Austrian Scholars Conference 2012

On now: The Hayek Memorial Lecture by Nicolai Foss, Copenhagen Business School on “The Continuing Relevance of Austrian Capital Theory.”

Preliminary schedule.

The International Society for Individual Liberty is sponsoring an Austrian Economics Summit in Shanghai, China on July 20-23, 2012.

Speakers will include Richard Ebeling, Josef Sima, Mark Skousen, and Mises Institute technology whiz kid, David Veksler, among many others.

So, take a sojourn in China and then head to Mises University 2012.

And then if you are really hardcore get yourself to Bryn Mawr College for IHS‘s Advanced Studies Seminar on The Challenges and Future of Liberty.

I don’t know of a better way to spend two weeks in the middle of the summer.

The new issue of the Journal of Economics and Financial Education is now available online and it is a special issue devoted to a symposium on teaching Austrian economics (Vol. 10, No. 2, Fall 2011).

Peter Boettke:

In his obituary of Bertil Ohlin, Paul Samuelson plays the game of “what if” — in this case, “what if the Nobel Prize was established in 1900, then who would have won the prize between 1901 and 1930?”

This is list of names Samuelson thinks would have won the prize:

“One cannot forbear playing the game of might-have-been. Here is the most likely scenario of awards from 1901 on: Bohm-Bawerk, Marshall, J.B. Clark, Walras, and Wicksell; Carl Menger, Pareto, Wicksteed, Irving Fisher, and Edgeworth; Sombart, Mitchell, Pigou, Adolph Wagner, Allyn Young, and Cannan; Davenport, Taussig, Schumpeter, Veblen, and Bortkiewicz; Cassel, J. M. Keynes, Heckscher, J. R. Commons, and J. M. Clark; Hawtrey, von Mises, Robertson, H. L. Moore, and F. H. Knight.”(p. 358, n1)

What do you think of that list? And, what do you think it says about Mises’s stature as an economic thinker if even Samuelson signaled that he would have been honored with the Nobel Prize for his contributions to economic science?

Wes Moore: “Mr. Secretary, good morning. Many people don’t know that actually food stamps fall under the Department of Agriculture. And a report was just released that nearly 1 in 7 Americans now are currently on food stamps. What strategies — what’s being done right now and being done going forward that is really addressing poverty and the poor within the country and bringing some alleviation to those kinds of numbers?”

Secretary of Agriculture Tom Vilsack: “Well, obviously, it’s putting people to work, which is why we’re going to propose some interesting things during the course of the forum this morning. Later this morning, we’re going to have a press conference with myself and Secretary Mavis and Secretary Chu to announce something that’s never happened in this country which we think is exciting in terms of job growth. But I should point out that when you talk about the snap program or the food stamp program, you have to recognize that it’s also an economic stimulus. Every dollar of snap benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, then someone has to stock it, shelve it, process it, package it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times. The reason why these numbers have gone up is we’ve done a pretty good job of working with states that have done a poor job in the past about the getting word out about this program. States like California and Texas and Florida underperformed and we’re now working with them to make sure that people who are eligible get the benefits and therefore help stimulate their local economy.” – MSNBC’s “Morning Joe,” 8/16/11.

Mr. Secretary, I most humbly observe that you do not understand the definitions of “benefit,” and “stimulus,” nor what exactly is entailed in “economic activity,” and how $1.84 is actually generated in the economy.

MSN Money recently published an article asking the question: Will Ron Paul-onomics beat Obama?

The author argues that the “libertarian Republican’s call to ‘end the Fed’ and return to the gold standard* is catching on in the GOP — and it could shape the political year.”

*Not exactly, but close enough for the present discussion.

The Mises Blog long ago spoke of the film Margin Call and it has just been rewarded by the Academy of Motion Picture Arts and Sciences with a nomination for the Best Original Screenplay.

Here is an interview with J.C. Chandor.

Jeffrey Tucker said of the film that it was “the best finance/Wall Street movie I’ve ever seen. The impression it leaves is extremely powerful. There are no splashy scenes, no trumped up relationship dramas, no shocking bits of surprise, violence, etc. Instead, we get the straight dope with a very deliberate pacing of time that is stable and yet the drama remains incredibly intense.”

The new film Margin Call is a tale of a Lehman-like collapse and a Goldman Sachs-like crony return that is the first to even try to explain the Austrian Business Cycle Theory in a major studio film even though they do miss the cause of these fluctuations that is the Federal Reserve, central banks, and the the fiat currencies that cause these bubbles, panics, booms, manias, and busts.

The head of the investment bank during the height of the financial crisis tries to justify his existence and his actions mixing a little Austrian Business Cycle Theory as well as Helmet Schoeck’s theory of envy and social behavior as well as an equilibrium hypothesis:

‎”So you think we might have put a few people out of business today. That its all for naught. You’ve been doing that everyday for almost forty years Sam. And if this is all for naught then so is everything out there. Its just money; its made up. Pieces of paper with pictures on it so we don’t have to kill each other just to get something to eat. It’s not wrong. And it’s certainly no different today than its ever been. 1637, 1797, 1819, 37, 57, 84, 1901, 07, 29, 1937, 1974, 1987 – Jesus, didn’t that [$#@&] me up good – 92, 97, 2000 and whatever we want to call this. It’s all just the same thing over and over; we can’t help ourselves. And you and I can’t control it, or stop it, or even slow it. Or even ever-so-slightly alter it. We just react. And we make a lot money if we get it right. And we get left by the side of the side of the road if we get it wrong. And there have always been and there always will be the same percentage of winners and losers. Happy foxes and sad sacks. Fat cats and starving dogs in this world. Yeah, there may be more of us today than there’s ever been. But the percentages-they stay exactly the same.”

Despite his moralizing he is on to something. Identifying the problem is the start to the solution.

The film was written by the son of a Merrill executive and stars Kevin Spacey, Jeremy Irons, Stanley Tucci, and Demi Moore.

305 years after Étienne de La Boétie’s The Discourse of Voluntary Servitude comes this cogent summation of his thought on the nature of tyranny by Fredick Douglass in his Address on West India Emancipation on August 4, 1857:

‎”If there is no struggle, there is no progress. Those who profess to favor freedom, and yet depreciate agitation, are men who want crops without plowing up the ground. They want rain without thunder and lightning. They want the ocean without the awful roar of its many waters. This struggle may be a moral one; or it may be a physical one; or it may be both moral and physical; but it must be a struggle. Power concedes nothing without a demand. It never did and it never will. Find out just what a people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue till they are resisted with either words or blows, or with both. The limits of tyrants are prescribed by the endurance of those whom they oppress. Men may not get all they pay for in this world; but they must pay for all they get. If we ever get free from all the oppressions and wrongs heaped upon us, we must pay for their removal. We must do this by labor, by suffering, by sacrifice, and, if needs be, by our lives, and the lives of others.”

See also the Globe and Mail article on the topic.

And, Murray Rothbard’s brilliant introduction to Boétie’s work.

“We can suppose no other object to be placed before ourselves but happiness… We are then entitled to pursue happiness in that way in which it can be shown we are most likely to find it, and as each man can be the only judge of his own happiness, it follows that each man must be left free so to exercise his faculties and so to direct his energies as he may think fit to produce happiness; – with one most important limitation. His freedom in this pursuit of freedom must not interfere with the exactly corresponding freedom of others.”

For more see Voluntaryism: The Political Thought of Auberon Herbert by Eric Mack

And, The Right and Wrong of Compulsion by the State by Auberon Herbert.

Austrian Fellow Traveler Mark Skousen gives an interesting rundown of his encounters at the latest American Economic Association meetings in Chicago where economists from around the globe meet and present papers on current issues.

Dr. Skousen has a number of well-conceived books on theory, investing, and the history of economic thought, but his essay Persuasion vs. Force remains his best work while his article The Art of Letting Go is a close second.

One would think Matthew Yglesias had become quite well versed in Austrian Economics by now or at least slightly familiar, but alas that is not the case. Sadly all one can do is shake ones head as I think it is a lost cause and he really is not interested in learning why it was Ron Paul stated that “We are all Austrians now.”

Here is his latest attempt to confuse and befuddle as he leaves one discombobulated and none the wiser. Yglesias crawls along as he confounds fact and fiction and then reaches his crescendo of confusion when he states:

“Many of the original Austrians found their business cycle ideas discredited by the Great Depression, in which the bust was clearly not self-correcting and country after country stimulated real output by abandoning the gold standard and engaging in deficit spending. Then for a long time after World War II, policy elites more or less agreed on a combination of “automatic” fiscal stabilizers (the deficit naturally goes up during recessions as tax revenues fall and social service outlays rise) and interest rate cuts. And it worked, so nobody much cared about Austrian economics outside of crank circles.”

Of course, no prestigious circle cared much about Austrian economics except the one that matters most that gave F.A. Hayek a Noble prize in 1974 for his pioneering work in the theory of money and economic fluctuations and his penetrating analysis of the interdependence of economic, social and institutional phenomena.

If Matthew or anyone else wants to see the error of their ways it is a quick click away and a short read to the real story behind America’s Great Depression.

Friedrich Hayek keeps popping up to drop his knowledge for generations to come. His latest is a discussion with Leo Rosten on democracy, special interests, and dictatorships in this Free To Choose Network archival clip filmed in 1978.

George Reisman, professor emeritus of economics at Pepperdine University responds to a recent article by Henry Blodget at Business Insider.

Dear Mr. Blodget:

I’ve read your article “Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs.”

In a capitalist economy, the wealth of the rich is in the form of capital, i.e., wealth employed in the production of goods and services for sale. This wealth is the foundation both of the supply of products that people buy and of the demand for the labor that people sell. The greater the wealth of the capitalists, the higher are real wages, both because of a more abundant supply of products produced and a greater demand for the labor of wage earners. Diverting funds used to purchase capital goods and pay wages into spending for consumers goods, which is the effect of virtually all taxation that falls on the rich, and also of government borrowing, reduces both the demand for and production of capital goods and the demand for labor. In other words, it serves to hold down production, keep up prices, and hold down wages.

Consumers are not responsible for the industrial development of any country. Consumers have myriad needs and desires, which go unmet except to the extent that businessmen and capitalists find ways of supplying them through the development of new and improved products and more efficient, lower-cost methods of production. When such improvements are introduced, consumers can be expected to buy them, frequently on a very large scale. The firms and industries producing the better and/or less expensive products then expand and again and again become major components of the economic system. This, however, does not represent an increase in the overall number of jobs. For example, while the development of electric light led to major increases in employment in producing light bulbs and electric lamps and wiring, it also led to the near total wiping out of the production of candles, lanterns, and gas light, with a corresponding loss of employment in those areas. Similarly, when the automobile replaced the horse and buggy, the vast number of jobs created in the automobile industry was accompanied by a massive loss of jobs on the part of buggy builders, blacksmiths, horse breeders, harness makers, and oat growers.

More consumer spending financed by inflation, i.e., the creation of new and additional money, has the potential for increasing employment in some circumstances, but only insofar as the sellers of the consumers’ goods that are faced with the additional spending save and invest their additional sales proceeds. If they too consumed, or if the government taxed away their additional sales proceeds, there would be no increase in the spending for labor or capital goods and no increase in employment. The ability of inflation to promote employment also depends on labor unions being weak or non-existent. To the extent that unions exist and are powerful, they will take advantage of the inflation to raise money wage rates even in the midst of mass unemployment, thereby nullifying the ability of more spending for labor to increase employment.

While on the subject of inflation, it should be realized that it is inflation, particularly in the form of credit expansion, that is responsible for the perceived increase in inequality of income. New and additional loanable funds, manufactured by the banking system, with the sanction and protection of the Central Bank (in the US., the Federal Reserve), enter the capital markets and proceed to raise the prices of stocks and real estate, thereby creating capital gains on a massive scale. New and additional money and spending also serve to increase nominal profits, inasmuch as they raise sales revenues immediately but increase income-statement costs only with a more or less considerable time lag. And if the process continues, increases in income-statement costs are accompanied by still further increases in sales revenues. For example, consider a very simple case. A businessman spends $100 on January 1st to produce a product that he will sell on December 31st for $110. This year, however, there is a 10 percent increase in the quantity of money and volume of spending, and so our businessman will be able to sell his product for $121 instead of $110. Profits now equal $21 instead of just $10; in terms of a percentage of sales revenues and costs they are approximately doubled, and are correspondingly increased relative to wages.

However, when the effects of taxation are taken into account, it turns out that these seemingly high profits are accompanied by a sharp decline in real profits. Assuming the same tax rate on profits, say, 50 percent, the businessman who earned $10 without inflation had $5 left that he could either consume or add to his business, because $100 of sales proceeds were sufficient to replace the goods he sold. Now, however, with inflation, he has $10.50 of profit, almost all of which is required to replace the goods he sells, which goods now cost him $110 instead of only $100. This leaves him with only 50 cents that he can use to consume or add to his business.

Hopefully, the above makes it clear that in an environment of inflation, taxes on profits can virtually never be low. In the above example, the tax rate would need to be approximately halved just to remain the same, given the approximate inflationary doubling of the profit income subject to taxation. It’s also extremely difficult to understand how, even apart from inflation, anyone could believe that today’s tax rates are low by historical standards. For most of American history, i.e., 1776 to 1913 (with the exception of the Civil War), there was no income or inheritance tax, period. Indeed, prior to the Civil War, the only sources of federal revenue were tariffs and the proceeds of land sales. After the Civil War excise taxes on tobacco and alcohol were added. That was it, until 1913. And when the income tax was first introduced, the maximum rate was 6 percent. Thereafter, as nominal rates rose, so too did the number of exemptions and “loopholes.” “Loopholes” can easily have the effect of making extremely high nominal tax rates end up being radically lower in actual impact. For example, fewer countries have higher corporate tax rates than Sweden—52 percent the last time I checked. Yet Sweden also allows firms automatically to deduct up to 50 percent of their profits as tax-free reserve for future investment, which reduces the effective rate of corporate income tax in Sweden to 26 percent, which is considerably less than the current 35 percent rate in the US. Actual, effective tax rates on profits in the US are by no means low.

I will close now. If you have found any of my comments helpful in any way, and would like further elaboration on the nature of capitalism and economic freedom then I would like to recommend that you download (without charge) the pdf replica of my book Capitalism: A Treatise on Economics. The book is fully searchable and hyperlinked. It can be downloaded from my website simply by clicking on its title in the previous sentence.

Cordially,

George Reisman

George Reisman., Ph.D., is Pepperdine University Professor Emeritus of Economics, a Senior Fellow at the Goldwater Institute, and the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996). His website is www.capitalism.net and his blog is georgereismansblog.blogspot.com.

Walter Block is back with another controversial article this time questioning a four year old article by Wendy McElroy.

Here is Wendy’s response to Walter from four years ago when he raised similar issues, but never replied.

This is an ongoing debate that last reared its ugly head in a discussion between Walter Block and Stefan Molyneux. Here is Molyneux’s response to an article by Walter Block on arguments on the value and potential of political action, who is and who is not a libertarian, and Ron Paul.

Fittingly, here is an excerpt from a letter from Murray Rothbard to Wendy McElroy, dated October 1982, in which he offers a counter to the voluntaryist contention that voting is immoral.

Christine Smith makes the counterpoint more succinctly:

All of the popular press that the Austrian school of economics, the Mises Institute, the Austrian business cycle theory, and the Physiocrats like Frederic Bastiat have garnered lately has led Paul Krugman to try to rewrite Hayek out of the history of macroeconomics contra all facts against him.

Krugman begins:

“Friedrich Hayek is not an important figure in the history of macroeconomics.”

Yet, he was only willing to do so under the cover of a David Warsh article where Warsh states: “With the publication of ‘The Use of Knowledge in Society’ in the American Economic Review in 1945, [Hayek] essentially won on the ‘calculation debate,’ conducted with Ludwig von Mises and Oscar Lange, concerning the possibility of central planning.”

Krugman neglects to mention that Warsh goes on to discuss the contributions of Dr. Robert Nozick, Rep. Ron Paul, and George Mason Economics professor Russ Roberts and filmmaker John Papola’s two widely-viewed videos, “Fear the Boom and Bust” and “The Fight of the Century.” Or, his citing approvingly of Bruce Caldwell of Duke University‘s summation that [Hayek's] “‘twin ideas of evolution and spontaneous order’ become prominent, especially the idea of cultural evolution, with its emphasis on rules, norms, and decentralization.”

Krugman may also want to reread Warsh’s final paragraph where he states:

“These are today lively concepts in laboratories and universities around the world.”

And, then we can read the words of the Nobel committee that awarded Professor Friedrich von Hayek the Nobel:

“Hayek’s contributions in the fields of economic theory are both deep-probing and original. His scholarly books and articles during the 1920s and 30s sparked off an extremely lively debate. It was in particular his theory of business cycles and his conception of the effects of monetary and credit policy which aroused attention. He attempted to penetrate more deeply into cyclical interrelations than was usual during that period by bringing considerations of capital and structural theory into the analysis. Perhaps in part because of this deepening of business-cycle analysis, Hayek was one of the few economists who were able to foresee the risk of a major economic crisis in the 1920s, his warnings in fact being uttered well before the great collapse occurred in the autumn of 1929…

“His conclusion is that it is only through a far-reaching decentralization in a market system with competition and free price formation that it is possible to achieve an efficient use of all this knowledge and information. Hayek shows how prices as such are the carriers of essential information on cost and demand conditions, how the price system is a mechanism for communication of knowledge and information, and how this system can mean an efficient use of highly decentralized resources of knowledge.

“Hayek’s ideas and analyses of the viability of economic systems, presented in a number of writings, have provided important and stimulating impulses to the great and growing area of research which is named comparative economic systems.”

Krugman can try to dismiss the “Hayek thing” all he wants as he attempts to whitewash history but it clearly is not going away.

“True liberty cannot exist apart from the full rights of property, for property is the only crystallized form of free faculties…The whole meaning of socialism is a systematic glorification of force… No literary phrases about social organisms are potent enough to evaporate the individual, who is the prime, indispensable, irreducible element.”

For more see Voluntaryism: The Political Thought of Auberon Herbert by Eric Mack

And, The Right and Wrong of Compulsion by the State by Auberon Herbert.

Comedian Adam Carolla breaks down the current occupy Wall Street movement in very frank terms (NSFW language). He dives into the cultural reasons that lead us into this situation.

See also Helmut Schoeck’s Envy: A Theory of Social Behaviour.

And, this is what the tragedy of the commons looks like.

Sheldon Richman discusses the folly that would be a military conflict with Iran.

President Obama’s refusal to rule out military action against Iran — and GOP contender Mitt Romney’s recent threat of war against Iran — should appall anyone who believes, with the free-market liberal Ludwig von Mises, that “not war, but peace, is the father of all things.”

If the U.S. government or its client state Israel were to attack Iran, all hell would break loose. Thousands of Iranians would die. That country’s infrastructure would be destroyed, bringing even more death, disease, and misery. And the democratic Iranian Green Movement, which is against foreign intervention, would be destroyed. Iran’s government would retaliate by closing down the Strait of Hormuz, through which much oil passes, and launching attacks against American ground and naval forces in the region.

In short, disaster would follow a U.S. attack or an Israeli attack — which would be seen, quite rationally, as a U.S.-backed operation…

As part of the ongoing survey of opinion here is Naomi Wolf on “the shocking truth about the crackdown on Occupy.” Naomi mmay be most well known to LVMI readers for her book Give Me Liberty: A Handbook for American Revolutionaries and her mindblowing interview with Lew Rockwell on America’s slow-motion Fascist coup.

The violent police assaults across the US are no coincidence. Occupy has touched the third rail of our political class’s venality

US citizens of all political persuasions are still reeling from images of unparallelled police brutality in a coordinated crackdown against peaceful OWS protesters in cities across the nation this past week. An elderly woman was pepper-sprayed in the face; the scene of unresisting, supine students at UC Davis being pepper-sprayed by phalanxes of riot police went viral online; images proliferated of young women – targeted seemingly for their gender – screaming, dragged by the hair by police in riot gear; and the pictures of a young man, stunned and bleeding profusely from the head, emerged in the record of the middle-of-the-night clearing of Zuccotti Park.

But just when Americans thought we had the picture – was this crazy police and mayoral overkill, on a municipal level, in many different cities? – the picture darkened. The National Union of Journalists and the Committee to Protect Journalists issued a Freedom of Information Act request to investigate possible federal involvement with law enforcement practices that appeared to target journalists. The New York Times reported that “New York cops have arrested, punched, whacked, shoved to the ground and tossed a barrier at reporters and photographers” covering protests. Reporters were asked by NYPD to raise their hands to prove they had credentials: when many dutifully did so, they were taken, upon threat of arrest, away from the story they were covering, and penned far from the site in which the news was unfolding. Other reporters wearing press passes were arrested and roughed up by cops, after being – falsely – informed by police that “It is illegal to take pictures on the sidewalk.”

In New York, a state supreme court justice and a New York City council member were beaten up; in Berkeley, California, one of our greatest national poets, Robert Hass, was beaten with batons. The picture darkened still further when Wonkette and Washingtonsblog.com reported that the Mayor of Oakland acknowledged that the Department of Homeland Security had participated in an 18-city mayor conference call advising mayors on “how to suppress” Occupy protests.

To Europeans, the enormity of this breach may not be obvious at first. Our system of government prohibits the creation of a federalised police force, and forbids federal or militarised involvement in municipal peacekeeping.

I noticed that rightwing pundits and politicians on the TV shows on which I was appearing were all on-message against OWS. Journalist Chris Hayes reported on a leaked memo that revealed lobbyists vying for an $850,000 contract to smear Occupy. Message coordination of this kind is impossible without a full-court press at the top. This was clearly not simply a case of a freaked-out mayors’, city-by-city municipal overreaction against mess in the parks and cranky campers. As the puzzle pieces fit together, they began to show coordination against OWS at the highest national levels.

Why this massive mobilisation against these not-yet-fully-articulated, unarmed, inchoate people? After all, protesters against the war in Iraq, Tea Party rallies and others have all proceeded without this coordinated crackdown. Is it really the camping? As I write, two hundred young people, with sleeping bags, suitcases and even folding chairs, are still camping out all night and day outside of NBC on public sidewalks – under the benevolent eye of an NYPD cop – awaiting Saturday Night Live tickets, so surely the camping is not the issue. I was still deeply puzzled as to why OWS, this hapless, hopeful band, would call out a violent federal response.

That is, until I found out what it was that OWS actually wanted.

The mainstream media was declaring continually “OWS has no message”. Frustrated, I simply asked them. I began soliciting online “What is it you want?” answers from Occupy. In the first 15 minutes, I received 100 answers. These were truly eye-opening.

The No 1 agenda item: get the money out of politics. Most often cited was legislation to blunt the effect of the Citizens United ruling, which lets boundless sums enter the campaign process. No 2: reform the banking system to prevent fraud and manipulation, with the most frequent item being to restore the Glass-Steagall Act – the Depression-era law, done away with by President Clinton, that separates investment banks from commercial banks. This law would correct the conditions for the recent crisis, as investment banks could not take risks for profit that create kale derivatives out of thin air, and wipe out the commercial and savings banks.

No 3 was the most clarifying: draft laws against the little-known loophole that currently allows members of Congress to pass legislation affecting Delaware-based corporations in which they themselves are investors.

When I saw this list – and especially the last agenda item – the scales fell from my eyes. Of course, these unarmed people would be having the shit kicked out of them.

For the terrible insight to take away from news that the Department of Homeland Security coordinated a violent crackdown is that the DHS does not freelance. The DHS cannot say, on its own initiative, “we are going after these scruffy hippies”. Rather, DHS is answerable up a chain of command: first, to New York Representative Peter King, head of the House homeland security subcommittee, who naturally is influenced by his fellow congressmen and women’s wishes and interests. And the DHS answers directly, above King, to the president (who was conveniently in Australia at the time).

In other words, for the DHS to be on a call with mayors, the logic of its chain of command and accountability implies that congressional overseers, with the blessing of the White House, told the DHS to authorise mayors to order their police forces – pumped up with millions of dollars of hardware and training from the DHS – to make war on peaceful citizens.

But wait: why on earth would Congress advise violent militarised reactions against its own peaceful constituents? The answer is straightforward: in recent years, members of Congress have started entering the system as members of the middle class (or upper middle class) – but they are leaving DC privy to vast personal wealth, as we see from the “scandal” of presidential contender Newt Gingrich’s having been paid $1.8m for a few hours’ “consulting” to special interests. The inflated fees to lawmakers who turn lobbyists are common knowledge, but the notion that congressmen and women are legislating their own companies’ profitsis less widely known – and if the books were to be opened, they would surely reveal corruption on a Wall Street spectrum. Indeed, we do already know that congresspeople are massively profiting from trading on non-public information they have on companies about which they are legislating – a form of insider trading that sent Martha Stewart to jail.

Since Occupy is heavily surveilled and infiltrated, it is likely that the DHS and police informers are aware, before Occupy itself is, what its emerging agenda is going to look like. If legislating away lobbyists’ privileges to earn boundless fees once they are close to the legislative process, reforming the banks so they can’t suck money out of fake derivatives products, and, most critically, opening the books on a system that allowed members of Congress to profit personally – and immensely – from their own legislation, are two beats away from the grasp of an electorally organised Occupy movement … well, you will call out the troops on stopping that advance.

So, when you connect the dots, properly understood, what happened this week is the first battle in a civil war; a civil war in which, for now, only one side is choosing violence. It is a battle in which members of Congress, with the collusion of the American president, sent violent, organised suppression against the people they are supposed to represent. Occupy has touched the third rail: personal congressional profits streams. Even though they are, as yet, unaware of what the implications of their movement are, those threatened by the stirrings of their dreams of reform are not.

Sadly, Americans this week have come one step closer to being true brothers and sisters of the protesters in Tahrir Square. Like them, our own national leaders, who likely see their own personal wealth under threat from transparency and reform, are now making war upon us.

From another perspective the brilliant and already sorely missed new publisher and executive editor of Laissez-Faire Books, author of It’s a Jetsons World: Private Miracles and Public Crimes and Bourbon for Breakfast: Living Outside the Statist Quo, the Jeff Tucker covers the political economy of #OWS.

The Difference Between OWS and Anti-Vietnam Protests
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The Occupy protesters imagine that they stand in a great tradition of American radicalism, willing to stand up to the man and risk arrest in order to achieve their goals. The most obvious case of such a mass movement would be the anti-war protests of the 1960s. They started small and grew and grew until they became mainstream and actually affected a dramatic policy change. The U.S. military pulled out of Vietnam, implicitly conceding defeat and mourning the long history of calamity.

But consider the gigantic differences. The Vietnam protest movement had a clear goal. It wanted to end the war. It had a clear enemy: the politicians and bureaucrats who wanted the war to last forever. It had a clear message: this war is wrong. It had an intense motivation: the protesters were terrified of being drafted to kill and be killed. This is what standing up to power is all about.

So far as anyone can tell, the Occupy movement has none of this clarity. Ten thousand articles have been written on these people and there is still no consensus concerning what the issue really is. The goals of the movement are posted here and there, but not everyone among the protesters agrees with them. The motivation is just as amorphous and varied: unemployment, sinking job prospects, sinking incomes, blowback from the bailouts, the desire to slum around in a decadent sort of way, and the destructive urge to trample down the pea-patch of life itself.

Worse, from my point of view, is that the movement isn’t really standing up to power. It is standing in for power to urge that the state take on more responsibilities and control people’s lives even more than it does already. They imagine that they are demanding human rights, but the main agenda as listed in public websites amounts to a list of ways for the government to violate human rights, or at least intrude aggressively upon them.

Raising the minimum wage, for example, amounts to a limitation on the rights of workers to negotiate their own employment contracts. The minimum wage says: you have no right to offer less for your services than the state gives you permission to offer. Thus, the minimum wage not only promotes unemployment; it restrains the human right to associate on any terms of a person’s choosing.

Likewise, the demand to nationalize health interferes with the rights of doctors and patients to negotiate their own contracts. The demand for tariffs interferes with the rights of people to peacefully trade with anyone from around the world, and effectively entrenches the nation-state as the only permitted geographic range of economic associations.

The imposition of new taxes takes people’s property. This is property acquired through their own labor which is then forcibly taken by the state to use for political purposes. This demand is a prescription for further impoverishment.

The push for refunding domestic infrastructure denies private entrepreneurs the opportunity to use their resources and talents to rebuild on a for-profit basis and in a manner that that can actually be maintained. There is a reason that state infrastructure always seems to be crumbling: it is built by the state with all the inherent economic irrationality of most state projects.

The real problem with the OWS movement is its political naiveté. The protestors imagine that by attacking free enterprise and the capitalist system they are upholding the rights of the common man. The exact opposite is true. The only real alternative to free enterprise is an economy owned and administered by society’s most ruthless and cruel elements, who always seems to gravitate toward statist means.

If OWS is successful, it will wake up to a world that is lorded over by federal bureaucrats and jack-booted enforcement thugs. The entire world will be run like the Post Office, the TSA, the IRS, and the Customs Bureau. This has nothing to do with freedom and nothing to do with human rights.

For this reason, the OWS protest is not really a threat to the establishment. So far, its message has been that the state needs to be truer to itself, that the worst aspects of both the Democratic and Republican platforms need to be implemented with a vengeance. This is a movement the state can come to love. Indeed, the White House has drawn closer and closer to this movement, saying that Obama “will continue to acknowledge the frustration that he himself shares.”

Again, the contrast with the Vietnam protests of the 1960s cannot be starker. The White Houses hated these people. The politicians of both parties were terrified of what “people power” meant in those days.

If we had the equivalent movement as it relates to economics today, it would be calling for an end to the Fed, privatization of education, privatization of health care, the right to global free trade, an end to state robbery of persons and their businesses, and a right to keep what you own. In short, a truly radical protest movement would be calling for a consistent and authentic capitalism as a corollary to the peace agenda in international politics.

Now that would be radical.

Regards,

Jeffrey Tucker