We shared an interest in the craft of writing and the rules of grammar, and we became friends through our long-distance chats. Beth confided that one of her responsibilities was to check for “leaks” in the writing—statements and arguments that undermined the philosophy of freedom.
It was a great joy to meet the person behind the voice some years later at a Liberty Fund conference convened by Doug Bandow (and led by Sheldon, I believe), and to see one another from time to time after that. Beth was always friendly and likable, but had an aristocratic restraint that I respected and admired.
It is sometimes noted that women are relatively rare in libertarian circles. The requirement of complete responsibility for oneself strikes many women as too harsh. But Beth illustrated that a compassionate, generous woman can also be a principled advocate for freedom. Her death is a tragic loss.
He spoke at four schools, two of them historically black colleges, in the Raleigh-Durham area: St. Augustine's, North Carolina Central University, North Carolina State, and Campbell. His topic was"Civil Rights and Black Fraternal Societies in the South."
His talk, based on his book From Mutual Aid to the Welfare State, featured rarely acknowledged aspects of black history--the self-help and entrepreneurial activities spurred by fraternal societies. George Leef wrote about the talk here.
He pointed out that the Dow Jones Index was around 300 just before the October 29, 1929, crash (301 on October 25--it had been higher earlier in the month, reflecting euphoric expectations). On October 29, the Dow Jones Industrial Average fell 30 points. It fluctuated and then gradually regained strength, reaching 293 on April 12, 1930.
In other words, Wall Street initially recovered from the crash.
Unfortunately, the Depression lay ahead.
Although the Dow Jones average stayed in the 200s for nearly six months in 1930, in October it fell below 200 and declined to a low of 43 in July 1932. The index did not reach 300 again until 1954.
So what caused the Depression? Gwartney and others have related the impacts of the Smoot-Hawley tariff (enacted in 1930), the Hoover tax increases (adopted in 1932), and, of course, the shrinkage of the money supply, famously discussed by Milton Friedman and Anna Schwartz.
And then, when Roosevelt became president, there were the famed destruction of hogs and baby chicks to raise farm prices, the implementation of costly public works projects, and numerous other economic distortions. (For a soft-pedaled overview, see Tyler Cowen’s article today.) There is much to blame the Depression on. But don't blame the stock market crash.
Across the country, efforts to start on-campus centers that reflect respect for markets and the roots of liberty have run into trouble.
Into this morass steps Adam Kissel, who worked for the Lehrman American Studies Center and the Jack Miller Center for the Teaching of America’s Founding Principles. On the Pope Center Web site, he offers ten steps for successfully starting academic centers.
Is Kissel too accommodating? Or is this the only way? Your choice.
One was Colin Powell’s endorsement of Obama. Whatever his personal reasons, Powell’s support signaled to the middle-ground voter that John McCain wasn’t really a maverick after all. He was still too close to the Bush administration, from which Powell was carefully distancing himself.
The second was Peggy Noonan’s dismissal of Sarah Palin in her Wall Street Journal column memorably titled “Palin’s Failin.’” After seven weeks of watching, Noonan decided that Palin just didn’t have a “philosophical grounding” in ideas that would make her a worthy descendant of great Republican thinkers such as Ronald Reagan (and perhaps Noonan). Noonan may be right about that; but perhaps it said more about her fatigue with the Republican Party than about the energetic, small-town conservative Palin.
The Republican Party certainly did get old and tired over the 28 years since Ronald Reagan was elected. Now it's time for the libertarian rejuvenation of that party, but that's another story that will, we hope, play out while the world scrutinizes Obama to find out his philosophical grounding.
As head of Advocates for Self-Government, he modified the Meyers-Briggs psychological test to identify four major personality types -- and gave each one of them a descriptive card and color. This taxonomy explains a lot.
As I recall (I couldn't find them on the Web in a quick look), they were as follows:
Green: Intellectual and serious (most libertarians fall into this group)
Yellow: Dutiful (teachers, for example)
Orange: Active and sociable (backpackers and fitness enthusiasts)
Blue: Sympathetic (bleeding hearts)
With this short outline, Marshall encapsulated the challenges facing libertarians. I am so sorry to learn that he died before his time.
David R. Henderson and Jeffrey Hummel say that we shouldn't blame Alan Greenspan for the easy money that preceded the crash. In a new Cato paper, they argue that the critics misinterpreted low interest rates as a sign of excess liquidity.
Certainly worthy of contemplation by others who know more about this topic than I!
The penetration of the"social justice" movement into our society can be glimpsed in schools of education. Jay Schalin, writing for the Pope Center for Higher Education Policy, has looked carefully at syllabi of one school, the University of North Carolina at Chapel Hill.
He quotes from the description of the school's educational leadership program:
". . . we are first and foremost concerned with the agenda of constructing democratic learning communities which are positioned in the larger society to support an agenda of social action which removes all forms of injustice.”
There's much more. (A previous article explores the philosophy behind"social justice.") And you thought education schools were about teaching teachers how to teach.
My husband and I recently sold our home. We sold it for 25 percent less than we had contemplated when we first thought about selling it two years ago and 29 per cent less than our “wildest dream” price.
These figures are even larger than the national drop in housing prices since 2006—nearly 20 per cent, according to the Wall Street Journal, which says that many economists anticipate another 10 per cent fall.
Is this a tragedy? Not for us, or for most people who owned a home for a period of time and had traditional mortgages. Certainly, it is tragic for people who took advantage of the bubble but timed it wrong (and surely some of those were taken advantage of, too.)
But apparently Alan Greenspan never considered that housing prices might fall. Could this be true? The Wall Street Journal article on his testimony said about Greenspan: “He answered that he never anticipated home prices could fall so much. ‘I did not forecast a significant decline because we had never had a significant decline in prices,’” he said.
Apparently, Wall Street didn’t either, so, during the bubble, financial gurus made billions of dollars on shaky derivatives whose values were opaque. Now, their bad judgment has transformed a fall in housing prices that is less than enormous into a global credit crisis. And now we, the Main Street folks who were able to handle the actual decline in real estate values, will bear the cost of holding up the system that Wall Street messed up—and this cost truly is unpredictable.
Like Captain Renault in Casablanca, Alan Greenspan is"shocked, shocked" to find that people were gambling with the dollars that the Fed generously kept producing."As I wrote last March: those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief," he said in his congressional testimony.
No, it wasn’t hearing the cowardly politicians mouthing banalities as they endorsed the “rescue” package; no, it wasn’t the slow crash on Wall Street (I don’t actually remember how Wall Street fared in Atlas Shrugged).
It was buying gasoline this morning. At the Crown gas station across the street from my office, all the pump handles were shrouded in plastic that said “Out of Order.” So I went next door to the Shell station. There, all the pump handles except for “regular” gas were covered.
My car takes premium, but as I sat there wondering what to do, more cars began to stop and turn in, adding to the few already filling up. It began to get crowded. I saw what was happening. I bought $20 of regular and left.
North Carolina has a price-gouging law. The governor and attorney general have been threatening gas retailers with punishment if they break the law by charging too much. At least one newspaper is cheering them on. It’s eerie.
Wouldn't it be wonderful if the American people--rationally ignorant and attracted so often to the worst socialist nonsense--come through this time and permanently repudiate this bailout? The 228-205 congressional vote dropped the curtain on Act I of this rescue scheme. Let's skip Act II and go home.
Roderick Long’s link to the surprisingly favorable New York Times Magazine article about Auburn's philosophy department spurred me to leaf through the printed version of the “College Issue.” It’s decidedly a mixed bag, with the New York Times unable to avoid politicking. We learn about what a good teacher Barack Obama was and how the Naval Academy today is nothing like what it was in the bad old days when John McCain was there.
"Government to the rescue" -- what an absurd idea. But just about everyone's buying it.
Not folksy local columnist Dan Barkin of the Raleigh News and Observer, however. He recalls how the federal government promoted home-buying in the mid-1990s:
"The federal government leaned heavily on banks to loosen up lending and eliminate 'red-lining,' the withholding of mortgages from entire neighborhoods. Down payments were reduced. Mortgages were available with low initial interest rates. The government and the big mortgage purchasers -- Fannie Mae and Freddie Mac -- pushed hard to streamline the underwriting process."
He recalls the movie"It's a Wonderful Life," which condemns Henry F. Potter, the mean-spirited banker who hated to lend money. Barkin even suggests that when the movie is shown again at Christmas"maybe we'll realize that Henry Potter got a bad rap." Potter actually worried about"whether people could make the payments."
I’m not an economist, so here are just a few observations about the turmoil – the “tumultuous 10 days that have remade the American financial system” and today’s “day of high drama in Washington” (quotes from the Wall Street Journal).
Years ago, as an editor at Business Week, I wrote an article about the Kondratieff cycle, a boom-and-bust cycle that supposedly moves in periods of about fifty years. (The fifty-year wave was named for the Russian economist Nicolai Kondratieff, who died in a Siberian prison for suggesting that the Soviet Union had not eradicated business cycles.) Although these long waves were endorsed by Josef Schumpeter and some other leading lights (I forget who!), most economists don’t accept the idea that there are long cycles of rising and falling prices. Nathan Rosenberg looked at the historical evidence and concluded that such a cycle simply did not exist.
I’m not so sure; but even if predictable cycles do not exist, there is the cycle that reflects human memory.
Since people are always being born and dying, the changing “collective” memory affects how policy-makers act.
For example, fear of another Great Depression led to inflation in the 1970s, as policymakers kept “priming the pump,” on the theory that such efforts had pulled the nation out of the Depression. The inflation was ended by Federal Reserve chairman Paul Volcker, who let interest rates rise to then-astronomic levels (which we may see again).
The end of inflation ushered in a long wave of prosperity beginning in the early 1980s (which we have been happily riding until recently). It was possible because the Federal Reserve steadfastly refused to inflate the currency.
But time moves on. People forget. Policy-makers forget. A South Sea bubble mentality takes over and no one is willing to stop it. The high-tech boom did halt abruptly – but the bust was contained because a lot of smart people (famously, Warren Buffett) avoided firms that they couldn’t understand.
Inflation in housing was different. Just about everybody got involved. It was another South Sea bubble, but one that engulfed rich and poor, especially because the federal government’s stepchildren (Fannie Mae and Freddie Mac) did everything they could to wheedle people into debt. Although other lenders lacked the federal government support that Fannie and Freddie had, they did the same. The extent to which the housing boom was spread among lenders and investors through sophisticated financial instruments is something we are just beginning to discover.
I was not alive during the Great Depression so my knowledge of it (and the crises that preceded it) is based on reading, hearsay, movies, and whatnot. But I feel as though we are going through something similar – a probable stock market crash and a possible economic collapse preceded by the frantic efforts of well-intentioned government officials and not-so-well-intentioned rent-seekers.
In their efforts to avoid a worldwide economic catastrophe, policy-makers have abandoned all principles of limited government and individual responsibility. If they are lucky, their Maginot line will hold, and you and I will pay for their abandon with inflation for years to come. If they are not so lucky, the economy will crash. They will be out of their jobs, with even less competent people replacing them, and the rest of us will face hardships we never anticipated. Either way, we are likely to have an unpleasant awakening in the months and years ahead.
John Gray’s views of Russia, cited by Mark Brady (below), got my attention. Gray’s claim that Russia is reverting to the power politics of the 19th century strikes me as right.
Those of us who hoped for better after 1991 were naïve. However, as Gray implies, Russia’s government, while authoritarian and ruthless, is not the same as the Soviet Union’s was. Russia is not closed off from the rest of the world, its economy is not so primitive that people stand in line for hours for food, its government no longer survives by fabricating lies repeated by academics around the world, and its citizens are no longer shot for trying to escape the country. It’s just another nation-state now, one of many ruled by a big, ugly government.
The Raleigh News & Observer featured the Libertarian Party today in its editorial section, including a Q & A with Michael Munger, Libertarian Party candidate for governor of North Carolina. Munger is the economist who chairs the political science department at Duke.
Great interview! Munger’s top issues:
A moratorium on capital punishment
Increasing the number of charter schools (the number is capped at 100 in the state, despite long waiting lists) and coming up with a voucher program
Improving roads by creating a commission to decide on highway priorities (comparable to the federal military base closing commission).
Among many good quotes:
Q: Tell me why a vote for you on Nov. 4 wouldn’t be a wasted vote.
A. All votes are wasted unless the election is decided by a single vote. The question is, how are you going to allocate that single vote that you have? Are you going to honor your principles or vote for the lesser of two evils?
In his acceptance speech McCain intelligently and artfully revealed his own transformation through his Vietnam experience -- from cocky and self-reliant soldier (read, George W. Bush, perhaps) to a humbled servant dedicated to his country. His speech was, ultimately, inspiring.
One thing bugged me though – McCain’s comment on Obama. McCain started to express respect for Obama as an individual (I thought) but then began quoting from the Declaration of Independence about equality and our inalienable rights. That sounded to me as though he was saying that Obama, even though he is black, is an equal – patronizing, I thought, and not called for. But maybe others heard it differently – with politics, I sometimes pick up on the wrong things.
The latest shot fired in the battle over affirmative action in academia is a study suggesting that the end of racial preferences at law schools would cause a precipitous drop in enrollment of African Americans in law schools. The study, reported in InsiderHigherEd.com, is a response (but not exactly a refutation) of U.C. L. A. professor Richard Sander’s claim that affirmative action causes a “mismatch” of minority students and schools.
Sander showed that giving a “leg up” to some students pushed them into more competitive schools, where they didn’t do as well as they would have if they had not received the affirmative action boost. But Jesse Rothstein of Princeton and Albert H. Yoon of the University of Toronto argue differently (using pretty much the same data). They contend that many African Americans simply wouldn’t get into law school without the boost. Thus, they predict that the number of first-year students would decline by 63 per cent at all law schools and by 90 per cent in the top schools. Their paper adds fuel to the argument that affirmative action is necessary.
My take? Their analysis is static and ignores the fact that people respond to incentives. As long as affirmative action is around to give a boost, some students will work less and end up inadequately prepared. If, instead, these students knew that competition would be unleavened by preference, their actions in high school and college would change. So the Rothstein and Yoon predictions are undoubtedly too dire.