“Israeli forces have boarded a ship trying to carry aid and pro-Palestinian activists to the Gaza Strip in defiance of Israel’s blockade of the territory. The 20 passengers include former US congresswoman Cynthia McKinney and Nobel Prize winner Mairead Maguire. . . . Ms McKinney described it as ‘an outrageous violation of international law’, as the boat was on a humanitarian mission and was not in Israeli waters.” (Read more at news.bbc.co.uk)

UN? IMF? World Bank? Israel? Nato? South Korea? Japan?

“ISLAMABAD – What appeared to be the deadliest U.S. missile attack ever on Pakistani soil brought an unusual reaction Wednesday in a country that has previously denounced such strikes as an affront to its sovereignty – silence.” (Read more from news.yahoo.com)

“The Central Intelligence Agency crucified a prisoner in Abu Ghraib prison near Baghdad, according to a report published in The New Yorker magazine.

‘A forensic examiner found that he (the prisoner) had essentially been crucified; he died from asphyxiation after having been hung by his arms, in a hood, and suffering broken ribs,’ the magazine’s Jane Mayer writes in the magazine’s June 22nd issue. ‘Military pathologists classified the case a homicide.’ The date of the murder was not given.

‘No criminal charges have ever been brought against any C.I.A. officer involved in the torture program.’” (Read more from mwcnews.net)

“[I will] smash the CIA into a thousand pieces and scatter them to the wind.” ~ John F. Kennedy

I often debate my friends’ casual (naive?) suggestions that the state control commerce, fight the war on drugs, and bailout incompetent companies. I argue, as Bastiat does in The Law, that government is our collective defense of life, liberty and property, and that whatever government does beyond this mandate is offensive to both freedom and prosperity because government must take from one to do for another.

When my friends give ground in the debate, they usually do so grudgingly, retreating to the sacred cows of statists – public education, public transportation, pollution laws and child labor laws.

There is much to be said about each of these. Below, I excerpt a couple of articles from mises.org regarding child labor laws.

The first is a long list of snippets from the Child Labor Amendment Debate in the 1920s.

The Trouble With Child Labor Laws
“Let’s say you want your computer fixed or your software explained. You can shell out big bucks to the Geek Squad, or you can ask – but you can’t hire – a typical teenager, or even a preteen. Their experience with computers and the online world is vastly superior to that of most people over the age of 30. From the point of view of online technology, it is the young who rule. And yet they are professionally powerless: they are forbidden by law from earning wages from their expertise.

Might these folks have something to offer the workplace? And might the young benefit from a bit of early work experience, too? Perhaps – but we’ll never know, thanks to antiquated federal, state, and local laws that make it a crime to hire a kid.

Pop culture accepts these laws as a normal part of national life, a means to forestall a Dickensian nightmare of sweat shops and the capitalist exploitation of children. It’s time we rid ourselves of images of children tied to rug looms in the developing world. The kids I’m talking about are one of the most courted of all consumer sectors. Society wants them to consume, but law forbids them to produce.

You might be surprised to know that the laws against ‘child labor’ do not date from the 18th century. Indeed, the national law against child labor didn’t pass until the Great Depression – in 1938, with the Fair Labor Standards Act. It was the same law that gave us a minimum wage and defined what constitutes full-time and part-time work. It was a handy way to raise wages and lower the unemployment rate: simply define whole sectors of the potential workforce as unemployable.

By the time this legislation passed, however, it was mostly a symbol, a classic case of Washington chasing a trend in order to take credit for it. Youth labor was expected in the 17th and 18th centuries – even welcome, since remunerative work opportunities were newly present. But as prosperity grew with the advance of commerce, more kids left the workforce. By 1930, only 6.4 percent of kids between the ages of 10 and 15 were actually employed, and 3 out of 4 of those were in agriculture.

In wealthier, urban, industrialized areas, child labor was largely gone, as more and more kids were being schooled. Cultural factors were important here, but the most important consideration was economic. More developed economies permit parents to ‘purchase’ their children’s education out of the family’s surplus income – if only by foregoing what would otherwise be their earnings.

The law itself, then, forestalled no nightmare, nor did it impose one. In those days, there was rising confidence that education was the key to saving the youth of America. Stay in school, get a degree or two, and you would be fixed up for life. Of course, that was before academic standards slipped further and further, and schools themselves began to function as a national child-sitting service.” (Read more from mises.org)

The Child Labor Amendment Debate of the 1920s
“Few causes are so shrouded in sanctimonious mist as the movement, early in the twentieth century, to abolish child labor. Sympathetic journalists and historians dubbed it ‘the crusade for the children’ and depicted its foes as avaricious manufacturers.

Some self-styled ‘child savers,’ especially the women novelists and inveterate reformers of New England, were sincerely concerned about exploited children. Others, however, intended to reconstruct the family and install ‘government as overparent,’ to use the words of Colorado Judge Ben Lindsey. Opponents of the Child Labor Amendment, far from being the calloused plutocrats of legend, included noted Progressives, urban Catholics, and thousands of farm families.

The fight over the amendment highlighted the growing breach between those loyal to Jeffersonian America and those who sought to concentrate power in the grandest overparent, Washington, D.C.

. . . .

Here you are, a Jeffersonian Democrat, the cardinal principle of which doctrine was the integrity of the states, urging me, a Hamiltonian Republican, to support a constitutional amendment enabling the national government to deal with the children of the states. Strange times, these are. But I think I can encourage you to expect favorable action, as the women always get nowadays what they ask for. – Senator William Borah (RID)

to a constituent, 1924:

[A] communistic effort to nationalize children, making them primarily responsible to the government instead of to their parents. It strikes at the home. It appears to be a definite positive plan to destroy the Republic and substitute a social democracy. – Clarence E. Martin, President American Bar Association” (Read more from mises.org)

There’s a lot of subtext in Bernanke’s last comment. I think he’s laying some rhetorical ground work. If HR 1207 passes, and we get to actually see the abuses and excesses of the Fed, it may trigger a run on the dollar, or an extreme downturn in the economy. Bernanke will then be able to say “see, I told you so,” as if the cause of the downturn was not the Fed’s crimes, but their revelation.

Here is a brief article from mises.org followed by the email debate I had after sending it to a friend:

“Last Monday evening, Lew Rockwell, from a tip by someone named ‘Travis,’ posted this damning quote of Paul Krugman’s from a 2002 New York Times editorial:

To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Krugman. 2002. Calling for a housing bubble.

What’s more, by explicitly calling for a new bubble to replace the recently burst one, he anticipated by 6 years the Onion’s hilarious “report” that “demand for a new investment bubble began months ago, when the subprime mortgage bubble burst and left the business world without a suitable source of pretend income.” Except Krugman was being serious.

The quote caught on in the blogosphere, to such an extent that Krugman actually responded in his New York Times blog Wednesday morning:

Guys, read it again. It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened.

So with a deft little two-step, Krugman paints himself as a doctor who gave an excellent diagnostic, and not a disastrous prescription. One of his ditto-heads posted on his blog that saying Krugman advocated or caused the housing bubble was ‘Like saying Nostradamus caused the rise of European fascism.’

. . . .

Mark Thornton on the Mises blog followed up with a devastating collection of 2001 Krugman quotes clearly documenting his support for inducing a housing bubble. The most damning of this batch is the following from a 2001 interview with Lou Dobbs:

Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. [emphasis added]

How the hell can anyone spin that as a purely academic musing, and not a policy recommendation for artificially inducing housing spending?” (Read more from mises.org)

Hi Roman,

Read the “quote” which isn’t a quote at all really. If you read the article by Krugman he was paraphrasing another guy, some investment banker and that “quote” was his words not Krugman. I don’t think Krugman was advocating that at all. I think the most salient part of the eight year old article lies in the last two paragraphs.

Misquoting and manipulating other peoples words smacks too much of FoxNoise. So I think that Lew Rockewll and the mysterious “Travis” are full of crap.

http://www.npr.org/templates/story/story.php?storyId=105783108

W.r.t. Paul Krugman, I read your email and was appalled by the possibility that both Lew Rockwell and the Mises Institute made a very sloppy (mis)quotation. I was going to write to them. But after looking at Krugman’s editorial, I don’t think they did.

Word for word:

“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Krugman clearly calls for a housing bubble.

This is consistent with his unrelenting justification of government spending, and the philosophy of his hero, Maynard Keynes, who thought that all problems could be spent away without future reprocussions. Unfortunately, the future is now here. In 1927 Keynes famously said there would be no more market crashes, ever. Somehow his disastrous policies and predictions have not diminished their persistence.

Not surprisingly, I disagree outright with the NPR story you sent. You’re welcome to disagree, but I’ll tell you the basic arguments.

I recently read Murray Rothbard’s book, “America’s Great Depression,” which I think is a very thorough refutation of Milton Friedman’s explanation of the Great Depression. After reading about Hoover’s massive and unending interference in monetary policy, trade policy, labor laws, industry, I’m really not sure how Milton Friedman can claim Hoover didn’t do enough. In fact, during the 1932 presidential campaign, Hoover was accused of being socialist.

It was his “help” which caused the depression. In 1921 the market suffered a bigger proportional crash than in 1929, but president Harding resisted the urging of then-secretary-of-commerce Hoover and didn’t “help.” By the time Hoover convinced him to help the economy recovered. Eight years later Hoover was ready, willing and able to take advange of the crash and institute a bunch of government controls which kept the economy crippled for a decade. FDR’s New Deal was an expansion of Hoover’s policies.

A quick note about the causes of the crash.

The AUSTRIAN BUSINESS CYCLE THEORY is what makes Austrian Economics different from other libertarians, like those of Milton Friedman’s Chicago Monetarist school.

Milton Friedman, like Krugman, Keynes, Marx and most television commentators believe that crashes spring from the bowels of capitalism. This is implied in the NPR article you sent. Freedom doesn’t work. We are asked to believe that all of a sudden, many entrepreneurs, who make a career out of predicting and meeting human desires, make bad predictions.

The Austrian Business Cycle Theory offers an explanation for these clusters of entreupreneurial errors. They are caused by loose monetary policy. Specifically, artificially low interest rates. This, incidentally, is exactly what Krugman called for when he suggested Greenspan create a housing bubble.

Monetary expansion by both banks and government in the 1920s caused the 1929 crash. Monetary expansion in the 90’s caused the internet bubble, then the 2001 crash, which was papered over by more monetary expansion i.e. the housing bubble. It is government, not free markets causing these crashes.

The worst thing that can come of this crisis is the condemnation of economic freedom.

Roman,

I stand corrected. You are right. And I admit that you have piqued my interest in Rothbard’s book, as long as it is not more right wing revisionist history. It sounds like it is not.

But “Waterloo” for Krugman sounds a bit overly dramatic to me.

The fact of the matter is that I believe in the “Tragedy of the Commons”. And i apply this to economics, the market as well as the environment. Man is by nature greedy. That is not in itself a bad thing. And enlightened self-interest is a positive outgrowth of that but that is not always what happens when markets are deregulated and self serving politicians are bought of by big monied interests. . I believe we need government to do certain things like enforce child labor laws, environmental and health standards, taxes to fund the military, interstate highways, etc. How much control and intervention is open to debate the democratic process.

Stay tuned for a discussion of child labor laws from the Austrian perspective. . . .

“Two people asked a Pentagon official cooperating with prosecutors in an investigation into the American Israel Public Affairs Committee to fake his own death to avoid testifying against two pro-Israel lobbyists charged in the case, according to the Justice Department.

Pentagon analyst Lawrence Franklin pled guilty in October 2005 to participating in a conspiracy with AIPAC officials Steven Rosen and Keith Weissman to obtain and distribute classified information. The Justice Department dropped the case against Rosen and Weissman last month as a trial approached.

‘Just prior to the entry of his guilty plea, Franklin was approached by two individuals who made a pitch to Franklin about faking his death by suicide and disappearing, thus thwarting any cooperation in the case against Rosen and Weissman,’ prosecutors wrote in a brief filed in connection with a motion to reduce the 12-year prison term Franklin was originally sentenced to.

‘In January 2006, Franklin conducted five consensually recorded telephone conversations with one of these individuals, in support of an obstruction of justice/witness tampering investigation; however, the FBI was unable to obtain the requisite incriminating evidence to support a criminal investigation,’ the Justice Department brief said.” (Read more from politico.com)

WASHINGTON, June 24 (Reuters) – The Federal Reserve sought to hide its extensive involvement and concerns about Bank of America Corp’s (BAC.N) acquisition of Merrill Lynch amid the latter’s worsening financial condition, a top Republican congressman said on Wednesday.

‘The committee has already learned that Ben Bernanke and the Federal Reserve made inappropriate threats to fire Bank of America management unless they went ahead with the “shotgun wedding” that was the Merrill Lynch acquisition,’ Rep. Darrell Issa of the House Oversight and Government Reform Committee said in a statement released to Reuters.

‘The Federal Reserve also engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies,’ the statement said.

The committee has obtained a number of emails and documents from the U.S. central bank about its behind-the-scenes role in the merger, according to sources familiar with documents.” (Read more from reuters.com)

HR 1207?

“Bob Filner (D-CA) wants to turn some of the vast horde of civilian Defense Department employees into an armed corps for use against Americans. Is this part of Obama’s promised “National Security Force“? Adding an internal army, at the command of the despot in the White House, to suppress dissent, grab guns, punish economic crimes (making a living without federal permission, etc.), is a natural next step in the Mussolinization process that has been going on since 1933.” (From lewrockwell.com)

“Congressional leaders agreed to a request from President Bush last year to fund a major escalation of covert operations against Iran aimed at destabilizing Iran’s leadership. This according to a new article by veteran investigative journalist Seymour Hersh in the New Yorker magazine.

The operations were set out in a highly classified Presidential Finding signed by Bush which, by law, must be made known to Democratic and Republican House and Senate leaders and ranking members of the intelligence committees. The plan allowed up to $400 million in covert spending for activities ranging from supporting dissident groups to spying on Iran’s nuclear program.

According to Hersh, US Special Forces have been conducting cross-border operations from southern Iraq since last year. These have included seizing members of the Iranian Revolutionary Guard, and taking them to Iraq for interrogation, and the pursuit of so-called ‘high-value targets’ who may be captured or killed.

While covert operations against Iran are not new, Hersh writes that the scale and the scope of the operations in Iran, which involve the CIA and the Joint Special Operations Command, have now been significantly expanded.” (Read more from alternet.org)

“The Obama administration has rescinded invitations to Iranian diplomats to attend US independence day celebrations on July 4, the White House said on Wednesday.” (Read more from ynetnews.com)

Remember, when ABCNNBBCBS speaks unanimously, and says the same thing over and over and over, they are lying.

“We all know that the CIA has been involved in several coup d’etats ever since President Harry S. Truman spawned this creature. Hell, they’ve even done it once before in Iran, in 1953. And I think we also know that Iran has been in the crosshair’s of the neocons, neoliberals and other policy makers for quite a while. Even the RAND Corporation has been lobbying for another world war to “save the U.S. economy”.

And that, I think is reason enough to concider the possibility that the spooks might have their dirty little hands in this one aswell. It is of course their modus operandi.

Editor’s Note: For those of you who think this is pure speculation, I direct you to these following articles Bolton Says We Must Attack Iran and Bush sanctions “black ops” against Iran in 2007.” (Read more from kopyme.com)

“The British government says it has frozen an unprecedented total of one billion pounds (1.64 billion US dollars) worth of Iranian assets. ‘The total assets frozen in the UK under the EU (European Union) and UN sanctions against Iran are approximately 976,110,000 pounds,’ Ian Pearson, Britain’s Economic Secretary to the Treasury said in a written statement to parliament on Thursday.” (Read more from campaigniran.org)