Liberty & Power: Group Blog
And now Janet Napolitano wants to stomp on the corpse of American spirit to make sure it doesn't come back to life like the dead body in the closing minutes of a horror movie. What a horror it would be for the all-consuming state if Americans found their self-respect and independence once more.
CBS News reports, Janet Napolitano Urges"Next Stage" of Airport Screening. Homeland Security Secretary Janet Napolitano will urge 90 nations to heighten their aviation security measures today to include screening devices that could prevent terrorists from bringing plastic- or powder-based explosives onto the plane. Not content merely to oppress America's own citizens, Napolitano wants to internationalize U.S. insanity. All corners of the globe are to snap-to and remove their shoes for American statism. If they don't, if they balk at making kids undergo 'child porn' scanners....well, then they will be endangering American citizens! Sounds like grounds for military invasion to me. Or, at least, grounds as valid as the invasion of Iraq. Let's roll! I am a non-American. I am planning all future trips so that I do not need to have stop-overs or any contact with American airports; my travel agent tells me that the most 'popular' request she receives is" can I avoid setting foot on American soil?" Because setting foot in America -- even to shuffle from one security area to another within the airport -- is degrading and frightening. Now the U.S. wants to make every airport an American one and make residents of other nations pay the price for its empire building in Iraq and Afghanistan. American atrocities in and occupation of those nations has made the U.S. a target of unprecedented hatred worldwide; the response of Americans has been unprecedented paranoia that encourages the pat down of children and the exposure of their genitalia in scanners. You people are f***ing INSANE!
And here I start to back off... Most of my family is American and, so, I cannot say"reap the whirlwind yourself!" because I know that most Americans are decent people. I know this from personal experience. But why, oh why are you tolerating and even endorsing the brutal empire-building that causes such hatred? Why are you willing to cyber-strip your own children to pacify an ever increasingly total State?
Leave the rest of the world alone. Do not convert the globe into your own personal insane asylum. America go home!
For more commentary, please visit WendyMcElroy.com.
David T. Beito
Lieven, a professor in the War Studies Department of King's College London and a senior fellow of the New America Foundation in Washington, DC., is author of America Right or Wrong: An Anatomy of American Nationalism (Oxford University Press, 2004) and several other books.
Unlike the briefer one I posted here because the Studies in Emergent Order site was being redesigned, I deal with his points in some depth.
I think the issues we are discussing are important for the intellectual development of the classical liberal tradition.
David T. Beito
I am delighted to announce that our own Robert Higgs will be appearing at the University of Alabama on October 5 to do what he does best. He will offer his legendary insights into the origins of the American Military-Industrial Complex. The talk will be in Room 205 at the Gorgas Library at 6:00 pm. He will be featured as part of the Liberty and Power Lectures.
Higgs is a Senior Fellow at the Independent Institute and editor of the Institute’s quarterly journal the Independent Review. He is the author of such path-breaking works as Depression, War, and Cold War, Crisis and Leviathan and Competition and Coercion.
Aeon J. Skoble
Amy H. Sturgis
It seems an appropriate day to revisit a quote or two:
"Wild fantasies arose in his mind; and he saw Samwise the Strong, Hero of the Age, striding with a flaming sword across the darkened land, and armies flocking to his call as he marched to the overthrow of Barad-dûr. And then all the clouds rolled away, and the white sun shone, and at his command the vale of Gorgoroth became a garden of flowers and trees and brought forth fruit. He had only to put on the Ring and claim it for his own, and all this could be. In that hour of trial it was the love of his master that helped most to hold him firm; but also deep down in him lived still unconquered his plain hobbit-sense: he knew in the core of his heart that he was not large enough to bear such a burden, even if such visions were not a mere cheat to betray him. The one small garden of a free gardener was all his need and due, not a garden swollen to a realm; his own hands to use, not the hands of others to command."
- J.R.R. Tolkien, The Lord of the Rings: The Return of the King
"My political opinions lean more and more to Anarchy (philosophically understood, meaning the abolition of control not whiskered men with bombs) — or to ‘unconstitutional’ Monarchy. I would arrest anybody who uses the word State (in any sense other than the inaminate real of England and its inhabitants, a thing that has neither power, rights nor mind); and after a chance of recantation, execute them if they remained obstinate! If we could go back to personal names, it would do a lot of good. Government is an abstract noun meaning the art and process of governing and it should be an offence to write it with a capital G or so to refer to people.… Anyway the proper study of Man is anything but Man; and the most improper job of any man, even saints (who at any rate were at least unwilling to take it on), is bossing other men. Not one in a million is fit for it, and least of all those who seek the opportunity."
- J.R.R. Tolkien, from Letter #52 (1943, to Christopher Tolkien), The Letters of J.R.R. Tolkien
Charles W. Nuckolls
Here is a more current example: Increasingly complex debt instruments have increased debts (disguised as easy credit), whether they are personal, corporate or governmental, to such levels that they can no longer grow - we can't pay them off anymore without assuming additional debt. And since we have built our entire financial and economic systems on credit - and hence debt -- there must follow a period of deleveraging. A warning sign should be that for every additional dollar put into the system, returns today are diminishing to the point that they threaten to become negative.
It's hard to see how this could not be extremely painful for most of us. Joseph Tainter's pivotal work is called the Collapse of Complex Societies for a reason. In nature, in physics, systems don't collapse gradually, or very rarely so; in 99% of cases, it's more like sticking a needle into a balloon.
For me, as an anthropologist, I find it increasingly useful to examine our predicament -- peak, peak credit, peak everything -- as an instance of complexity gone wild. The past is littered with examples of what happens in these circumstances. But of course, there is always American exceptionalism to fall back on. I doubt that can provide the same kind of assurance it used to.
David T. Beito
Over the last decade or so, dozens—perhaps hundreds—of homes in Montgomery have been declared blighted and razed in a similar manner. The owners tend to be disproportionately poor and black, and with little means to fight back. And here's the kicker: Many of the homes fall along a federally funded civil rights trail in the neighborhood where Rosa Parks lived. Activists say the weird pattern may not be coincidence.
The present recession starkly displays this characteristic crisis-related abatement of the economy’s investment process. Indeed, the decline of private investment during recent years has been much greater than most observers realize. Consider the following data, taken or derived from the most recently revised National Economic Accounts prepared by the Commerce Department’s Bureau of Economic Analysis (Tables 1.1.5, 1.1.6, and 5.2.6).
In 2006, gross private domestic investment reached its most recent peak, at $2.33 trillion (in constant 2005 dollars), or 17.4 percent of GDP. After remaining almost at this level in 2007, this measure of investment fell substantially during each of the next two years, reaching $1.59 trillion, or 11.3 percent of GDP, in 2009. This decline is severe enough, but it does not give us all the information we need to gauge the extent of the investment bust.
The greater part of gross investment consists of what the statisticians call the capital consumption allowance, an estimate of the amount of money that must be spent simply to offset wear and tear and obsolescence of the existing capital stock. In a country such as the United States, with an enormous fixed capital stock built up over the centuries, a great amount of funds must be allocated simply to maintain that stock. In recent years, the private capital consumption allowance has ranged from $1.29 trillion in 2005 to $1.46 trillion (in constant 2005 dollars) in 2009. Thus, even in the boom year 2006, about 60 percent of gross private domestic investment was required merely to maintain the economy’s productive capacity, leaving just 40 percent, or $889 billion in net private domestic investment, to augment that capacity.
From that level, net private domestic investment plunged during each of the following three years, taking the greatest dive between 2008 and 2009, when it fell to only $54 billion (in constant 2005 dollars), having declined altogether by 94 percent from its 2006 peak! Last year only 3.5 percent of all private investment spending went toward building up the capital stock. Thus, net private investment did not simply fall during the recession; it virtually disappeared.
Unless this drastic decline is reversed soon, the future will be bleak for the U.S. economy. Without substantial net private investment, brisk economic growth is unthinkable beyond the very short run. Although private investment spending has recovered somewhat since it reached its trough in the third quarter of 2009, gross private domestic investment in the most recent quarter (April to June) of 2010 remained 21 percent below its peak in the first quarter of 2006, and net private domestic investment remained about 64 percent below its previous peak.
While this private-sector disaster was occurring, however, the government sector of the economy was booming. The ratio of all federal government spending – purchases of goods and services plus transfer payments – to GDP increased from 20.6 percent in the fourth (October to December) quarter of 2007 to 25.4 percent in the most recent (April to June) quarter of 2010.
Of this increase, about 73 percent represents an increase in transfer payments. According to the National Economic Accounts (Table 3.2), federal transfer payments for social benefits to persons – old-age pensions, unemployment-insurance benefits, disability-insurance benefits, Medicare benefits, and so forth in great variety — increased from a seasonally adjusted annual rate of $1.28 trillion in the fourth quarter of 2007 to $1.72 trillion in the second quarter of 2010 – a leap of more than one-third in only two and a half years. During the same period, government grants-in-aid to state and local governments rose from a seasonally adjusted annual rate of $382 billion to $525 billion, an increase of more than 37 percent.
Data compiled by the Bureau of Labor Statistics show that the number of private nonfarm employees fell from 114.1 million in 2006 to 108.4 in 2009, and even further this year, reaching 107.9 million in August 2010. At the same time, the number of government employees at all levels increased from 22.0 million in 2006 to 22.5 million in 2009, although a slight reduction has occurred recently, putting the number at 22.4 million in August 2010.
The Federal Reserve System has played a major role during the current recession, acting in unprecedented ways to inject funds into the financial system in general and into selected failing firms in particular, especially AIG, Fannie Mae, and Freddie Mac, which have been effectively taken over by the government, giving rise to a situation in which the government supplies or insures about nine-tenths of all new residential mortgage loans. Before the recession, the Fed’s financial assets consisted overwhelmingly of U.S. Treasury securities. It now holds a variety of securities, including mortgage-backed securities valued on the Fed’s books at approximately $1.1 trillion. In this way, the Fed has become the major direct source of funds for the government-sponsored enterprises that provided an inviting secondary market for the commercial banks and other primary lenders that inflated the housing bubble.
Through the TARP scheme, created late in 2008, the U.S. Treasury acquired ownership stakes in hundreds of commercial banks.
Of course, the government also took over General Motors and Chrysler, bypassing existing bankruptcy laws and ramming into place restructuring arrangements that served the Obama administration’s political goals, especially its support for members (active and retired) of the United Auto Workers.
The foregoing measures constitute only a small fraction of the many significant actions the federal government has taken to augment its size, scope, and power during the current recession. Thus, while the market system’s driving force – private investment – was being brought to its knees, the government’s crisis-driven surge only added an additional discouraging feature to those operating though market channels, such as the reluctance of commercial banks to make new loans and investments and the desire of households to repay debts and increase their holdings of cash balances. A government growing in so many different directions at once, with many additional initiatives — such as higher tax rates, new taxes on energy use, and new restrictions on financial service providers — still awaiting enactment or regulatory specification, creates tremendous uncertainty for anyone contemplating a long-term investment: who knows what the contours of future government exactions, restrictions, and requirements will be, and hence whether a particular investment will prove to be profitable or not?
Therefore, a major consequence of the Great Divergence – the starvation of private investment and the feasting of government – is what I call regime uncertainty. This form of uncertainty is a pervasive incalculable apprehension about the future security of private property rights in capital and the income it yields to investors; indeed, a pervasive apprehension that extends beyond investors to include nearly all private participants in the economy – consumers, workers, and managers, as well as investors — in regard to the future economic order. The Great Divergence in itself is very bad news. Its effects in enhancing regime uncertainty only make it more unfortunate for everyone outside the privileged precincts of government.
Unfortunately neither my critique nor Sandefur's response to it are available yet without buying the journal, though that will change in 6 months. (But they can use the business so I hope you buy it if you do not subscribe!) In a word, my argument is that Sandefur completely misses the importance of Hayek's distinction between a spontaneous order and an instrumental organization.
Sandefur argues in his response that if a spontaneous orders is unable to be described teleologically then it says nothing about moral or policy issues. This is a mistake because the abstract procedural rules of spontaneous orders bias the resulting order in terms of specific values without saying what the manifestation will be, or even that other values might also be served. For example, both the market and science are spontaneous orders, but the rules that generate them are different, serve different values, and lead to different kinds of patterns, coordination, feedback, and outcomes.
In his reply Sandefur argues his position undermines the usefulness of Hayek's critique of constructivism. Again, I think this evidences a misunderstanding of Hayek. As Hayek used the term "constructivism" was the belief that we could rationally create planned orders where the pattern of results was superior to the performance of spontaneous orders. He did not mean to suggest that we could not create or cultivate the conditions within which a spontaneous order could arise or improve on it if it pre-existed. The US constitution adapted existing cultural and poliical values to procedural rules that were abstract, formally neutral, and so on - the characteristics of rules able to generate a spontaneous order. A key clue here is that contradictory purposes could be pursued, as in the market and in science, with no assurance as to what the outcome would be in the future.
Sandefur also argues my example of the US Constitution as essentially creating a spontaneous order is false because the Constitution explicitly prohibits certain kinds of legislation. But this misunderstands my point about democracies as spontaneous orders. That goes beyond a blog post, but my initial argument to that effect was published in Critical Review in 1989. It can be downloaded (along with more recent refereed pieces further exploring this issue) at http://blog.beliefnet.com/apagansblog/politics-social-theory.html
I hope that my Independent Review response and some other critical responses to Sandefur will initiate a renewed and better informed interest in the explanatory power of Hayek's concept.
In a move that will surely grant them the first prize ribbon for “Scumbags of the Year” and (if God is just) earn its leadership a future home in the Ninth Circle of Dante’s Inferno, the union - in the midst of a crushing depression - is working in tandem with the National Farmers Union to raise the price of food. What a swell bunch.
Having failed to unionize Wal-Mart’s workforce, they are now turning to President Obama to attack the company for…ready…holding down food prices. The horror. What do they have planned for their next “progressive” move, stealing candy from babies? Check that – they’re already working on it.
If you go onto their website you’ll come across the UFCW insisting, “When we unite for better wages, benefits, and working conditions, we help protect and improve the livelihoods of all workers.” Well, not all workers, just those with a UFCW card, and no soul.
Charles W. Nuckolls
In"Conspicuous Consumption," Veblen states that"the exigencies of the modern industrial system frequently place individuals and households in juxtaposition between whom there is little contact in any other sense that that of juxtaposition." In the absence, in other words, of any other connecting mechanism, we are driven to consume, and thereby display, our wealth as the only means of establishing our social identities and relationships to each other."The only practicable means," he says,"of impressing one's pecuniary ability on these unsympathetic obsevers of one's everyday life is an unremitting demonstration of ability to pay."
Two things should impress us here, and both are at odds with the evangelstic free-market individualism of The God in the Machine (Patterson's 1943 work). First, Veblen correctly identified consumption as a mechanism of social solidarity -- not a particularly good one, however, since its use depends on buy and selling items chiefly intended for display, not practical employment. Veblen believed this led to a misallocation of resources, as well as a noteable deadening of the social bonds that unite people in less consumerist societies. People become flat and one-dimensional, and their interactions with each other, however one measures them, increasingly fragile and subject to disruption with the viscissitudes of the market. With only conspicuous consumption to unite them, and only the market to make that happen, everything depends on keeping the market intact. When it fails, so the logic goes, so does the very basis of social solidarity.
The second point at odds between Patterson and Veblen would surely be the question of human nature. Patterson seems to have believed that it is natural to want to be free, and freedom involves relentless individualism -- the only force, she thought, powerful enough to keep at bay the dreaded threat of" collectivism." The free-market thereby is not a thing in itself, but a defense against something else(collectivism) that Patterson has a hard time explaining except as a freak of nature. Why, then, are we constantly menaced historically by something Patterson considers an aberration? Veblen thought differently: freedom, once exercised, could become the basis for voluntary cooperation, the actual foundation of our nature as social beings. If such a point be conceded, even for the sake of argument, that it alters and diminishes the role of the market. At the very least, it de-links the market from the role Patterson attributes to it: the direct expression of human nature, and its primary guarian.
No, one doesn't suppose Patterson and Veblen would have gotten along, or that Thorsten would have been invited to the conference. But I cannot help but think the juxtaposition would have been all the more interesting for that reason.
“They saw the United States in a long-term slow growth environment with the near-term risk of recession quite real,” said Wien, in a commentary to Blackstone clients. “The Obama administration was viewed as hostile to business and that discouraged both hiring and investment. Companies and entrepreneurs were reluctant to add workers because they didn’t know what their healthcare costs or taxes were going to be.”
Add this report to the many similar ones to which my colleagues and I have called attention over the past two years.
Of course, for mainstream macroeconomists, such evidence means nothing. In fact, they hold it in complete contempt because (1) their formal mathematical models do not have a variable called “regime uncertainty,” and (2) even if they could be persuaded to take this factor into account, the canned data on which they rely — the product of the Commerce Department’s Bureau of Economic Analysis, for the most part — do not supply them with an “official” data set for their analysis. What you can’t measure, according to their “scientific” credo, does not exist. Their de facto motto (of which I have more than once been on the receiving end) is: you’ve got no formal model; you’ve got nothing.
In my study of regime uncertainty over the past fifteen years, I haved given weight to three independent forms of evidence: (1) specific legislative, executive, judicial, and regulatory actions the government is taking, the ideology embraced by major government actors and advisors, and, in light of basic economic logic, what investors might reasonably infer about the future security of their private property rights from the government’s actions and the ideology of its leading figures; (2) direct testimony by investors themselves, as well as relevant opinion surveys of businessmen, when available; and (3) changes in risk premiums demanded by investors in the corporate bond markets, as shown by changes in the slope of yield curves. During the past two years, my scrutiny of these types of evidence has persuaded me that regime uncertainty has arisen and that this uncertainty probably accounts, at least in part, for the very low level at which long-term private investment has settled, with only relatively small recovery since it hit its most recent trough.
Again, however, full disclosure obliges me to warn the reader that the acknowledged experts in macroeconomics — those who work in this area at MIT, Stanford, Harvard, Chicago, Yale, Princeton, and the other esteemed universities — are to my knowledge unanimous in their disregard of the idea that regime uncertainty might be contributing to the prolongation of the present recession (or might have contributed to the prolongation of the Great Depression, as I argued in my 1997 paper). So, if you prefer to go with the experts, you should disregard my argument and my evidence and make your bets on the basis of what the experts say. You might wish to consider, however, that these are the same experts who, virtually to a man, failed to predict the present recession (and most of the preceding ones, as well) and that, according to their positivistic tenets, predictive power is the sine qua non of a scientific theory, as much in economics as in physics or chemistry.
Jeffrey Rogers Hummel
Jeffrey Rogers Hummel
ROCHESTER — The Lake Shore Limited runs between Chicago and New York City without crossing the Canadian border. But when it stops at Amtrak stations in western New York State, armed Border Patrol agents routinely board the train, question passengers about their citizenship and take away noncitizens who cannot produce satisfactory immigration papers.
The little-publicized transportation checks are the result of the Border Patrol's growth since 9/11, fueled by Congressional antiterrorism spending and an expanding definition of border jurisdiction. In the Rochester area, where the border is miles away in the middle of Lake Ontario, the patrol arrested 2,788 passengers from October 2005 through last September.
If you are following the campaign for the Labour Party leadership, you would be aware that the two leading candidates, David and Ed Miliband, are brothers and the sons of the late Marxist intellectual Ralph Miliband.
This contest between siblings prompts retired British academic John Gray, once a favored scholar of many American conservatives and libertarians, to discuss the checkered history and cloudy future of leftist political ideology. And this in turn prompts Marxist author and blogger Richard Seymour to engage with John Gray.
Amy H. Sturgis
Today, StarShipSofa became the first podcast ever to win a Hugo Award.
To Tony, to the other StarShipSofa contributors, to all of our listeners and supporters, and to every member of the larger podcasting family, I offer heartfelt thanks and congratulations. History has been made!
Congratulations to all of the 2010 Hugo Award winners, as well.
David T. Beito
The Liberty and Power Lectures (a name inspired by this humble blog) will debut on Wednesday, September 8 at 7:30 in the Ferguson Theater at the University of Alabama. We are starting with a tsunami. Our first speaker is Jimmy Wales, master of Wikipedia, and his topic will be"Liberty, Power, and Wikipedia."
The series, focuses on the relationship between liberty and power in history. Future speakers include Robert Higgs, Scott Horton of Harper's, Steve Horwitz, and Jonathan Bean. For more details on the lectures, see here.
As Andrew Ross Sorkin has written recently in the New York Times:
Mr. Obama was viewed as a member of the elite, an Ivy League graduate (Columbia, class of ’83 . . .), president of The Harvard Law Review — he was supposed to be just like them. President Obama was the “intelligent” choice, the same way they felt about themselves. They say that they knew he would seek higher taxes and tighter regulation; that was O.K. What they say they did not realize was that they were going to be painted as villains.
So, once again, Barack Obama’s presidency reflects that of Franklin Delano Roosevelt, the well-heeled playboy-politician who ascended the political ladder while living very comfortably, owing to his forebears’ accumulation of wealth, and circulated with complete ease among the “best people.” (Note: In FDR’s case, the credentials were the reverse of Obama’s – Harvard College, graduated 1904; Columbia Law School, attended but dropped out in 1907, having already passed the New York State bar exam.) After Roosevelt became president, however, especially from 1935 onward, he was reviled as a “traitor to his class” because of his attacks on “economic royalists,” whom he blamed for the Depression and for the New Deal’s failure to restore prosperity. Perhaps before long the contemporary moguls will revive the American Liberty League.
Too many Americans think of Barack Obama as somehow alien to the established politico-economic order. Many accuse him of all sorts of affiliations and loyalties at odds with the preservation of that order. In my view, however, he is as American as apple pie – as American as Franklin D. Roosevelt. He was not born in a sharecropper’s shack; he did not walk six miles barefooted through the snow, uphill both ways, to attend school; he has always been a successful player in the upper reaches of the participatory fascist system that thickheaded Americans revere as “democracy in action” in the “land of the free.”
So, yes, the billionaires have a perfect right to feel betrayed. They accepted Obama as one of their own; they supported his rise to power, from his student days onward; and they bankrolled his election as president. But, now, after directing hundreds of billions of dollars toward politically well-connected firms in the course of the various bailouts and Fed effusions his administration has inherited, sponsored, or overseen, he has decided to make the Wall Street movers and shakers his whipping boys.
Before concluding that these cry babies are only getting what they richly (pun intended) deserve, we might well pause to consider that the Obama administration’s policies are, in fact — just as big-league investors and businessmen are increasingly saying publicly — creating regime uncertainty that seriously impedes the recovery of private investment, which must be an essential part, indeed, the very beating heart of any genuine restoration of prosperity.