Tom Woods Show: Favorite Episodes So Far

Tom Woods Show: Favorite Episodes So Far.

Within the last couple weeks days I’ve managed to finish up the audiobook version of Mises’ Human Action, catch up on 50 or so episodes of the Tom Woods Show, and start taking the Liberty Classroom Courses. I just thought I would share a few of the Tom Woods Show Episodes I found most interesting.

Interview with Lew Rockwell on October 17th Some interesting anecdotes on the early days of the Mises Institute.

Interview with Gary Chartier on October 25th Gary Chartier patiently picks apart at the edifice of the statist consensus (I actually caught this one the day it was broadcast).

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The Centenary of the Cartel’s Charter

The Centenary of the Cartel’s Charter.

So it’s the 100 year anniversary of the creation, by legislation, of the Federal Reserve. How appropriate that not more than two weeks ago I picked up a used (but basically new) copy of G. Edward Griffin’s The Creature from Jekyll Island? I’ve always wanted this book, but given opportunity cost, I tended to put off going out of my way to buy it. Finding a recent (perhaps the latest) edition at a bargain center for less than $2.00, however, proved irresistible. I think maybe I should start it tonight in honor of this day. Or at least give this another listen:

End the Fed!!!

What Ails You, Economy?

What Ails You, Economy?

The Keynesian is ever mistaking economic activity for economic growth, credit expansion for wealth creation, profligacy for progress. Growth, wealth, progress. He uses his own definitions of each to reinforce his definitions of the others. And they are all fallacious.

When the Austrian tells the Keynesian that the printing and spending of mere pieces of paper cannot lead to more wealth in society, the Keynesian retorts that it is undeniable that credit expansion and stimulus lead to more economic activity. In this he is technically correct. Printing more dollars and handing them out to those who would consume and invest them, does indeed lead to “activity,” even more perhaps than there otherwise would have been.

But our Keynesian assumes, or assumes that his audience will assume, that mere economic activity is growth, is wealth, is progress. Presumably this includes even that activity which our Austrian rightly considers overinvestment (more properly, malinvestment), overconsumption, and/or the proverbial breaking of windows, each of these a common side-effect of the Keynesian witchdoctor’s remedies (often intended to cure ailments caused by earlier interventions, some Keynesian, some not).

If the Keynesian’s definition of economic activity doesn’t (oh, but it does!) include these things then the burden of proof is on him to show that his prescriptions lead to more real growth than would their absence on an unhampered market. And that his incantations lead, on the whole, to economic health rather than disease. A free market is largely unencumbered by the ailments mentioned above so in order to do this it would need to be shown that the sicknesses that do affect it are somehow worse than those caused by intervention.

And to be sure, pure economic freedom isn’t perfect. It has its own share of maladies. But these are all coughs and sneezes by comparison. Cures, if they are needed at all, come from the market itself. The economic meddlers and potion peddlers only serve to make things worse.

We must admit that not even on the most unfettered of markets does all economic activity lead to growth. For human actors err, and the market punishes their errors. How much more is all this the case under a centrally-planned expansionary-monetary/stimulatory-fiscal regime?  And how much more severe will be the punishment?

Standard Oil, Like a Phoenix Rising from the Ashes (Bust the Trusts! The Right Way for Once!)

Standard Oil, Like a Phoenix Rising from the Ashes (Bust the Trusts! The Right Way for Once!).

What is it with me and bashing evil corporations of late (not necessarily on this blog, though I’m sure if you look through the archives…)? I hope it’s not habit-forming.

Well, could be that some of them, at least at some point in their history, became what they are with special thanks to the government. Could also be that some of them have been grandfathered in and are protected from competition from those who haven’t been grandfathered in. Might also have a little something to do with the fact that some of them have benefitted from foreign policy meddling and institutionalized theft committed by the state. But other than that, I have few complaints. Here’s a comment I left (since edited) at the end of a survey that sparked this article:

“I like surveys that have political and societal relevance. I believe in the desirability and functionality of free markets. And Exxon Mobil is a great company all things considered. However, they could not have gotten to where they are today without a little outside help. Some of this came from the consumer, to be sure. But some of it came from the state through the virtual cartel status granted to all major [US, Dutch, and British, at least] oil companies going back at least to the 1953 [CIA instigated] Iranian Coup… [This] greatly benefitted the Seven Sisters oil companies (a number of which [were Standard Oil descendants that later] merged to become Exxon Mobil) and is one of the main causes of unease in the Middle East and around the world today. They, like all oil companies, great and small, foreign and domestic, have also benefitted from oil’s status as de facto commodity backing for the US dollar. The world reserve currency known as the Federal Reserve Note is denominated in crude oil. The oil companies have a vested interest in maintaining this corrupt arrangement.”

Federal Reserve Octopus

What say you? Are some/most/all big corporations what they are today more thanks to competition or more thanks to monopoly? Here’s one for extra points: what about “small business,”? Aren’t they also protected from competition, in certain industries more than others, by regulations that keep newcomers out and by subsidies that keep competing technologies down?

For the record, anti-trust legislation actually has the effect of restraining competition, thereby securing monopoly, so when I say “bust the trusts” I don’t advocate anti-trust legislation, I simply want to let free market competition give some of these bigger guys a run for “their” money! The burden of proof is on them to show that they would really be as big as they are today were they under a system of laissez-faire capitalism. I guess you could say I’m with the left-libertarians on this one (except for the fact that I dared to use the word “capitalism”).

Standard Oil Octopus

Also, Brandon and I had our little chat on conspiracy theories. The collusion of big businesses (usually involving the state at some level) to form cartels (take note that Standard Oil, known to us today as Exxon Mobil and Chevron, was owned by John D. Rockefeller, who also had a hand in creating the Federal Reserve; I wouldn’t say everything that has happened in regards to these two was meticulously plotted, but I wouldn’t call it mere coincidence, either) happens to be one of the ones that I subscribe to. I think Adam Smith can back me up on this one. And unlike some who use the quote to support anti-trust legislation, I’ll give you more than just the first two sentences in order to show why such laws are not the best conclusion:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Monopoly Octopus

Ham-Fisted Coercion and Incompetence versus the Invisible Hand of Self-Interest

Ham-Fisted Coercion and Incompetence versus the Invisible Hand of Self-Interest.

[The following is my entry for the first ever Thorpe-Freeman Blog Contest, originally published at Notes on Liberty on May 22nd. My entry for last month's contest, which was one of two runners up mentioned here, can be read here.]

A Tale of Two Hands

I came across Gary Galles’ recent article in The Freeman about Leonard Read’s analogy of government coercion as a clenched fist, “The Clenched Fist and the General Welfare.” I see a symmetry between this analogy and Adam Smith’s about self-interest unintentionally channeled into market organization, one that is so familiar to free market proponents and detractors alike that it is a common metaphor: the invisible hand.

Government coercion and market organization. Two very important concepts for any libertarian to master. Which one better provides for the general welfare? Smith and Read would contend the latter. The reasons for this are contained in the analogies. As Read and Galles point out, not much good can come from a clenched fist. Only violence and incompetence. It can punch. It can pound. That’s about it. What better description of government? Likewise, as Smith notes, the usefulness of markets is that they do better than government many of the noble things government tries to do, thereby rendering it redundant, if not unnecessary, in those areas. The all-too obvious fist of government regulations and mandates is no match for a more efficient, less obvious hand: self-interest.

The clenched fist of government coercion is quite visible. It holds up the occasional good it achieves, downplays the great expense at which such good comes about, and blames its own inadequacies on “free” markets. The invisible hand, however, is open. It is able to do more, and better, than the clenched fist, without stifling progress in other areas.

Coercion seems like a question of ethics, and organization a question of economics, but they are each, in essence, questions of both. What is unethical for an individual is also unethical for a group of individuals. And if made policy, it is no longer simply unethical, but uneconomical as well, because of the fear,  uncertainty, and even exuberance that arises among market actors, leading to misallocation of resources into unprofitable lines of production.

The questions are irrevocably linked. Even natural, inalienable rights—ethical concepts—are, for our purposes, best understood as constructs devised to protect the economic interests (the pursuit, use, and extension of life, liberty, and property) of individuals. They exist to help us avoid, and ultimately, resolve what are really economically motivated disputes.

Cantillon, Smith, Menger

Mark Thornton’s “Cantillon and the Invisible Hand” suggests that Richard Cantillon was Adam Smith’s influence in his description (in The Theory of Moral Sentiments, 1759, and The Wealth of Nations, 1776) of the mechanism (self-interest’s effect of inadvertently providing for the general welfare) that he calls “an Invisible Hand.” In Thornton (2009), this standard interpretation appears to be upheld against several modern theories of the metaphor’s meaning.

With this interpretation and then further development of the idea to incorporate “newer” concepts, we can say that actions taken for personal gain accumulate in the marketplace in the form of signals indicating supply, demand, cost, loss, and profit, leading to various levels of further risk, production, and consumption, which have serendipitous advantages for others participants in the marketplace. The marketplace facilitates trade. In a free market, this means voluntary exchange. Since the Marginal Revolution, it has been acknowledged that voluntary exchanges benefit all parties to them, or they would simply not take place. Thus, the general welfare is provided for.

In The Theory of Moral Sentiments, on the subject of landlords’ relationships with tenants, writes Smith (pp. 184-85):

They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.

Cantillon and Smith appear not to have incorporated the idea that landlord and tenant could each receive something they valued more in exchange for what they valued less. So how could they say that tenant benefit at all? Because the things they received were necessities, without which they might have starved.

Before the Industrial Revolution was in full swing, tenancy was often just a higher form of serfdom. Even so, the self-interest of tenants benefited landlords, not just the other way around. And there were relationships besides those of tenants and landlords. Merchants and laborers would have also had mutually beneficent dealings with tenants and landlords. But Smith focused on one aspect of one relationship in his first economic use of the phrase “an Invisible Hand.”

Market’s Good Invisible, State’s Evil Unseen

Because social benefits derived from self-interest go unseen, they are often taken for granted. It is assumed that man must either benefit only himself or rely on handouts. The first implies a zero-sum game at best and a Hobbesian jungle at worst. The second implies charity, but where that alone is insufficient in caring for the needy and the lazy, forced wealth redistribution. To the (sometimes willfully) unobservant, the concept of markets as fortuitous is an unfathomable alternative.

The clenched fist (government) often gestures towards the progress it has made. It has certainly made some progress for some. The favored classes. Individual autocrats placating the coalitions of their supporters, plutocrats pulling the levers of power, or democrats vying for public privilege. But, usually, some stable combination thereof. This progress comes at the expense of that (superior) progress which would have been achieved had producers’ wealth not been expropriated. But, as Bastiat (That Which is Seen and that Which is Not Seen, 1850) and Hazlitt, (Economics in One Lesson, 1946) have shown, this ill effect goes unseen, and so, government-driven progress is made out to be, by those with more influence, larger platforms, and louder voices, equal or superior to market-driven progress.

Why can’t they let things be? The world goes on by itself!

Getting Closer!

Getting Closer!

Getting Closer to the Prize!

Last month I gave myself a week and a half to write a blog post for Notes on Liberty building off of Ross Emmett’s FEE article “What’s Right with Malthus” for the Thorpe-Freeman blog contest.

Yesterday, the contest judges posted their findings.

Congratulations to contest winner Adam Millsap on his piece on the gradual reemergence of the ordered chaos of city life.

And I am happy to announce that my post was mentioned as a runner-up! Not bad, if I do say so myself. With Brandon’s victory for the May contest, that makes for two recent mentions of Notes on Liberty by The Freeman‘s website.

Also mentioned was Babatunde Onabajo’s essay, also on Malthus, which I do recommend. In it, he describes why the business cycle, that is, prosperity interrupted by recession, could be considered a good thing. Endless wealth and growth might keep those driving it in good shape, but it can erode their character and leave those few who are unable to be a part of it to fend entirely for themselves. If those with the most to share (freely, not stolen from them through fraud or force, of course) are unable to sympathize with the less fortunate, what reason would they ever have to help them?

Getting Closer to Utopia!

I found Onabajo’s arguments compelling, but I would like to offer two critiques. One slight, and one very slight. To be fair, the author was only permitted 1,000 words for his essay, so he could not have really gone into these points, even if he wanted to.

The first is that the business cycle needn’t always include what we think of as painful recessions and depressions. Ups and downs, sure; the market isn’t perfect. But nothing along the lines of 1907, 1920, 1929, 1973, 2000, or 2007. These were all the result of central banking and/or state interventionism. In a free market, gone global and unhindered by trade barriers, recessions (if you could even call them that) would tend to be far less severe. Depressions would probably be nonexistent. Using Onabajo’s arguments, this could eventually lead to moral decline. Endless prosperity for which fewer and fewer have any skin in the game (indirectly proportionate to the increase of the rate of growth) destroys character. From the ensuing ethical and intellectual decay, I would imagine that the result would be more calls for state-intervention, leading, in time, to more severe recessions. (Interestingly, there is a cycle even in what I just described. But it may be more akin to a modern-day anacyclosis than it is to the business cycle. I am not well versed in Public Choice Theory, but I would be surprised if it didn’t have some good insights into this matter.)

The other critique I have is that under ideal free market circumstances, the need for charity for those simply down on their luck (as opposed to the defenseless and the handicapped) would decrease due to an approximately equitable distribution of not just the bare necessities, but of basic comforts and common frivolities. Coupled with milder and milder recessions, this would mean that not only would there be fewer to sympathize and fewer to be sympathized with, but also far less need to sympathize. (That is, until moral degradation sets in, giving special interests the opportunity to call for state-intervention, leading to severe recessions and depressions.)