with me," he said. "They want to give back to their country...."
But such an objection is illogical and beside the point. "Most" does not mean "all." If it did, Obama would not be talking about a tax. He would be talking about a "gift." Furthermore, the level of taxes is still being arbitrarily determined by a band of elected politicians. Obama arbitarily taxing "millionaires and billionaires" today only validates the principle that he is able to arbitrarily tax you tomorrow.
But let's consider Obama's proposals in a wider context. When the federal government in Washington spends money on anything, it is money first obtained by taxing some individuals, whether millionaires, billionaires or you. By the process of taxing and spending the government takes away from you that which was formerly your private property. Had the government not taken your property, you would have had the freedom to do with that property what you wished. If you no longer have that property, you no longer have that freedom. Because of the government's taxing and spending, you no longer have the freedom to decide. The government decides for you. And expects you to like it!
Why do you suppose Obama said that "most wealthy Americans would agree" with his proposal to tax them? He also said that rich people "want to give... ...It's just Washington hasn't asked them to." Why did he say this?
Because most Americans understand that a voluntary exchange is morally superior and eminently more satisfying than a forced confiscation. Voluntary exchange between individuals is a principle of peace. Millions of individuals make billions of peaceful and voluntarily exchanges everyday. Such is the norm in societies where property, freedom and peace are respected. On the other hand, Americans understand that forced confiscation is a recipe for conflict and a principle of war. By couching taxation in the language of voluntary exchange Obama was trying to pass off a sow's ear as a silk purse.
But such verbal deception is the norm for Washington politicians. They perceive that voters want them to cut "spending," so they attach the Orwellian label "spending" to tax cuts and tax deductions. The property you own that goes untaxed is, by the government's twisted logic, spending that they must cut! They call taxation "investment." They call increases in appropriations that are less than desired "spending cuts." They call grants, subsidies and transfer payments "gifts" or "benefits." They call Social Security "insurance." All this official doublespeak is intended to hijack the language of free and voluntary exchange and, thereby, pawn off legalized theft as acceptable and sensible to moral people.
The whole of Obama's speech was an attempt to make Americans believe that their country was founded on the principle of robbing Peter to pay Paul, instead of on the principle of free and voluntary exchange! His visionary American Dream is of a time when virtually all property is forcefully expropriated from American individuals by the federal government, then spent by the federal government as it sees fit, not as the former owners of that property see fit.
The beautiful irony of Obama's vision -- as he sees it -- is that Rodney King was right after all. We can "work it out!" How? By simply working together! We can just "get along."
*Sigh* Personally, I didn't think Obama's speech to the nation on Wednesday was as moving or sincere as Rodney King's speech to his neighbors in 1992. But you know what?
It was every bit as pathetic!