Budget Deficits and Stimuli

It’s an article of faith that running budget deficits during the New Deal helped end the Great Depression. This myth has been demolished countless times, but it hasn’t penetrated to the pundits and pop economists who host cable news-talk shows. In fact, FDR did not run extraordinarily large budget deficits, and J.M. Keynes actually criticized FDR for this. For details see this New York Times article by Price V. Fishback of the University of Arizona and the National Bureau of Economic Research. Fishback writes, “Once we take into account the taxation during the 1930’s, we can see that the budget deficits of the 1930’s and one balanced budget were tiny relative to the size of the problem [reversing the fall in GNP since 1929]."

This point was also made by Jim Powell in FDR’s Folly: “Changes in federal budget deficits didn’t correspond with changes in gross domestic product, and in any case the federal budget deficit at its peak (1936) was only 4.4 percent of the gross domestic product, much too small for a likely cure.” (Emphasis added.)

Cross-posted at "Anything Peaceful."

It's Official. I'm Tired of Barack Obama

I tried to hold out until after inauguration day. I really did. But I can't. He promises a "fresh" approach to our economic problems -- monster "stimulus"borrowing and deficit spending is fresh? -- without ideological (read: theoretical) preconceptions. But of course that is impossible. No one looks at economic or social phenomena without theoretical preconceptions. The only question is whether one's theoretical preconceptions are sound or unsound. It's been said we're all Keynesians now, and in one respect that includes me. Keynes said, "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."

Mr. Obama, pay attention.

Auto-Destruct

The Big Three automakers got a cold reception in Congress this week when they asked for a bailout loan of $25 billion. But I wouldn’t count them out just yet. After appropriating over $700 billion to bail out the financial industry -- with nothing to show for it but an ominous precedent and a scary accretion of power in the U.S. Treasury -- members of Congress may be a little reluctant to hand out more money to demonstrably failing -- even de facto bankrupt -- companies. Yet I have a hunch Congress will get over its reluctance, maybe as early as next month. Things just seem to work that way in Washington. Remember the first bailout bill?

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

Preventive Detention?

Update: My full op-ed on this subject is at The Future of Freedom Foundation website.

The New York Times reports:

[A]s Mr. Obama moves closer to assuming responsibility for Guantánamo, his pledge to close the detention center is bringing to the fore thorny questions under consideration by his advisers. They include where Guantánamo’s detainees could be held in this country, how many might be sent home and a matter that people with ties to the Obama transition team say is worrying them most: What if some detainees are acquitted or cannot be prosecuted at all?That concern is at the center of a debate among national security, human rights and legal experts that has intensified since the election. Even some liberals are arguing that to deal realistically with terrorism, the new administration should seek Congressional authority for preventive detention of terrorism suspects deemed too dangerous to release even if they cannot be successfully prosecuted. [Emphasis added.]

President-elect Obama, put a stop to this at once by categorically opposing preventive detention.

Hat tip: Jacob Hornberger, FFF

What Does Obama See in Her?

I don't mean Hillary Clinton, though I could ask that too. I mean Madeleine Albright. She has spoken for Obama's campaign, and now she is one of his representatives at the G-20 meeting on how to fix the world financial markets. Shudder.

So what's wrong with Albright?

For those who have forgotten, Albright was Bill Clinton's UN ambassador and then secretary of state who in 1996 notoriously pronounced the deaths of half a million Iraqi children due to the U.S. post-Gulf War embargo "worth it." When Sarah Palin accused Barack Obama of "palling around with terrorists," she had the wrong person in mind.

Read my account of her attempt to clean up the record.

Bush Warns Against Dismantling Free Market

This is not from The Onion. It's from the Washington Post:

After presiding over some of the most dramatic market interventions in U.S. history over the past two months, President Bush came to Wall Street on Thursday to urge world leaders not to venture too far down a path of government interference in capitalist economies. ...

"History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market," Bush said to resounding applause from the crowd of about 175. "Our aim should not be more government," he added later, "it should be smarter government."

Given all the intervention he's embraced, what would he consider too far?

George Bush, Big-Government Man

In an unscripted and candid moment, a top spokesman for President-elect Barack Obama let the cat out of the bag. On Meet the Press, interviewer Tom Brokaw asked transition co-chair Valerie Jarrett, “I wonder if, as a Democrat, which has always represented the party of big government, . . . there will be a kind of paradigm shift this time, that you’ll take the [Chicago mayor] Rich Daley model and shift more money and more responsibility to municipalities and the state government.”

To which Jarrett replied, “It’s ironic that you would say that it’s the Democrats that are responsible for big government because government has grown enormously over the last eight years.”

That was a significant concession from the Obama camp because the advocates of activist government like to portray the Bush years as “laissez-faire” and “do nothing.”

The rest of this week's op-ed, "George Bush, Big-Government Man," is at The Future of Freedom Foundation website.

Save Us from Government Spending

If you're a glutton for torment as I am, you watch cable-TV news shows most nights. These days the shows are feeding viewers a steady diet of 100-proof Keynesianism as the cure for our economic woes. Leading in this department is Chris Matthews of MSNBC's "Hardball." (I call it "Nerf Ball." Matthews's idea of a hardball question for a politician is, "Are you running for president?") Matthews declared last week, "We're all Keynesians now," and each night he pontificates on why the government must start to spend massive amounts of money, even though it doesn't have massive amounts of money. We'll worry about the consequences later. Why must it spend? Because we aren't doing it and that's putting the economy in recession. Someone has to spend, Matthews says, and the government is spender of last resort.

The rest of this week's TGIF, "Save Us from Government Spending," is at the Foundation for Economic Education website.

The Freeman, November

The November Freeman is now online. The table of contents is here.

Anything Peaceful

FEE now has its own blog, Anything Peaceful. Check it out here.

What's So Funny, Chris?

Chris Matthews, host of "Hardball" on MSNBC (it really should be called Nerfball), tonight found the idea of an African-American libertarian laughable. Now why in the world would he want to insult African-Americans that way?

Cross-posted at Liberty & Power.

Left-Libertarianism Comes to Cato!

I urge everyone to read Roderick Long's blast at the corporate state at Cato Unbound:

"Corporations versus the Market;
or, Whip Conflation Now."

Responses will be published over the next few days.

Well done, Roderick!

Did She Really Say That?

Obama transition co-chair Valerie Jarrett let this slip yesterday when talking to Tom Brokaw on Meet the Press:

It's ironic that you would say that it's the Democrats that are responsible for big government because government has grown enormously over the last eight years.

I thought the Obama position was that we've had eight years of laissez faire under George II.

Tacit Consent

On Friday I conducted a colloquium at Hendrix College in Conway, Arkansas, with the title "If You Believe in Nonviolence, You Should Be an Anarchist." (I'll post the link when it's uploaded to YouTube.) During the Q&A I was challenged by two professors who invoked the social contract and tacit consent in an effort to refute my claim that the state is founded on (the threat of) violence against nonaggressors. They argued that since we all tacitly consent to the state, its use of force cannot be properly regarded as aggression. Rather, it is merely a sanction against those who have violated their agreement to obey the state. (I apologize if I have not precisely captured their objection. I believe this is the gist of their argument.)

For the first time in a while this got me thinking about the curious principle of tacit consent. Here are the thoughts I jotted down today. (I'll be returning to this subject, I'm sure.)

• When did I or anyone consent?(One of my interlocutors seemed to think this was an invalid, even unfair question.)
  
• If I have tacitly consented to be taxed, why haven't I also tacitly consented to all the purposes to which the state puts my money?
  
• Why can't I withdraw my consent?
• How do I withdraw my consent? Must I move out of the state's jurisdiction?
• If that is the only way, doesn't that imply that the state owns the territory?
• How did that come about? (I'm thinking of Monte Python and the Holy Grail now; script is here.)
  
• Presumably the state has obligations under the social contract. But what if the state defaults on its obligations? Does that nullify the contract?
• Who decides when and if that has occurred? Presumably, the state's own courts.
  
• Why do the state's courts get to judge a claim that the state has defaulted on the contract? Why not a truly neutral arbiter?
  
• Is my consent tacit, unconditional, and perpetual?
• How can that be?

Humility or Hubris?

Another presidential election has come and gone, only this time the results are astoundingly and, yes, satisfyingly historic. In light of our racial history and leaving aside political philosophy, I am overjoyed at what Barack Obama’s election means. I cannot put it better than Will Wilkinson did at The Fly Bottle, “It means something profound that a black man was elected to the most visible, high-status position our society offers. The mere fact that Obama won truly does make our society a better place.” I also share Wilkinson’s reservations. In a truly free society, the presidency would not be the most visible high-status position our society offers. That designation would be reserved for a variety of private-sector roles. Unfortunately, however, the presidency does have that status today, and Obama’s election must be appreciated from that perspective. Relatedly, I am uneasy about, though understanding of, the public displays that followed John McCain’s concession Tuesday night. Again, Wilkinson: “[F]rankly, I hope never to see again streets thronging with people chanting the victorious leader’s name.” Amen.

President-elect Obama’s many supporters and well-wishers have great confidence in his ability to solve the economic problems that vex American society. That ability is said to lie in his cool judgment, his good intentions, and his eloquence. Let us grant that he possesses all three. Valuable as they are, they will be useless if he attempts to solve our economic problems directly by an exercise of power. That’s because there is something he does not have -- something no man or woman can have: the power to repeal the laws of economics.

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

Cross-posted at Liberty & Power.

Marshall Fritz, 1943-2008

I am saddened by the news that Marshall Fritz, my friend and constant source of inspiration, died yesterday at age 65 after a long struggle against cancer. Marshall was founder of both the Advocates for Self-Government and the Alliance for the Separation for School and State. It was in the latter context that he and I worked together. He founded the Alliance in 1994, just as my book Separating School and State was being published, though neither of us knew in advance what the other was up to. Marshall's conferences (SepCons) were important gatherings of the wide variety of advocates of educational freedom and opponents of government schooling. The Alliance continues to play a key role in promoting the liberation of families from the state.

Marshall was a great public speaker, whose eloquence flowed from his love of life and his love of liberty. Because of his enthusiasm about the future and his great humor, Marshall was unforgettable. He was as decent a human being as I've ever known. Through all his medical challenges he was unfailingly optimistic and inspirational.

I will miss him very much.

The Day After

"Government is not reason; it is not eloquence; it is force. Like fire, it is a dangerous servant and a fearful master."

Depressing Day

Not only because one of those presumptuous scoundrels will fulfill his dream of being "commander in chief," but because the airwaves and cable channels are rife with media talking heads discharging their self-appointed duty of re-legitimizing the state. The last few days especially have been devoted less to partisanship than to praise of both "courageous" candidates for their service and dedication. In the end, for these windbag commentators what counts most is the process, i.e., the state's continued legitimacy. Nothing disturbs them more than discussion that undermines The Consensus. All underhanded campaigning can be forgiven in light of the larger mission, the collective choosing of a Leader, which can be used ultimately to absolve the state of its crimes. Nothing, therefore, is more sacred than the ritual of voting. Or so the media talkers would have us believe, as they rhapsodize about "caring" and "participation." In truth, getting out the vote is a way to get everyone's hands dirty enough that they can't regard the state as an external villain, an occupying power.

Anyone who points out that this process is based on fraud and coercion would be dismissed as a cynic or a nihilist. But no need to worry. No one who would point this out will be invited to comment in the first place. Can't have the purity of the moment sullied by the truth. The media are safe for Peggy Noonan, David Gergen, and the rest of the state's cheerleaders. No one will say what should already be obvious to any thinking person: the electoral process is a distraction, a massive effort in misdirection to keep our minds off what is really going on. The illusion of popular power hides the fact that real power is securely beyond the people's reach.

"If voting could change things, it would be against the law." No wiser words ever graced a wall.

Staying Home

That's what I'll be doing today.

American Conservative

My American Conservative article on the foolishness of the Wall Street bailout is here.

Choices, Choices

McCain says Obama wants to be redistributor in chief, while he wants to be commander in chief.

Oh my. Shall we not be spared?