Jeffrey Rogers Hummel
Jeffrey Rogers Hummel
Bryan returned to the subject of my lecture, discussing a question he had posed to me during the seminar's recorded Q & A:"Agree or disagree: In developed countries during the last 10-15 years, central banks have become (close to) the most efficient state enterprises." After some hesitation, I had to reluctantly agree, despite my unequivocal advocacy of the Fed's abolition. But I throw the question open to discussion: what is your candidate for the least inefficient state enterprise?
Bryan of course approves of my answer, which is why he posed the question. But his reasons are somewhat different than mine. He gives two in his post: (1) the public's exaggerated fears of inflation partially offset the time-inconsistency problem that would otherwise cause central banks to generate higher inflation; (2) central bank independence allows them to rely more on economists, who do a better a job than mere mortals.
I have already questioned the claim that the public exaggerates the danger of inflation relative to economists in an ECON JOURNAL WATCH article. Economists only consider inflation's deadweight loss, ignoring inflation's transfer, which bothers the public just as much and just as reasonably as the transfer from the income tax. Does it really make sense to say that the public hates taxes too much because most of the extracted revenue is just a transfer?
Bryan's second reason really combines two points, one with which I agree and one with which I disagree. I do think central bank independence is important but not because it results in employing more economists. The economists I know seem to be just as susceptible to incentives as the general public. They may cast more intelligent votes, where as Bryan argues incentives are weak, but I don't see how it follows that they will make more public-spirited (i.e., welfare enhancing) decisions when faced with the temptations of power.
Here are my three reasons, given somewhat sporadically in my lecture, for the better performance of central banks in developed countries since the 1980s:
1. Highly developed financial systems with widespread fractional reserve banking have reduced government seigniorage, even at double-digit inflation rates, to a trivial source of revenue. (During the Great Inflation of the 1970s, direct seigniorage never covered more than 2 percent of the U.S. government's outlays.) This greatly diminishes the incentive for central banks to generate high inflation.
2. Globalization and international competition have approximated Hayek's world of competing private banks issuing fiat money. The major difference is that we have competing central banks. Investors can fairly easily move from one currency to another, which means the market immediately prices changes in central bank policy and punishes them when necessary. Central banks are still the major noise traders in the interest-rate and foreign-exchange markets. But whenever a central bank goes up against speculators and tries to seriously misprice its currency, the central bank almost always loses and the speculators almost always win. This tends to discipline central banks.
3. Central banks are freer to respond sensibly to this growing international competition and market discipline because of their political independence.
Wendy McElroy
An earlier blog post Leave the United States if you can" in which I urge people to move their persons and wealth out of America has stirred controversy and prompted email inquiries. I want to answer one inquiry in a public manner: namely, “why have you become so pessimistic.”
By nature, I am not a pessimist. Nor am I currently pessimistic about my own life or the prospect of freedom in other areas of the world. But I see little reason for any optimism about freedom or prosperity within the US over the next several years; instead, I see the rise of a totalitarianism that is unparalleled in my experience. I know many people think nothing has fundamentally changed State-side; they believe the economy or society is just going through a bad patch. Perhaps people feel this way because they wake up every morning at the same time beside the same person, they eat a customary breakfast with coffee the way they like it and, then, drive well-known roads to work. Thus, life may be more stressful but it is basically unchanged, and anyone who warns them that a slow car accident is heading their way is an alarmist.
By contrast, I believe the United States has fundamentally changed since 9/11. Although many people’s lives follow the same routine as last year and the year before, I believe the political, economic and social framework that allowed Americans to be the freest and richest people in the world is now gone.
Here I must make a distinction between America and Americans. America to me is not geographical boundaries but a nation built (as much as I have ever known) along the principles of individual liberty and the celebration of productivity. I always resonated to Ayn Rand’s statement that she was more American than those born within US borders because she chose to be American. I am Canadian but I have chosen to make a lifelong study of American history and politics because it is fascinating and sometimes an expression of what I consider “the ideal”…or as close to it as flawed and self-contradictory human beings can come. When I say “America”, I mean the specific institutions (e.g. the Bill of Rights) which established a civil society sanspareils and protected the individual – largely against the State.
What do I mean by Americans? De Tocqueville described the American character superbly in Democracy in America, including the characteristic that later became known as rugged individualism. But why did Americans develop these characteristics more often and in a more heightened form than the French or Spanish? The answer can’t be genetic because there is no genetic American (I leave aside the issue of Indians); I don’t think it is cultural because (especially in de Tocqueville’s time) the U.S. was a patchwork of cultures and far less cohesive. I believe the American character arose as a result of breathing in the freedom, safety and confidence that true civil society offers to individuals. Rugged individualism arose largely due to the institutional structure of society in which people bowed their heads to no ruler and were expected to come to their own conclusions about their own lives.
I don’t think that structure still exists. The institutions that were the framework in which individualism flourished have been so discarded or distorted as to be unrecognizable. The justice system has no connection to justice. Police agencies do the opposite of protecting you from violence. Public schools do not teach how to think but how to obey. ‘Defense’ agencies are obsessed with conquering and occupation a nation that never attacked America. Ask yourself…if institutional frameworks like the Bill of Rights gave rise to rugged individualism, what sort of person results from the institutions of Big Brother government?
Is rugged individualism dead? I don’t think so. I see it whenever I look at the areas/issues where the fight for freedom is still raging – for example, the gun rights movement. But it has ceased to be a defining or prevalent characteristic in the American psyche or politics. Is the Bill of Rights dead? Of course not; in its essence, the Bill of Rights is a set of ideas/ideals that existed long before a piece of paper was signed; the continuing existence of those ideals does not depend upon any document.
Moreover, institutions and civil society can be rebuilt. This has happened repeatedly throughout history and around the globe.
But it will not happen in the midst of an economic crisis such as the one into which the United States is just starting to slide. Economic crisis, as much as War, is the health of the State. I don’t think the rebuilding of American freedom will occur with much effect for years. That doesn’t mean I’m going to stop trying…liberty v. power is the best fight in town and one to which I committed long ago. But I'm also going to tell the truth as I see it vis-a-vis the odds of success...all the while being very grateful that the United States is only one of many, many places in the world. Just as ideals do not depend on pieces of paper, freedom has no natural native soil.
Robert Higgs
A remarkably similar outburst occurred during government leaders’ deliberations with regard to forcibly removing persons of Japanese ancestry from a huge swath of the West coast states and confining them in concentration camps. In a meeting on February 1, 1942, Assistant Secretary of War John J. McCloy bridled at what he took to be Justice Department criticism of the Army, telling Attorney General Francis Biddle: “You are putting a Wall Street lawyer in a helluva box, but if it is a question of safety of the country, [or] the Constitution of the United States, why the Constitution is just a scrap of paper to me.”
Notice that Bush’s outburst came during a discussion of the USA Patriot Act, and McCloy’s during a discussion of removing and confining persons alleged (but not proven) to pose a threat to national security. Notice further that the USA Patriot Act was never necessary for the protection of the country, and neither was the action to remove and confine the Japanese and Japanese-Americans. Existing laws and legal due process would have sufficed to deal with the prevailing conditions in both cases. The government in the early 1940s and again in recent years simply grabbed and exercised great powers while the public, ignorant of the true situation, allowed its groundless fears and ethnic prejudices to dominate its thinking.
In every such national emergency, precisely when constitutional restraints on the government are most desperately needed, the Constitution becomes nothing but a scrap of paper. Government leaders understand this fact, and they speak and act accordingly.
(My source for the quotation from McCloy is Kai Bird, The Chairman: John J. McCloy, the Making of the American Establishment (New York: Simon and Schuster, 1992), pp. 149-50.)
Wendy McElroy
Make plans right now while opportunities still exist to secure your wealth outside of the authorities' rapacious reach because that door of opportunity may be slammed in your face in the near future. It is not merely that government at all levels is starving for the cash that's dried up from property taxes and, so, will steal and confiscate like a drunken highwayman. Many factors point to rise of the Total State, which will grind up your freedom, your future and the lives of those who resist.
I read about 12 news sources a day, from far-left to the Religious Right; month by month, there is a dramatic increase in reports of police brutality, government surveillance, crack-downs, the control of daily life down to the minutia of which oils you may cook french fries... And there seems to be precious little opposition to the arrival of totalitarianism. Perhaps the flood of oppression is too overwhelming and has caused a general paralysis; at times, that is my reaction. But, mostly, I think people are either focused on financial survival or they actually applaud the Total State. Even those who believe they believe in freedom are among the applauders because they buy the justifications being offered for the annihilation of civil liberties. For example, consider just one of the incredible and successful assaults on the due process and liberties of us all; in the name of defending women and children, the campaign against sex offenders has created a class of"untouchables" in class-free America -- people whom the government tells where to live, how to make a living, which sites they can e-visit, etc., etc. In the name of noble goals, the government has erased the idea of serving out a time in jail (which used to be called"paying your debt to society") and, instead, established the idea of indefinite sentences and 'forever' punishments.But the establishment of this caste system is just one aspect of the wild plunge into tyranny.
What should worry you the most is that everything has occurred before the economic collapse of the United States, which I believe will happen in the near future. (The timing depends somewhat on when"too many" foreign-held dollars are dumped back into America.) I expect a severe depression to unfold over the next few years. And nothing, nothing, nothing encourages the growth of State as much as people who are frightened and hungry/homeless. An entire population can turn to a leader much as children turn toward a parent...and for the same reason: to feel safe.
If an economic depression is added to the convergence of the police state with a total surveillance society, then I honestly don't know what will happen. But I do know that you don't want to be there to find out. Don't be fooled by those who say"but America has too strong a tradition of freedom for this to happen." Pre-Nazi Germans thought their culture was too sophisticated and fine to allow the triumph of barbarism. Leave.
Cross posted at WendyMcElroy.com
David T. Beito
In making these statements, of course, McCain played a key role in creating the climate of fear that led many Americans to support the U.S. invasion of Iraq.
David T. Beito
Before we single out Obama, however, it might be worth finding out if McCain is any better on this issue.
David T. Beito
BUSTED! NOW WHAT DO I DO? A deadly lesson in what NOT to do.
TALLAHASSEE,FL 8/02/08
In 2007 Rachel Morningstar Hoffman was stopped by the Tallahassee Police Department for speeding. She couldn't have known that being in a hurry would result in her death.
During the stop an ounce of Marijuana was discovered in her car. This led to her participation in Leon County's Drug Court. This program is administrated by the State Attorney's Office led by Willie Meggs. The terms of this program are,basically,Pay the fine, stay clean for the duration,fulfill all requirements of the court(community service,etc.). Well, things were going well with the diversion program(thanks to The Wizzinator) right up to April 15,2008. TPD Investigator Ryan Pender(B#780) recieved information that she was selling large amounts of Cannabis. This, and other info, resulted in Ofc. Pender seeking a search warrant. While Ofc. Pender was enroute to write the application for the warrant, Rachel was observed exiting her building and attempting to enter her vehicle. she was detained by Ofc.Pate, miranda'd and confessed to having 1/4lb of cannabis,2"Ecstasy" pills and 4 valium pills in her residence.
SO. here's where Rachel stands as of the evening of 4/17/08. Possession of over 20 grams of Cannabis. Felony. Possession of MDMA. Felony. Possession of Valium. Felony. Let's see...That's at least 3 felonies, not to mention the diversion program which goes straight in the toilet if they find out about this. During interrogation she also confesses to selling 10-15 Lb's of Cannabis per week.
She was a 23 year old Free Spirit, A 'Hippie Chick' as the cops, who got her killed, referred to her. She loved Jam bands and music festivals. She had a degree from FSU in Criminology and psychology, but she wanted to go to culinary school to be a chef. She did not want her parents to know about this. A deal was struck. If she delivered a bigger bust, April 17th never happened. She was not charged with the 4/17 bust, the state attorney was not notified, and a naive(if not stupid) chick was set loose to collar some 'big time' drug dealers. Does she flip on her source? Are you kidding? Where's she gonna get her pot when this is all over? No, what happens is she smokes a joint on the way to get her car detailed. One of the guys working on the car comments on the good smell eminating from the car. Hmmm.....'Know where I can score 1500 hits of X, 2 1/2 OZ's of coke, and, by the way, I'd like a couple of assault rifles with that.' Would you like that super-sized?
On May 7,2008, Rachel and TPD,FHP & DEA set up a 'Buy/Bust' meeting at a city owned public park specified by the TPD agents. There were 15+ TPD officers, 1 FHP officer and 3 DEA agents actually participating in the"Transaction". She was given $13,000 in marked cash and fed to the wolves. She wasn't even familiar with the area where the transaction was supposed to take place. The targets called her and changed the meet to a dead end road 2 miles away. She notified TPD as to where she was going. Out of 20+ officers participating, only one even knew where Gardner Road is. Her cell phone went dead as well as the audio surveillance equipment. The oficers tasked with visually monitoring her lost sight of her. The DEA plane overhead couldn't monitor her due to"tree cover", if they even knew where to look.
The next morning TPD holds a press conference about"A missing woman, facing felony charges, went missing while assisting them in a drug investigation." Her father offers a $150,000 reward for info. Her car is discovered in Perry, FL 60 miles away around noon. FDLE arrests the two suspects(who TPD said they did not know of before this- in spite of the fact that one of them was being investigated for the theft of a .25 caliber pistol from the detail shop where they worked.) in Orlando, 200 miles away, by 5 PM. On the 9th they lead investigators to her body in Taylor County, dumped off of a dirt road. Dead by gunshot wounds, probably from the gun they were gonna sell her before they decided to rob her. Her mother buried her 2 days after Mother's Day.
The Grand Jury that indicted the two suspects called the handling of this case by TPD"Unconscionable". The DEA will not allow their agents to testify before the Grand Jury about their involvement.
The moral of the story? Speeding can get you killed in Tallahassee, FL.
Where she went wrong.
She liked to smoke pot.
She committed a moving violation while driving and in possession of a controlled substance.
She had the right to remain silent. But, apparently, not the ability. Never confess. It may be good for the soul, make 'em prove it anyway.
She had the right to an attorney, in fact she had one from the first case. She didn't use him. If her dad had the opportunity to use the $150k reward money for a good lawyer, she'd be alive and,more than likely, not have had to serve a day in prison. She just wasn't that big of a fish in the Tallahassee pond.
She obviously trusted TPD to look after her interests more than she trusted her parent's ability to deal with what happened. Look what that got her.
She made a deal with TPD. You don't make deals with the cops. If you're gonna make a deal, make it with the prosecutor via your lawyer. If you are offered this kind of deal by the cops, politely decline and have your attorney see if the DA is aware that the police are making these types of deals.
She tried to do a $13k deal with people she had never dealt with before. BIG red flag.
She took the cash to the deal before checking out what she was gonna buy instead of looking at the goods and arranging for someone(maybe a cop?) to bring the money after she was satisfied.
She was naive to the point of stupidity.
This is not about the drug war. this is about the death of a young woman while under the 'supervision and protection' of three law enforcement agencies.
info on this case can be found at www.tallahassee.com
David T. Beito
In 2005, for example, he declared that:
It [democracy] must not be forced [upon people] like a cap. Democracy can only grow upwards, like a plant. Democracy must begin at the local level, within the local self-government. Only then can it develop further."
.....Solzhenitsyn slammed the US policy, saying that over ten years ago, the US"launched an absurd project to impose democracy all over the world.""The US has a strange idea of democracy - they first interfered with the Bosnian situation, bombed Yugoslavia, then Afghanistan, and then Iraq.""Who is next, perhaps, Iran?" the writer wonders."The US must understand that democracy cannot be introduced by force, by the army," he said.
Mark Brady
David T. Beito
Hat tip Scott Horton.
David T. Beito
Finally, someone has created a good source for historically-minded movie buffs. Reel Faces evaluates the accuracy of movie depictions of historical events and personalities.
The list is still rather thin but it now includes entries on such movies as"Charlie Wilson's War,""Titanic,""Hollywoodland," and"Seabiscuit." The entry on"Titanic" was rather good and debunks some of the same myths exposed in Stephen Cox's book, The Titanic Story.
Hat tip Randy Barnett.
Mark Brady
Reading this prompted me to read the entry on Magee in the Oxford Dictionary of National Biography (behind subscription). There I read that"[a]lthough his religious views were always of an evangelical tone, they broadened considerably in later years ... In a sermon of December 1885 Magee accepted evolution ... All fanatical excesses in religion were abhorrent to him. He had little sympathy with the eccentricities of teetotal fanatics and other social reformers, and some remarks in his later speeches that he would rather see England free than sober, and that under certain circumstances betting was not wholly sinful, led to much misconception, but were fully consistent with his hatred of exaggeration and misapplied enthusiasm." Evidently he was a pretty sound fellow with whom I could enjoy a drink or two.
UPDATE (August 1): Today the Financial Times has seen fit to publish my letter about Bishop Magee together with a picture of the prelate himself.
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