The S-Word

So the S-word has surfaced in the presidential campaign. One candidate accuses the other candidate of being a socialist because he would raise taxes on the wealthy while "cutting taxes" for, among others, workers who pay no income taxes. The accused laughs it off, saying next he'll be called a communist for sharing his toys in kindergarten. (Of course, then he was sharing his own toys.) Meanwhile, the first candidate -- the one hurling around the "socialism" charge -- says if elected he'll buy up shaky mortgages and send checks to people who pay no income taxes so they can get medical insurance. I'm beginning to understand how Alice felt.

The rest of this week's TGIF, "The S-Word," is at the Foundation for Economic Education website.

What Greenspan Missed

Former Federal Reserve Chairman Alan Greenspan made headlines around the world with this admission: “[T]hose of us who have looked to the self-interest of lending institutions to protect shareholders’ equity (myself especially) are in a state of shocked disbelief. Such counterparty surveillance is a central pillar of our financial markets’ state of balance. If it fails, as occurred this year, market stability is undermined.”

Greenspan made his confession before the House Committee on Oversight and Government Reform....

Now it will be said endlessly, “Even Alan Greenspan concedes that the free-market philosophy is flawed.” But not so fast.

The rest of this week's op-ed is at The Future of Freedom Foundation website.

What Does Supporting the Free Market Mean?

Dean Baker is far from a libertarian, but he often knows the score. Here's what he wrote in "Beat the Press" yesterday:

NYT readers no doubt asked this question when they saw that Charlie McCreevy, the European internal market commissioner, was identified as "a supporter of free-market economics." What does this mean? Did Mr. McCreevy oppose the bank bailouts? Is he opposed to copyright and patent protection? Or, did the NYT just mean to tell us that, like almost everyone else, he is not a supporter of Soviet-style central planning?

It would be useful if reporters could get beyond cliches and try to ensure that their characterizations of individuals actually provide information to readers.

Visit him regularly here.

Nationalizing Banks, Impoverishing Society

My article on the Wall Street bailout in the American Conservative is now online. Read it here.

Government Is Already an Income-Transfer Machine

Isn’t it a little late for John McCain and the Republicans to start worrying about government redistribution of wealth? McCain claims to be alarmed by Barack Obama’s tax plan, which would tax upper-income people in order to provide tax cuts to lower- and middle-income people, many of whom don’t pay income taxes. McCain and running-mate Sarah Palin call this socialism.

But the criticism is odd considering all the redistribution McCain has proposed in his presidential campaign and has supported during his long career.

The rest of this week's op-ed, "Government Is Already an Income-Transfer Machine," is at The Future of Freedom website.

Who Needs Evidence?

Around the corner from FEE's offices, on Main Street in Irvington, N.Y., there's a life-size statue of Rip Van Winkle awakening from his 20-year slumber. After reading Jacob Weisberg's Newsweek and Slate columns this week, I feel as though I must have been asleep for an equally long time. According to Weisberg, editor in chief of Slate, the financial turmoil taking place worldwide is the fault of . . . libertarians. That must mean libertarians have been in a position to repeal generations of deep-seated government intervention in the financial and related industries, including the Federal Reserve system. That would have taken a long time, yet I don't recall reading that a libertarian revolution occurred in the United States. Surely it would have been in the newspapers. Hence, I must conclude that I, like old Rip, was slumbering all those years. I missed the revolution! It's the only possible explanation. Unless Weisberg is wrong.

The rest of this week's TGIF, "Who Needs Evidence?" is at the Foundation for Economic Education website.

Cross-posted at Liberty & Power.

What Hath Ayn Rand Wrought?

Alan Greenspan says he is shocked to have learned that his free-market philosophy has a flaw. Banks wouldn't protect their stockholders' interests in the absence of regulation. Really. Read his mea culpa here. And here is prescient Murray Rothbard on Greenspan.

An Echo, Not a Choice

Republicans talk about the burdens of regulation, which leaves the impression that they are for free markets. But this is wrong. Free markets are free of more than regulation; they are also free of subsidies, privileges, and guarantees. Lightening up on regulation may please business, but if it is done while keeping the subsidies, privileges, and the guarantees in place, it is not a move toward the free market.

The rest of this week's op-ed, "An Echo, Not a Choice," is at The Future of Freedom Foundation website.

Into the Bog

It's still hard to tell if Joe the Plumber would pay more taxes under Obama or McCain. I've heard both sides argued. Whatever. It's a phony argument because McCain would just borrow whatever money he needs that can't be raised in taxes. Someone who frets about $18 billion a year in earmarks but relishes spending $11 billion a month in Iraq isn't going to be watching the taxpayers' interests very closely.

To me the real story about Joe the Plumber was Obama's reply to him that "spread[ing] the wealth around" would be good for the country. We haven't heard that phrase in a long time, and there's something refreshingly honest about it. If we look close, we'll see that McCain isn't against spreading the wealth. Look at his mortgage plan -- his proposal to keep home values artificially high by buying at face value all mortgages in which the amount owed exceeds the appraised value of the home. Nice deal for the banks. He would then reduce the amount of the loans and the interest rate. The taxpayers would pay the bills. Sounds like spreading the wealth to me.

To hell with all "legal" plunderers.

Capitalism or Freedom

"These measures are not intended to take over the free market, but to preserve it," George W. Bush said in Orwellian tones Tuesday as he announced the partial nationalization of nine major American banks.

He was partly right, though not in the way he meant his words. There is no free financial market to take over. But that means there is no free market to preserve either. The moves he announced, which include government part-ownership of smaller banks too, were just more, albeit big, steps along the corporatist route the country has been following for generations.

The rest of this week's TGIF, "Capitalism or Freedom," is at the Foundation for Economic Education website.

The Republican Albatross

At lunch I watched Jonathan Alter of Newsweek interviewed on MSNBC about his latest column in which he writes a near-obituary for the McCain campaign. He attributes the state of the campaign to McCain's failure to "break not just from Bush, but from the rotting corpse of his party." Instead, Alter says, he's fighting the last war, which won't work because, among other reasons, "the free-market party of Reagan is dead (thanks to the financial crisis)."

Free-market party? A free-market party would have abolished Fannie and Freddie. It would have renounced the "too big to fail" doctrine. It would have ended all business privileges, along with the regulations (which the GOP left untouched). It would have at least begun to cut spending and borrowing. It would have stopped the deep economic distortion wrought by the military-industrial complex and its war-based imperial foreign policy. Has there been even a tiny movement in these directions?

This is why radical free-market advocates must hope that a Republican never is elected president. The party is an albatross for any champion of individual liberty because no matter what it does to increase the size of the state, its occasional mild lip-service to freedom is all that counts for most people. Jimmy Carter and Bill Clinton did some deregulating, but they are never called laissez-faire advocates.

The bigger the loss for McCain-Palin, the better.

Theory and Crisis

What might be even more distressing than the current buildup of the corporate state in response to the supposed economic crisis is the way some self-styled advocates of the free market are willing to cast aside the economic theory they claimed to embrace.

The rest of this week's TGIF, "Theory and Crisis," is at the Foundation for Economic Education website.

Barack Harold Obama

I don't think Republicans would be using Obama's middle name if it weren't Middle Eastern-sounding. Do you?

Cross-posted at Liberty & Power.

Sorry, Sorry Performance

John McCain couldn't even coherently explain his proposal for health insurance! I ran his "explanation" back on my DVR. It made no sense! "Do the math," he said. Based on what he said, you can't do the the math! Arrrrrgggggggggghhhhhhhhhhhh.

Good Maverick, Bad Maverick

Answer me this: why do those crowds at Sarah Palin rallies go nuts every time she invokes McCain's maverick record, when his quintessential maverick achievement is McCain-Feingold, which restricts free political speech?

The Freeman, October

The Freeman, October 2008, is off the press and online at FEE's website. The cover article by David Henderson is titled, "Let's Not Be Energy Independent." Here's more:

"Politicians Eye the Oil Market," by Robert Murphy
"Making Social Security More Harmful," by J.R. Clark and Dwight R. Lee
"Language, Loyalty, and Liberty," by Becky Akers
"Commerce, Markets, and Peace: Richard Cobden's Enduring Lessons," by Edward P. Stringham
"Beyond Municipal Wireless," by Steven Titch
"The Subprime Crisis Shows That Government Intervenes Too Little in Financial Markets?" by Lawrence H. White
"The Holiday That Isn't," by Lawrence W. Reed
"Mendacity by Metaphor," by Thomas Szasz
"The Great Escape from the Great Depression," by Robert Higgs
"Legalize All Drugs," by John Stossel
"Worker Freedom in Peril," by Charles Baird

Fannie's Folly

Today's New York Times has an informative article on how the government egged Fannie Mae on to buy ever more high-risk mortgages during the current decade. One weakness of the article, however, is its failure to stress the government's implicit guarantee to stand by behind the government-sponsored enterprise, a guarantee we now know was all too real. The article is here.

Frankly, He's a Criminal and Should be in Prison

If you want to see the criminality of the U.S. government in all its glory, observe that Rep. Barney Frank, one of the men responsible for the current economic debacle, will head the investigation into what caused that debacle.

About the bailout of Wall Street, Frank had the nerve to say, "We were the EMTs rushing to the rescue of an economy that suddenly found itself choking, but now we have to perform more serious reform."

A better analogy would be this: Frank & Co. were choking the American people and while doing so, they picked the people's pockets and handed their money to Wall Street.

When will guys like this finally go to prison?

Cross-posted at Liberty & Power.

The Debate

Some cable commentators, Joe Scarborough, for one, think Sarah Palin deep down is a libertarian. It must be really deep down because there was no sign of it last night. Her explanation for the economic turmoil is "greed and corruption on Wall Street," which she promised McCain and she would clean up. You couldn't even tell from her remarks that Fannie and Freddie were creatures of the government. She pointed out that McCain favored tough regulation of them years ago.

Cross-posted at Liberty & Power.

The Pretense of Regulatory Knowledge

Advocates of the free market are sometimes parodied for their seemingly all-purpose answer to any problem: Let the market handle it. What may sound like a simplistic answer, however, is actually the most complex prescription imaginable. In the modern world, the workings of any particular market are so complicated, they are beyond the grasp of mere mortals. Moment by moment, day by day, so many subtly interrelated decisions are made by so many people worldwide that no individual or group could possibly understand the big picture in any detailed way. So there is nothing simplistic about proposing the market as a solution to an economic problem. It’s short way of saying: let the multitude of knowledgeable people seeking profit, risking their own money, and responding to incentives find a solution based on persuasion not force. Translated that way, it sounds like a promising approach.

Ironically, those who don’t appreciate markets are in fact the ones who offer a simplistic, even empty alleged solution to economic problems: government regulation.

The rest of this week's TGIF, "The Pretense of Regulatory Knowledge," is at the Foundation for Economic Education website.

Cross-posted at Free Association.

Herbert Hoover, Wild-Eyed Activist

Here's my just-submitted letter to the editor at the Arkansas Democrat-Gazette:

In chiding the House for initially rejecting the Wall Street bailout plan, you wrote, "Monday’s performance in the House, or rather non-performance, would have made Herbert Hoover look like a wild-eyed activist." But considering that after the stock market crash in 1929, Hoover raised taxes; signed the Smoot-Hawley Tariff, which destroyed world trade; created the Reconstruction Finance Corp. to funnel taxpayer money to failing railroads and banks; and jawboned employers to keep wages up while the Federal Reserve shrunk the money supply by a third -- Hoover WAS a wild-eyed activist. And his activism helped turn a recession into the Great Depression.

Since your economics is no better than your history, I'd say the House was right the first time.

Luxury or Necessity?

Have you noticed how many pro-"free-market" politicians and pundits believe that theory is a luxury we cannot afford in this time of crisis? What they are probably too dense to realize is that their support for a bailout of Wall Street is also based on a theory. Only it's a bad one.

With allies like that, we hardly need adversaries.

Cross-posted at Liberty & Power.

Richman on Fascism

The revised Concise Encyclopedia of Economics, edited by David R. Henderson, is now online at the Liberty Fund's Library of of Economics and Liberty website. My contribution to the encyclopedia is the article on fascism. It's here.

Not bad timing, I'd say.

Summing Up

I highly recommend Chris Sciabarra's analysis of the economic turmoil here. If we don't grasp the deeper corporatist lesson of the current crisis, we will get nowhere.

I also highly recommend Steven Horwitz's "An Open Letter to My Friends on the Left."

Gag Me with a Spoon!

Lawrence Kudlow, a self-styled free-market, small-government man, said on MSNBC today that he had spoken to Alexander Hamilton, "the greatest treasury secretary in history," who told him the bailout of Wall Street was necessary to "save capitalism."

I'm not surprised that either Kudlow or Hamilton support the bailout. Being for capitalism obviously is not the same thing as being for the free market.

My latest op-ed on the issue is here.

Is This What It's All About?

Business reporter Ali Velshi of CNN was talking about the alleged credit drought last night when he stopped and said (roughly), "When I say 'dried up,' I don't mean there's no money. But you'd better have good collateral and good credit."

Oh, is that what's going on? That's why we're panicking and being plundered of $700 billion?