Liberty & Power: Group Blog
Wednesday, August 20, 2008
U.S. Government Default: Good, Bad, or Just Plain Ugly? Comment on Cowen and Caplan
Back in 1993 I gave a lecture at Golden Gate University, "The National Debt: Good, Bad, or Just Plain Ugly?" Toward the end of the lecture (which I have presented many times since), I discussed the problem created by the unfunded liabilities of Social Security and Medicare. Given that politicians have little incentive to fix the problem, I predicted an eventual U.S. government default on Treasury securities, possibly within my lifetime. Even some of my most rabid libertarian listeners thought at the time I was going off the deep end. But over the intervening fifteen years, several commentators have started to take seriously the prospect of a risk premium on Treasuries, including David Romer of Berkeley, the WALL STREET JOURNAL, and Moody's Investors Services. In fact, economist Laurence J. Kotlikoff himself predicts such a default in a recent issue of the ECONOMISTS' VOICE, edited by Joseph Stiglitz.
Now two of the most prominent libertarian economists on the blogosphere have started to discuss government default as well, possibly arising from other causes. Tyler Cowen wrote: "When it comes to the mortgage agencies, there is no real choice but to bail out the debt holders. The alternative is a run on the dollar and collapse of faith in U.S. government securities and the end of the world." This inspired Bryan Caplan to consider such a potentiality in two successive posts: here and here.
There seems to be a certain tension between Tyler's argument for bailouts and some of his other opinions. He wrote in a subsequent post that although "I have very much favored the 'bailouts' to date [,] I don't favor that they were necessary." The statement is difficult to interpret. If it means anything more than that Tyler prefers utopia if possible, it suggests that he wishes the U.S. had a macroeconomic regime in which the alternative to bailouts was not "the end of the world." Yet Tyler has also dismissed free banking and/or a gold standard as providing no significant benefits over the current system of central bank-managed fiat money. But isn't fiat money managed by a central bank a major feature of what, in Tyler's opinion, links the future of the mortgage agencies to the future of the U.S. dollar?
More important, would a U.S. government default indeed be "the end of the world"? Cowen's scenario contains many implicit assumptions that require examination. The first is that saving Freddie Mac and Fannie Mae decreases the probability of U.S. default. As Mark Brady pointed out to me, one could plausibly argue just the opposite. In fact, a firm refusal to bail out the mortgage agencies would establish a strong barrier between U.S. Treasuries and the fortunes of not only the mortgage agencies themselves but also the myriad other institutions that we can imagine receiving similar treatment. Wouldn't that in fact help maintain confidence in U.S. government securities?
Tuesday, August 19, 2008
How Many Philosophers Can We Cram Onto a Panel?
[cross-posted at Austro-Athenian Empire]
The Molinari Society will be holding its fifth annual Symposium in conjunction with the Eastern Division of the American Philosophical Association in Philadelphia, December 27-30, 2008. Here’s the latest schedule info:
Monday, August 18, 2008
political politcal science
Below is a message from the president of the American Political Science Association, which appears to take the side of union workers "site unseen."
Dear APSA Member:
The Annual Meeting is upon us and all the necessary preparations for a challenging and successful program have been made.
If you are attending the Boston meeting you will learn of a labor action involving the food and beverage provider in the Hynes Convention Center. You may question how the labor action will bear on the Association’s ability to provide the needed services for a successful meeting.
The labor dispute between Local 26 of UNITE HERE and the Aramark Corporation involves food and beverage services at the Hynes. APSA has arranged to have no service contracts with Aramark and will not be using them for any food functions in the Hynes Center. There are no labor disputes involving the Hynes Center itself, or the conference hotels. All food functions have been moved to the Sheraton and Marriott hotels, which are not facing labor disputes. Local 26 has responded positively to this, and we understand they will refrain from demonstrations during our 2008 Annual Meeting. APSA has taken these steps consistent with Council policy adopted in Fall of 2007 stating that the Association "shall make every effort to give preference to a suitable unionized hotel and/or service provider, cost considerations being otherwise equal." and to assure access to and availability of services fo r members at the meeting. While these food and beverage matters arose quite late in our planning for the meeting, we are confident that the arrangements we have made for the meeting will provide full services for attendees without added cost and will allow attendance at the meeting without encountering labor disputes.
Sincerely,
Dianne Pinderhughes, President
Lenders Have Not Stopped Lending
People continue to assert that “nobody wants to lend” or that “credit has dried up,” but the data fly in the face of such claims. A great deal of lending is taking place. The interest-rate data I reported in a previous post derive from this lending.
For example, commercial and industrial loans at all commercial banks were $1,503.6 billion as of June 1, 2008. This loan volume is almost 19 percent greater than it had been a year earlier, 34 percent greater than two years earlier, and 53 percent greater than three years earlier.
Sunday, August 17, 2008
Why are Interest Rates So Low?
A month ago, I posted a little piece at The Beacon to raise some questions about the so-called credit crunch. You boys and girls should note that this expression is not a technical term in economic science, but rather an idiom that journalists and financial pundits toss around. In any event, for my trouble, I received a certain amount of mockery and insult in the blogosphere; serves me right, no doubt, for being such an obvious idiot. What none of my mockers and insulters saw fit to give me, however, was an answer to the question I had raised: if there is a credit crunch, why have we not seen a substantial increase in interest rates across the board?
Saturday, August 16, 2008
The Lone Crazy Theory
For more commentary visit Wendy McElroy.com
Murray Rothbard's theoretical approach to history included the idea and importance of what he called "the lone crazy." The lone crazy is a wild card -- the individual (or small group) who seems to appear out of nowhere and acts in an unpredicted manner that dramatically and forever alters the world as we know it. An example would be the nationalist zealot Gavrilo Princip who assassinated Archduke Franz Ferdinand of Austria and his wife in Sarajevo in 1914 and, so, sparked World War I.
Murray's point was that the best-laid plans of policy-makers can be shattered by a single bullet fired from one man's hand; future history is neither predictable nor amenable to social engineering. This Rothbardian theory came to mind while I was thinking about the current conflict between Georgia and Russia which, admittedly, involves a whole lot of non-lone crazies. But the sudden conflict stands as another example of how the balance of global power can suddenly and surprisingly shift. While neocons were making other plans, Russia abruptly asserted its status as a super-power that would not brook interference with its zones of influence. (In stating this, I do not mean to show admiration or sympathy for Russia...or Georgia, for that matter.)
While the West (largely the U.S.) was busy planning to include Georgia in its zones of influence -- e.g. through inclusion in NATO -- Russia acted in a lone crazy manner that changed the conditions of history/politics in this region. Arguably, given how important Russia is to the Middle East, the conflict with Georgia has changed that history as well. Certainly, it has exposed the weakness of America/Bush who can do little more than shake a forefinger at Putin and Medvedev.
How the War in Georgia Started
For a break from the non-stop "Georgia as innocent victim" marathon at CNN and Fox, check out this story from the BBC:
The Bush administration appears to be trying to turn a failed military operation by Georgia into a successful diplomatic operation against Russia. It is doing so by presenting the Russian actions as aggression and playing down the Georgian attack into South Ossetia on 7 August, which triggered the Russian operation.
Yet the evidence from South Ossetia about that attack indicates that it was extensive and damaging.
The BBC's Sarah Rainsford has reported: "Many Ossetians I met both in Tskhinvali and in the main refugee camp in Russia are furious about what has happened to their city.
"They are very clear who they blame: Georgia's President Mikhail Saakashvili, who sent troops to re-take control of this breakaway region."
... Human Rights Watch concluded after an on-the-ground inspection: "Witness accounts and the timing of the damage would point to Georgian fire accounting for much of the damage described [in Tskhinvali]."
Friday, August 15, 2008
Barr Threatens to Sue Church for Not Inviting Him to Forum
I hope that this story was misreported. No Libertarian candidate deserving of the name would even consider forcing a church to do this. Unfortunately the evidence reported indicates that the story is accurate:
Barack Obama and John McCain are scheduled to make a joint appearance Saturday at Saddleback Church in Orange County, Calif...
Russ Verney, campaign manager for the former Georgia congressman, has just sent out a mass e-mail saying Barr will seek a court order to require the church to invite him, too.
Thursday, August 14, 2008
Steve Davies on African History
Steve Davies, a Liberty and Power member, holds forth on African History:
Hat Tip Tom G. Palmer.
Who Wrote the DISCOURSE OF VOLUNTARY SERVITUDE?
[cross-posted at Austro-Athenian Empire]
Montaigne himself, whose subtle candor disestablished
authority as the weather brings down a stone wall ....
– Isabel Paterson
Outside of libertarian circles, the 16th-century essayist Étienne de la Boétie is best known (when he is known at all) as the “friend of Montaigne” – that is, the friend Montaigne praises so extravagantly in his essay “On Friendship.”
Within libertarian circles, of course, La Boétie is best known as the author of the brilliant libertarian treatise Discourse of Voluntary Servitude; Rothbard, for example, describes La Boétie as the “one of the seminal political philosophers” and the “first theorist of the strategy of mass, non-violent civil disobedience,” and credits him with originating the “fundamental insight was that every tyranny must necessarily be grounded upon general popular acceptance.”
But did La Boétie actually write it?
Cultural Competence and Your Child
For more commentary, please visit WendyMcElroy.com
A buzz term is appearing with increased frequency in the literature and programs surrounding education at both the public school and university levels: Cultural competence. Parents would do well to ask, "What is it, and how could it affect my children?"
The term “cultural competence” first arose in connection with health care services, where a standard definition is, "services that are respectful of and responsive to the cultural and linguistic needs of the patient." This means, for example, health care providers should be able to communicate with a non-English-speaking patient. They should take other cultural differences into account as well; for example, a clinic might arrange for a female doctor to perform a pelvic exam on a Muslim woman.
Wednesday, August 13, 2008
Michael Phelps Said No to Ritalin
If Michael Phelps had stayed on Ritalin, would he be where he is today? Here’s a story Thomas Szasz would appreciate:
At age 9, Michael was put on Ritalin, a stimulant used to treat hyperactivity.
His mother thinks it helped a little. “He seemed to be able to focus longer,” she said. “He could get through homework without moving around so much.” She said he was still a middling student. “It might have raised some C’s to B’s,” she said. But if a homework assignment had to be at least four sentences, she said, “he’d just do four sentences.”
After two years, Michael asked to get off the meds. He had to go to the school nurse’s office to take a pill at lunch, she said, and felt stigmatized. “Out of the blue, he said to me: ‘I don’t want to do this anymore, Mom. My buddies don’t do it. I can do this on my own.’ ”
“I was always stern as a parent,” she said, “but from Day 1, I included my children as part of the decision process. So I listened.” After consulting with Dr. Wax, Michael stopped medication.
Muslim Cartoon Week on RightBias
Cross Posted at WendyMcElroy.com.
Kudos to RightBias (Nancy Morgan) for hosting Muslim cartoon week; the site currently offers 23 cartoons that highlight the cowardice and consequence of allowing radical Islam to stifle freedom of speech. The mission of Muslim cartoon week: To protest the growing wave of appeasement and censorship on all things Muslim. Personally, I would have tempered the mission statement to make it clear that it is radical Muslims and not "all things" Muslim that is the threat.
Tuesday, August 12, 2008
Must the Government Combat Americans’ Addiction to Foreign Bananas?
Americans, we are told again and again, are “addicted to foreign oil” and “in love with the automobile.” These phrases are so common in news commentaries that they glide past our intellect almost unnoticed. Yet, they are the sheerest claptrap, and the arguments that accompany them are a waste of the electrons required to carry them along in the World Wide Web.
Suppose a serious policy of “energy independence” were actually implemented, rather than being merely spewed out along with the rest of the political hot air. Would we be better off? Absolutely not. We would be vastly poorer because we would have to sacrifice a great deal more of the non-oil products we now produce and consume in order to acquire the petroleum products we demanded.
ACME Private Defense Company
A hat tip to Nathan Larson for creating the elaborate parody site Acme Private Defense Company. Its mission: An anarcho-capitalist entrepreneur has launched a new business venture that will use deterrence to secure libertarian tax havens against government aggression. The company claims an effective defense system has been the missing link in previous attempts by libertarian secessionists to become independent, and that its services can fulfill that hitherto unmet need.
Monday, August 11, 2008
Police in Georgia's "Growing Democracy" Attacking Demonstrators in 2007 to Enforce Martial Law
In a weak moment, I made the mistake of turning on Fox News today. A jingoistic Fox reporter asked Ralph Peters, an equally jingoistic guest, about the Georgia crisis.
Peters called for massive sanctions against Russia. The obliging reporter egged him on by volunteering that Georgia had a "growing democracy." Perhaps she missed this revealing footage from 2007 showing police in that country beating up demonstrators to enforce martial law.
A Query on Two Secessions: Kosovo and South Ossetia
Can anybody explain why the U.S. opposed violent anti-secessionism by Serbia in Kosovo but (apparently) now apparently supports violent anti-secessionism by Georgia in South Ossetia?
Sunday, August 10, 2008
After Multiculturalism
Today, I posted another installment in my SITL series; I discuss a new book by John F. Welsh, entitled After Multiculturalism: The Politics of Race and the Dialectics of Liberty. Though today's entry is a detailed review of sorts, I had provided a blurb for Welsh's book, which appears on the book's back jacket. I wrote:
John F. Welsh provides a comprehensive survey of libertarian and individualist thought on race and multiculturalism. Examining such thinkers as Ayn Rand, Murray Rothbard, Lysander Spooner, Albert Jay Nock, and Max Stirner, Welsh's provocative book demonstrates the analytical power of dialectical-libertarian perspectives. Exploring multiple, interconnected levels, Welsh offers a fundamentally radical critique of racism in all its guises, while challenging current models of thinking on this volatile subject. This is truly a much-needed addition to the growing scholarly literature.
To read my larger discussion, take a look at Notablog.
Military Humanitarianism: A Moral Impossibility
Crossposted at WendyMcElroy.com
Although the following article was first published on May 11, 2000 by Lew Rockwell, it directly addresses and debunks the currently-relevant concept of using the military in Iraq (Afghanistan, Iran et al) to 'promote' values like democracy or women's rights.
Saturday, August 9, 2008
August 9, 1945, A Date That Will Live in Infamy
I note with sadness that today is the sixty-third anniversary of the U.S. explosion of an atomic bomb over Nagasaki, Japan. The explosion killed an estimated 40,000 to 75,000 persons immediately, and perhaps as many as 80,000 died by the end of 1945 from the effects of their wounds and radiation sickness. Nearly all of the victims were civilians.
President Truman ordered this attack even though Japan was already effectively defeated. It possessed no capability to harm Americans in their home territory, and its surrender was only a matter of time, especially in light of the Soviet Union’s declaration of war against Japan on August 9, four days after its unilateral abrogation of the Soviet-Japanese Neutrality Pact, and its initiation of military actions against Japanese forces in Manchuria. Japan, not yet a rich country, was militarily and economically exhausted from the wars in which it had been engaged since 1937. The Japanese government sought only reasonable terms, including retention of the emperor as the nation’s supreme political authority.
Any “point” the United States government sought to make about its newly devised military power, whether to the Japanese or to the Soviets, had already been made all too well by its devastating explosion of an atomic bomb over Hiroshima three days earlier. The decision to drop the second bomb must be condemned by every decent person as a gratuitous criminal act. The U.S. armed forces had already killed hundreds of thousands of Japanese civilians by fire-bombing the highly flammable houses and other structures in which the people lived and worked. To kill another huge number of people–men, women, and children, prisoners of war, foreigners, and other innocent persons in the city–was a war crime, plain and simple. That many Americans continue, even today, to defend this senseless and flagrantly brutal act is shameful.
Recent Entries
- U.S. Government Default: Good, Bad, or Just Plain Ugly? Comment on Cowen and Caplan
- How Many Philosophers Can We Cram Onto a Panel?
- political politcal science
- Lenders Have Not Stopped Lending
- Why are Interest Rates So Low?
- The Lone Crazy Theory
- How the War in Georgia Started
- Barr Threatens to Sue Church for Not Inviting Him to Forum
- Steve Davies on African History
- Who Wrote the DISCOURSE OF VOLUNTARY SERVITUDE?
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