Gore in Gaza Again

Until the Israeli government decides to treat the Palestinians as human beings with rights, the violence we see happening in Gaza will continue to break out periodically. Should Palestinians indiscriminately shell southern Israel? No. Should the Israeli armed forces indiscriminately attack Gaza? No. The only way to break the cycle is for the Israeli government to change its attitude toward the Palestinians. They have been treated badly for more than a century. Those who acquiesced when the regime was imposed on them were treated like junior citizens. Those in the occupied territories have been treated like animals. Expecting peace under those circumstances is absurd.

More on the Madoff Case

The New York Times yesterday reported that stock-fraud prosecutions have gone down the last several years, implying that the Bush administration's lax attitude toward regulation of Wall Street let the Madoff scam go on for so long. Whether FBI and SEC fraud investigations are really down, I can't say, but let's accept that they are. This hardly makes the case for regulation. Why? Laws against fraud are not the same thing as regulation. Fraud is theft of property by deception. Thus a law against it is a law protecting property. In contrast, regulation is an imposition by government unrelated to any specific wrongdoing; it violates property. Repealing laws against fraud (or the refusal to investigate and prosecute it) is not deregulation. If it were, so would repeal of the law against armed robbery be deregulation. No one talks that way -- for a good reason. There is a big difference between regulation and prohibitions on depriving people of their property. Anti-market people like to conflate the two categories to score points for the regulatory state.

By the way, if the government were to vigorously investigate fraud, it might indict everyone who keeps Social Security going.

Cross-posted at Anything Peaceful.

Madoff Scandal Exposes Government Failure

The common reaction to the Bernard Madoff $50 billion financial scam was wholly expected. As Los Angeles Times columnist Tim Rutten wrote, “The lesson is one that becomes clearer with each excruciating turn of the Wall Street screw. The long, bipartisan experiment with financial deregulation has failed utterly. The argument that a return to rigorous oversight will somehow stifle Wall Street’s ‘creativity’ is no longer convincing. Whatever its theoretical costs, regulation is dramatically cheaper than intervention. And absolutist insistence on the superiority of ‘individual choice’ and ‘free markets’ now is exposed as so much vacant rhetoric. Any system that permits a scam artist like Madoff to deceive not just widows and orphans but also sophisticated investors, like Fairfield Greenwich Group’s Walter Noel and Hollywood’s Jeffrey Katzenberg, isn’t a market at all; it’s a shooting gallery.”

The last sentence is a tipoff that something is wrong with this outlook. Financial regulation is usually proposed to protect the unsophisticated. People knowledgeable about finance and securities presumably can take care of themselves. But what makes the Madoff scandal so noteworthy is that the most sophisticated types were taken in, even though several experts sounded alarms. Why?

The rest of my op-ed, "Madoff Scandal Exposes Government Failure," is at The Future of Freedom Foundation website.

Contradictions in Terms

Some of my favorites:

• Paid vacation -- why would one person pay another person to be idle?
• Free election -- how can it be free when voters are under the duress of taxation and other impositions?
• Keynesian economics -- how can the rejection of economics be a form of economics?

Heads They Win, Tails We Lost

Why is it that when the regulatory regime fails–see the Madoff fraud case–many people call for more regulation, but when markets (allegedly) fail, these same people don’t call for more markets but rather more regulation?

Cross-posted at Anything Peaceful.

Economic Stimulus Amounts to Central Planning

That there will be a huge “stimulus” package in the early days of the Obama administration is a certainty. Nearly everyone thinks the government must do something drastic to, using President-elect Obama’s word, “jolt” the economy into recovery. That something is deficit spending on “infrastructure.” But it’s not as simple as it sounds. A big debate is shaping up over whether the program should concentrate on big, transformative projects or boring bridge repairs and pothole filling.

Either way, it is taken for granted that deficit spending will stimulate a sustainable recovery. But it won’t. A real recovery requires real savings and investment to correct for years of government-induced waste. Government spending, however, displaces savings and investment. Whether the government borrows, taxes, or creates money through the Federal Reserve, real wealth will be commandeered by bureaucrats. Jobs thus created in the parasitic sector will mean fewer jobs created in the productive sector. That can hardly be a recipe for recovery.

Moreover, real danger lurks in the Obama administration’s plan to use the recession as a cover for “transforming” the economy, particularly with respect to energy.

The rest of my op-ed, "Economic Stimulus Amounts to Central Planning," is at The Future of Freedom Foundation website.

And here are a few previous ones I neglected to blog:
"The Wizards of Washington"
"The Bailout State"

Taxpayer Protection

In arranging the various multi-billion-dollar bailouts, members of Congress and the Bush administration incessantly promise "taxpayer protections." That's most considerate, except for one problem. What the taxpayers need protection from most are Congress and the Bush administration!

Cross-posted at Anything Peaceful.

Second Amendment Book Bomb

I heartily pass this long from the Second Amendment Book Bomb:

Monday, December 15, marks America’s Bill of Rights Day, the anniversary of the ratification of the Bill of Rights of the U.S. Constitution. To commemorate this event, the Second Amendment Book Bomb website has been created, a unique and powerful way to communicate the importance of the Bill of Rights’ Second Amendment for the protection of liberty. With your help, we can launch constitutional rights to the top of national book bestseller lists, making a loud and clear statement that Second Amendment rights are inalienable!

The Second Amendment has already won a historic victory on June 26, 2008, when the U.S. Supreme Court ruled in the landmark case of District of Columbia v. Heller that the Second Amendment protects an individual right to own and bear arms. However, the Heller ruling was immediately attacked and efforts continue on the national level and across the country to undermine gun rights. Therefore, to secure the Second Amendment now and for the future the American public must be made aware of the reasons why the Founders sought to protect this right.

And now we have the tool to do so. Fascinating, seminal, and inspiring, the new book, The Founders’ Second Amendment: Origins of the Right to Bear Arms, by Dr. Stephen P. Halbrook, is the perfect way both to educate ourselves and to reach friends and family who don’t yet understand Second Amendment rights. Our goal is to reach one million Americans with Dr. Halbrook’s book during the Holiday Season and throughout the New Year ahead. Will you help?

To achieve this goal the Second Amendment Book Bomb website has been established to create a phenomenon so great that even the mainstream media will have to take notice. Let’s spread The Founders’ Second Amendment so far and wide that Americans across the political spectrum, and all walks of life, will be discussing the Second Amendment in every possible venue.

With your help, we can make Dr. Halbrook’s book #1 on the New York Times bestseller list. To make this happen, please go to the website and pledge to buy at least one copy of the book before or on the December 15th Second Amendment Book Bomb date. Let’s make this the most amazing and explosive event ever on the right to bear arms, and declare in no uncertain terms that the Second Amendment will be around for a very long time to come.

With your pledge to buy the book, we can:

* Make The Founders’ Second Amendment #1 on the New York Times bestseller list.
* Make The Founders’ Second Amendment a #1 bestseller on Amazon.com.
* Make The Founders’ Second Amendment a #1 bestseller on BarnesandNoble.com.
* Make The Founders’ Second Amendment a #1 bestseller on BooksAMillion.com.

Please help now by making your pledge here.

Republican Betrayal on the Auto Bailout

The Senate Republicans who killed the auto bailout betrayed the free-market principles they claim to embrace. (I know what you're saying: Is this really news? No, it's not.)

Why betrayal? The Republicans did not say they opposed a bailout on principle under all circumstances, which is what free-market advocates would be expected to say. Rather they said they oppose the House version of the bailout. In its place they favor one in which the United Auto Workers makes bigger concessions.

The Wall Street Journal editorial page said:

Senate Republicans ... asked the auto workers to show they were serious about making Detroit competitive again. In exchange for a lifeline from Washington, [Sen. Bob] Corker wanted the union to set a "date certain" in 2009 for lowering the Detroit Three's hourly labor costs to the average of foreign-owned auto makers in the U.S....

The union's counteroffer was that it would bring down labor costs in 2011, when its current contracts run out.

What's wrong with the Republican demand? What's wrong is that government has no business trying to abolish the wage differential between domestic and foreign-owned companies, which by the way is smaller than usually reported. (For the lowdown on the wage differential see David Leonhardt's article.)

It should offend any market advocate to see the government meddling in business-labor relations like this. By all means (well, not all means), work to deregulate and desubsidize business and labor, but do not encourage the state to determine the details of companies' labor relations.

It is hypocritical for Republicans to claim to favor the free market and then to use a bailout as a crowbar to break the union. If you favor the free market, say you favor the free market and oppose all bailouts on principle. If you favor government's breaking unions, say that. But don't sully the free-market position, as the Senate Republicans have done, by conflating the two. Are we to think it would have been some kind of libertarian triumph had the Senate GOP alternative passed?

Cross-posted at Anything Peaceful.

So Much for Democracy

Nice to know that even though the auto-bailout bill died in the Senate, President Bush may bail the Big Three out anyway using the TARP money. Reportedly, the Fed itself could come to the rescue. Isn't democracy grand?

Robert Higgs Told Us So

According to Reuters:

The credit crunch is not nearly as severe as the U.S. authorities appear to believe and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says.

As a result, governments are pumping masses of public money into the economy across the world because of the difficulties of a few big, vocal banks and industries such as car manufacturing, which would be in difficulty anyway, according to the report published by Celent, a financial services consultancy....

The report, much of which is based on U.S. Federal Reserve data, challenges a long list of assumptions one by one, arguing that there is indeed a financial crisis but that, on aggregate, the problems of a few are by no means those of the many when it comes to obtaining credit....

The picture appeared to be broadly similar in much of Europe and Japan, said the report, based on publicly available data on trends in bank lending to industry, households and among banks themselves in the so-called interbank markets. [Emphasis added.]

The taxpayers are on the hook for over $7 trillion in federal commitments that were supposedly critical to easing the credit crisis. We have been scammed.

Cross-posted at Anything Peaceful.

Hat tip: Steve Horwitz

Governmental Logic

Mitch McConnell, the Republican Senate leader, had this to say in connection with the auto bailout:

We will not let the taxpayers spend their hard-earned money on ailing carmakers unless these companies are forced to reform their bad habits -- either inside or outside bankruptcy.

So the way McConnell sees it, we taxpayers want to spend our hard-earned money to save the Big Three, but he is going to stop us -- for our own good -- if the companies aren't compelled to reform themselves.

I guess that's Republican paternalism. As a libertarian, I object. If I want to spend my tax money on GM, Chrysler, and Ford, I'm going to do it whether some presumptuous senator from Kentucky wants me to or not. This is a free country!

Cross-posted at Anthing Peaceful.

Beth A. Hoffman, 1950-2008

I am saddened to announce that my longtime colleague and Freeman managing editor, Beth A. Hoffman, passed away Monday at the age of 58. Beth, who joined the FEE staff over 30 years ago, was beloved by the Foundation’s many friends and supporters. She worked tirelessly and ably in a variety of capacities, including the editing of books and other materials. But her great love was The Freeman, which she served as managing editor for many years. While her important work was behind the scenes, it was not unheralded. She was a true champion of liberty whose contributions were many and long-lasting.

We will miss her.

She is survived by her husband, Peter, and son, Ted.