Lecture from last summer @ Iowa City public library. Sorry for the poor quality.

It always troubles me to see professionally produced, economically illiterate videos condemning capitalism. Here’s one:

David Harvey asks if it is time to look beyond capitalism towards a new social order that would allow us to live within a system that really could be responsible, just, and humane?

@ 3:20 — The fifth of his list of “popular explanations of the crisis” is pretty much correct, though Glenn Beck and the World Bank are hardly apostles of deregulation. Why doesn’t he cite Ron Paul, Peter Schiff, Mises, etc? This guy would do well to study the Austrian School.

@ about 3:40, the narrator asks, “What kind of plausible story can I write [explaining our economic crash] which is none of the above?” I think, WTF? Uniqueness is not how we should judge economic theories. How about a meticulous logical examination? “Renowned academic,” my ass.

@ 4:20, the narrator relates a story about the Queen of England asking economists why they didn’t see it coming. “Story” is a good description for what David Harvey is telling. He ignores the many Austrian Economists who did see it coming, and now see things getting much, much worse before they get better. Maybe we should listen to them before we try David Harvey’s workers’ paradise.

@ 6:00, he speaks from Marx’s flawed class analysis. In a free market, the interested of capital are not opposed to those of labor. They are complimentary. In fact, capital competes with other capital for the best of labor, and labor competes with labor for the best jobs. If you consider each a monolithic class opposed to the other, you will be blind to much of the world. Significantly, Marx, in his writing, never defined his most crucial term: class.

@ 7:15 — Capitalism DOES solve its own crises, if you let people fail, and let people accept whatever they damn well please as money. Bailouts and forcing people to use fiat money have nothing to do with free markets or capitalism.

@ 8:50 — Financial innovation does not empower financiers. Government bailouts and government subsidies empower financiers. If firms were allowed to go bankrupt they would regulated themselves / be regulated by their investors.

@ 10:15 — “I don’t have the solutions.” Here, I completely agree with you, Mr. Harvey.

From their website: For over 250 years the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) has been a cradle of enlightenment thinking and a force for social progress. Our approach is multi-disciplinary, politically independent and combines cutting edge research and policy development with practical action.

That’s not enlightenment suckling in their cradle. I think the previous century has seen enough of their sort of “progress.”

PFS 2010 – Nikolay Gertchev, Not New, Not True, Irrelevant or Evil: How Economic Nobel Prizes Are Won from Sean Gabb on Vimeo.

This is a wonderful essay I recently discovered by Hans Hermann Hoppe. It demonstrates the anarcho-capitalist point of view.

If the government excludes a person while even one domestic resident wants to admit this very person onto his property, the result is forced exclusion (a phenomenon that does not exist under private property anarchism). Furthermore, if the government admits a person while there is not even one domestic resident who wants to have this person on his property, the result is forced integration (also non-existent under private property anarchism).

Here’s the video of the lecture I posted about earlier.

Socialism in the 21st Century by Dr. Yuri Maltsev at the University of Iowa from Michael McKay on Vimeo.

This is a great talk by hedge fund manager Kevin Duffy about Austrian Economics and Investing. It included some great quotes which demonstrate interventionists in big business, government, media and academia being wrong about the economy, corrupting history, vilifying free markets. I transcribed some of them below.

“At the rate things are going, we are all going to end up working for the Japanese.” -Lester Thurow, MIT, economist, 1989

“The United States is rapidly become a colony of Japan.” -Congresswoman Helen Bentley (R-MD), 1990

“The Cold War is over, and Japan won.” -Senator Paul Tsongas (D-MA), 1992

Austrians were able to see the bubble.

As it pertains to the investor: “Entrepreneurial judgement cannot be bought on the market. The entrepreneurial idea that carries on and brings profit is precisely the idea which did not occur to the majority. It is not correct foresight as such that yields profits, but foresight better than that of the rest. The prize goes only to the dissenters, who do not let themselves be misled by the errors accepted by the multitude.” -Ludwig von Mises

Discussing the investing challenge resulting from that fact that Austrian Economics tells you what will happen but not when. (It is in fact impossible to time markets, as Mises discusses in chapter 38 of human action.)

Vilifying free markets:

“This was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out the fake IDs!” -Paul McCully, PIMCO, on the financial meltdown

“This laissez faire really has killed us.” -Jim Cramer, interviewing Rep. Barney Frank (D-MA), Jan 21, 2010

“No one likes to put the taxpayer into situations like this . . . Government intervention is not something I came down here wanting to espouse, but it sure is better than the alternative.” -Hentry Paulson, Treasury Secretary, on the government takeover of Fannie Mae and Freddie Mac, Sept 8, 2008

“Depression scholars – including Bernanke – tend to see the Hoover administration’s approach of balancing budgets and tightening belts during the downturn as a tragic mistake.” -Time 2009 Person of the Year article, Dec 28 2009

“Those who contended that during the period of my administration our economic system was one of laissez faire have little knowledge of the extent of government regulation.” -Herbert Hoover

“Nobody saw this coming” -Angelo Mozilo, CEO, Contrywide Financial, July 24 2007

When markets crash, instead of blaming interventionists and inflationists, there begins a witch hunt against private investors who saw it coming, often short sellers.

“It’s very natural for us all to overreact in times of stress, but I’m not a fan of unmitigated shorting. We have nearly $2 trillion in hedge funds that simply don’t have any reporting responsibilities.” -Charles Schwab, BusinessWeek, July 16, 2008

“I’m for markets. But when it felt like it had gotten abusive, when it was free money to short-sellers who were piling on, it felt less like the market and more like it was being manipulated, I corssed over.” -Lloyd Blankfein, CEO, Goldman Sachs, January 2010

Applauding regulation after Enron:

“Conviction on all 49 counts makes this unlikely in the future. This is good: it restores confidence… We were in the biggest bubble in history… I don’t think that’s going to happen for a long time… There were lessons I think that were learned.” -Jeremy Seigel, as appeared on CNBC, May 26, 2006

“Now we have a greater appreciate of the role of watchdogs. Sarbanes-Oxley was a good idea, is a good idea. Leave it alone. We need it to prevent the enrons of the future.” -Anthony M. Sabino, law professor, St. John’s University, Washington Post, May 26, 2006

Business Week Cover: It’s a low, low, low, low-rate world.
Time Cover: The New Sheriffs of Wall Street (Three women, because the problems were caused by too much testosterone, as opposed to intervention, subsidizing irresponsibility, artificially low interest)
Newsweek Cover: America’s Back! The remarkable tale of our economic turnaround (Celebrating the stimulus)
Business Week Cover: Obamanomics is working better than you think. Who Says? Wall Street. (Picture of Obama-look-alike shooting a giant nickle like a basketball)

“One trillion dollars is a big number. This is enough to buy all of Greece’s debt twice, with enough left over to buy all of Portugal’s debt. It was meant to remove any potential for contagion. Problem solved.” -Alan Skrainka, Chief Market Strategist, Edward Jones, Barron’s, May 15 2010

At the end of his talk, Kevin Duffy showed this cartoon. I’m not certain whether he was the creator:

Libertarians differ widely on the issue of capital punishment. Murray Rothbard offers his perspective here. Discussion here.

The gist of it putting punishment decisions in the hands of the victim or the victim’s representative. I like it, though one problem is the possibility of intimidation by the criminal or his allies.

One of the comments in the discussion reflect some work currently being done to image a world with restitution, but no punishment:

Rarely do I disagree with Rothbard, and this is one of those disagreements. While I do agree with Restitutional Justice, I don’t agree with the notion that an aggressor surrenders his rights when he violates the rights of others. Haven’t we all agreed to this point that these are Natural Rights, rights which are ironclad and irremovable without the consent of the person in question? From what Rothbard had argued, it all seems periously close to Vengeance than Justice, which has more to do with consoling the victim than undoing the harm that has been done.

It is possible for a murderer to be punished without violating his natural rights. Simply being marked as a murderer in the first place in public means he will likely be economically exiled, if not completely exiled. In the theoretical world of anarchistic Libertarianism, such people would have a tough time affording insurances of any sort; their life would likely become short and painful. The good news is that in such a world there are plenty of avenues to regain trust, even for crimes as monstrous as murder, although they would always be tough. In prison, or in this case capital punishment, there is no avenue to productively regain the trust of the local community.

Sure capital punishment can deter future crimes but with human beings as imperfect as they are, I don’t think its wise to let them take away lives not rightfully belonging to them. Innocents could always be caught in the crossfire, as too often they have.

This essay from mises.org is about Emma Goldman and her evolution from anarcho-communism to a very individualistic anarchism which, I think, strongly resembles anarcho-capitalism.

I was struck by a small portion of the essay with compared the dangerous allies of libertarianism around the turn of last century with present-day ones. I also raises the question of how anarchists should label themselves.

When Mother Earth was suppressed, and its editor and publisher, a 51-year-old woman who had spent nearly 35 years — her entire adult life so far — in this country, was deported, the first American libertarian movement truly came to an end. In effect, the movement’s organizers had committed an important tactical error. Like the libertarians of our current movement, they had seen that a fully consistent libertarian must be an anarchist, but they had made the tactical mistake of frankly calling themselves by that name.

They used the word “libertarian” in describing themselves, too, but the main term of self-description they used was “anarchist.” They thought of their movement, not as the libertarian movement, but as the anarchist movement. And since, like libertarians of today, they were a tiny minority in the population, they sought to make common cause with other unconventional thinkers who seemed to share many or even most of their goals. The members of the first libertarian movement, regarding themselves as anarchists, made common cause with other anarchists — most of whom were European immigrants with rather different ideas from those of Benjamin R. Tucker and his associates when it came to matters like economics and political violence.

Inevitably, when certain of their more numerous anarchist allies got the wrong sort of publicity, that bad publicity rubbed off on Tucker and his associates. In the last years of the 19th century and the early years of the 20th century, after the Haymarket affair, the attempt on Frick’s life, and the assassination of President McKinley by a self-proclaimed anarchist, there came to be widespread public prejudice against anarchists.

. . . .

Today’s libertarians have allies who vastly outnumber them, just as the libertarians of 1901 did. But we contemporary libertarians have taken the path Benjamin Tucker and his associates avoided. Our allies are what Tucker and his associates would have called “liberals” — we call them “minarchists” or “limited-government libertarians” — and sometimes their behavior is embarrassing to us, just as Tucker and his associates were sometimes embarrassed by the behavior of their anarchist allies a hundred years ago.

There is a key difference, however. Tucker’s allies embarrassed him by attempting and sometimes carrying out assassinations — murders. Our allies embarrass us by lending their moral support to state-sponsored murder — as when they support the Iraq and Afghanistan wars — or by nominating a conservative like Bob Barr to represent the Libertarian Party in the 2008 election. (Read more from mises.org)

Rather obscure, but as someone recently introduced to anarcho-capitalism, I found this very interesting.

This lectures begins with the illuminating analogy. Fast forward to 3:45 to cut to the chase.

From the moment Mises’s 1912 book, The Theory of Money and Credit, made its appearance, and warned about the grave danger to free enterprise represented by paper money and central banking, the Austrians have been right.

That’s 100 years of “we told you so.”

Right in the middle of these years, there is a forgotten episode in monetary history that teaches us lessons today. It concerns the controversial role that Henry Hazlitt played in battling the Bretton Woods monetary system enacted after the Second World War.

Under Mises’s influence, Hazlitt used his editorial position at the New York Times to warn against the plan, predicting correctly that it would lead to world inflation. For saying what he said, he was pushed out of his position at the Times.

. . . .

They met from July 1 to July 22, 1944, at the Mount Washington Hotel in Bretton Woods, New Hampshire, and drafted the Articles of Agreement. It was nearly a year and a half later, in December 1945, that the agreement was ratified. On March 1947, one of the monstrosities created during event, the International Monetary Fund, began operations.

What was the goal of the plan? It was the same goal as at the founding of the Federal Reserve and the same goal that has guided every monetary plan in modern history. The stated idea was to promote economic growth, encourage macroeconomic stability, and, most absurdly, tame inflation. Of course, it did none of these things.

There are other analogies to the Fed. In the same way that the Fed was to serve as a lender of last resort, a provider of liquidity in times of instability, so too the Bretton Woods Agreement obligated all member nations to make their currencies available to be loaned to other countries to prevent temporary balance of payment problems.

. . . .

Keynes’s message at Bretton Woods, in Mises’s summary, was that the world elites could turn stones into bread. And so under the influence of Keynes, the target at the Bretton Woods meeting was liberalism itself, which was widely assumed to have failed during the Great Depression. The elites also came out of World War II with a more profound appreciation for the role of central planning. They had reveled in it.

The Bretton Woods plan for monetary reconstruction did not go as far as Keynes would have liked. He proposed a full-scale world central bank and a single paper currency for all nations, which he wanted to be called the “bancor,” so there could be no escaping inflation. That plan is still awaiting implementation. As it was, the Bretton Woods conferees, under pressure from the United States — which wanted the dollar to be the bancor — took a compromise position.

. . . .

The Bretton Woods system established a gold dollar that was fixed at $35 per ounce. But it was the only currency so fixed. Every other currency could be a fiat currency based on the dollar.

. . . .

The breakdown really began soon after the plan was implemented. But most of the effects were disguised through currency controls. Once the 1960s came, and the expenses of LBJ’s welfare-warfare state mounted, the Fed played its traditional role as the financier of big government. Pressure on the dollar mounted, foreign governments became more interested in the gold than the paper, and the whole cockamamie scheme unraveled under Nixon’s welfare-warfare state. When the world entered the all-paper money regime, most economists said than the price of gold would fall from $35. The Austrians predicted the opposite.

. . . .

Hazlitt wrote, “it would be difficult to think of a more serious threat to world stability and full production than the continual prospect of a uniform world inflation to which the politicians of every country would be so easily tempted.”

. . . .

On July 1, 1944, when the representatives [of an international monetary council] first gathered, he [Hazlitt] greeted them with a punch in the nose.

it would be impossible to imagine a more difficult time for individual nations to decide at what level they can fix and stabilize their national currency unit. How could the representatives of France, of Holland, of Greece, of China, make any but the wildest guess at this moment of the point at which they could hope to stabilize?

. . . .

The whole project, wrote Hazlitt, “rests on the assumption that nothing will be done right unless a grandiose formal intergovernmental institution is set up to do it. It assumes that nothing will be run well unless Governments run it.”

. . . .

In 1967, Hazliltt also had a last laugh, if it is a laughing matter to see your worst predictions come true. Hazlitt was now a syndicated columnist with the Los Angeles Times. He wrote about the unraveling of the system, which finally happened in 1969. By 1971, the entire world was on a fiat-money paper standard and the result has been nothing short of catastrophic for societies and economies, which have been thrown into unrelenting chaos.

To be sure, Hazlitt was not, as he said, the “seventh son of the seventh son.” He wasn’t born with some amazing prophetic power. What Hazlitt did was read Mises and come to understand monetary economics. It sounds easy until you realize just how rare these talents were in his day and in ours. (Read more from mises.org)

Although Aristotle, in the Greek tradition, scorned moneymaking and was scarcely a partisan of laissez-faire, he set forth a trenchant argument in favor of private property. Perhaps influenced by the private-property arguments of Democritus, Aristotle delivered a cogent attack on the communism of the ruling class called for by Plato. He denounced Plato’s goal of the perfect unity of the state through communism by pointing out that such extreme unity runs against the diversity of mankind, and against the reciprocal advantage that everyone reaps through market exchange. Aristotle then delivered a point-by-point contrast of private as against communal property. (Read more from mises.org)

A friend recently posted on my Facebook wall Robert Locke’s misguided criticism of Libertarianism in The American Conservative magazine:

Libertarianism is basically the Marxism of the Right. If Marxism is the delusion that one can run society purely on altruism and collectivism, then libertarianism is the mirror-image delusion that one can run it purely on selfishness and individualism. Society in fact requires both individualism and collectivism, both selfishness and altruism, to function. Like Marxism, libertarianism offers the fraudulent intellectual security of a complete a priori account of the political good without the effort of empirical investigation. Like Marxism, it aspires, overtly or covertly, to reduce social life to economics. And like Marxism, it has its historical myths and a genius for making its followers feel like an elect unbound by the moral rules of their society.

My rebuttal:

The difference between libertarianism and statism is the difference between peace and war. As Ludwig Von Mises wrote “A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.”

Let me now back up this statement by picking apart Robert Locke’s:

libertarianism is the mirror-image delusion that one can run it purely on selfishness and individualism. Society in fact requires both individualism and collectivism, both selfishness and altruism, to function

Selfishness does not go away when you replace economic power with political power. Bureaucrats are just as selfish as entrepreneurs. The important difference is that to the extent which we have a free market, people must act on their selfishness by providing goods an services which society VOLUNTARILY consumes. We are all slaves to the consumer. No such pressure exists on bureaucrats. To whatever extent economic activity is run by the state, people act upon their selfishness by bending the coercive hand of government to force people to buy their product, get direct subsidies, outlaw competition, etc.

Secondly, Locke seem to find a contradiction between altruism and libertarianism. You do not need to hold a gun to my head (taxes are collected under threat of violence), and filter my money through a den of theives for me to be altruistic. Were we allowed to keep more of our money, society would be MORE, not less, altruistic.

Like Marxism, libertarianism offers the fraudulent intellectual security of a complete a priori account of the political good without the effort of empirical investigation.

False. The empirical evidence is overwhelming. The correlation between economic freedom and economic prosperity should have long ago put to rest all these collectivist ideas that keep rising from the grave. We have yet to see a society which is too free.

My favorite examples are the ones in which similar cultures adopted different economic policies: Estonia vs. Latvia & Lithuania, West Germany vs. East Germany, Hong Kong in the 80s vs. the rest of China in the 80s, Botswana vs. the rest of Africa. I also hesitate to mention Chile vs. the rest of S. America, because their relatively free economy was put into place by a murderous dictator and often deemed guilty by association.

You can also look at all former Soviet states and see an almost exact correlation between economic freedom and economic prosperity.

Secondly, I disagree completely with Locke’s criticism of priori theory. You need theory. Without theory, economics is just endless data that tells you nothing. The world is too big to isolate experiments the way a physicist does.

An example often cited by Murray Rothbard are prices in the 1920s. Without theory all you see are stable prices. Just data attributable to almost anything. Theory tells you that the incorporation of the electric grid into production increased efficiency which should have lowered prices, but at the same time, massively inflationary monetary policies put upward pressure on the dollar, weakening its purchasing power. Hence, prices were stable.

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It’s not overstated. It’s completely misstated.

EK: Why?

JG: What is the nature of the danger? The only possible answer is that this larger deficit would cause a rise in the interest rate. Well, if the markets thought that was a serious risk, the rate on 20-year treasury bonds wouldn’t be 4 percent and change now. If the markets thought that the interest rate would be forced up by funding difficulties 10 year from now, it would show up in the 20-year rate. That rate has actually been coming down in the wake of the European crisis. (Read more from voices.washingtonpost.com)

Here, he goes toe to toe with Peter Schiff:

Ludwig Von Mises wrote about several categories of professional economists in Human Action:
“The development of a profession of economists is an offshoot of interventionism. The professional economist is the specialist who is instrumental in designing various measures of government interference with business. He is an expert in the filed of economic legislation.”

and

“Tax-supported universities are under the sway of the party in power. The authorities try to appoint only professors who are ready to advance ideas of which they themselves approve.”