Geithner: U.S. will never lose Aaa debt rating

February 8, 2010 5:48 PM by Douglas French (Archive)

We can all sleep soundly, the Treasury Secretary told ABC News that a downgrade of US debt "will never happen to this country."

Mortgage Bankers Association selling their building

February 8, 2010 4:34 PM by Douglas French (Archive)

The Mortgage Bankers Association is selling their building in Washington DC for $41.3 million, which sounds like a lot, except the trade group bought the building for $79 million in 2007 with the help of a $75 million loan from PNC Financial.

A year ago, the folks at Cassidy & Pinkard Colliers described the office market in the nation's capitol as "recession-resilient yet again." And with the city's main employer adding jobs, the outlook for office was somewhat positive.

So who is buying the building? CoStar Group Inc. one of the go-to real estate data providers for appraisers. One would think the people at this company would know a deal when they see it.

Doug French on Radio FreeMarket

February 8, 2010 3:50 PM by Mises.org Updates (Archive)

Here is an interview with Doug French on fractional reserves on RadioFreeMarket.

Two Product Changes

February 8, 2010 3:28 PM by Jeffrey Tucker (Archive)

Human Action now has a new cover, 3.0 one might say. In any case, it is very sleek and good looking, with an astonishing price of $35. The associated products such as the Study Guide and Audio will conform in time.

Meanwhile, the two volume set of Libertarian Forum has undergone upheaval. We are now able to distribute the hardback of these volumes at half the price of what the softcover once was. I recall all too well what it was like to bring these volumes out only a few years ago. It was expensive and the print runs were small, because the demand was low. But with demand on the increase and technology marching foward, we were able to negotiate this special release, which, to my mind, is a huge improvement. These are large books and better in hard back in any case. The image that you see on the site is not the hardcover. We haven't had time to set up the big art shot yet.

In any case, one can hardly believe that these two large volumes of Murray's own publication are now in wide distribution in hardcover. Murray would be completely thrilled to know this! It is an exciting publication of commentary and analysis and some good dose of gossip - a real time capsule of the development of libertarian ideas. They also contain a strong element of lost knowledge waiting to be recovered.

Libertarian Papers, vol. 2 (2010): Arts. 1-4: Moundsville Reconsidered; Austrian Business Cycle Theory and 100 Percent Reserves; Block on Roads; Block on Van Dun

February 8, 2010 3:06 PM by Stephan Kinsella (Archive)

Three new articles published today in Libertarian Papers, vol. 2 (2010):

1. "Moundsville Penitentiary Reconsidered: Second Thoughts on Hyperreality at a Small Town Prison Tour", by Allen Mendenhall

Abstract: In 2007, I toured Moundsville Penitentiary, a tourist spectacle that was once--and fairly recently--a working prison. I wrote about the experience as would a journalist, except that my working paradigm was the postmodern theory of hyperreality, which Jean Baudrillard used to describe the complex tensions between reality and illusion. A term of semiotics, hyperreality refers to the disappearance of the referent and its subsequent, oft-replicated simulation. It almost always involves strategically controlled images that distort and conceal true meaning. The International Journal of Baudrillard Studies published my essay in January 2009. Shortly thereafter, many of my libertarian friends and colleagues wrote to ask for clarification or to express their disagreements. In what follows, whether I'm describing hyperreality or speculating about the horror-themed attractions at Moundsville Penitentiary, my principal concern is laying the libertarian foundation for my argument. I do not mean to defend my theories so much as explain them; nor do I insist that my cultural criticism is somehow "the" right way. I simply hope to fill a critical vacuum and to generate conversation not only about the condition of the American prison system writ large, but also about state-run tourist attractions that glorify the history of the sovereign at the expense of real knowledge about human suffering.

2. "Austrian Business Cycle Theory: Are 100 Percent Reserves Sufficient to Prevent a Business Cycle?", by Philipp Bagus

Abstract: Authors in the Austrian tradition have made the credit expansion of a fractional reserve banking system as the prime cause of business cycles. Authors such as Selgin (1988) and White (1999) have argued that a solution to this problem would be a free banking system. They maintain that the competition between banks would limit the credit expansion effectively. Other authors such as Rothbard (1991) and Huerta de Soto (2006) have gone further and advocated a 100 percent reserve banking system ruling out credit expansion altogether. In this article it is argued that a 100 percent reserve system can still bring about business cycles through excessive maturity mismatching between deposits and loans.

3. "Rejoinder to Carnis on Private Roads", by Walter E. Block

Abstract: Carnis (2009) is a commentary on a debate I (Block and Block, 1976; Block, 1978c) have been having with Tullock (1976) on the privatization of roads. The present paper is a rejoinder to Carnis (2009) who is highly critical of Tullock's share of the debate, and offers some luke-warm support of my side of this issue, plus some criticisms of it.

4. "Van Dun on Freedom and Property: A Critique", by Walter E. Block

Abstract: Van Dun rejects private road ownership on the ground that owners will trap homeowners whose property abuts their thoroughfares. The present paper rejects this claim, and demonstrates that a free enterprise system of private ownership will maximize the welfare of householders, not minimize it.

C.S. Lewis Society Newsletter with Calls for Papers

February 8, 2010 2:33 PM by Art Carden (Archive)

Here. It includes calls for papers for a number of very interesting-looking conferences.

The Revolution Continues: Revamped Online Resources from FEE

February 8, 2010 1:07 PM by Art Carden (Archive)

The Foundation for Economic Education has revised its online library (HT: Lawrence Reed). A quick scan suggests a treasure trove of useful material. This reinforces my belief that we're living in the middle of an intellectual revolution. As more material like this goes online and as more supplements are developed, I think we're going to see fundamental changes in the educational enterprise. Here's Jeff Tucker on the LvMI presence on iTunes U.

Argentina update: Civilized Coordination from Yale.

February 8, 2010 11:33 AM by Douglas French (Archive)

Argentina President Christina Kirchner found some Yale-trained talent in her own backyard to serve as central bank president.

"Everyone knows that I am convinced that the central bank and the monetary, exchange rate and financial policy are fundamental for deepening the development policies," Mercedes Marco del Pont said when appointed. "I believe in the operating autonomy of the central bank but I don't think it can be independent from the whole of the nation's economic policies," she said. "We will propose a coordination just like what's done in all the civilized countries on the planet."

Did Goldman Sachs push A.I.G. over the edge?

February 8, 2010 11:20 AM by Douglas French (Archive)

A very interesting New York Times article explores the business relationship between Goldman and A.I.G..

"Well before the federal government bailed out A.I.G. in September 2008, Goldman's demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in."

Are Rothbardians unreasonable?

February 8, 2010 11:17 AM by J.H. Huebert (Archive)

In a post on "Libertarian Schisms," economist Arnold Kling tries to figure out whether he's a Rothbardian or a Hayekian.

To do so, he asks himself several questions, the first of which is:

1. How are willing are you to talk about compromises with the state as it is?

My answer is, "very willing." For example, when I talk about raising the retirement age for Social Security, that is a compromise relative to "abolish Social Security."

I justify this not on the basis of political pragmatism but on the basis of self-doubt. I believe that the state could reduce or phase out Social Security without harmful consequences, but I am not certain of this. One can imagine potentially harmful consequences, including repercussions that ultimately harm the cause of liberty. In general, I think in terms of incremental steps and experiments rather than in terms of the ultimate libertarian ideal. The much-ignored Unchecked and Unbalanced champions those sorts of ideas, even as it aims for an ideal that is very different from our current form of government.

This is the sort of thing that is often said to make Rothbardians sound ridiculous. They won't accept anything less than the abolition of social security -- and that, of course, means they're nuts!

But I've never met a Rothbardian who would disapprove of raising the social-security retirement age or consider it a "compromise." To the contrary, it is a partial repeal -- fewer people are entitled to taxpayer money than before -- and therefore laudable.

A "compromise" would be something that substitutes a new government program for an old one, as in the case of so-called "privatization."

It also isn't un-Rothbardian, as far as I can tell, to think strategically about what advances toward liberty should be made before others. For example, some Rothbardians have thought about what the consequences might be of allowing open borders before repealing the welfare state -- much to the dismay and disgust of certain "Hayekians." (Unreasonable radical that I am, I say open them now anyway.)

I should add that Kling's post does rightly suggest that most people who call themselves libertarians really aren't too far apart on the vast majority of what matters, and the differences between them are primarily, though not entirely, ones of tone and emphasis. More talk about what we have in common, in addition to what divides us, would probably be beneficial.

Big Business in Politics

February 8, 2010 7:59 AM by Mises Daily (Archive)

Rome set the example to modern Germany of making war profitable. In the half-century following the fall of Carthage, fifty million dollars in tribute and plunder drained into Rome. This sum gave a great opportunity to energetic men. FULL ARTICLE by H.J. Haskell

Change Your Mind

February 8, 2010 7:57 AM by Mises Daily (Archive)

Our thinking is formed by our reading and it's not enough to only occasionally read serious work while mostly reading useless books, magazines, and newspapers. People don't think the shallow reading harms them, but it does. FULL ARTICLE by Doug French

The Race Against Government

February 8, 2010 7:54 AM by Mises Daily (Archive)

Isn't there a way we could tap into people's philanthropic side without doing something intrinsically useless, like having a bunch of fourth graders walk around the school parking lot eight times? FULL ARTICLE by Robert Murphy

voluntary socialism versus human nature

February 6, 2010 4:09 PM by B.K. Marcus (Archive)

I lived half a year on a kibbutz back in the late 1980s, just as the intifada was starting.

For most of that time, I was the "shotef sirim" — the pot scrubber. For me, it was a proud title. It was the one kitchen job they wouldn't let women do (something about the weight of the pots or the height of the top shelves), so I spent the work days surrounded by women — but with my own little domain behind the oversized sinks and the power spray of hot and cold water.

Now I learn from the Financial Times ("The rise of the capitalist kibbutz") that "Tasks that used to be performed by kibbutzniks regardless of their education and background — such as washing the dishes — are today largely the preserve of hired workers from outside the community."

As the article's title implies, that's not the only change confronting the kibbutzim, the once-upon-a-time bastion of voluntary socialism — the "proof," as some of us once claimed, that "it worked."

As kibbutznik-turned-economics-professor Omer Moav argues,

the kibbutz movement was always destined to fail. It worked, he says, only as long as kibbutzniks enjoyed a standard of living broadly comparable to, if not better than, the Israeli average. "People respond to incentives. We are happy to work hard for our own quality of life, we like our independence," he says. "It is all about human nature — and a socialist system like the kibbutz does not fit human nature."

And They Still Make Wagon Wheels

February 6, 2010 4:00 PM by Jim Fedako (Archive)

Besides providing for the most-desired consumer goods, the market provides for niche goods as well. Consider The World Almanac, the 1008-page compendium of summarized historical and out-of-date facts.

With the internet at my disposal, I can find in-depth research and up-to-the-minute data. Easy, too.

Yet, time and again, I find myself thumbing through the almanac. Not as a primary source, but as an enjoyable diversion -- the original information surfing.

I would never buy one myself. But someone thought it would make a good Christmas gift. And he was right.

As I see it, the fact that you can still buy wooden wagon wheels and almanacs proves that the market serves the consumer.

Top ten free market economists list

February 5, 2010 4:56 PM by Douglas French (Archive)

Geoff Lawrence, the Fiscal Policy Analyst at the Nevada Policy Research Institute has penned his top-ten list on the NPRI blog.

The list is very Austrian, with two economists that spent a good deal of time in Nevada.

Disparaging the Boot Is a Bootable Offense

February 5, 2010 2:15 PM by S.M. Oliva (Archive)

On the heels of this week's decree against a Colorado physician group, the Federal Trade Commission announced another order today against the executive director of another Colorado-based physician group. The Commission voted 3-1 to sanction Mary Catherine Higgins, the executive director of Boulder Valley IPA, over remarks she made criticizing the agency's prior order against the group.

In 2005, the FTC targeted Boulder Valley and forced the IPA to sign a "consent order," similar to the one I discussed the other day. Although sometimes the Commission targets individual employees in these cases, it did not prosecute Ms. Higgins individually. But the story didn't end there, according to a dissenting statement issued by Commissioner J. Thomas Rosch:

First, Ms. Higgins denounced the consent decree in the press, asserting, among other things, that Boulder Valley had agreed to the consent decree only to avoid the substantial expense that litigation would entail. Second, in response to the notice for public comment on Boulder Valley's proposed consent, Anthem Blue Cross Blue Shield complained that "the terms of the Consent Order may be interpreted to allow individuals associated with . . . BVIPA" to continue to attempt to facilitate collusive pricing. Third, following those complaints and conversations with Anthem, staff notified Ms. Higgins that it was evaluating whether to add her to the Boulder Valley complaint or name her separately. Fourth, Ms. Higgins then separately met with the Commissioners (with the exception of the undersigned) in an effort to persuade them not to pursue her individually. Fifth, following those meetings, staff offered Ms. Higgins a consent decree that restricts Ms. Higgins's ability to participate in a pure "messenger system" in obtaining rates for those physicians that Boulder Valley represents. Sixth, Ms. Higgins rejected that consent decree, but rather than litigate, the Commission has since agree to a consent decree that (unlike the Commission's consent decree with Boulder Valley) (1) restricts Ms. Higgins to a limited messenger model for one year and (2) prevents Ms. Higgins from negotiating with any payor on behalf of any physician that participates in the BVIPA for two years.

In other words, Ms. Higgins publicly criticized the FTC, upset a major insurance company, and the Commission retaliated. That was too much even for Commissioner Rosch -- who is hardly shy about abusing his power -- to swallow:

[I]n my view, the Commission's decision today is unnecessarily punitive: Ms. Higgins cannot possibly do her job to the fullest extent for Boulder Valley if she is limited in her conduct as described. Moreover, I am gravely concerned that the Commission's abrupt decision to change its tune can be viewed as retaliation for Ms. Higgins's decision to exercise her First Amendment rights when she publicly criticized the Commission's initial decision against Boulder Valley and for her ensuing decision to meet individual Commissioners in an effort to persuade them not to pursue her separately.

...I believe that by separately naming Ms. Higgins, the Commission has reneged on its deal. Such actions will inevitably undermine the Commission's ability to effectively negotiate consent decrees in the future.

Well that last part would be a good thing. As Ayn Rand said, ""In any compromise between food and poison, it is only death that can win."

Charles Goyette Dollar Meltdown Video Interview

February 5, 2010 12:33 PM by Michael Martin (Archive)

Charles Goyette Dollar Meltdown Video Interview from Michael Martin on Vimeo.

Author and radio show host Charles Goyette speaks with Michael Martin of MartinKronicle and Contributor to the LvMI Economics Blog about the state of the US economy, Bernanke's re-appointment, and US long-term debt.

The Mises post Goyette refers to early in this interview is called Goyette: We're Near The Crack-Up Boom.

Goyette will be speaking at the Mises Circle / Phoenix on April 10.

Hayek-Keynes Debate Freed from IP Limbo

February 5, 2010 11:37 AM by John Cochran (Archive)

For anyone who might be interested in a more technical comparison of Hayek to Keynes and Hayek and Keynes relative to the macro neo-classical synthesis of the 1970s-80s, Fred Glahe and my The Hayek-Keynes Debate-Lessons for Current Business Cycle (1999), has been partially rescued from IP limbo (see http://blog.mises.org/archives/009729.asp) and can be obtained from the bookstore in a very generic paperback reprint at http://mises.org/store/Hayek-Keynes-Debate-P577.aspx.

In the foreword Roger Garrison wrote of the book, "The present exposition and defense of a capital-based business cycle theory … has maintained its timeliness - ands will continue to do so well into the future."

"Who dat" owns the term "Super Bowl"?

February 5, 2010 11:01 AM by Douglas French (Archive)

The NFL has been hyper-aggressive in protecting what it considers its property--the words "Super Bowl"--for years. Casinos in Las Vegas used to advertise their "Super Bowl" parties on the huge marquees fronting gaming properties. Then a few years back the league threatened court action if the term Super Bowl was used and casinos showed the game to casino patrons on screens exceeding a certain size.

Now all the marquees advertise betting lines for "the big game."

I'm part of the problem

February 5, 2010 9:24 AM by Jeffrey Tucker (Archive)

Yesterday, I inadvertently squandered $4000 plus worth of medical resources during a lunch break. That I could do this, gain no benefit, and not even see the bills, is what's right and wrong with American medical care.

I'll tell the story in moment but first consider that none of the politically active reform proposals being debated deal with the absence of market pricing for medical care, that system-wide problem that there is a disconnect between the supplier and the consumer, and this problem is absolutely pervasive. You rarely know the prices of what you are getting, and even when you do, the prices are an abstraction: something to know but not act on, since they don't really affect your premiums as with other forms of insurance.

The result is hardly surprising. End-user costs soar higher and higher and resource use lacks that essential component of economizing by priority. The American system just assumes that there is no such thing as too much technology, too many drugs, too much service, too much care. The consumer, in the end, isn't really a consumer but a passive conduit of an unchecked contractual relationship between producer and third-party payers who are heavily subsidized by taxpayers.

So now my slightly goofy story of how I spent probably $4000 yesterday without knowing it. I had a chest cold of some sort that was getting on my nerves, so I finally decided to see the doctor at a walk-in clinic. I complained of tightness in my chest that wouldn't go away. Within minutes, an EKG machine was hooked up to my heart and x-rays were being taken of my chest. Fifteen minutes later, the doctor came back to tell me that he found a big black spot on my lungs. He inquired about my past smoking.

Of course at this point, I'm ashen and woozy and worrying about who will update my Facebook page after I'm dead. The doctor orders a cat scan: "stat!" Suddenly, I felt like I was in a television show. I make my way to a medical specialist company, a place that looks like a industrial castle. I'm greeted by receptionists, hooked up to an iv by nurse practitioners, and slapped down on the scanning machine, which whirls and buzzes wildly all over my chest. The staff gathers around the pictures I could not see but I can see all these people's faces through a glass. They are staring and pointing with looks of intense seriousness. Meanwhile, the scans are sent to a radiologist in Tennessee, who is also examining them.

In my mind, I've already divided up my property among heirs and I'm hoping that I have time to train someone to do stuff that I do. My final wishes for world peace and prosperity will be written in my last message to the world, read to all those gathered at my funeral.

Thirty minutes later, they gather to tell me the news. Nothing. No one can see anything at all. My lungs are pink, my heart is working away, and I'm healthy as can be. The nurse suggests that the walk-in clinic needs to fix their x-ray machine, which is evidently throwing blacks spots around the images. Maybe it is a filter. Maybe someone bumped the machine. Regardless, my life was back and I appreciated all things anew.

Oh but wait. I pointed out to them that I never received anything for my chest cold. The lady said: "oh that. Take some Mucinex."

And that's what $4000 bought yesterday between the hours of 1 and 5pm. Maybe it was more. Maybe it was less. I don't really know.

On the one hand, the whole process was amazing. The speed! The efficiency! The miraculous technology! On the other hand, it was all wholly unnecessary. Now, you might say, hey, don't complain: at least you know. That's true enough. But if there were really a concern about costs, I'm not entirely sure this would have happened. And can there be any doubt that the scan was ordered over liability concerns mainly?

Lots of people benefit in this system. You could say that I benefitted. But at what cost? And is the cost proportional to the benefit? This is what the system doesn't seem to address. And the reform proposals, so far as I can tell, are designed to make what I went through a universal feature of American medicine. It's wishful thinking, and while the attempt might last a while, eventually it will go the same way all such attempts go: skyrocketing costs and universal stagnation.

Wage Earners and Employers

February 5, 2010 7:49 AM by Mises Daily (Archive)

It is a myth that there prevails a conflict between the interests of the corporations and firms and those of the people employed by them. In fact, good profits and high real wages go hand in hand. FULL ARTICLE by Ludwig von Mises

Austrian Business Cycle Theory and Global Crisis

February 5, 2010 7:47 AM by Mises Daily (Archive)

Although ABCT provides a sound approach that is capable of explaining the origin of the financial crisis in the United States, it still needs further elaboration to explain its global depth. FULL ARTICLE by Ersan Bocutoglu and Aykut Ekinci

The Brilliance of That Hayek vs. Keynes Rap

February 5, 2010 7:42 AM by Mises Daily (Archive)

As with the classical music show on public radio that takes apart a symphony to explain "why it is great," I want to explain why this video is great. To begin with, the character depiction is fantastic. FULL ARTICLE by Jeffrey Tucker

Mises Solves Current "Conundrum"--60 Years in Advance

February 4, 2010 3:54 PM by Joseph Salerno (Archive)

Wall Street analysts and financial pundits are struggling with a "conundrum," declared the talking head on MSNBC this morning. Retail sales in stores open at least a year ("same-store sales") posted an unexpected increase of 3.3 percent in January compared to a year earlier. Furthermore, labor productivity rose a seasonally adjusted 6.2 percent in the fourth quarter of 2009. This productivity improvement also exceeded expectations and implied a fall in per unit labor costs. Yet, on the same day as these statistics were released,an unanticipated and substantial rise of U.S. jobless claims was reported. The concurrence of these data presented the conundrum: Why are businesses not taking advantage of their rising sales and declining labor costs to increase employment and output and earn higher profits?

The answer, as Mises told us, is that entrepreneurs and workers only belatedly and painfully free themselves from the false and frenzied optimism fostered by the inflationary boom, especially one that turns into a runaway bubble. Once people finally do recover a sober view of reality, a deep and abiding pessimism sets in and makes entrepreneurs especially wary of embarking on new and seemingly profitable ventures. As Mises explained it:

"The process of readjustment, even in the absence of any new credit expansion, is delayed by the psychological effects of disappointment and frustration. People are slow to free themselves from the self-deception of delusive prosperity. Businessmen try to continue unprofitable projects; they shut their eyes to an insight that hurts. The workers delay reducing their claims to the level required by the state of the market; they want, if possible, to avoid lowering their standard of living and changing their occupation and their dwelling place. People are more discouraged the greater their optimism was in the days of the upswing. They have for the moment lost self-confidence and the spirit of enterprise to such an extent that they even fail to take advantage of good opportunities. . . . The recovery and the return to 'normalcy' can only begin when prices and wage rates are so low that a sufficient number of people assume that they will not drop still more."

Trillion dollar deficits, higher present and future tax bills, inflationary monetary policy and promiscuous bailouts to stabilize prices and wages are hardly the means to restoring the shattered confidence of entrepreneurs.