Blogroll Category: Current Affairs

I read blogs, as well as write one. The 'blogroll' on this site reproduces some posts from some of the people I enjoy reading. There are currently 368 posts from the category 'Current Affairs.'

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Inflation, War, and Oil: How Today's Crises Are Rehashing the 1970s

Mises Institute - 1 hour 8 min ago

Persistently loose monetary policies always have negative growth and distributional effects that impair political stability. In extreme cases, there are civil wars and armed conflicts between countries.

Original Article: "Inflation, War, and Oil: How Today's Crises Are Rehashing the 1970s"

This Audio Mises Wire is generously sponsored by Christopher Condon. 

Categories: Current Affairs

Mises University Is the Fix!

Mises Institute - 7 hours 23 min ago

Is college over?

You know the answer. I know the answer. But we’re in limbo. We still hate to think of our kids and grandkids not going to college. We are stuck in Baby Boomer and Gen X mindsets. University degrees were a big part of our identity and professional careers. We want young people to be educated in the real sense of the word—and better off than we were.

Mises University fixes this. Let me explain.

We already know college costs far too much and fails to teach marketable skills. They still offer courses in economics, history, science, math, literature, philosophy, and classics, but those courses are diluted and inadequate. They are essentially remedial, comparable to what high school students once knew. And with the terrible moral hazard of government student loans, many students graduate (or not) with six-figure debts and useless degrees employers don’t want.

Mises U can save young people from this. You can help.

Even worse, many students leave university with disastrously stupid worldviews—hostile to property, markets, free speech, family, and even civilization itself. The whole cottage industry of “identity studies” is useless and destructive, by design. These phony courses leave kids dispirited, depressed about the future, and ready to throw away centuries of received wisdom for a progressive blank slate. Unwitting students graduate meaner, dumber, and older—with de facto degrees in narcissism (“I feel”) and nihilism (“I hate”). Talk about opportunity cost! Paraphrasing Mises, universities are gardens of socialism rather than exciting places for knowledge, ideas, and development.

In these times, more than ever, the Institute represents an oasis of sanity in an increasingly unhinged desert. —Marcel Gautreau, Mises University graduate

Mises U is the alternative and the refuge. Your donation helps make it possible.

I mentioned limbo. Many of us (I have teenagers) wrestle with how to view college for our kids. And it’s still necessary for credentialed fields like medicine and law. We might even cling to outdated distinctions between white-collar and blue-collar jobs. We know young people can learn things online and read the Great Books themselves, but part of us still believes in formal education and the status of a degree—even when everything we read tells us universities have become totally corrupted. We want our loved ones to have broad liberal educations, to read Chaucer and Shakespeare and Plato, not to mention Aquinas and Mises and Rothbard!

The point is not to bash college. It’s to make sure kids attend with eyes wide open. And to let them know real options exist like never before. Mises U is the weeklong required course for every student who is serious about jump starting a real education.

Mises University is not simply a weeklong immersion in correct economics. It teaches history, philosophy, political theory, sociology, ethics, and much more. It is the gateway to a lifetime of self-directed learning. And it is how we introduce young people to another world apart from their awful professors, pathetic PC textbooks, and Soviet campus atmospheres. For many students, it is the beginning of their deprogramming. The beginning of a serious reading habit. And, frequently, the start of lifelong friendships and connections around the world.

A major highlight of the experience was being able to have access to so many brilliant professors and to be able to ask them questions and talk to them in more detail. My favorite conversation was with Professor Ritenour on comparative advantage and artificial intelligence. I also really loved talking to other like-minded people who share my passions for Austrian economics and liberty. I’m looking forward to keeping in touch with everyone after the event and building relationships. —Anthony Cesario, Mises University graduate

Mises U was always radical. When Lew Rockwell started the program in the ’80s, it brought the Austrian economics revival to a whole new generation of students. It was the summer experience for young people interested in market economics and uncompromising political liberty.

And what an experience! Our students learned from legends over the years, beginning with Murray Rothbard himself, our first academic dean. Through the ’80s and ’90s our Mises U faculty was a list of intellectual giants, from the brilliant antidemocrat Hans-Hermann Hoppe and Christian economist Gary North to Ronald Hamowy and historian Ralph Raico. Students also rubbed elbows with top economics professors like Roger Garrison, Walter Block, Yuri Maltsev, Thomas DiLorenzo, Richard Vedder, Jeffrey Herbener, and our own Joseph Salerno. They heard lectures on the history of war from the great lawyer and historian John Denson, lectures on philosophy from David Gordon, and incredible talks on international trade from Auburn professor Leland Yeager. A few very lucky students even enjoyed talks from coconspirator JoAnn Rothbard!

These experiences are life changing. Please consider making your most generous donation to make Mises U possible for more students. The impact is immediate and profound.

Former students become superstars themselves. Jörg Guido Hülsmann is the world’s expert on the cultural consequences of fiat money—and now produces his own PhD graduates in Europe. Historian, author, and podcaster Tom Woods reaches hundreds of thousands of people through his platforms. Peter Klein is an acknowledged expert on business organization and the economics of firms. His protégé Per Bylund—also a Mises U alum—is the foremost authority on entrepreneurship. Robert Murphy is among the top Austrian monetary economists in the world, while Shawn Ritenour at Grove City College has taken up the mantle of explaining the Christian view of economics. Most recently, Patrick Newman has become the leading revisionist historian on the topic of American cronyism.

Hundreds of our graduates work across academia, finance, banking, tech, and business. All of them got their start at Mises U, with the help of generous people like you.

Mises University is a truly energizing week of the year for all involved, as the Mises Institute brings together some of the most dedicated professors and passionate students for a week of education and camaraderie. I have benefited tremendously from the experience and am deeply grateful for this opportunity. I will always cherish the memories I’ve made over the course of the week and will strive to meaningfully contribute to the edifice of Austrian economic thought and pass on what I have learned to future defenders of human freedom. —Karras Lambert, Mises University graduate

We live in profoundly anti-intellectual times. Truth, knowledge, beauty, and even objectivity are under attack like never before in my lifetime. Mises U offers young people the incredible opportunity to transcend the banalities of today’s college curricula and begin learning the foundations of economics and all the related liberal disciplines. Every student needs an intellectual home, a North Star to guide them toward the education their professors won’t—and frankly can’t—provide.

In the past week, I learned more about economics, history, and sociology than I could have in four years of college! One of my favorite quotes from the week is “Do not give in to evil, but proceed ever more boldly against it.” After attending Mises U, I will go back to California with much more clarity about the world. —Barry Bai, Mises University graduate

We need your help to make Mises University better than ever. A gift of $1,000 sponsors one student, $2,000 sponsors two. But please make your most generous contribution, and know that any amount helps. You can go to mises.org/2022MU to donate online.

Mises U is our single most important program. It’s at the heart of the Mises Institute’s mission. And it changes lives for the better, as I’ve seen up close with students over the past seven years. Please help support this magnificent week of education for the deserving students who seek out the Mises Institute!

Categories: Current Affairs

What Krugman Gets Right and Wrong on Trade Surpluses

Mises Institute - 9 hours 23 min ago

Longtime readers know that I am not the biggest fan of Paul Krugman, especially when it comes to his advocacy of government inflation and budget deficits. It's especially ironic when I criticize Krugman's writing on international trade, since that's the area in which he won the Nobel Prize. But here we go again, as Krugman's recent New York Times column on Russia features commentary on trade surpluses that is at best very misleading.

Krugman on Russian Trade

The context for Krugman's article is the West's trade sanctions on Russia in retaliation for the invasion of Ukraine. Because other countries are still importing Russian oil and gas but exports to Russia are effectively discouraged, Russia now has a large trade surplus. But even though many people (including fans of Donald Trump) take it for granted that trade surpluses are a good thing, Krugman argues to the contrary:

The effect of sanctions on Russia offers a graphic, if grisly, demonstration of a point economists often try to make, but rarely manage to get across: Imports, not exports, are the point of international trade.

That is, the benefits of trade shouldn't be measured by the jobs and incomes created in export industries; those workers could, after all, be doing something else. The gains from trade come, instead, from the useful goods and services other countries provide to your citizens. And running a trade surplus isn't a "win"; if anything, it means that you're giving the world more than you get, receiving nothing but i.o.u.s in return.

Yes, I know that in practice there are caveats and complications to these statements. Trade surpluses can sometimes help boost a weak economy, and while imports make a nation richer, they may displace and impoverish some workers. But what's happening to Russia illustrates their essential truth. Russia's trade surplus is a sign of weakness, not strength; its exports are (alas) holding up well despite its pariah status, but its economy is being crippled by a cutoff of imports. (bold added)

Although I understand the basic (and important) point Krugman is trying to make in the above excerpt, in his zeal to explode mercantilist fallacies, Krugman swings too far in the opposite direction. Specifically, the sentence I put in bold is at best misleading, and at worst simply wrong. (I should note that this has nothing to do with Keynesian ideology; elsewhere I caught the Wall Street Journal making a similar mistake.)

In the rest of this article, I'll first explain what Krugman gets right in the above commentary, but then spell out what's wrong with it too.

What Krugman Gets Right on Trade Surpluses

Krugman is right that in the grand scheme, the benefits of international trade are the goods and services that people in a given country can obtain from foreigners at a lower cost than if they had to produce those goods and services domestically.

The principle is obvious when it comes to an individual household: It would be foolish for the Smith family to "buy local" by growing their own food, making their own clothes, and building their own cars. Instead, the Smith family enjoys a much higher standard of living by focusing on those areas in which they excel—perhaps Mr. Smith is an accountant, Mrs. Smith is a lawyer, and the teenagers work at the mall—and producing far more of these services than the Smith household will personally consume. The Smiths sell the excess services to people outside of their household in exchange for money, which they use to "import" food, clothes, cars, and everything else they want.

A similar pattern holds at the country level. The United States enjoys a much higher standard of living, per capita, by focusing on producing those goods and services in which its people have a "comparative advantage." Those items made in excess of what Americans consume domestically can be exported abroad and used to buy imports from other countries. This allows the US and her trading partners to consume more (again, per capita) than if each country relied only on items made domestically.

Furthermore, in the excerpt above, Krugman is right that we shouldn't focus on the jobs that are "created" in export industries. So long as wages and prices are allowed to adjust, in the long run every productive worker can ultimately find a job and earn an income, whether the worker serves the domestic or international market. That's why if we were to blockade a country and cut it off from the rest of the world, the harm we'd impose would be due to cutting off imports flowing into the country. The workers who originally (before the blockade) were in the export sector could eventually find work producing goods and services for their neighbors. It's just that they would be earning far lower real wages in the new setting, because they would be missing out on the advantages of the international division of labor.

Where Krugman Goes Wrong on Trade Surpluses

As I've argued above, the basic gist of Krugman's analysis is correct. However, he oversteps by possibly misleading the average reader when he writes: "Running a trade surplus isn't a 'win'; if anything, it means that you're giving the world more than you get, receiving nothing but i.o.u.s in return."

To repeat what I said above, this dubious way of writing isn't limited to Keynesians; the free-market editors at the Wall Street Journal made this mistake even more explicitly when writing the subtitle to a Robert Barro op-ed. In order to see the problem, we can once again return to a household analogy.

Suppose Mr. Smith asks his two teenagers how their finances are faring. His daughter reports that over the year she earned $10,000 working at a clothing store in the mall and spent $7,000 on her car, clothing, going to the movies, and other fun items. She put the remaining $3,000 into a savings account with her local bank. Mr. Smith's teenage son reports that he earned $10,000, too, from selling pretzels at the mall. However, the son spent a total of $12,000 on fun items during the year, depleting all of his earnings as well as running up $2,000 in credit card debt.

How should Mr. Smith react to these reports? He might be tempted to praise the daughter, but having just read Krugman's column on Putin, Mr. Smith instead scolds her. "Julia, don't think you are 'winning' just because you sold more than you purchased," he complains. "If anything, your report means that you're giving the community more (in retail services) than you get, receiving nothing but an IOU from the bank in return."

In contrast, Smith congratulates his clever son, who managed to convince the community to give him $12,000 worth of goodies in exchange for only $10,000 in pretzel-preparation services. Suckers!

Trade Deficits Can Be Productive, Too

In the previous section, I used a simple analogy of a household to showcase how Krugman's Putin column could possibly mislead readers. Specifically, a trade deficit doesn't mean that a country is driving a hard bargain with foreigners and getting more imports in exchange for its exports. No, when we measure imports and exports in this context, we are already using money terms. So if the US imports (say) $50 billion in goods from Japan during a certain period, it pays precisely $50 billion for them—that's what it means to measure in dollar terms.

Before closing this article, I want to avoid giving the reader the wrong impression going the other way. Even though in my Smith household analogy above, it was clear that the teenage son was engaged in behavior that was not sustainable in the long run, that doesn't mean that trade deficits are a bad thing or necessarily unproductive.

For example, suppose a small country's inhabitants see the light and all become Rothbardians. Their government adopts amazing policies such as slashing taxes and regulations (or perhaps even dissolves away entirely, allowing for private courts and military defense). The revamped country would enjoy tremendous economic growth as a consequence.

In this scenario, the rest of the world would invest more (on net) in this new Rothbardia than its residents would invest in the rest of the world. This would show up in the official statistics as a trade deficit for Rothbardia. Intuitively, the rest of the world would send real resources (such as oil, natural gas, steel, etc.) to the small country in exchange for partial ownership of the new wealth being created in the laissez-faire powerhouse. (For more details on trade accounting, see my earlier article.)

Conclusion

Professional economists have been trying for centuries to get the public to understand that when it comes to international trade, the benefits flow from the ability to import goods and services on better terms than they could be produced on domestically. The jobs and incomes in export industries are incidental, because workers could find jobs producing for their neighbors if the export sector didn't exist (after wages and prices adjust).

However, in their zeal to drive home the relative benignity of trade deficits, economists sometimes overshoot and end up leading readers to believe that trade surpluses are bad. But this is incorrect. In general, so long as they are the result of voluntary decisions, trade surpluses make a country richer than would otherwise be the case. There's nothing foolish about piling up IOUs in exchange for surplus exports, just as there's nothing foolish about a household living below its means and accumulating financial assets.

Categories: Current Affairs

The Progressive Colonialism of Roe vs. Wade

Mises Institute - 9 hours 23 min ago

In this episode of Radio Rothbard, Ryan McMaken and Tho Bishop consider progressivism as a form of modern colonialism. The response to the prospects of the Supreme Court overturning Roe vs. Wade has highlighted the degree to which the American left—particularly those that reside in major blue cities—can't live with the concept of other areas of the country not abiding by what they see as moral absolutes. Ryan and Tho look at how this tension is shaping the modern political landscape, and they discuss the history of this impulse towards "liberal" centralization.

Recommended Reading

"The New Postliberalism" by Jeff Deist: Mises.org/RR_83_A

"Federal Control of Abortion Laws Is Modern Colonialism" by Ryan McMaken: Mises.org/RR_83_B

"The Clash of Metropolis and Colony" by Charles and Mary Beard: Mises.org/RR_83_C

"Why the US Supports Secession for Africans, but Not for Americans" by Ryan McMaken: Mises.org/RR_83_D

Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.

Categories: Current Affairs

Banning big bets

Adam Smith Institute - 10 hours 2 min ago

The government’s review of gambling, designed to update gambling regulation for the digital age, has been long drawn out, derailed by distractions like partygate and much else. But a gambling White Paper is at last being ‘finalised’ and is expected to appear soon. And one of the proposals, a little bird tells me, is to limit the amount of money that punters can gamble online. This, the idea is, will prevent people from gambling more than they can afford online.

I should declare an interest — or lack of it: I don’t receive any money from betting companies, online or traditional. But I still think this is a very bad idea.

For a start, it tries to solve the problem that a few people have by putting restrictions on everyone, not just the few. We don’t tackle alcohol addiction by restricting the number of bottles that anyone can buy in the supermarket, any more than we combat heavy smoking by restricting how many cigarettes people can buy. Instead we use well-placed warnings, and ensure that resources — public and private — are focused on the few at most risk.

If you come into a windfall and decide to bet it all in an online casino, that should be your affair. But this proposal will stop large bets like this, even if they are infrequent or one-off. Remember too that some people make their living by betting — mostly by using their specialist knowledge to get the edge over other gamblers, and the gambling companies. So that is their livelihood effectively taken away.

And talking about livelihoods, 60% of online gambling operates from Gibraltar — a well-regulated British overseas territory. Preventing large bets, even from people who know what they are doing, will make a big dent in Gibraltar’s economy. It’s basically a rock, and apart from tourism, it hasn’t much else going for it. I can’t imagine that the Foreign Secretary would be particularly pleased by this prospect.

In fact, online gambling companies already have ways to deal with problem gamblers, methods that are far more subtle and effective than any government-designed blanket spending limit. Many companies allow customers to set their own limits, for example. And companies can (and do) use algorithms to detect when people seem to be overdoing things, and pause their gambling. After all, it is better for their reputation if they do this rather than let customers get into problems.

It’s certainly better that problem gamblers patronise responsible companies that can help them control their spending and maybe even advise on treatment for gambling addiction. Spending limits on everyone will simply drive them towards illegal and unregulated sites where they will have no such protection or help. Even responsible but large gamblers might well be prompted into the illegal sector too, if they find themselves blocked by legal companies. That will do them no good, only potential harm. 

The government’s proposal would require a big bureaucracy to police it, though no doubt it will try to load the cost onto the gambling providers. That just means less attractive odds for customers. But even so, government will need its own bureaucracy to check that the online gambling companies are actually and effectively setting the limits.

As I say, I haven’t taken the shilling of any gaming provider. Nor have they taken mine — I don’t gamble because I just can’t see the point, particularly of casino-type games. But I still think that this idea, if the government really is contemplating it, is an assault on all our liberties and will prove ineffective and indeed counterproductive in terms of its purpose.

Categories: Current Affairs

Suppliers going bust is evidence that markets are working

Adam Smith Institute - 15 hours 22 min ago

This is not, to put it mildly, the conventional view yet it is true all the same. If the cheap end of a market features firms continually going bust then that’s a sign that the market is working:

Households risk being cut off from the internet as runaway inflation threatens to cause a wave of bankruptcies among broadband networks.

Ofcom is drawing up contingency plans with BT which could take on thousands of customers if a number of the smaller suppliers, so-called 'alt-nets', begin to fail.

More than 150 BT challengers backed with billions of pounds of private investment have entered the market to try and capitalise on the upgrade to ultrafast speeds.

Private equity, pension funds and sovereign wealth have been pouring money into broadband start-ups in the hope of securing steady, long-term returns from the shift to speedier connectivity.

However, concerns are mounting that the fierce levels of competition will begin pushing some firms to the brink, as they struggle to compete with the might of BT's Openreach and Virgin Media O2.

Our aim in having a market at all is that those folk can indeed try their new ideas about how to do things. Most of them will fail - most new companies do - but out of that wreckage comes those few new ways of doing things better, more efficiently, more inline with consumer desires. It being those few that are the mark of the advance of society in doing things better, more efficiently, more inline with consumer desires.

That people are constantly testing that low end of the market with new ideas is evidence that there is free entry into that marketplace. That most of these news ideas fail is evidence that the current market players are relatively efficient and inline with consumer desires.

That there are no $100 bills on the sidewalk is evidence that $100 bills get picked up. That new competitors can’t gain a foothold in a market is evidence that the current market structure doesn’t leave room - there is no fat to be cut - for new competitors.

That there are continued new attempts to enter a specific marketplace and also that most of those attempts fail is evidence that markets are working.

Categories: Current Affairs

Panel: "The Absolute State of Money"

Mises Institute - Tue, 24/05/2022 - 23:00

Recorded at Maggiano’s Little Italy in Orlando, Florida, on May 14, 2022.

Special thanks to Greg and Julann Roe for sponsoring this event.​

Categories: Current Affairs

Welcome and Opening Remarks

Mises Institute - Tue, 24/05/2022 - 23:00

Recorded at Maggiano’s Little Italy in Orlando, Florida, on May 14, 2022.

Special thanks to Greg and Julann Roe for sponsoring this event.​

Categories: Current Affairs

Massive State Economic Intervention Has Led to This Point

Mises Institute - Tue, 24/05/2022 - 20:15

Everything from huge Keynesian "stimulus" policies to the war in Ukraine is dovetailing in a bout of stagflation: the simultaneous growth of inflation and unemployment.

Original Article: "Massive State Economic Intervention Has Led to This Point"

This Audio Mises Wire is generously sponsored by Christopher Condon. 

Categories: Current Affairs

Ireland: When MMT and Price Controls Collide, Little Remains

Mises Institute - Tue, 24/05/2022 - 17:00

The following is a real-world example (and unfortunately not a parable) of what happens when the perils of modern monetary theory (MMT) and price controls both are ignored.

David McWilliams is an economics writer in Ireland and is a big fan of MMT, often confusing saving with printing money. In a recent piece, he opined on the Irish property market, referring to the increasing costs of construction and the fact that housing supply must be increased while studiously avoiding mention of the core reasons why prices are rising and housing supply is curtailed in Ireland.

By way of overview, we in Ireland have, in essence, two central banks and a government currently following policies/setting rules with opposing effects in the market.

The European Central Bank (ECB) (through its decade-long application of MMT) is intent on inflating the money supply and hence prices. This, as all sane economic thinkers know, drives up the cost of all real assets (including land and the materials used to build properties) and is now affecting consumer and producer prices too. These increases long predate Russia's invasion of Ukraine, despite the recent efforts of politicians and journalists across the world to insist inflation is all Putin's fault.

The Central Bank of Ireland (CBI) is intent on keeping the price of properties down (through its mortgage lending rules). These mortgage lending rules were introduced after the great financial crisis (GFC) to curb the excessive credit growth fueling rising property prices.

The ECB's low interest rates in the early 2000s facilitated a speculative property bubble in Ireland that burst slightly ahead of the GFC

These mortgage lending rules were introduced in 2015 and have had various iterations. After the GFC, there was a significant oversupply of properties and a consequent downward pressure on house prices and rents, but by 2014/15, the signs of the overhang having been "worked through" were becoming more evident through a partial recovery in prices and rents, especially in the major cities.

These mortgage lending rules effectively cap the buying ability of one set of buyers (hopeful homeowners and private investors who plan to finance their purchases) while other buyers (cash buyers and investment funds) are not so hamstrung. These rules have the effect of creating a price ceiling for many buyers (who mostly vote) but not for others (many of whom do not, such as investment funds).

Nonvoting buyers pricing voting buyers out of the market is a recipe for economically challenged observers to cast their eyes leftward and fertile ground for the type of politicians that believe Venezuela is an economic model to be emulated.

The major reason for our housing shortage in the last ten years has been the CBI doing its best to suppress the housing prices and not caring that they have suppressed it below the costs of supplying housing. Separately, these costs have been increasing more and more because of the ECB's MMT-inspired policies.

In the meantime, the Irish government responded to the upward pressure on rents by introducing rent pressure zones (RPZs) in 2016. Firstly, a brief history of Irish rent control: rent control existed in a limited form in Ireland up until the early 1980s, at the Irish Supreme Court held rent control to be an unconstitutional attack on the right to property recognized in the Irish Constitution. 

RPZs were/are identified as specific areas (initially the major cities but gradually spreading out across the country, local authority by local authority) where there is significant upward pressure on rents caused by a housing shortage (in great part caused by the CBI mortgage lending rules, as we shall see below). Annual rent increases were capped at 4 percent per annum (from whatever the rent on each particular property happened to be in 2016 and not necessarily the market rent at that time). These rules initially applied for four years but have since been rolled forward. The time-bound limitations of the caps and very modest increases permitted were/are clearly means to avoid triggering a constitutional challenge to the rent controls.

In the most recent iteration of the rules, annual rent increases are capped at between 2 percent per annum and the increase in the Consumer Price Index (CPI), whichever is lower. More left-wing political parties (some of whom have a yearning for the economic miracles performed by Venezuelan socialism) are advocating for a flat out freeze on rents for three years.

So the CBI's mortgage lending rules essentially operate to cap the buying power of great number of market participants, the RPZs are an effort to cap rents, and the ECB merrily MMTs the money supply according to Buzz Lightyear's motto, with the consequence that construction costs have been soaring over the decade. 

The housing supply, meanwhile, has been mirroring Buzz's plummet, for as all sane economic thinkers know, everywhere and any time a price ceiling for a particular good or service has been set at a level below that which the free market would otherwise set, the result is a shortage and/or a drop in quality. Even Paul Krugman knows that.

The CBI policy is also substantially responsible for the run up in rental prices over the last ten years. By trying to limit the prices at which residential properties can be sold, the CBI has, for years, disincentivized developers from building. 

By preventing/hindering the hopeful homeowners from buying sooner (through the mortgage lending rules), the CBI has forced them to remain renters. By severely limiting private investors from investing in residential accommodation, the CBI has reduced the supply of rental accommodation.

All the foregoing is a recipe for one thing and one thing only. A shortage of rental accommodation that can only pressure rents upward. As noted, the government then tried to solve that problem by creating RPZs, which have had the effect of driving out of the market many landlords (who don't fancy paying a marginal income tax rate of 52 percent while being vilified to boot,) further curtailing the supply of rental properties.

Also, many landlords who had been renting at below-market value in 2016 (and were trapped indexing their increases to this below-market rent) have either sold up and exited the market (reducing the supply of rental properties) or made sure to index rents up at each opportunity. The Left's response has been predictable; ban the landlords from selling, unless tenants are left in situ. 

This is without getting into all the other issues that push property prices upward; viz., the value-added tax (a sales tax of 13.5 percent imposed on the first sale of newly developed properties) and the insistence by a vocal swathe of the population that water be provided "free"—without user charges and out of general taxation—without limit. This has had the knock-on effect of property developers paying increased infrastructure costs, which then must be passed on to the purchasers of these properties.

In the nation with the most progressive tax system in both the European Union and the Organisation for Economic Co-operation and Development, it's a very good bet that most of this swathe who insist on "free" water without limit are contributing a portion of tax revenues vastly smaller than the demands they place on those revenues. In addition, McWilliams continually advocates for a tax on vacant land to incentivize development, in essence imposing an extra cost on development. 

This plays well to his gallery, who either refuse to acknowledge, are incapable of appreciating, or forget that costs of a business must be passed on to their customers or the business goes out of business, in which case another business—say, an investment fund—fills the gap.

There has a been a move toward build-to-rent schemes, which are creating political and popular backlash against those who refuse to or cannot appreciate that the current situation is a direct and predictable consequence of central bank and government policy. The only thing one can say for the government is that the opposition's Krugmanesque policies are far, far worse, essentially being tax, borrow, print, and spend far more on public housing. Again, when MMT and price controls collide, little (supply) remains.

Categories: Current Affairs

Ben Ford on Situational Awareness and Managing for Constant Change

Mises Institute - Tue, 24/05/2022 - 16:45
How do businesses actually manage — rather than plan for — continuous change?

The increasing adoption of systems thinking in business tells us that the world is changing very fast, and companies need to change at least as fast as their environment in order to thrive. It’s comfortable to talk about but hard and uncomfortable to do. Most people prefer to continue to do what they’re used to rather than embrace change and constant experimentation.

There’s a lot to be learned from the military where special forces are trained to specialize in rapid reaction in chaotic or VUCA (volatile, uncertain, complex and ambiguous) worlds. They face an ever-changing environment (often described as kinetic). They have a very pure evolutionary process: what wins, survives. While the military organization is hierarchical, military operations are flat so that tactical decisions can be made by the people on the ground.

While we are anti-war, we can nevertheless recognize that the military has experience and expertise in managing and organizing for continuous change. We can learn from it.

There are significant barriers to overcome to implement rapid change management in business.

Certainly, the time scales are different. Companies change at an intergenerational pace, one generation of managers (or managerial techniques) learning from the last one. In hierarchical organizations, people reach managerial and executive positions by accumulating experience. By the time they get to their high position in the hierarchy, they have locked in an old mental model. They miss the signals of change and fall back on preconceived ideas and notions and methods.

In addition, there is considerable inertia to overcome — a resistance to change that acts as a blocker to agility. It’s human nature to resist change. Once a company has established a niche or a market share, it’s genuinely hard to abandon the strategy or the tooling or the products and services and the marketing that got them there.

To put it in military terms, change is a constant battle.

Situational awareness is a set of tools that are transferable from military to business to improve management of change.

Situational awareness governs how well your understanding of the world maps to reality. It operates along two perspectives and 3 time frames.

Internal situational awareness concerns the orientation of your firm, resources, capacity, the capabilities of your team, morale and so on. External situational awareness concerns markets, competitors, customers, trends, technologies, and all the environmental factors that are subject to change.

The three timeframes in military terminology are tactical, operational, and strategic.

The tactical timeframe concerns people on the ground in contact with the environment. In business, this can be the sales team or customer service or engineers in direct contact with customers. They’re doing implementation work but they are also the sensing mechanism. They may have daily or even hourly cycles for intention to change, making the change, learning from the consequences of the change and moving forward to the next change. They must be empowered, trained and equipped, and confident about their freedom of action and adaptation.

The strategic timeframe is the macroeconomic scale of what the firm is trying to achieve for the customer. This frame may be months or years, and dictates how to organize, how to invest, and where to allocate resources.

The operational timeframe is between the other two. How does the firm integrate short term implementational excellence with long term strategic engagement with a changing environment? How does the firm integrate all the hourly and daily information coming from the front line with the long-term investments and resource allocation projects? In a software business for example, there may be a trade-off between building new tooling, which takes time, and rapidly delivering products from established tooling.

How to apply situational awareness.

Actively use the 6-box framework (internal /external perspectives, tactical/ operational/ strategic timeframes.

To achieve better alignment of internal / external timeframes, look for mismatches across boundaries in the firm. Do the people working on the front line have the same understanding of the importance of the work as the managers and executives. Does getting thing done seem more difficult than it should be? Are the feedback loops fast? Is the information in the feedback loops spread throughout the firm, through multiple teams, divisions and silos? What’s the gap between perceived ideals and actual experience?

To implement across three time frames is an exercise in portfolio balancing and active discovery, with a high premium on sensing skills.

How much time and resource effort should a firm spend on refining its tooling (the operational timeframe) so that every produced end-product is exactly the same (the tactical timeframe) while keeping an eye out for environmental change, when a future competitor might introduce a faster cheaper product (the strategic timeframe)?

As Austrian economics always stresses, there’s no objective answer, just subjective learning from experience. For example, Netflix was part of the strategic timeframe that Blockbuster failed to manage. Blockbuster was operating its stores in a proven fashion (tactical) and adding new stores (operational), while rejecting the implications of the Netflix model. Today (May 2021), Netflix shows signs of missing some strategic signals. They made content their focus (tactical) and built original production capability (operational) but may be finding that customer tastes are changing and the appeal of their produced content is in decline (strategic).

Similarly, for the last few years, funding has been easy for startups (tactical) and so they have focused on long term market development (strategic) without hitting profit and cash flow milestones (operational). Now that funding is drying up, they are having to shore up their operational capabilities.

There are a couple of techniques that are helpful. One is Horizon Scanning: allocating some resources to identifying and picking out future external scenarios that represent potential change or strategic threats and building a response in advance. Another is red team thinking: mapping out future internal failure modes and then working backwards from them to identify the trip wires to look out for, and to nip emerging issues in the bud.

The after action review (AAR) is an important element of situational awareness.

The AAR is applied not just in the military but in fast change business environments such as agile software development. It’s a tool to separate the quality of the decision you made from the outcome of the action that you took. We tend to get attached to our decisions, even if they were based on poor principles.

The components of an AAR include:

  • What was expected to happen?
  • What actually happened?
  • What went well and why?
  • What can be improved and how?

The discussion must be open and honest without hierarchy or blame. As far as possible, everyone on the team should participate so that all perspectives can be included. The focus is on results and dentification of ways to sustain what was done well as well as the development of recommendations on ways to overcome obstacles. It’s really important to identify with high fidelity what happened, because only then is there a good chance to identify new opportunities or trends with equal fidelity. In situations of uncertainty, it’s important to identify “what happened” accurately, in order to be able to identify what it means and what it implies for future actions.

AAR becomes part of disciplined execution.

The Economics For Business community is familiar with the explore/expand method of managing business complexity: explore many options through experimentation and expand (by allocating more resources) those that show good results. Annika Steiber in episode 170 (Mises.org/E4B_170) called this capability “ambidexterity” — combining two logics of business in consistent and reliable execution on one hand and openness to change and exploration on the other.

Ben expands this thinking into the concept of disciplined execution. Once a process is proven and is producing reliable results, map it out carefully and then take individual steps or parts of the process and see if they can be further improved, e.g., by automation, without changing the outputs. Processes thus become more resource efficient in producing their output. Always be trying to improve what you already do well.

Similarly, once an “explore” project starts to become productive, apply the same continuous improvement standard. Map the process, examine parts that can be improved, and do so part by part so production is maintained and efficiency is increased.

All of this change dynamic should be driven from the bottom up.

Process improvements, fast responses to feedback loops, experimentation and rapid change are all insurgencies — the established hierarchy and mental models will often find them hard to embrace. Insurgency is a bottom-up dynamic. When transformation is pushed from the top down, it often happens that the territory changes before the consultants have drawn the new map. The hierarchy’s role is to provide strong alignment with the orientation of the firm and its culture and vision-mission, alongside loose control of front-line action.

Additional Resources

"Apply Situational Awareness To Manage Change" (PDF): Mises.org/E4B_171_PDF

Ben Ford’s website, where you’ll find his Mission Control services: MissionCtrl.dev

Ben Ford’s LinkedIn page, with a lot of presentations and recordings to learn from: Mises.org/E4B_171_LinkedIn

Categories: Current Affairs

The New Post-Liberalism

Mises Institute - Tue, 24/05/2022 - 12:00

Post-liberalism is having its moment on the political Right in America.

And why not? What exactly do conservatives have to lose which they haven’t lost already? The Bushes and their noxious legacy may be in the dustbin where they belong, but if Mitt Romney and Liz Cheney represent the future of the movement, then a radical rethinking is in order.

That rethinking took the form of Trump six years ago, but today it manifests in figures like Israeli writer Yoram Hazony, Notre Dame political science professor Patrick Deneen, Yale law professor Adrian Vermeule, and journalist Sohrab Ahmari. It finds voice politically in candidates like JD Vance in Ohio and Blake Masters in Arizona, and support at outlets like the Claremont Institute and Compact Magazine.

Even CPAC, an older fixture in what post-liberals rightly attack as Conservative, Inc., just held a special CPAC conference in Hungary. It featured Viktor Orbán attacking media and progressive institutions under a banner of “God, Homeland, Family.” Mitt Romney certainly appreciates all three of these things in spades, especially if you count his six houses, but somehow I doubt he will appear arm in arm with Mr. Orbán anytime soon.

Do the Hazonys and Orbáns have a point? Do the post-liberal critics get liberalism right?

The essential argument goes like this: liberalism has become a perverse force in the West, owing to an overly abstract bastardization of Enlightenment rationalism. In fact it irrationally elevates individualism above family and community, while imposing free-market orthodoxy and global trade at the expense of good manufacturing jobs and blue-collar communities, not to mention pride and readiness.

This libertarian economic focus on limited government, combined with a willingness to cede one culture issue after another to progressives, helped create a technocratic elite with lots of money but no connection to or love for average Americans. This artificial cadre of globalists, Rothbard’s “luftmenschen,” are void of any particular feeling for America’s history, people, or land.

And an essentially neoliberal foreign policy of invade the world/invite the world puts the interests of US hegemony and globalism first instead of America first.

Thus liberalism has become anti-family, anti-God, and anti-human, making us miserable and isolated as we seek meaning in temporary material things or careers. Rather than build enduring attachments to God, family, friends, town, or tradition—to things larger than ourselves—liberalism encourages and rewards superficial choices. Worse still, it encourages replacing God or family with a saccharine higher purpose through a religious zeal for political activism. Meanwhile our decaying cities, drug-addled rural towns, and despondent, atomized young people bear witness to the manifest failures of liberalism.

There are truths here. Post-liberals certainly get the bastardization part right; 20th (and 21st) century liberalism is a caricature of the 19th century conception. Progressives certainly have won the culture. We do suffer under an unnatural group of elites whose interests are contrary to average Americans. Cities are in trouble, young people are indeed despairing, and US foreign policy appears divorced from reality. And clearly the Enlightenment came with costs, as so many things in society seem to advance faster than our psychological coping.

But the old liberalism1, the earlier and better version which took shape in the 1800s, goes strangely unexamined by the critics of post-liberalism. They conflate the two, stuck as they are in the framing and narratives of 2022. But Hazony and company would benefit from getting past their superficial readings of Hayek to consider the great champion of the old liberalism, Ludwig von Mises—who literally wrote the book on the subject.

Post-liberals should find Mises’s work compelling. He rooted liberalism in property and self-determination, a far cry from the positive rights worldview of today’s liberals. He saw highest the possible degree of autonomy and localism for political minorities (are you listening, conservatives?) as the keys to peace domestically. And post-liberals might appreciate his optimal case for a “liberal nationalism,” one which recognized organic political entities but allowed for peaceful breakaway movements when that organic shared principle failed (as it has in 2022 America). They might even begin to see free international trade as the key to peace abroad, a driver of a more restrained foreign policy.

For Mises, liberalism was a political and economic project focused on property and trade, not an exercise in liberation from human nature or freedom from material want. He had no illusions about remaking men to better fit a system.

Liberalism was an evolution in how humans organized society, intended to make us free of kings and feudal lords and dictators, free to own property, free to contract for mutual benefit, and free to live under a non-arbitrary set of laws applied to all. It was never designed to make us equal or distribute wealth, and certainly not to free us from work or hierarchy or human differences. In fact these differences drive specialization, comparative advantage, and thus trade itself. Mises’s liberalism, in stark contrast to today, was not a call for sameness or political universalism at all.

In hindsight, knowing how far “liberal” has fallen in a century, we might wish he had chosen a different title for Liberalism: perhaps Laissez-Faire or The Free Society to emphasize a focus on political and economic liberty.

Of course Mises’s liberalism never fully took hold anywhere, and where it took hold partially it soon succumbed to the political pressures of democratic voting. Its glory years had already passed even when Mises wrote Liberalism in the interwar years. And in fact, the thoroughgoing Rothbardian critique of the 20th century is based largely on this terrible metamorphosis from laissez-faire into egalitarianism, democracy, and redistribution.

Post-liberalism should reconsider that critique, and ask whether they have been bamboozled into accepting the Left’s framework. It should be a broader critique of American society itself, rather than a specific response to the Left-progressive political program. And it must be a direct assault on effete conservatism which spent the last century getting steamrolled.

There are two competing visions for the Right. One is ascendant, one is moribund. One is populist, one is elitist and technocratic. One is nationalist, one is globalist. One recognizes restraints on government and foreign policy, at least conceptually, and one tends toward grandiosity and state omniscience. One finds purchase in rural and flyover regions; one exists comfortably in Bluest America.

If the former is to prevail, it must swear off empty husks like National Review, jettison K Street and fantasies about “public policy,” and reject Foggy Bottom’s calls for “statecraft.” It must be relentlessly bottom up and anti-elite, always guarding against the co-opting camel’s nose under the tent. And it could use a good dose of Mises, Rothbard, and Hoppe to rethink the economics of a new right populism. If libertarians need culture, conservatives need economics.

Have we lost “liberal” forever? Maybe. If liberalism is dead, then liberals killed it. I’m doubtful we can ever reclaim it. Perhaps we need a new word for organizing society through property, peace, trade, and sound money.

[1] 

  • 1. Many libertarians and conservatives attempt to distinguish themselves using the tired “classical liberal,” which elicits nothing but eye rolls and contempt from the Left.
Categories: Current Affairs

Utilitarian Free-Market Economics

Mises Institute - Tue, 24/05/2022 - 10:00
A. Introduction: Utilitarian Social Philosophy

Economics emerged as a distinct, self-conscious science or discipline in the nineteenth century, and hence this development unfortunately coincided with the dominance of utilitarianism in philosophy. The social philosophy of economists, therefore, whether the laissez-faire creed of the nineteenth century or the statism of the twentieth, has almost invariably been grounded in utilitarian social philosophy. Even today political economy abounds with discussion of the weighing of "social costs" and "social benefits" in deciding upon public policy.

We cannot engage here in a critique of utilitarianism as an ethical theory.1 Here we are interested in analyzing certain attempts to use a utilitarian ethic to provide a defensible groundwork for a libertarian or laissez-faire ideology. Our brief criticisms will concentrate, then, on utilitarianism insofar as it has been used as a groundwork for a libertarian, or quasi-libertarian, political philosophy.2

In brief, utilitarian social philosophy holds the "good" policy to be the one that yields the "greatest good for the greatest number": in which each person counts for one in making up that number, and in which "the good" is held to be the fullest satisfaction of the purely subjective desires of the individuals in society. Utilitarians, like economists (see further below) like to think of themselves as "scientific" and "value free," and their doctrine supposedly permits them to adopt a virtually value-free stance; for they are presumably not imposing their own values, but simply recommending the greatest possible satisfaction of the desires and wants of the mass of the population.

But this doctrine is hardly scientific and by no means value free. For one thing, why the "greatest number"? Why is it ethically better to follow the wishes of the greater as against the lesser number? What's so good about the "greatest number"?3 Suppose that the vast majority of people in a society hate and revile redheads, and greatly desire to murder them; and suppose further that there are only a few redheads extant at any time. Must we then say that it is "good" for the vast majority to slaughter redheads? And if not, why not? At the very least, then, utilitarianism scarcely suffices to make a case for liberty and laissez-faire. As Felix Adler wryly put it, utilitarians

pronounce the greatest happiness of the greatest number to be the social end, although they fail to make it intelligible why the happiness of the greater number should be cogent as an end upon those who happen to belong to the lesser number.4

Secondly, what is the justification for each person counting for one? Why not some system of weighting? This, too, seems to be an unexamined and therefore unscientific article of faith in utilitarianism.

Thirdly, why is "the good" only fulfilling the subjective emotional desires of each person? Why can there be no supra-subjective critique of these desires? Indeed, utilitarianism implicitly assumes these subjective desires to be absolute givens which the social technician is somehow duty-bound to try to satisfy. But it is common human experience that individual desires are not absolute and unchanging. They are not hermetically sealed off from persuasion, rational or otherwise; experience and other individuals can and do persuade and convince people to change their values. But how could that be so if all individual desires and values are pure givens and therefore not subject to alteration by the inter-subjective persuasion of others? But if these desires are not givens, and they are changeable by the persuasion of moral argument, it would then appear that inter-subjective moral principles do exist that can be argued and can have an impact on others.

"Why is it ethically better to follow the wishes of the greater as against the lesser number? What's so good about the 'greatest number'?"

Oddly enough, while utilitarianism assumes that morality, the good, is purely subjective to each individual, it assumes on the other hand that these subjective desires can be added, subtracted, and weighed across the various individuals in society. It assumes that individual subjective utilities and costs can be added, subtracted, and measured so as to arrive at a "net social utility" or social "cost," thus permitting the utilitarian to advise for or against a given social policy.5  Modern welfare economics is particularly adept at arriving at estimates (even allegedly precise quantitative ones) of "social cost" and "social utility." But economics does correctly inform us, not that moral principles are subjective, but that utilities and costs are indeed subjective: individual utilities are purely subjective and ordinal, and therefore it is totally illegitimate to add or weight them to arrive at any estimate for "social" utility or cost.

B. The Unanimity and Compensation Principles

Utilitarian economists, even more than their philosophic confreres, are eager to make "scientific" and "value free" pronouncements on public policy. Believing, however, that ethics are purely arbitrary and subjective, how may economists then take policy positions? This chapter will explore ways in which utilitarian free-market economists presume to favor a free market while attempting to refrain from taking ethical positions.6

One important utilitarian variant is the Unanimity Principle, based on the criterion of "Pareto optimality" that a political policy is "good" if one or more people are "better off" (in terms of satisfying utilities) from that policy while no one is "worse off." A strict version of Pareto optimality implies unanimity: that every person agrees to, hence believes that he will be better off or at least no worse off, from a particular government action.

In recent years, the Unanimity Principle as groundwork for a free market of voluntary and contractual agreements has been stressed by Professor James Buchanan. The Unanimity Principle has great attractions for "value-free" economists eager to make policy judgments, for far more than in the case of mere majority rule; surely the economist can safely advocate a policy if everyone in the society favors it. While the Unanimity Principle may at first appear superficially attractive to libertarians, however, there is at its heart a vital and irredeemable flaw: that the goodness of free contracts or unanimously approved changes from the existing situation depends completely on the goodness or justice of that existing situation itself. Yet neither Pareto Optimality, nor its Unanimity Principle variant, can say anything about the goodness or justice of the existing status quo, concentrating as they do solely on changes from that situation, or zero point.7

Not only that, but the requirement of unanimous approval of changes necessarily freezes the existing status quo. If the status quo is unjust or repressive of liberty, then the Unanimity Principle is a grave barrier to justice and liberty rather than a bulwark on its behalf. The economist who advocates the Unanimity Principle as a seemingly value-free pronouncement for liberty is instead making a massive and totally unsupported value judgment on behalf of freezing the status quo.

The commonly accepted "Compensation Principle" variant of Pareto optimality contains all the flaws of the strict Unanimity Principle, while adding many of its own. The Compensation Principle asserts that a public policy is "good" if the gainers (in utility) from that policy can compensate the losers and still enjoy net gains. So that while there are losers in utility from this policy at the beginning, there are no such losers after the compensations take place.

But the Compensation Principle assumes that it is conceptually possible to add and subtract utilities interpersonally, and thereby to measure gains and losses; it also assumes that each individual's gains and losses can be precisely estimated. But economics informs us that "utility," and hence gains and losses in utility, are purely subjective and psychic concepts, and that they cannot possibly be measured or even estimated by outside observers. Gains and losses in utility therefore cannot be added, measured, or weighted against each other, and much less can precise compensations be discovered.

"Individual utilities are purely subjective and ordinal, and therefore it is totally illegitimate to add or weight them to arrive at any estimate for 'social' utility or cost."

The usual assumption by economists is to measure psychic losses in utility by the monetary price of an asset; thus, if a railroad damages the land of a farmer by smoke, it is assumed by the compensationists that the farmer's loss can be measured by the market price of the land. But this assumption ignores the fact that the farmer may well have a psychic attachment to that land which is far greater than the market price, and that, furthermore, it is impossible to find out what the farmer's psychic attachment to the land may be. Asking the farmer is useless, since he may say, for example, that his attachment to the land is much higher than the market price, but he may well be lying. The government, or other outside observer, has no way of finding out one way or the other.8

Furthermore, the existence in the society of just one militant anarchist, whose psychic grievance against government is such that he cannot be compensated for his psychic disutility from the existence or activity of government, is enough by itself to destroy the Compensation Principle case for any government action whatsoever. And surely at least one such anarchist exists.

A stark but not atypical example of the fallacies and the unjust devotion to the status quo of the Compensation Principle was the debate in the British Parliament during the early nineteenth century on the abolition of slavery. Early adherents of the Compensation Principle were there maintaining that the masters must be compensated for the loss of their investment in slaves. At which point, Benjamin Pearson, a member of the libertarian Manchester School, declared that he "had thought it was the slaves who should have been compensated."9

Precisely! Here is a striking example of the need, in advocating public policy, to have some ethical system, some concept of justice. Those of us ethicists who hold that slavery is criminal and unjust would always oppose the idea of compensating the masters, and would rather think in terms of requiring the masters to compensate the slaves for their years of oppression. But the "value-free economist," resting on the Unanimity and Compensation Principles, is, on the contrary, implicitly placing his unsupported and arbitrary value imprimatur on the unjust status quo.

In a fascinating exchange with a critic of the Unanimity Principle, Professor Buchanan concedes that

I am defending the status quo … not because I like it, I do not…. But my defense of the status quo stems from my unwillingness, indeed inability, to discuss changes other than those that are contractual in nature. I can, of course, lay down my own notions…. But, to me, this is simply wasted effort.

Thus, tragically, Buchanan, admitting that his idea of ethics is one of purely subjective and arbitrary "notions," is yet willing to promulgate what can only be an equally subjective and arbitrary notion on his own grounds—a defense of the status quo. Buchanan concedes that his procedure:

does allow me to take a limited step toward normative judgments or hypotheses, namely to suggest that the changes seem to be potentially agreeable to everyone. Pareto efficient changes, which must, of course, include compensations. The criterion in my scheme is agreement.

But what is the justification for this "limited step"? What's so great about agreement on changes from a possibly unjust status quo? Isn't such a limited step also an arbitrary "notion" for Buchanan? And if willing to proceed to such an unsatisfactory limit, why not go still further to question the status quo?

Buchanan proceeds to assert that

[O]ur task is really … that of trying to find, locate, invent, schemes that can command unanimous or quasi-unanimous consent and propose them. [What in the world is "quasi-unanimity?"] Since persons disagree on so much, these schemes may be a very limited set, and this may suggest to you that few changes are possible. Hence, the status quo defended indirectly. The status quo has no propriety at all save for its existence and it is all that exists. The point I always emphasize is that we start from here not from somewhere else.10

Here one longs for Lord Acton's noble dictum: "Liberalism wishes for what ought to be, irrespective of what is."11

Buchanan's critic, though far from a libertarian or a free-market liberal, here properly has the last word: "I certainly do not totally object to seeking contractual solutions; but I do think that they can't be projected in a vacuum which allows the status quo power structure to go unspecified and unexamined."12


C. Ludwig von Mises and "Value-Free" Laissez Faire13

Let us now turn to the position of Ludwig von Mises on the entire matter of praxeology, value judgments, and the advocacy of public policy. The case of Mises is particularly interesting, for he was, of all the economists in the twentieth century, at one and the same time the most uncompromising and passionate adherent of laissez faire and the most rigorous and uncompromising advocate of value-free economics and opponent of any sort of objective ethics. How then did he attempt to reconcile these two positions?14

Mises offered two separate and very different solutions to this problem. The first is a variant of the Unanimity Principle. Essentially this variant affirms that an economist per se cannot say that a given governmental policy is "good" or "bad." However, if a given policy will lead to consequences, as explained by praxeology, which every one of the supporters of the policy will agree is bad, then the value-free economist is justified in calling the policy a "bad" one.

Thus, Mises writes:

An economist investigates whether a measure a can bring about the result p for the attainment of which it is recommended, and finds that a does not result in p but in g, an effect which even the supporters of the measure a consider undesirable. If the economist states the outcome of his investigation by saying that a is a bad measure, he does not pronounce a judgment of value. He merely says that from the point of view of those aiming at the goal p, the measure a is inappropriate.15

And again:

Economics does not say that … government interference with the prices of only one commodity … is unfair, bad, or unfeasible. It says, that it makes conditions worse, not better, from the point of view of the government and those backing its interference.16

Now this is surely an ingenious attempt to allow pronouncements of "good" or "bad" by the economist without making a value judgment; for the economist is supposed to be only a praxeologist, a technician, pointing out to his readers or listeners that they will all consider a policy "bad" once he reveals its full consequences.

But ingenious as it is, the attempt completely fails. For how does Mises know what the advocates of the particular policy consider desirable? How does he know what their value scales are now or what they will be when the consequences of the measure appear? One of the great contributions of praxeologic economics is that the economist realizes that he doesn't know what anyone's value scales are except as those value preferences are demonstrated by a person's concrete action. Mises himself emphasized that:

one must not forget that the scale of values or wants manifests itself only in the reality of action. These scales have no independent existence apart from the actual behavior of individuals. The only source from which our knowledge concerning these scales is derived is the observation of a man's actions. Every action is always in perfect agreement with the scale of values or wants because these scales are nothing but an instrument for the interpretation of a man's acting.17

Given Mises's own analysis, then, how can the economist know what the motives for advocating various policies really are, or how people will regard the consequences of these policies?

Thus, Mises, qua economist, may show that price control (to use his example) will lead to unforeseen shortages of a good to the consumers. But how does Mises know that some advocates of price control do not want shortages? They may, for example, be socialists, anxious to use the controls as a step toward full collectivism. Some may be egalitarians who prefer shortages because the rich will not be able to use their money to buy more of the product than poorer people. Some may be nihilists, eager to see shortages of goods. Others may be one of the numerous legion of contemporary intellectuals who are eternally complaining about the "excessive affluence" of our society, or about the great "waste" of energy; they may all delight in the shortages of goods. Still others may favor price control, even after learning of the shortages, because they, or their political allies, will enjoy well-paying jobs or power in the price-control bureaucracy.

All sorts of such possibilities exist, and none of them is compatible with Mises asserting, as a value-free economist, that all the supporters of the price control—or of any other government intervention—must concede, after learning economics, that the measure is bad. In fact, once Mises concedes that even a single advocate of price control or any other interventionist measure may acknowledge the economic consequences and still favor it, for whatever reason, then Mises, as a praxeologist and economist, can no longer call any of these measures "bad" or "good," or even "appropriate" or "inappropriate," without inserting into his economic policy pronouncements the very value judgments that Mises himself holds to be inadmissible in a scientist of human action.18 For then he is no longer being a technical reporter to all advocates of a certain policy, but himself an advocate participating on one side of a value conflict.

Moreover, there is another fundamental reason for advocates of "inappropriate" policies to refuse to change their minds even after hearing and acknowledging the praxeological chain of consequences. For praxeology may indeed show that all types of government policies will have consequences that most people, at least, will tend to abhor; however, (and this is a vital qualification) most of these consequences take time, some a great deal of time.

No economist has done more than Ludwig von Mises to elucidate the universality of time preference in human affairs—the praxeologic law that everyone prefers to attain a given satisfaction sooner than later. And certainly, Mises, as a value-free scientist, could never presume to criticize anyone's rate of time preference, to say that A's was "too high" or B's "too low." But, in that case, what about the high–time preference people in society who may retort to the praxeologist: "perhaps this high tax and subsidy policy will lead to a decline of capital; perhaps even the price control will lead to shortages, but I don't care. Having a high time preference, I value more highly the short-run subsidies, or the short-run enjoyment of buying the current good at cheaper prices, than the prospect of suffering the future consequences." And Mises, as a value-free scientist and opponent of any concept of objective ethics, cannot call them wrong. There is no way that he can assert the superiority of the long run over the short run without overriding the values of the high–time preference people; and this cannot be cogently done without abandoning his own subjectivist ethics.

In this connection, one of Mises's basic arguments for the free market is that, on the market, there is a "harmony of the rightly understood interests of all members of the market society." It is clear from his discussion that he doesn't merely mean "interests" after learning the praxeological consequences of market activity or of government intervention. He also, and in particular, means people's "long-run" interests, for, as Mises states, "For 'rightly understood' interests we may as well say interests 'in the long run.'"19

But what about the high–time preference folk, who prefer to consult their short-run interests? How can the long run be called "better" than the short run; why must "right understanding" necessarily be the long run?20 We see, therefore, that Mises's attempt to advocate laissez-faire while remaining value-free, by assuming that all of the advocates of government intervention will abandon their position once they learn of its consequences, falls completely to the ground.

There is another and very different way, however, that Mises attempts to reconcile his passionate advocacy of laissez faire with the absolute value freedom of the scientist. This is to take a position much more compatible with praxeology: by recognizing that the economist qua economist can only trace chains of cause and effect and may not engage in value judgments or advocate public policy.

This route of Mises concedes that the economic scientist cannot advocate laissez faire, but then adds that he as a citizen can do so. Mises, as a citizen, then proposes a value system but it is a curiously scanty one. For he is here caught in a dilemma. As a praxeologist he knows that he cannot (as an economic scientist) pronounce value judgments or advocate policy; yet he cannot bring himself simply to assert and inject arbitrary value judgments. And so, as a utilitarian (for Mises, along with most economists, is indeed a utilitarian in ethics, although a Kantian in epistemology), what he does is to make only one narrow value judgment: that he desires to fulfill the goals of the majority of the public (happily, in this formulation, Mises does not presume to know the goals of everyone).

As Mises explains, in his second variant:

Liberalism [i.e., laissez-faire liberalism] is a political doctrine…. As a political doctrine liberalism (in contrast to economic science) is not neutral with regard to values and ultimate ends sought by action. It assumes that all men or at least the majority of people are intent upon attaining certain goals. It gives them information about the means suitable to the realization of their plans. The champions of liberal doctrines are fully aware of the fact that their teachings are valid only for people who are committed to their valuational principles. While praxeology, and therefore economics too, uses the terms happiness and removal of uneasiness in a purely formal sense, liberalism attaches to them a concrete meaning. It presupposes that people prefer life to death, health to sickness … abundance to poverty. It teaches men how to act in accordance with these valuations.21

In this second variant, Mises has successfully escaped the self-contradiction of being a value-free praxeologist advocating laissez faire. Granting in this variant that the economist may not make such advocacy, he takes his stand as a "citizen" willing to make value judgments. But he is not willing to simply assert an ad hoc value judgment; presumably he feels that a valuing intellectual must present some sort of ethical system to justify such value judgments. But, as a utilitarian, Mises's system is a curiously bloodless one; even as a valuing laissez-faire liberal, he is only willing to make the one value judgment that he joins the majority of the people in favoring their common peace, prosperity, and abundance. In this way as an opponent of objective ethics, and uncomfortable as he must be with making any value judgments even as a citizen, he makes the minimal possible degree of such judgments. True to his utilitarian position, his value judgment is the desirability of fulfilling the subjectively desired goals of the bulk of the populace.

A few points in critique of this position may here be made. In the first place, while praxeology can indeed demonstrate that laissez faire will lead to harmony, prosperity, and abundance, whereas government intervention leads to conflict and impoverishment,22 and while it is probably true that most people value the former highly, it is not true that these are their only goals or values.

The great analyst of ranked value scales and diminishing marginal utility should have been more aware of such competing values and goals. For example, many people, whether through envy or a misplaced theory of justice, may prefer far more equality of income than will be attained on the free market. Many people, pace the aforementioned intellectuals, may want less abundance in order to whittle down our allegedly "excessive" affluence. Others, as we have mentioned above, may prefer to loot the capital of the rich or the businessman in the short run, while acknowledging but dismissing the long-run ill effects, because they have a high time preference. Probably very few of these people will want to push statist measures to the point of total impoverishment and destruction—although this may well happen. But a majority coalition of the above might well opt for some reduction in wealth and prosperity on behalf of these other values. They may well decide that it is worth sacrificing a modicum of wealth and efficient production because of the high opportunity cost of not being able to enjoy an alleviation of envy, or a lust for power or submission to power, or, for example, the thrill of "national unity" which they might enjoy from a (short-lived) economic crisis.

What can Mises reply to a majority of the public who have indeed considered all the praxeological consequences, and still prefer a modicum—or, for that matter, even a drastic amount—of statism in order to achieve some of their competing goals? As a utilitarian, he cannot quarrel with the ethical nature of their chosen goals, for, as a utilitarian, he must confine himself to the one value judgment that he favors the majority achieving their chosen goals.

The only reply that Mises can make within his own framework is to point out that government intervention has a cumulative effect, that eventually the economy must move either toward the free market or toward full socialism, which praxeology shows will bring chaos and drastic impoverishment, at least to an industrial society. But this, too, is not a fully satisfactory answer. While many or most programs of statist intervention—especially price controls—are indeed cumulative, others are not. Furthermore, the cumulative impact takes such a long time that the time preferences of the majority might well lead them, in full acknowledgment of the consequences, to ignore the effect. And then what?

Mises attempted to use the cumulative argument to answer the contention that the majority of the public prefer egalitarian measures even knowingly at the expense of a portion of their own wealth. Mises's comment was that the "reserve fund" was on the point of being exhausted in Europe, and therefore that any further egalitarian measures would have to come directly out of the pockets of the masses through increased taxation. Mises assumed that once this became clear, the masses would no longer support interventionist measures.23

But, in the first place, this is not a strong argument against the previous egalitarian measures, nor in favor of their repeal. But secondly, while the masses might well be convinced, there is certainly no apodictic certainty involved; and the masses have certainly in the past, and presumably will in the future continue knowingly to support egalitarian and other statist measures on behalf of others of their goals, despite the knowledge that their income and wealth would be reduced.

Thus, Dean Rappard pointed out in his thoughtful critique of Mises's position:

Does the British voter, for instance, favor confiscatory taxation of large incomes primarily in the hope that it will redound to his material advantage, or in the certainty that it tends to reduce unwelcome and irritating social inequalities? In general, is the urge towards equality in our modern democracies not often stronger than the desire to improve one's material lot?

And, on his own country, Switzerland, Dean Rappard pointed out that the urban industrial and commercial majority of the country have repeatedly, and often at popular referenda, endorsed measures to subsidize the minority of farmers in a deliberate effort to retard industrialization and the growth of their own incomes.

Rappard noted that the urban majority did not do so in the "absurd belief that they were thereby increasing their real income." Instead,

quite deliberately and expressly, political parties have sacrificed the immediate material welfare of their members in order to prevent, or at least somewhat to retard, the complete industrialization of the country. A more agricultural Switzerland, though poorer, such is the dominant wish of the Swiss people today.24

The point here is that Mises, not only as a praxeologist but even as a utilitarian liberal, can have no word of criticism against these statist measures once the majority of the public have taken their praxeological consequences into account and chosen them anyway on behalf of goals other than wealth and prosperity.

Furthermore, there are other types of statist intervention which clearly have little or no cumulative effect, and which may even have very little effect in diminishing production or prosperity. Let us for example assume again—and this assumption is not very farfetched in view of the record of human history—that the great majority of a society hate and revile redheads. Let us further assume that there are very few redheads in the society. This large majority then decides that it would like very much to murder all redheads. Here they are; the murder of redheads is high on the value scales of the great majority of the public; there are few redheads so that there will be little loss in production on the market. How can Mises rebut this proposed policy either as a praxeologist or as a utilitarian liberal? I submit that he cannot do so.

Mises makes one further attempt to establish his position, but it is even less successful. Criticizing the arguments for state intervention on behalf of equality or other moral concerns, he dismisses them as "emotional talk." After reaffirming that "praxeology and economics … are neutral with regard to any moral precepts," and asserting that "the fact that the immense majority of men prefer a richer supply of material goods to a less ample supply is a datum of history; it does not have any place in economic theory," he concludes by insisting that "he who disagrees with the teachings of economics ought to refute them by discursive reasoning, not by … the appeal to arbitrary, allegedly ethical standards."25

But I submit that this will not do. For Mises must concede that no one can decide upon any policy whatever unless he makes an ultimate ethical or value judgment. But since this is so, and since according to Mises all ultimate value judgments or ethical standards are arbitrary, how then can he denounce these particular ethical judgments as "arbitrary"?

Furthermore, it is hardly correct for Mises to dismiss these judgments as "emotional," since for him as a utilitarian, reason cannot establish ultimate ethical principles, which can therefore only be established by subjective emotions. It is pointless for Mises to call for his critics to use "discursive reasoning," since he himself denies that discursive reasoning can ever be used to establish ultimate ethical values.

Furthermore, the man whose ultimate ethical principles would lead him to support the free market should also be dismissed by Mises as equally "arbitrary" and "emotional," even if he has taken the laws of praxeology into account before making his ultimately ethical decision. And we have seen above that the majority of the public very often has other goals which they hold, at least to a certain extent, higher than their own material well-being.

Thus, while praxeological economic theory is extremely useful for providing data and knowledge for framing economic policy, it cannot be sufficient by itself to enable the economist to make any value pronouncements or to advocate any public policy whatsoever. More specifically, Ludwig von Mises to the contrary notwithstanding, neither praxeological economics nor Mises's utilitarian liberalism is sufficient to make the case for laissez faire and the free-market economy.

To make such a case, one must go beyond economics and utilitarianism to establish an objective ethics which affirms the overriding value of liberty, and morally condemns all forms of statism, from egalitarianism to "the murder of redheads," as well as such goals as the lust for power and the satisfaction of envy.

To make the full case for liberty, one cannot be a methodological slave to every goal that the majority of the public might happen to cherish.

This article is taken from chapter 26 of The Ethics of Liberty. Listen to this chapter in MP3.

  • 1. For the beginning of a critique of utilitarianism in the context of the alternative of a natural-law ethics, see John Wild, Pluto's Modern Enemies and the Theory of Natural Law (Chicago: University of Chicago Press, 1953); Henry B. Veatch, For An Ontology of Morals: A Critique of Contemporary Ethical Theory (Evanston, Ill.: Northwestern University Press, 1971). On utilitarianism's inadequacy as a libertarian political philosophy see Herbert Spencer, Social Statics (New York: Robert Schalkenbach Foundation, 1970), pp. 3–16.
  • 2. For preceding criticisms of utilitarian approaches in this work, see pp. 11–13 above.
  • 3. And what if, even in utilitarian terms, more happiness can be obtained by following the wishes of the smaller number? For a discussion of this problem, see Peter Geach, The Virtues (Cambridge: Cambridge University Press, 1977), pp. 91ff.
  • 4. Felix Adler, "The Relation of Ethics to Social Science," in H.J. Rogers, ed., Congress of Arts and Science (Boston: Houghton Mifflin, 1906), vol. 7, p. 673.
  • 5. Furthermore, some preferences, such as someone's desire to see an innocent person suffer, seem immoral on objective grounds. Yet a utilitarian must hold that they, fully as much as the most innocuous or altruistic preferences, must be included in the quantitative reckoning. I am indebted to Dr. David Gordon for this point.
  • 6. For an extended analysis of the relationship between economics, value judgments, and government policy, see Murray N. Rothbard, "Praxeology, Value Judgments, and Public Policy," in E. Dolan, ed., The Foundations of Modern Austrian Economics (Kansas City: Sheed and Ward, 1976), pp. 89–111. Available in PDF.
  • 7. Neither does the Unanimity Principle, as will be shown further below, keep the economist from making his own value judgments and thus breaching his "value freedom"; for even if the economist merely shares in everyone else's value judgment, he is making a value judgment nevertheless.
  • 8. Individuals demonstrate part of their utility rankings when they make free-market exchanges, but government actions, of course, are non-market phenomena. For a further analysis of this question, see Walter Block, "Coase and Demsetz on Private Property Rights," Journal of Libertarian Studies 1 (Spring 1977): 111–15, available in PDF. For more on demonstrated preference as opposed to the concept of social utility, see Rothbard, "Praxeology, Value Judgments, and Public Policy"; and Murray N. Rothbard, Toward A Reconstruction of Utility and Welfare Economics (New York: Center for Libertarian Studies, 1977).
  • 9. William D. Grampp, The Manchester School of Economics (Stanford, Calif.: Stanford University Press, 1969), p. 59. See above, p. 60. Also see Murray N. Rothbard, "Value Implications of Economic Theory," The American Economist (Spring 1973): 38–39.
  • 10. James M. Buchanan, in Buchanan and Warren J. Samuels, "On Some Fundamental Issues in Political Economy: An Exchange of Correspondence," Journal of Economic Issues (March 1975): 27f.
  • 11. Gertrude Himmelfarb, Lord Acton (Chicago: University of Chicago Press, 1962), p. 204.
  • 12. Samuels, in Buchanan and Samuels, "Some Fundamental Issues," p. 37.
  • 13. This section is adapted from my "Praxeology, Value Judgments, and Public Policy."
     
  • 14. For a posing of this question, see William E. Rappard "On Reading Von Mises," in M. Sennholz, ed., On Freedom and Free Enterprise (Princeton, N.J.: D. Van Nostrand, 1956), pp. 17–33.
  • 15. Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press 1949), p. 879.
  • 16. Ibid., p. 758. Italics in original.
  • 17. Ibid., p. 95.
  • 18. Mises himself concedes at one point that a government or a political party may advocate policies for "demagogic," i.e., for hidden and unannounced reasons. Ibid., p. 104n.
  • 19. Ibid., pp. 670 and 670n.
  • 20. For a challenge to the notion that pursuit of one's desires against one's long-term interests is irrational, see Derek Parfit, "Personal Identity," Philosophical Review 80 (January 1971): 26.
  • 21. Mises, Human Action, pp. 153–54.
  • 22. See Murray N. Rothbard, Power and Market, 2nd ed. (Kansas City: Sheed Andrews and McMeel, 1977), pp. 262–66.
  • 23. Thus, see Mises, Human Action, pp. 851ff.
  • 24. Rappard, "On Reading von Mises," pp. 32–33.
  • 25. Ludwig von Mises, "Epistemological Relativism in the Sciences of Human Action," in H. Schoeck and J.W.Wiggins, eds., Relativism and the Study of Man (Princeton, N.J.: D. van Nostrand, 1961), p. 133.
Categories: Current Affairs

Sadly, Oxfam aren't even understanding their own numbers

Adam Smith Institute - Tue, 24/05/2022 - 06:01

Oxfam tells us that:

Food prices, which are up more than 30% over the past year on average, are likely to push more than 263 million more people into acute poverty than before the pandemic. That would take the number of people living on less than $1.90 a day to 860 million by the end of the year.

This is not wholly and precisely true. The $1.90 a day measure of that extreme, abject, poverty is the value of consumption. It isn’t cash income, it’s value of consumption. Most of those abjectly poor are in fact subsistence peasants. That means they produce their own food and eat their own production of their own food. If food prices rise then the value of their consumption of their own production rises.

No, this isn’t true of all of those 860 million but it is so of a large portion of them. They are food producers on whatever tiny scale. Therefore rising food prices increase the value of their consumption.

If your analysis starts out getting matters so abjectly wrong then your solutions are also likely to be more than a little ropey.

Oxfam is calling for a tax of 90% on excess profits134 on a temporary basis, to capture the windfall profits of corporations across all industries; this will reduce today’s profiteering and create significant funds for investment. In September 2020, Oxfam estimated that such a tax on just 32 super-profitable corporations during the COVID-19 pandemic could have generated $104bn in revenue.

As Maya Forstater has pointed out, global tax revenues are of the order of $23 trillion. An increase in such tax revenues of 0.45% - well, that’s going to solve a lot, isn’t it?

Oxfam started out with the simple aim of getting food to those who were hungry. Now it has an equally simple message, more tax. It’s not obvious that this is an improvement in the message being proferred. But then that long march through the institutions has been going on for a long time, hasn’t it?

Categories: Current Affairs

Federal Control of Abortion Laws Is a Form of Imperialism

Mises Institute - Mon, 23/05/2022 - 22:45

The abortion debate in the United States has become essentially a debate over how much abortion policy ought to be centralized at the federal level. Given that there is no real chance of a nationwide abortion ban, the question of whether or not the US Supreme Court strikes down Roe v. Wade is a question of whether or not abortion policy will become the domain of state and local governments. That is, without Roe to federalize abortion policy, the matter goes back to where it was before 1973: to state and local lawmakers.

Yet, the centralists who demand that abortion policy be mandated from Washington, DC—and only from Washington, DC—can’t seem to stand the idea that maybe people in other parts of the country might disagree with pro-abortion national elites. Yet,  tolerating state and local control over an important policy issue is hardly a revolutionary idea. State and local policymakers are generally responsible for lawmaking in many other areas considered to be life or death issues—such as violent crime and the death penalty.

The centralists, however, employ a moralistic argument in order to override any concerns about localism or federalism. The argument looks like this: “Yes, there are some areas where we might allow state some local control over law and policy. But the legal right to an abortion is so important, that any limitation of this right constitutes a violation of human rights. Therefore, we cannot tolerate any local control because this issue is so important.

This is a cunning trick that has been employed in many contexts other than abortion. It has even been used to justify US invasions of foreign countries in the name of humanitarianism. It is also the fundamental ideological justification for imperialism and colonialism: “those savages in those places outside our enlightened metropolis don’t know how to government themselves. So we’ll do it for them.” In the end, however, centralizing political power in this way constitutes its own violation of human rights.

Why The Centralists Won’t Tolerate Local Self-Determination

Certainly, pro-abortion centralists make a variety of arguments to support their position that abortion policy must be made by national-level elites. Many make legal arguments, and claim that a proper interpretation of the US Constitution mandates federal control over abortion. Others make a pragmatic claim, insisting that allowing local control of abortion law will lead to confusion, unrest, or even civil war.

Yet, at the core of these arguments is usually a moral claim: that legal limits on abortion are so morally wrong as to justify federal intervention regardless of concerns over federalism or local control. 

For example, writing for The Los Angeles Times, Ronald Granieri admits that maybe some level of local self-determination could be tolerated, but that the “republic has to guarantee some baseline rights shared by all citizens, which imposes limitations on how widely states can diverge.” Naturally, Granieri considers legal abortion to be among these baseline rights. Similarly, in The Nation, Atima Omara opines that Democrats in Congress and the White House must do “whatever it takes” to guarantee the legal status for abortion nationwide. Omara is clear she considers the situation to be of extremely high importance, writing “here we all are staring at the brink of disaster and open season on our fundamental human rights.” Moreover, as Ruth Marcus wrote in The Washington Post last June, allowing states to make their own laws on abortion “would empower them to be agents of oppression.”

In their view, these are high stakes to say the least, and it’s no wonder that the solution proffered by the pages of The Nation is to have the federal government do “whatever it takes” to “guarantee” a baseline of rights. Notably, however, op-eds like these never mention how exactly these guarantees are to be made, or what doing whatever it takes actually entails in practice. In actual practice, this means using the coercive power of the state to force compliance with federal edicts. It means sending federal agents to ensure that local officials do not close down abortion clinics or do not prosecute abortion doctors. But that ultimately requires threats of using coercive force. And if those threats fail, it means actually sending armed federal agents to ensure compliance.

This is why opponents of localism in abortion policy must employ universalist, moralistic terms like “human rights” and “disaster.” It is necessary to show that maintaining the legality of abortion trumps other consideration. The message is clear: whatever our legal traditions or texts might say about state sovereignty, local control, or federalism, that is all nothing compared to the moral imperative to intervene to ensure the protection of human rights.

This position, it must be remembered, should not be confused with merely denouncing abortion restrictions or encouraging activists and voters in these states to resist them. Local resistance to state power in the name of human rights is entirely different from imposing rights from above. The former is a form of liberation from state control. The latter is a form of imperialism. 

The Abortion Centralists Use the Language of Imperialists and Colonialists

The centralist argument of human-rights-justify-anything-we-do is dangerous, to say the least, because it essentially says there are no limits on federal power. In those cases, concern for whatever we define to be basic human rights will negate concerns over what we might call “self-determination,” “self-rule,” “local autonomy,” or “constitutional law.”

This language is also fundamentally the same as that which has been used to justify imperialism and colonialism in many cases throughout history. As the Indian human rights activist Salil Shetty has noted, supporters of colonialism long relied on human rights arguments to justify their foreign interventions:

Human rights in the last one-and-a-half centuries were in an odd and artificial way always linked to the project of colonisation itself, before they more genuinely became a part of the reverse effort of resistance against colonialism. … colonialism and early, modern-day human rights fed upon each other.

This was often explicitly the case when European colonizers in the nineteenth century claimed to be imposing foreign rule on indigenous populations “for their own good.”  As noted by historian Alice Conklin:

Republican ideas of civilization influenced French policy making in West Africa between 1895 and 1914 in two distinct but complementary ways. First, drawing on the universalist rhetoric of 1789 regarding the right of all people to basic freedoms, republican ideology inspired the French to identify, and take measures to liberate Africans from, forms of oppression that they believed to exist-including African slavery, "feudalism," ignorance, and disease. ... Second, liberal ideals encouraged the French to set limits on the amount of coercion the colonial administration could use against the colonized, especially in the administration of justice and use of forced labor; this was done through the legal means of codification, which in turn created the illusion that basic human rights in the colonies were being respected. Both initiatives conspired equally, and tragically, to legitimate a regime based on force in the age of democracy.

The Americans were similar in their views toward the Philippines. The justification for American intervention there in the early twentieth century was the notion that the United States would “civilize” the Filipinos by “Christianizing” the population—which was already mostly Catholic and therefore Christian—but also to teach the Filipinos to govern themselves in a manner thought to be sufficiently oriented toward American ideas of human rights.

In both West Africa and the Philippines, of course, the process of imposing "respect" for human rights by force required violating the human rights of the locals on countless occasions.

Regional Majorities that are National Minorities: In a DeFacto State of Colonization

But the realities of colonization and the denial of self-determination is not just something that occurs in faraway lands where people look different and speak different languages. Nor is this negated by the existence of democratic institutions. 

In his 1927 book Liberalism, Ludwig von Mises recognizes that self-determination is routinely denied even within polities that are democratic. Mises writes:

The situation of having to belong to a state to which one does not wish to belong is no less onerous if it is the result of an election than if one must endure it as the consequence of a military conquest…. To be a member of a national minority always means that one is a second-class citizen.

Within the US's own political system, entire regions of the country can find themselves in a situation like this when policy is imposed on residents in spite of the political ideologies and values of local majorities. That is, if national majorities are sufficient to keep in power pro-abortion policymakers at the national level—this means anti-abortion local majorities lack self-determination. If this situation endures, then local majorities essentially have no means of exercising any real control over the national government. These local majorities are essentially in the same position as a colony without a vote or the permanent minorities described by Mises. 

In a confederation like the United States, there is an easy way to address this problem: limit the power of the central government to only matters of external affairs such as foreign policy; maximize self-government at the state, local, and regional levels; and ultimately allow for secession when compromise becomes no longer feasible. 

The rhetoric of the abortion centralizers, however, is going in exactly the opposite direction. The language of "accept our definition of human rights, or else" is typical of what we'd expect from the imperialists of old who insisted those rubes in the provinces couldn't be trusted with self-government. 

Categories: Current Affairs

Albert Jay Nock's Laws of Political Process

Mises Institute - Mon, 23/05/2022 - 20:00

[This article originally appeared in the College of Nursing Art and Science Hyogo Bulletin, Vol. 14, 2007.]

The Problem Stated: Is "Nockian" a scientific or a literary term?

Albert Jay Nock (1870–1944) was an outstanding representative of early twentieth century libertarian thought and advocacy. Even today the libertarian movement, impacted though it is by the subsequent thought of Ludwig von Mises (1881–1973), Murray Rothbard (1926–1995), Ayn Rand (1905–1982) and others, pays a nostalgic tribute to Nock as an early advocate and belletrist.

This paper is an inquiry into whether and to what extent Nock may be considered more than just a brilliant writer and journalist. To what extent may we consider Nock a social scientist? The question probably would not have bothered Nock himself in the least, but it is important to raise in the light of contemporary libertarian theory. Libertarianism is the political philosophy that maintains that a free and just society is incompatible with any form of coercion. While almost all political thinkers consider private coercion (e.g., murder, larceny) to be criminal, libertarians would extend this prohibition on the use of force to public (especially state) agencies as well.

At present the libertarian movement is to some extent in disarray, caught between radicalism and pragmatism, left and right, anarchism and minarchism, and considered by some to be a spent force in its pure form. Does Nock still have anything to say that is better than contemporary theorists have to offer?

It is a safe contention that Nock is still the most humanistic of the libertarians, if humanism is considered in the broad sense defined by Irving Babbitt.1 However, this very humanism would seem to exclude Nock from consideration as a social scientist, let alone a member of the economics profession, often presumed to be the most rigorous of the social science fields.

To see Nock as an economist we would have to reorganize knowledge in such a way that economics became a branch of the human sciences. This is a step at which even some members of the Austrian school, among the least positivistic economists, might balk. The problem is not that Austrians, in eschewing positivism, are careful to proceed within carefully constructed logical categories, for this is a procedure that Nock would certainly concur with. Rather, the nub of the distinction between Nockian argumentation and Austrian deduction is the latter's rigorous separation of psychology and human action theory. When considered under the canon of "antipsychologism," Nock's discourse seems unscientific. However, this very antipsychologism, as important as it is for grounding catallactics in a pure theory of human action, vitiates economics as the basis for a general sociology. If the desideratum of libertarian theory is a general sociology, rather than harping on the truism that "the market works," then a return to social theory in the grand style of Albert Jay Nock would seem to be in order.

The political economy of Albert Jay Nock has things to say that are both vital to understanding the apocalyptic tendencies of modern society as well as the perennial predicaments of the human race. It is unfortunate that he has come to be considered, in his own words, "a superfluous man," for the ideas that Nock exposited were anything but irrelevant or trivial. That he has come to be seen as no more than a rhetorician or journalist of the Old Right, is in part a result of that ideology splitting up into the two antagonistic movements of conservativism and libertarianism respectively.

This split has been amply covered by several writers (e.g., Justin Raimondo). However, within the libertarian movement itself Nock has been sidetracked due to an intellectual shift precipitated by the arrival of European free-market economists in America in a period roughly coincident with Nock's death. This produced the "Austrian turn" in American libertarian theory, and ultimately banished Nock to the folksy company of Mark Twain (1835–1910) and H.L. Mencken (1880–1956) as protolibertarian journalists.

Indeed, the very readability of Nock has stood in the way of his thought being considered as being of continuing relevance to leading-edge social theory. To be sure, Nock coated his sour view of human failings with a sweet and affable style, and it is understandable that people in general would enjoy the surface and throw away the core. On the other hand, it is not acceptable to exclude a thinker from serious consideration in social science on the grounds of alleged psychologism until the antipsychologistic canon has proved relevant.

In the process of assessing Nock's continuing relevance, it will be necessary to make a critical examination of the approaches that economics has made to the humanities, and why many are justly alarmed whenever strictly observational canons are discarded in favor of the contents of human thought, whether individual or collective. However, I will first try to extract the bare bones of Nock's political economy from his lucid prose, hoping to limn the outlines of his social theory and its relationship to both previous and subsequent economic and sociological thinking.

Pre-Austrian Libertarian social theorist

I. Influences

Nock had no training in the social sciences considered as a specialized field, even such training as would have been available to him around the turn of the 19th and 20th centuries. He did get a sound education in the classics and languages, which gave him a good empirical background for reflecting on contemporary politics in the light of history. In his biography he gives ample explanation of those factors which inclined him towards the individual as well as keeping the state always analytically separate from society. Thus when he came across the works of Herbert Spencer (1820–1903) it seems to have been more of a confirmation of what he already suspected rather than a "conversion" to the principles of radical liberalism. In addition to Spencer, Nock was evidently familiar with the works of John Stuart Mill (1806–1873), from which he no doubt absorbed the basics of classical economics as it existed up to around 1870.

His astute observations on history seem to stem from his reading of the memoirs of statesmen such as John Adams (1735–1826) and, notably, Thomas Jefferson (1743–1826) rather than from historians or sociologists. In an indirect way this reading would have put him in contact with the thought of social philosophers and economists, such as the French "Physiocrats."

Apart from Spencer, the only other theoretician who had a major influence on Nock was Henry George, the leading advocate of the single-tax movement. Again, as with Spencer, this was not an academic influence, but rather the economic articulation of a reform movement that was gathering strength in America at the beginning of the 20th century. Another thinker who had a decisive effect on Nock was Charles Beard (1874–1948), again not a theorist but an economic historian who linked land speculation to the development of American constitutional government. When we look at these combined influences as a totality, we are hardly surprised to see in the kind of worldview that was sympathetic to Nock an emphasis on personal and property rights, an indebtedness to the basic principles of classical economics, a willingness to see history in terms of class conflict, and a belief in evolution combined with a skepticism of its "progressive" nature in the near term.

What we do not see in Nock, and what many post-Austrian libertarians will cavil at, is any sustained involvement or interest in marginal utility theory. I have not been able to determine to what extent Nock was aware of the work of Carl Menger (1840–1921) or his successors, but tentatively I would suspect that it was by hearsay, if that. So much for what was lacking that might have helped. What is present but may have hurt is the influence on Nock, late in life, of Ralph Adams Cram (1863–1942), architect and social thinker. It might be tempting to try to exculpate Nock from Cram's influence, in the same fashion that Randians have attempted to distance Ayn Rand from Nietzsche. But laying the anthropological speculations of Cram aside, let's look at the outline of political economy that can be extracted from Nock's own works.

II. Nockian Political Economy: The Three Laws

While Nock never wrote any systematic treatise on political economy or social science, he was very candid about the worldview that formed the basis of his social criticism, as found in the articles and books he published on political and historical topics. Although the principles which he adhered to were embedded in entertaining polemics, they were not merely ad hoc but exhibit an internal coherence which go a long way towards the elucidation of social facts. In particular he enunciated three laws which he alleged to be universal in the constitution of human society.

Nock writes towards the end of his life (1944) in Memoirs of a Superfluous Man,

"I was indescribably fortunate in getting, as early as I did, a clear sense of the bearing which three great laws of the type known as 'natural' have on human conduct. I say fortunate, for it was by good luck alone, and not my own deserving, that I got this sense. By luck I stumbled on the discovery that Epstein's law, Gresham's law, and the law of diminishing returns operate as inexorably in the realm of culture; of politics of social organization, religious or secular as they do in the realm of economics. This understanding enabled me to get the hang of many matters which far better men than me have found hopelessly puzzling, and to answer questions to which otherwise I would have found no answer." (Nock 1944, pp. 133–4)

The first of these, Epstein's Law, is the inherent tendency of human beings to satisfy their wants through the easiest means available. The second, Gresham's Law, asserts that less valuable items will push items of greater value out of circulation. The third is the law of diminishing returns, which declares that every successive unit applied to a given end will have less utility than the one that has gone before it.

The first of these laws Nock claimed as his own formulation (named after a friend of his) but the latter two were formulas already familiar to economics, although given a somewhat different role in Nockian sociology. Nock claimed that these three laws explained the most salient social problem of his day (and by extension ours as well). That problem, as Nock saw it, was the failure of the Western democratic movement to fulfill its aim of creating a just and livable civilization. In Nock's mind the democratic movement had not abolished, but rather abetted, what he saw as the two great evils of modernity, "economism" and "statism." Economism is the tendency to reduce all human ends to epiphenomena of wealth accumulation. Statism is the tendency to surrender social power (custom, traditional sanctions, moral sense) to state power (legislation and coercion).

If the three laws are the lynchpin upon which Nockian political economy hangs, then class theory is the mechanism by which these laws are translated into social facts. Unlike many non-Marxists, Nock was not afraid to boldly appeal to class analysis as an explanation of social facts. This was, of course, quite different from appealing to the interests of a specific class.

For one thing, he recognized that most loose talk about "class" was nothing more than a projection of what Nietzsche called "resentment." He was not in favor of what, from a Marxist point of view, might have been called a classless society. As long as different classes could coexist without exploitation Nock had no objection. Rather, the salient social fact, as Nock saw it, was the use of state power by one or more classes to exploit the rest. This, to him, lay at the heart of modern society's many injustices.

Furthermore Nock's notion of class was not a hypostasized entity that resulted from ineluctable historical forces. It was simply a category of people who happened to have certain economic interests in common. As such, it was rather loose around the edges, for classes might overlap and some individuals and organizations might not necessarily have a clear grasp of what class they were primarily associated with. However, the potential class interest might be mobilized by a core group, a "cabal" with a well-thought-out program of political action in mind.

This core group would come into existence whenever an opportunity to use state policy to the advantage of their class presented itself.

Nock drew a distinction between political and economic means as alternate, and opposing, ways to govern social and productive relations. Whenever a class substituted state power for social power, pursuing enrichment at the expense of other classes by the use of tariffs, imposts, embargos, rationing, wage-fixing, etc., the society was governed by political means. In Nock's view all contemporary societies were governed by political means. A non-exploitative society governed by economic means was to be considered either a hypothetical construct or a dim memory of pre-state societies.

The ubiquity of political governance was in turn founded on the three laws, which Nock had distilled from the history of political economy and his own observations. In particular, Epstein's Law, which showed that people in the mass would take the path of least resistance in order to increase their well-being, dictated that political means would triumph over economic means in a democratic society. Given the choice of increasing production or voting a subsidy to one's income (and that of one's fellow class members), the choice was obvious.

However, Epstein's Law does not apply to naked transfers of power and wealth, such as would easily be recognized as an ordinary criminal act. Rather, the legitimacy of the exploitation is justified by conceptually overlaying society with an institution called "the State," which impersonates society through the pretense of organizing the social whole, this idea having rooted itself as a mental habit characteristic of the population at large.

As Nock writes in Our Enemy the State,

"It is a commonplace that the persistence of an institution is due solely to the state of mind that prevails towards it, the set of terms in which men habitually think about it. So long, and only so long, as those terms are favorable, the institution lives and maintains its power and when for any reason men generally cease thinking in those terms, it weakens and becomes inert." (Nock 1935 HI, Pt. 2)

Note in this passage Nock's appeal to collective mental representations on the part of the population at large. We will examine subsequently how this kind of discourse raises questions among methodologically rigorous libertarian theorists on the grounds of (1) methodological individualism, and (2) antipsychologism.

Nock continues:

"Thus it is that what we are attempting to do in this rapid survey of the historical progress of certain ideas, is to trace the genesis of an attitude of mind, a set of terms in which now practically everyone thinks of the State and then to consider the conclusions towards which this psychical phenomenon unmistakably points. Instead of recognizing the State as 'the common enemy of all well-disposed, industrious and decent men,' the run of mankind, with rare exceptions, regards it not only as a final and indispensable entity, but also as, in the main, beneficent. The mass-man, ignorant of its history, regards its character and intentions as social rather than anti-social and in that faith he is willing to put at its disposal an indefinite credit of knavery, mendacity and chicane, upon which its administrators may draw at will. Instead of looking upon the State's progressive absorption of social power with the repugnance and resentment that he would naturally feel towards the activities of a professional-criminal organization, he tends rather to encourage and glorify it, in the belief that he is somehow identified with the State, and that therefore, in consenting to its indefinite aggrandizement, he consents to something in which he has a share — he is pro tanto, aggrandizing himself." (Ibid.)

Again note Nock's appeal to a "psychical tendency" as the salient support of the state system, a procedure that would seem to lay him open to charges of philosophical idealism. However, the laws of human nature that Nock appeals to are self-evident, even though his use of them makes his theories wander off in directions different from those taken up by later libertarian theorists, such as Rand and Rothbard, who were wary of discouraging their followers by saying anything that could be construed as deterministic or pessimistic.

Furthermore, Nock sees human motives as playing themselves out in terms of control of the factors of production. This element of economic realism Nock acquired not from Marx but from Henry George, leader of the single-tax movement, who saw economic exploitation as tightly bound to land monopolies. Nock combined this Georgist political economy with Beard's analysis of the establishment of the American state and generalized these into an overall explanation of statism:

"Bearing in mind that the state is the organization of the political means — that its primary intention is to enable the economic exploitation of one class by another we see that it has always acted on the principle already cited, that expropriation [of rights in land] must precede exploitation. There is no other way to make the political means effective. The first postulate of fundamental economics is that man is a land-animal, deriving subsistence wholly from the land." (Nock 1935, chap. 4, sec. i)

III. The Three Laws Exemplified through Historical Case Studies: The French and American Revolutions of the late 18th century

Nock's method in political economy was neither abstractly theoretical nor uncritically historical. Rather we see in his works an interplay between abstract laws and their working out in a historical context. In Memoirs of a Superfluous Man, he shows how the schematic of the three laws was manifested in the progress (or rather regress) of the French Revolution. At first the actors in this drama were motivated by idealism rather than political competition:

"In response to an urgent social demand, a revolutionary régime was set up in France in 1789. At the outset it was backed and promoted by men of far-seeing intelligence, including a good part of the aristocracy. They charted the revolution's course, and made a good job of it. Taine says truly that the French aristocrats were never so worthy of power as when they were on the point of losing it. The thing to be remarked is that the primary interest of these men and the primary intention of the revolution were social." (Nock 1944, p. 165)

However, as the revolution institutionalized itself into a New Regime rather than simply an anti-Old Regime movement, the laws of political process began to come into operation.

Then at the moment when the revolution became a going concern, Epstein's law brought in a waiting troop of political adventurers whose interest was not social but institutional. Their views of the social demand which brought the revolutionary organisation into being were shaped by that interest.

As Benjamin Franklin put it, they were of the sort whose sense of political duty is, first, to themselves; second, to their party; and third (if anything be left over) to society. Their aim was to make the revolution serve this institutional interest, and in virtue of their numbers and peculiar aptitudes they rather easily did so.

Then Gresham's law struck in. As the numbers of this latter group increased, their interest became the prevailing interest, and their view the prevailing view. Social interest was rapidly driven out, and as almost always happens in the case of political revolutions, those who represented it were lucky if they escaped with their lives.

Then finally the law of diminishing returns took hold. As the institution grew in size and strength, as its confiscations of social power increased in frequency and magnitude, as its coercions upon society multiplied, the welfare of society (which the original intention of the revolution was to promote) became correspondingly depleted and attenuated. (Ibid. pp. 165–6)

As important as the French Revolution is as an instantiation of Nock's political economy, the true locus classicus that provides the test of the Nockian worldview is the evolution of the American governmental system, especially the period from the 1770s to the early 19th century. This history is covered in what many consider to be Nock's magnum opus, Our Enemy the State. In this work the influence of the three laws does not provide the explicit framework of the historical narrative in the way that characterizes Nock's synopsis of the French Revolution above. Nonetheless it is implicit in the analysis, and below I will paraphrase parts of that longer work in such a way as to draw attention to these underlying axioms.

What makes this history the classical exemplification of Nock's world view is that it combines the three laws, the distinction between social and state power, and the radical Georgist critique of land tenure and land speculation which can best be illustrated by the economic history of the United States constitution. It is well known, both in America and abroad, that the United States was transformed from a loose confederation into a strongly united republic through the adoption of the present constitution in 1789. What is less widely understood is the social dynamic that motivated this move in the direction of centralization. It is this dynamic that Nock seeks to explain in Our Enemy the State.

Nock notes that from their initial beginnings the English colonies were a mix of political and economic governance, with the former tending to predominate along the Atlantic seaboard; however, the revolution of 1776 opened up a unique opportunity to reform a society in the direction of economic governance. According to Nock, this opportunity was squandered and by 1789 the United States had reverted to the pattern that existed in Britain and the continental European states, minus a few of the feudal trappings.

The constitution devised by Alexander Hamilton and his Federalist colleagues represented a virtual coup d'état against the local interests, which favored the Articles of Confederation of 1783. They had outwitted and outmaneuvered their Antifederalist opponents in the constitutional convention of 1787 and the ensuing ratifying state conventions, thus enabling their faction to set the political agenda of the emerging republic. Nock quotes the observation of the man who was soon to become Hamilton's opponent, Thomas Jefferson, who had been abroad as ambassador to France during the entire episode. Almost pathetically Jefferson wrote, "I hope to receive soon permission to visit America this summer … and to possess myself anew, by conversation with my countrymen, of their spirit and their ideas. I know only the Americans of the year 1784. They tell me that this is to be much a stranger to those of 1789."

The Constitution of 1787 had been set up, according to historians of the Beard school, through the cooperation of several property-holding elites, notably speculators in western real estate who needed enforceable, non-conflicting legal title to their claims, a condition which could only be ensured by the permanent establishment of a strong central government. They were joined by creditors and merchants in the East who saw the new regime as an agency for debt-collection and the protection of commerce.

It is important that Nock does not glorify either this mercantile/speculator cabal or its opponents, the Jeffersonian agrarians and debtor classes. Rather he generalizes the motivations of both factions under the rubric of Epstein's Law. That is to say, both groups were attempting to use political means to their economic advantage as a substitute for reliance on their own productive efforts. In Nock's political economy, as opposed to that of the Marxians, there is no exceptional class, the victory of which expresses the goal of history and the universal interest of the human race. Indeed, in Nock's later thought there is no "human race" at all, since the triumph of any universal class would be constrained by the operation of Gresham's Law which, interpreted in Nock's terms, would reduce all values to the most common, essentially pre-human instincts and drives. For Nock, such hope as exists for human beings stems from individual excellence, not the teleology of classes.

To some extent this elitism was reinforced by the skepticism of Ralph Adams Cram regarding the sapience of the average human, a view which Nock came, somewhat reluctantly, to share. However, it may also be seen as the logical outcome of Nock's political economy, a theory that holds out little hope for common betterment through political means. Thus Nock came to see himself as less of a contemporary libertarian advocate than a bellwether for posterity, writing to a future "remnant" of humanity.

In the concrete example at hand we see that the land speculators of 1787 were unwilling to submit to economic governance, or what some contemporary theorists would call "the libertarian law code." The people of that time were already quite capable of conceiving the notion of "homesteading" as enunciated by John Locke (1632–1704). They might be expected to appreciate the notion that land could be appropriated only by farming virgin territory or purchasing it from previous users (presumably the native population). However, they were not farmers but rather, at most, surveyors who measured out large blocks of territory on the basis of fictive grants from legal authorities. The land could then be sold, often many times over, before coming into the hands of actual users. This resulted in financial gains, which came at the cost of far less effort than that of a typical homesteader, a classic case of using political rather than economic means to gain wealth. In Nock's view it was also an instantiation of the working of Epstein's Law.

Nock is not so naive as to imagine that the agrarians and the debtors of 1787 would have eschewed political means to get them out of their own predicaments, that is to say, that they would have been exempt from the universal workings of Epstein's Law. He does not reverse the Marxian dialectic and glorify the losers rather than the winners of class struggles. Nonetheless the Federalists (speculators, merchants, and bankers) did win, and the etiology of American statism can only be studied with regard to the fortunes of that party.

The next stage in the establishment of the national government illustrates the operation of Gresham's Law. The original cabal of Federalists included many of the ablest and brightest men in Anglo-America, including Hamilton, Washington, and Adams, as well as many lesser luminaries. Their ingenious statesmanship not only resulted in the foundation of the American political system but was remembered in the mythos of the "founding fathers" as a variant on the theme of the philosopher king or epic lawgiver.2 Nock notes that these statesmen-like figures lingered for an uncommonly long period on the political scene, buttressing the constitutional scaffolding that they had so carefully erected. As Beard had pointed out, they were by no means selfless in their class interests, but by the standards of the time they were on the whole honorable — or at least intelligent.

Nonetheless, the workings of what Nock termed "Gresham's law" soon put an end to that, as public offices multiplied under the national system. A new class of political job seekers came into existence, whose only means of subsistence was to pledge their loyalty to a party and receive a government post in what became known as the "spoils system." The first generation of constitution-making Federalists, like their Jeffersonian opponents, were men of means who employed their surplus talents in public service and at a private loss. They benefited as a class from the establishment of a national government, but they were overqualified and under-remunerated in its administration. With the development of a political class the situation reversed itself, with the entry into public life of men who, unable to earn a living in a trade or on the frontier, had to fall back on political means to support themselves.

As a result, the services of the government, which never approximated the ideal of general welfare, came increasingly to accrue to the political jobholders and their clients. This in turn led to the working out of the third law, which Nock terms the law of diminishing returns.

The initial benefits of government, security and civil peace, were indiscriminately beneficial to the entire population of the polity, but as functions of the government began to multiply and specialize, these became of increasing benefit to specific sectors of the population, while the costs were born by the generality of the taxpaying public. Therefore in terms of general welfare, the average benefits of governance tend to decline with its increase. That specialization and multiplication of offices over time would inevitably increase was assured by Gresham's Law, which insured that disinterested statesmen would decline office, leaving the field to candidates who would see office as a way of extending their authority and revenue.

The Federalist movement was partially checked by the "revolution" that swept Jefferson and the Democratic-Republicans into power in 1800. However, by that time the organic institutions of the federal state had been well established. John Adams, on the last day of his presidency, multiplied the federal district courts and staffed them with Federalist party loyalists. Jefferson resigned himself to the reform, rather than the destruction of this system, and even so was only partially successful. Jefferson himself was, of course, an idealist and never imagined that the nascent republic he presided over would some day become a vast imperial state.

He seems to have imagined several independent republics in the west, such as Oregon territory becoming a "Cascadia" Republic … ideas perhaps forestalled by the abortive Wilks/Burr conspiracy in Louisiana. Even the individual states were too large for Jefferson, and he hoped that the primary political unit would be what he called the "ward" consisting of a single autonomous town or village.

His own actions and those of his fellow party members betrayed him, and according to Nock, he fell afoul of the inexorable laws of political economy which have already been enunciated. Nock tells us how Jefferson wrote a friend in 1800,

"'a single consolidated government would become the most corrupt government on earth,' and twenty-one years latter he remarked … that, 'our government is taking so steady a course as to show by what course it will come to destruction, to wit by consolidation first, and then corruption, its necessary consequence. The engine of consolidation will be the federal judiciary; the other two branches the corrupting and corrupted instruments.'" (Nock, Jefferson, p. 269)

Nock goes on to ask,

"But why? What was the substantial motive of this surreptitious movement towards centralization?" (Ibid.)

Jefferson himself never quite realized why his own party deserted the ideals of small government. According to Nock he could only deplore,

"'[t]he present distinction between the Republicans and the pseudo-Republicans, but real Federalists.' One may pause upon these words. In his reflections on the schisms and defections that took place in his second term, discovering himself so much alone in his resistance to the surreptitious structural refashioning of the government, Mr. Jefferson, like Hamilton, failed to reckon with one most important effect of the cohesive power of public plunder. … Mr. Jefferson never seemed aware that the prospect of getting an unearned dollar is as attractive to an agrarian as it is to a banker; to a man who owns timber or mineral deposits as it is to one who owns governmental securities or who profits by a tariff. For this reason he could not understand why [Democratic-] Republicanism almost at once became a mere name." (Ibid. 273–4)

We see here the cogency of Nock's class analysis, a class analysis that sees diverse interests collaborating in political means of governance, means that lead to the insidious usurpation of social power by state power. This usurpation, again in Nock's view, went hand in glove with a rise in war, intra-social conflict, arbitrary authority, indebtedness, and many other injustices.

Making Nock Superfluous: How and why various schools have ignored his political economy

I. Neoclassical Economies and the Mainstream

It is hardly surprising that the generality of mainstream economists and social scientists have ignored the work of Albert Jay Nock. Nonetheless it is useful to reflect on the reasons why this might be the case. It is not a matter of Nocks work being insufficiently technical. Certainly this would figure largely in any attempt to discredit Nock, but it is not the salient divide between Nock's way of thinking and that of a typical academic engaged in public economics today.

Generally speaking economics today is considered a "policy science" — that is, it performs its function as a servant of the state rather than a pure science. The goal is to enrich the state, and to provide for harmony and compliance among various sectors of the body politic. In contrast, Nock's mode of thinking was universal, and aimed at uncovering the truths of human nature acting in society. Thus contemporary economists could be described as engaging in what the Greeks would call techne rather than theoria. This doesn't primarily mean that they use advanced mathematical algorithms in their work, although they generally do. What it means is that they are interested in advising society as a whole (in fact the state) as to what strategy will bring about certain concrete benefits.

In that case we might call neoclassical economics subjective economics, in the sense of subjective knowledge intended to bring about desirable results for a certain class of people.3 In contrast we might call Nock an objectivist in the sense that he was dealing with disinterested truisms concerning human nature, rather than advancing particular interests (wealth, welfare always in reference to a "society," circumscribed by territorial limits and in fact corresponding to a political unit). Ironically, considered from this angle, Nock the avowed humanist turns out to be more scientific in the pure philosophical sense of "theoria" than today's number-crunching mainstreamers.

II. Public Choice and More Geometrico

Among the knowing and unknowing heirs of Nock the school of Public Choice must be given prominent mention. The central idea of public choice, as formulated in the school of James Buchanan (1919–) and Gordon Tullock (1922–) is that political outcomes can be determined by the values and expected behaviors of players under specific sets of circumstances. This bears a strong family resemblance to Nock's way of theorizing, in that the three laws utilized by Nock also led to specified outcomes under the conditions of political government. However, the Public Choice school has always had a strong interest in fine-tuning the predicted outcomes of public policies as well as basic constitutional considerations. What, in the case of Nock, were broad generalizations concerning human nature have been transformed by the Public Choice school into algorithms of the political process. One thing that is missing is Nock's normative commitment to libertarianism, something that Public Choice economists reduce to the level of a methodological principle.

Public choice economists often equate anarchism with the Hobbesian "state of nature" and then theorize the steps by which this condition is transcended through mutual bargaining. Nock didn't hypothesize any evolutionary baseline such as a "state of nature," but rather conjectured how an essentially changeless human nature might eventuate in either political or economic government, depending on whether or not conditions favored monopoly. As one might guess, the more geometrico reasoning of public choice tends to reinforce consensus views, giving political scientists a view of how to "fine-tune" the relationship between political agents and the constituencies they represent. This is far from the radical view of Nock, who rejected modern politics as altogether decadent.

III. Austrianism and Praxeology

The Austrian School, which in large part embraces philosophical principles congenial to those Nock advocated, began to impact American thinking in the years immediately after Nock died. In particular, the leaders of what have been called the "third generation" of Austrian thinkers, namely, Ludwig von Mises and Friedrich Hayek, were able to relocate outside of Central Europe before the war years. This brought a renewed rigor to the economic case for liberal principles of free trade, open markets, and limited government. However, it also gave many advocates of liberalism (or libertarianism as it now came to be called, in contradistinction to social liberalism) the impression that an economic defense of the free market was not only necessary, but even sufficient to bring about a freer society. In this respect, as in so many others, Nock was much more circumspect in his view of what was, and what was not, possible.

Nonetheless, the newly self-conscious libertarian movement retained a respect for the works of Nock as important landmarks in the exposition of liberal principles. However, they were treated as works of advocacy rather than theory. At last, it seemed, libertarianism had found its definitive conceptual foundation, and it was not in the humanism of Nock but in the praxeology of Ludwig von Mises. To be sure, there was a more total ideology offered by Ayn Rand's "Objectivism," a worldview that exploded into the cultural mainstream of America during the 1950s and '60s — only to wither into a cult-like shell of itself as the 20th century marched towards its end.

It would be a fair generalization to say that while all Randians recognize and respect the contributions of Austrian economics to libertarianism, not all libertarians are in similar agreement with regard to Rand's contribution. Therefore one can say, with little exaggeration, that Austrian economics is the mainstay of libertarian thinking in American, hence worldwide, libertarian thought. In this regard an analogy may be made between the "Austrian turn" in 20th-century liberalism and the division of 19th-century socialism into a "pre-scientific" and "scientific" phase, punctuated by the adoption of Marxism as that movement's ideology.

With Mises's ouster of Nock and Mencken as the touchstone of American individualist political theory, the libertarian movement could congratulate itself as being on the road to a true science. Nock, Mencken, Garrett, et al. were now reduced from expositors of political economy to curmudgeonly journalistic figures … not so much libertarians as proto- or paleo-libertarians.

Although Mises and his admirers rejected scientism in economics and sociology, they were obliged to replace the mathematical basis of neoclassical economics with a competitively rigorous foundation. This foundation was Mises's "praxeology," a purely logical science of human choice that constituted the axioms from which all the lesser laws of economics, and hopefully sociology, could be deduced. Although ignored by the neoclassical mainstream, praxeology was wildly successful among Austrians and libertarians, and from the time of the publication of Mises's magnum opus Human Action (1949) has served as the philosophical standard for all purist approaches to the free market.

In contrast to the rigorously axiomatic form that Austrian economics took in its Misesian version, Nock's forays into political economy seemed retrospectively ad hoc. Nock's three laws, though working well enough to explain the historical dynamic of the Federalist coup d'état against democratic agrarianism (i.e., the data provided by Charles Beard's study) was never articulated as a general model for the social sciences. More fundamentally, those components of Nock's model that were borrowed from economics and applied to sociology, seemed intolerably inaccurate once libertarians began basing their thought on economic logic (praxeology) rather than ad hoc theorizing.

The parts of Nockian political economy he had borrowed from the tradition of economic theory, namely, Gresham's Law and the law of diminishing returns, underwent a metamorphosis in the context of Nock's application. Gresham's Law was originally a formulation of monetary theory. Although an often bantered-about term, it is also generally misunderstood. As Murray Rothbard notes,

"Gresham's Law [was] one of the first economic laws to be discovered. Few have realized that this law is merely a specific instance of the general consequences of price controls. Perhaps this failure is due to the misleading formulation of Gresham's Law, which is usually phrased: 'Bad money drives good money out of circulation.' Taken at its face value, this is a paradox that violates the general rule of the market that the best methods of satisfying consumers tend to win out over the poorer. … Actually, Gresham’s Law should read: 'Money overvalued by the State will drive money undervalued by the State out of circulation.'" (Rothbard 2000, pp. 898–899)

Nock's use of "Gresham's Law" lifts it out of its original monetary context in order to make a general sociological statement. Nock wants to say that things of lesser value tend to gravitate to the public sphere while things of greater value tend to be kept in the private sphere. In the context of Nock's historical treatment this refers particularly to human talents. Nock is saying that people with meager talents tend to compete for public office since this is the only sector where they can compete with people of greater talents and win by chicanery. In contrast, someone with greater talents would be squandering their life in public service. Here there is only a suggestive, rather than an exact, analogy to Gresham's Law. The state is, in a sense, overvaluing the service of political jobber, but the person who goes into the private sector is not exactly hording his or her talents, since he or she is, as it were, "circulating" all the same. Nock seems to be saying something important, but his quasi-economic mode of expression, picked up from the Single-Tax movement or the Beard school, makes his argument seem antiquated.

This is even clearer in the case of the law of diminishing returns. Nock's notion of "diminishing returns" refers to the decrease in efficiency that results from the tendency of bureaucracies to extend their oversight to ever-wider spheres of responsibility. This bears only a rhetorical similarity to the economic concept of "diminishing marginal utility." This latter concept refers to the lowered value of each unit of a good when a new unit is added to stock. Thus the use-value of one's first and only loaf of bread will be higher than the thousandth loaf one has in stock. There is no ethical value attached to this "diminishing" in pure marginal utility theory. In contrast Nock's thesis is that a bloated bureaucracy will be of ever-less use to society … a statement he intended as a condemnation of political power.

Thus in contrast to the tightly logical nature of Austrian economics, Nock's theories seem to be little more than loose talking about the ills of society. Moreover the point at which Nockian social commentary departs from praxeologically based economics can be specified with even greater clarity. Nock does not make a rigorous distinction between human action theory and psychology. Mises, in his great work Human Action, and elsewhere, went to great pains to show how human economic behavior could be understood without access to the vague data of consciousness. Mises divided the study of the human mind into two branches: (1) praxeology, the a posteriori study of human choice and action, and (2) thymology, the study of whatever interior states might have preceded manifest behavior. In Misesian economics psychology, newly dubbed "thymology" is considered to be useless. Economics can be founded upon a logic of choice alone, and indeed the intrusion of psychological data into economic theory is a fertile source of error.4

Nock was interested in articulating truisms of human nature, while Mises wanted to establish an airtight epistemological basis for economic, and hopefully social, science. In pursuit of this goal, Mises was forced to banish psychology from economics. In Mises's terminology, psychology lost its very name and was reformulated as "thymology." In part this was a helpful distinction between that part of psychology that lay on the nature side of the human/nature divide — "psychology" (behaviorism, neurology, etc.) in contrast to "thymology" which lay on the human side (analytic, depth, Gestalt psychology, etc.).

However, there was another sense in which the term "thymology" was intended to serve the same role in Misesian economics as the "things-in-themselves" served in Kantian epistemology. Thymology was put beyond the pale of science in order that (in this case economic) science might be made more rigorous. It was an important methodological consideration but it came at the price of a further disjunction: that between Austrian economics and libertarian social theory. We will conclude by considering the costs and consequences of this disjunction and the prospects for the revival of the Nockian project.

Nockian Humanism Vindicated

I. The costs of antipsychologism

Those who have sought to make Austrian economics the theoretical basis for libertarian thought have had to wrestle with the term "subjectivism." This is obviously a homonymous term, the multiple uses (and abuses) of which stretch across many theories and disciplines of the social sciences. In marginal utility theory, subjectivism has a very clear meaning, referring to the fundamental nature of human choice and evaluation in economic exchange, price formation, etc. However, in establishing the axioms and criteria of economic science, Austrians, more so than most other schools, have attempted to avoid "subjectivism" in the bad sense of relying on the vague data of consciousness. Hence Austrianism is considered to be "antipsychologistic." This is a credible stance in economics, where the objective is to understand the nature of the market process. Indeed, Austrianism has successfully endeavored to show, not only that the market works, but how it works as well.

This is a necessary endeavor in pursuit of a liberal, or libertarian, society. However, it may not be sufficient to attain such a goal. The task of the libertarian theorist is not only to show that a free society would work, but also to diagnose the barriers that stand in the way of such a society's realization. Attempts to broaden Austrian economics into a comprehensive philosophy of life and politics have run afoul of the simple word "subjectivism." After all, it is not clear how even the best defense of the market can overcome the axiomatic nature of subjective choice.

If people want tyranny, shouldn't they be allowed to have it? The question of what people want and why they want it is fundamentally a psychological one, and thus a problem that Austrian economics seems to have abdicated.

II. Nock and the merits of noble rhetoric

Thus Nock's political economy stands accused of being "unscientific" even by Austrian, let alone positivist, standards. However, one wonders if Nock would even have cared. He seems to have been willing to posit theses about human beings in such a way that they would be subject to the bar of informed judgment rather than rigorous proof. This mode of argumentation is neither inductive like that of positivism, nor deductive, like that of the Misesians. Rather it is rhetorical in the classical sense given to "rhetoric" in Ciceronian humanism.

Rhetoric would seem out of place in the field of political economy, in contrast to public speaking. And indeed ever since Plato's dialogue Gorgias, rhetoric has had an evil reputation among scientific and philosophical purists. No more is this the case than in economics, even, or perhaps especially, Austrian economics. Murray Rothbard, Ludwig von Mises's successor as dean of the Austrian school, criticized those of his fellow economists who were trying to slip in hermeneutic reasoning as a tool for understanding the market. Yet even Rothbard acknowledged that there was such a thing as "noble rhetoric" — that is, a rhetoric that puts itself at the service of reality, or what Nock would call "seeing things as they are."

Nock's aim was far larger than simply showing that "the market process works." It was, in fact, more concerned with showing how politics doesn't work. What is needed in libertarian theory today is not to prove that there is a "promised land," but any contribution to clearing a road that might lead there. This is a complementary task to that of market economics, and a vital one. It asks questions not about prices and markets, but salient questions nonetheless: Why do revolutions fail? Why do people voluntarily submit to servitude? These questions remain as vital to the world of the early 21st century as they were to the early 20th century of Albert Jay Nock. His laws have not stood the test for inclusion into scientific economics, but they have passed a more important test: the test of time. Indeed, Nock's writings are political economy for anyone willing to consider political economy a branch of the humanities.

  • 1. Everybody would admit that Nock was a humanist in the sense propounded by Irving Babbitt (1865–1933) who defined "humanist" as a person who takes their own culture and views from the best which had been offered from the timeless works of classical literature rather than the popular culture of the day. That Nock was a humanist from the start of his intellectual career contributed towards his skepticism towards many of the illusions of his day and launched him on his journalistic career as a critic of government. The question discussed here is whether such "humanism" can translate into sound social science or whether it is too ideal and literary from the outset. Note also that this use of "humanist" is different from "secular humanist," meaning a skeptic in religious matters.
  • 2. In fact "the founders" created no basic laws but only devised a system of administration.

    The colonies were never under a system of anarchy (in the bad sense of the word) but had possessed since their founding the parallel legal systems of common law, merchant law, king's law, and (in some places) canon law. In other words, they already had a constitution in the sense that Friedrich Hayek (1899–1992) speaks of as "the constitution of liberty" in his study of the same name. To be sure, pre-1787 law was not perfect, but it contained the seeds of liberty.
  • 3. This is not to be confused with subjective in the sense of subjective utility, the analysis of which is most consistently carried out by the Austrian school.
  • 4. The classic example of this error in economic theory is the failure to distinguish what is now called "Gossen's Law of satisfaction of wants" from the law of diminishing marginal utility. In the case of a consumable, like bread, we can see how the first piece might be delicious but increased consumption would lead to satiation. This is an important psychological fact but it is imprecise as a basis for marginal utility theory. The latter is a purely logical deduction of the relationship between increasing numbers of units in stock and decreasing utility for each added unit. If the theory of decreasing marginal utility were merely a description of satiation then there would be no general theory which could embrace consumable and non-consumable goods (such as capital goods).
Categories: Current Affairs

Understanding Russia's War: The Strange Philosophy of Aleksandr Dugin

Mises Institute - Mon, 23/05/2022 - 19:45

Trying to interpret the actions of Vladimir Putin or politics in Russia using Western narratives is likely to end in failure.

Original Article: "Understanding Russia's War: The Strange Philosophy of Aleksandr Dugin"

This Audio Mises Wire is generously sponsored by Christopher Condon. 

Categories: Current Affairs

Austrian Economists Are Not Surprised by the Shortages

Mises Institute - Mon, 23/05/2022 - 17:00

In the last few years, it seems as if there has been a hot new story about a different commodity facing some form of shortage every single day. Most recently we have seen a baby formula shortage. However, that is most certainly not the only one we have seen of late. We have seen chicken wing shortages, lumber shortages, medical product shortages—heck, even toilet paper shortages (although I’ll admit that that last one was probably nothing more than goofy panicking). I’d venture a guess that there is not a single person reading this who has not been affected by some shortage in the past few years, or even in the past year alone.

Each of these shortages seemed to have its own answer. There is a pandemic; no one can work. There is a pandemic; demand is up for the product in these uncertain times. The Suez Canal is blocked, so everything is backed up. There have been serious supply chain issues. We could potentially be at war with Russia in Ukraine any day. Well, regulations have messed with the market and caused this shortage. All of these arguments consist of very valid points. If any one of these shortages had happened alone, it might even be safe to say there was nothing else to it. However, seeing this spree of shortages, it has to be addressed that there is more going on. In Murray Rothbard’s America’s Great Depression, he addresses these clusters of errors:

The better entrepreneurs, with better judgments in forecasting consumer or other producer demands, make profits; the inefficient entrepreneurs suffer losses. The market, therefore, provides a training ground for the reward and expansion of successful, far-sighted entrepreneurs and the weeding out of inefficient businessmen. As a rule, only some businessmen suffer losses at any one time; the bulk either break even or earn profits. How, then, do we explain the curious phenomenon of the crisis when almost all entrepreneurs suffer sudden losses? In short, how did all the country’s astute businessmen come to make such errors together, and why were they all suddenly revealed at this particular time?

The same comparable question can be asked today. Sure, supply chain issues happen. All sorts of issues happen. As a result, shortages are going to happen. Certainly, in a mixed economy like ours we will inevitably see interventions that cause occasional shortages in various different markets. But that would not be enough to explain such a string of shortages all at so close to the same time. For the answer, we again turn to Rothbard:

Businessmen were misled by bank credit inflation to invest too much in higher-order capital goods, which could only be prosperously sustained through lower time preferences and greater savings and investment; as soon as the inflation permeates to the mass of the people, the old consumption-investment proportion is reestablished, and business investments in the higher order are seen to have been wasteful. Businessmen were led to this error by the credit expansion and its tampering with the free-market rate of interest.

Put in much less jargony terms, credit rates tell businessmen how much the average person has saved—and thus how much they prefer goods now or later. Businessmen will invest for the future based on that. When the rate is lowered artificially, businessmen think people prefer future goods over present goods much more than they do, and they plan for them. Sooner or later, the reality of what people have actually saved and actually prefer sets in, and the businessmen’s plans end in a cluster of errors all at once.

This is exactly why these shortages are not particularly surprising from an Austrian perspective. By investing in the future when the savings are not really there to support it, one ends up planning for a population that seems to need a lot less now than is really the case. As a result, when the public’s real present needs make themselves known, the entrepreneur’s plans have shifted too many resources to the future, and as a result, we see these shortages in the present. Suddenly, we have a cluster of shortages in every market imaginable and a new story on the news every day.

This is not in any way to say that all the other explanations are incorrect. There certainly have been supply chain issues. Regulations have certainly placed a stranglehold on markets. Production certainly was curtailed for years. All these problems are intensely real and certainly need to be addressed as well. This is simply to show why we should not be surprised to see these shortages come suddenly and why we should not be surprised as more come up in the future.

Categories: Current Affairs

The Pandemic of Executive Overreach Comes to an End. When Will the Next One Begin?

Mises Institute - Mon, 23/05/2022 - 12:00

Over the past few decades, the executive branch of the federal government has taken an increasingly autocratic approach to governing. Past presidents have unilaterally attempted to bypass Congress due to partisan gridlock and the inevitable tug-of-war involved in governing a nation of 330 million people. President Joe Biden has governed in a similar fashion, regardless of progressive anger at him for not “doing something.”

The covid-19 pandemic prompted public acceptance of a similar phenomenon at the federal level and across a majority of the fifty states. Most state executive branches responded to the pandemic with unilateral action. The federal executive branch was constrained in its approach to the pandemic because states possess more power than the federal government in responding to declared emergencies. Congress could have passed laws granting explicit statutory authority to the president, but it has in recent decades preferred to defer its governing authority to the president.

Republican senator Ben Sasse summarized this phenomenon back in 2018: “The real reason [Congress] punts most of its power to executive-agencies is because it is a convenient way to avoid responsibility for controversial and unpopular decisions. If your biggest long-term priority is your own re-election, then giving away your power is a pretty good strategy.” As Rich Lowry writes in National Review, Congress has been a complicit if not “eager participant in its own neutering.” This principle has been especially true throughout the pandemic.

Many of the federal government’s covid-19 pandemic measures could have been statutorily authorized by Congress. However, Congress has been eager to shift its responsibilities, and thus accountability, to the president. Congress has delegated authority to the executive branch for decades, but today’s Congress is plagued by loyalty to political party over loyalty to the institution. As Lowry states, “What’s new is that partisanship has created a loyalty for members of Congress that transcends their attachment to Congress itself, while more and more members consider their office merely a platform to get attention.”

In keeping with the executive branch’s encroachment on legislative activities, the Biden administration directed numerous executive branch agencies to adopt contentious nationwide policies. Often, these directives stretched the various agencies’ statutory authority. Since President Biden’s inauguration, the Centers for Disease Control and Prevention (CDC) and the Department of Labor’s Occupational Safety and Health Administration (OSHA) have issued widely applicable edicts, most notably a sweeping eviction moratoriumvaccine mandates, and mask mandates. Many states and localities separately introduced their own measures to supplement federal policy. While many, if not most, of these covid restrictions have ended, it is important to understand how the executive branch lost these three major legal disputes.

The CDC’s Eviction Moratorium

In March 2020, Congress passed the CARES Act. The CARES Act provided aid to individuals and businesses adversely affected by covid-19, but buried within the bipartisan spending package was a 120-day moratorium on eviction filings. The Trump administration, however, did not allow the moratorium to expire. Instead, the administration’s CDC “instated on September 4 a moratorium on evictions for nonpayment of rent for tenants,” which was set to expire on January 1, 2021. The Biden administration continued to extend the CDC’s eviction moratorium until the Supreme Court ruled against the measure’s legality on August 26, 2021.

In criticizing the CDC’s legal authority, a majority of the Supreme Court asked, “Could the CDC, for example, mandate free grocery delivery to the homes of the sick or vulnerable?” The Supreme Court separately noted that the CDC’s temporarily expanded statutory authority “is a wafer-thin reed on which to rest such sweeping power.” The CDC’s eviction moratorium is just one example of an executive branch agency overstepping its statutory authority.

Vaccine-or-Test Mandates

Throughout the early months of the Biden administration, the administration and the corporate media pressured all eligible Americans to receive the covid-19 vaccines. As Americans ignored the Biden administration and public health “experts,” the White House became increasingly disdainful of those who were skeptical of the covid-19 vaccines. While a slim majority of eligible Americans opted to voluntarily receive the covid-19 vaccines, the minority was labeled as “antivax” despite their variety of reasons for not getting vaccinated, including medical conditions, vaccine hesitancy, and the lack of rigorous long-term study of the vaccines’ side effects. The Biden administration continued to grow enraged that nearly half of eligible Americans ignored their expertise.

In September 2021, White House announced a “vaccine or test” requirement through legal maneuvering. The most wide-ranging requirement came from OSHA’s emergency temporary standard (ETS), which required employers to determine the vaccination status of each employee, obtain acceptable proof of vaccination status, and maintain records of each employee’s vaccination status. The ETS required each unvaccinated worker to test for covid-19 weekly. At that time, an unvaccinated worker was defined as an individual without two doses of the mRNA vaccines (Moderna and Pfizer) or one dose of the Johnson and Johnson vaccine; the ETS was purposefully silent on those who had natural immunity (immunity from previous exposure to the virus).

As expected, special interest groups immediately challenged the OSHA ETS in court. The legal challenges ended on January 13, 2022, with the Supreme Court ruling in favor of the National Federation of Independent Business over OSHA. The Supreme Court found that “permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization.”

Mask Mandates

On January 21, 2021, President Biden issued Executive Order 13998, which directed executive branch officials to require individuals to wear masks while engaging in domestic and international travel. On February 3, 2021, the CDC published its mask mandate for domestic and international travel, bypassing the Administration Procedures Act notice and comment procedures. The CDC defended its actions by claiming “it would be impracticable and contrary to the public’s health” to delay the mandate.

In March 2022, the Senate voted 57–40 to “overturn a federal requirement that passengers on airplanes and other modes of public transportation wear masks.” However, the Senate failed to reach the sixty-vote requirement, so this measure failed. In April 2022, the CDC’s interstate travel masking requirement stood as the last visible relic of the federal government’s covid-19 regime. The Biden administration publicly supported the continued enforcement of this requirement and renewed the mandate for one more month on March 18.

On April 18, 2022, district judge Kathryn Kimball Mizelle struck down the CDC’s mask mandate. Progressives were quick to deride Judge Mizelle and her ruling. Dr. Anthony Fauci’s criticism of this ruling resembled that of a high priest: “the principle of a court overruling a public health judgment by a qualified organization like the CDC is disturbing in the precedent that it might send.”

After two years of governance by public health “expert,” courts have finally found the courage to confront emergency power abuses at the federal level. As Justice Neil Gorsuch wrote, “Even if the Constitution has taken a holiday during this pandemic, it cannot become a sabbatical.”

Conclusion

After more than two years of a constitutional sabbatical, federal courts have overturned the most egregious abuses of covid-19 emergency power. Unfortunately, the president remains undeterred from implementing his party’s preferred policies through unilateral action. Progressives in Congress have pressured President Biden to unilaterally cancel student loan debt. His colleague Representative Jim Clyburn explained an approach that mirrors the Biden administration’s guiding legal principle: “So my whole thing is, use your executive authority and let the courts have at it.” President Barack Obama governed in a similar manner, “I refuse to take no for an answer…. When Congress refuses to act … I have an obligation as president to do what I can without them.”

Given the Biden administration’s legal track record, one would expect their legal approach to change; however, this seems unlikely, given the executive branch’s trajectory in recent decades. “Do what you want until the courts say it’s illegal” is not a legitimate or democratic governing principle in a twenty-first-century constitutional republic. The most obvious solution to this crisis of legitimacy is for Congress to regain its mantle as the legislative body and to accept accountability for contentious policy issues.

Unfortunately, there are no signs that Congress is willing to take any positive steps in that direction. Both major political parties have been vocal opponents of the imperial presidency, but “when the need to build a legislative consensus does come up, [presidential] candidates simply promise to [implement policy] themselves.” While the pandemic of covid-related executive overreach has come to an end, it is time for freedom advocates to tackle the greater legitimacy crisis at hand.

Categories: Current Affairs

This doesn't work as a policy

Adam Smith Institute - Mon, 23/05/2022 - 06:01

The aim of having an economy, of having a society even, is that more people get to have more of what those people want. In the absence of there being third party harm from their getting it of course.

This idea, this policy, fails that test:

The legal smoking age in England could reportedly be raised from 18 to 21 after a “radical” review into plans to make the country smoke-free by 2030.

An independent review commissioned by the health secretary, Sajid Javid, and led by Javed Khan, the former chief executive of the children’s charity Barnardo’s, is also expected to support new taxes on tobacco company profits,

If consenting adults wish to smoke then that’s up to those consenting adults - that’s exactly one of those things that they desire to have more of and the purpose of the whole having an economy, a society, thing.

Taxing cigarettes ferociously, sure, why not? Demand is pretty inelastic, we’ve got to gain tax revenues from somewhere, taxing things where demand is inelastic is a great idea. Pointing out the very large private costs to the smoker of smoking is equally justifiable. A free and vibrant market in alternatives - vaping, snus, heated not burnt products - is again just the standard liberal line. Folk want more of these things, there’s no harm to others, why not?

No, we cannot justify anti-smoking drives by “costs to the NHS” as people who die young from relatively swift complaints like lung cancer save the NHS money - as they do save cash for any lifetime health care system.

Eighteen year olds are indeed consenting adults. They have the vote, even if they are likely to vote for Jezza. So, they have to be trusted with the decisions - properly informed decisions of course - they make.

The driver of this mooted policy is in fact that we think you shouldn’t do that. A profoundly illiberal idea and therefore one that fails in the basic task of governance. As at the top, the aim of the entire idea and system is that folk get more of what folk want. Not, as here, more of what some clerisy will allow them to have.

No.

Categories: Current Affairs

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