After barely a week in full-tilt operation the “Cash for Clunkers” program has been suspended. As recently taken apart in a Mises Daily, this program is a particularly absurd example of the broken-window fallacy. But the suspension of the program has brought even more economic absurdity.

Rep. Candice Miller breathlessly tells us “The thing has exploded. It has exceeded everyone’s expectations.” Before we go on let’s just pause and reflect on these people who were surprised. Here is the amazing turn of events:

1. The government starts handing out free money.
2. People start grabbing it as fast as they can.
3. The bureaucrats quickly realize that they are hitting the program’s budget in mere days (of the program being finalized) and suspend the program.

What is the reaction to this perfectly foreseeable sequence of events? “…dealers were amazed…”, “the explosively popular… program.”

As if the program itself and the surprise at its reception weren’t enough, there is one more bit of economic foolishness dolloped on like a cherry on top. Returning to the brilliant Rep. Miller (representative from Michigan and co-architect of the glorious program) she is enthused at the results: “‘Throughout our history, it has been auto sales that have pulled us out of recession. People are more likely to buy cars than houses. Not to be too Pollyannaish, but we’re gettin’ our mojo back. This could be the pivot’ that begins an economic recovery.”

How do you get an economic recovery going? Start raining free money down on everyone’s heads. I grew up thinking that the people from the Middle Ages were idiots… They believed the earth was flat! Turns out they didn’t actually. But Rep. Miller (and how many Americans?) really does believe this nonsense. I have found the Dark Ages and it is us.

This documentary covers the events of February 28-April 19, 1993 at Waco, Texas that resulted in a total of eighty-six deaths. Called the Waco Siege or Waco Massacre, it is an amazing illustration of the principle that every command and regulation of the state is backed up by deadly force.

In this case, the Bureau of Alcohol, Tobacco, and Firearms initiated the raid due to suspicion that the people there were guilty of violating firearm regulations, (they ran a business buying and selling firearms). Ultimately, eighty-two people were killed including more than 20 children and two pregnant women, as a consequence of what was initially the enforcement of a business regulation. These people were not convicted of any crimes, but merely suspected of violating a government regulation. They were not accused of killing anyone or stealing from anyone. They had even expressed willingness to have the ATF inspect their inventory.

There is so much to be said about the horrifying events documented here. I would only add that here we see a dramatic example of the militarization of domestic law enforcement… A trend that has only become more intense since 1993.

No rating, but be warned that there are some graphic, horrifying images.

See more Films on Liberty and the State.

Dear Walter Block and the Ludwig von Mises Institute,

This is a Russian Federal highway that runs from Moscow to Yakutsk. Though the road is a vital highway it does not have an asphalt surface.

Please translate Professor Block’s Privatization of Roads & Highways into Russian as soon as possible.

Thank you.

Respectfully,

Russia

Against Intellectual Monopoly by Michele Boldrin and David Levine, subject of much discussion on this blog, will be the center of a conference this week at the authors’ home university, Washington University in St. Louis: The Economics and Law of Innovation.

Note that George Selgin, author of Good Money, is on the schedule.

Bob Murphy has unwittingly made a great contribution in his article today to a short list of common false dichotomies in the area of political economy:

The first thing to realize is that people do not decide to “spend” or not; rather, they decide whether to spend in the present versus in the future.

Here is a similar false dichotomy spotted by Hayek who wrote about the use of the term “planning” to mask what was really at stake… Who should plan? The government or individuals?:

“Planning” owes its popularity largely to the fact that everybody desires, of course, that we should handle our common problems as rationally as possible, and that in so doing we should use as much foresight as we can command… According to the modern planners, and for their purposes, it is not sufficient to design the most rational permanent framework within which the various activities would be conducted by different persons according to their individual plans. This liberal plan, according to them, is no plan…”

The Road To Serfdom, p. 36 (emphasis mine).

It has long been a habit of welfare statists to say that those who oppose government provision for the needy oppose “compassion” or “caring”. So, in short, here are some common false dichotomies:

• Spend vs. Not Spend
• Plan vs. No Plan
• Compassion vs. No Compassion

What these have in common, of course, is that they are logical fallacies used in service to the growth of the State. Can you think of others?

This comment in a Financial Times post by Willem Buiter, The end of American capitalism as we knew it, is a perfect illustration of Mises’s point that interventionism is not stable and tends to lead to more and more interventions until parts of the economy are outright socialized:

If financial behemoths like AIG are too large and/or too interconnected to fail but not too smart to get themselves into situations where they need to be bailed out, then what is the case for letting private firms engage in such kinds of activities in the first place?

…There is a long-standing argument that there is no real case for private ownership of deposit-taking banking institutions, because these cannot exist safely without a deposit guarantee and/or lender of last resort facilities, that are ultimately underwritten by the taxpayer.

It is important not to miss the hope in Mises’s gloomy thesis though. The chaos caused by interventions do not have to lead to more interventions. There is a fork we can take that leads to a road less travelled. In this particular case, it requires rejecting the notion that “deposit-taking banking institutions… cannot exist safely without a deposit guarantee and/or lender of last resort facilities, that are ultimately underwritten by the taxpayer.” Not only can they exist safely without state involvement, they would ultimately be more safe and stable then the house of cards we are now watching fall apart.

[Thanks Big Contrarian]

The Dilbert comic strip has a series running right now (two strips so far, maybe more?) you shouldn’t miss on hyperinflation. Both focus on the difficulty of making purchases when the money is becoming more worthless almost by the moment: Potato and Fetid Water.

As often with good comedy, inflation at “a billion percent, daily” is just an exaggeration of many real hyperinflations that have occurred throughout history… But especially since the 20th century and the wide adoption of central banking. See, for example, Hans Sennholz on the Hyperinflation in Germany, 1914-1923. Also, see Mises’s discussion of the same topic. He uses the charming term “the crack-up boom”. Let us hope hyperinflation remains something to joke about because the reality of living through one is not funny at all.

Is the myth of the “do nothing” Herbert Hoover dying? Michael Kitchen at MarketWatch writes:

…Herbert Hoover — only nine months into his presidency — assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package. The proposal called for $160 million in tax relief — only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008. Read Time’s original coverage of the plan.

Also on the table was an assurance from the Federal Reserve that it would provide cheaper credit.

Has someone been reading Rothbard? [Thanks Digg]

It is a commonplace, for libertarians at least, that coercive redistribution cuts into charity by reducing the funds available for charitable giving. But Arthur C. Brooks, in his book Who Really Cares, points to another effect of redistribution on giving… To be precise, an effect of a belief in redistribution. From an interview with Brooks in the Acton Institute’s Religion & Liberty:

…the belief that the role of government is to provide for needs—that belief in and of itself suppresses charitable giving. Ask somebody, “do you think the government should do more to redistribute income?” People who strongly disagree with that give twelve times more money a year to charity than the people who strongly agree with that. You virtually never see differences that are that big. Even when you correct for income and age and education, there are big differences that persist between [those two] groups.

Garrison Keillor notes the anniversary of the GI Bill on the Writer’s Almanac:

It was on this day in 1944 that President Franklin D. Roosevelt signed into law the GI Bill of Rights. It was one of the most important and influential pieces of legislation ever signed by an American president, but the newspapers barely covered the story at the time. They were too busy reporting on the Allied invasion of Europe.

…Before the war, about 10 percent of Americans attended college. After the war, that figure rose to about 50 percent.

…The cost to taxpayers for the GI Bill was about $5.5 billion, but the result was 450,000 engineers, 240,000 accountants, 238,000 teachers, 91,000 scientists, 67,000 doctors, 22,000 dentists, 17,000 writers and editors, and thousands of other professionals. It helped spur one of the greatest economic booms in American history.

(The Writer’s Almanac links to this worshipful remembrance from establishment historians.)

Thomas DiLorenzo wrote an excellent demolition of the myths around the GI Bill some years ago. He points out in particular the politicization of the universities that was started by the GI Bill:

Today, accreditation agencies, private in name only, have tremendous power over colleges and universities, and they are slavish to government’s agenda. Today, these agencies are the major source of political correctness and big-government ideology on college campuses.

I would only add two direct critiques of Keillor’s analysis. He seems to implicitly assumes that because the GI Bill produced more professionals of various sorts that it was obviously a great thing. Besides the unconscious self-congratulation that one expects from the intelligentsia (“more of us is clearly what the world needs”), there is the matter of how many college degrees is optimal. Should every man, woman and child have a PhD? If not, what is the right number? How does Keillor know that 450,000 engineers was exactly what society needed at that time? Absent the operation of the free market there is no way to know.

Secondly, the contention that pouring out lots of people with college degrees produces “economic booms” simply can’t stand up to the post-WWII experience. States trying to engineer economic growth throughout the developing world have tried this and I don’t believe any positive correlation has been found between how many more people are getting college degrees and how well the economy grows. It would not surprise me at all, in fact, if there was a slight inverse correlation since huge jumps of investment in higher education are typically not something that happens through market demand but through things like the “GI Bill” that have been happening in developing countries through many decades of economic misery.

In If Men Were Angels Robert Higgs analyzes James Madison’s famous passage from The Federalist No. 51 containing the quotable line “If men were angels, no government would be necessary.” This is an excellent article with several useful analytical approaches to thinking about the state. Of particular value is a section on the “dynamic considerations” left out by the Hobbesian or Lockean account of moving from the “state of nature” to a state:

Suppose, if only for purposes of discussion, we conceded that the initial establishment of the state reduces the degree of social disorder. The obvious question, however seldom philosophers may have asked it, then becomes, What happens next? Does the degree of social disorder remain constant… ?

All in all, the article is a wonderfully hard-headed critique of the rather naive approach often taken by political philosophers and political scientists: Giving the state the benefit of the doubt.

Anyone who has read RJ Rummel’s China’s Bloody Century: Genocide and Mass Murder Since 1900 can only wish that the Chinese would get a merciful break after all that. (Except for the neocons who are eager to get a conflict going with China and for whom mercy, I gather, is not a virtue.)

A Chinese co-worker recently returned from a visit back home after not being back in China since 2000. His account of the changes he saw from those 7 years of the (somewhat) unleashed market is amazing and encouraging.

The first thing he told me: “Everyone has cars!” In 2000 only a small elite had cars, but now a large middle class does, and nice ones. Of course, this and the other things he told me apply primarily to places like his home city Nantong (on the other side of the Yangtze River from Shanghai), Shanghai and a few other cities he was able to visit. Stock ownership has gone from something like 10% of the Chinese in 2000, to a stunning two-thirds of the urban population. Not only cars but cell phones, media players and other gadgets are not only ubiquitous in the cities but often have superior features to what we have in the US. My friend had trouble recognizing his home city due to all the new roads (for all the new cars to get around on) and new buildings. My friend, who is 43, says that many of his peers back in China are now millionaires from businesses started 5 to 10 years ago. The private sector is, of course, where the ambitious young Chinese go.

One worrying aspect of his report is that stock market speculation seems to be in the sort of frenzy we often see in a boom. His father put money into the stock market a month ago and the value of his investment has more than doubled in that time. This is typical. Some people have shut down their businesses and put the money into the stock market instead.

Another interesting note is that the government has cracked down on stores selling pirated music, movies and software. In 2000 they were everywhere, but this time they were nowhere to be found.

Even if there is some of this that is an unsustainable bubble, clearly China is going through a market revolution that is changing life for tens of millions of Chinese at a record-breaking pace. There is hope in the air in China. Finally.

Joe Kissell at Interesting Thing of the Day does a little investigation to try to piece together The Story of Toilet Paper. If someone is going on about how idyllic life was before capitalism destroyed our more natural way of life (e.g., distributists, environmentalists, communitarians, hippies, etc.) then just bringing up the lack of toilet paper prior to the mid-19th century should snap them out of it. (Thanks to my very funny friend Richard Taylor for pointing this out years ago. He made this point to a classroom full of lefties waxing nostalgic about the past.)

One thing that is clear from Kissell’s history is that this is a story of capitalism. Entrepreneurs innovating to iteratively approach a solution that consumers find ideal (until someone comes up with something even more ideal of course). Here is my favorite bit:

A 1935 ad for Northern Tissue boasted that it was “splinter-free,” but this does not in any way suggest that all toilet paper prior to that time had splinters!

When the U.S. government initially brought an antitrust case against Microsoft in 1998 at the behest of competitors Netscape and Sun, beltway types marvelled that Microsoft did not even have a lobbyist in DC. Somehow this technology company had become a huge corporation without playing the usual political game. Well, Microsoft has matured. (I’ve been trying to figure out the odd usage of “matured” by statist political pundits. Near as I can tell, it means “become thoroughly corrupted by politics”.)

Microsoft recently lost out in a bidding war to buy online advertising company DoubleClick. Google won (for a hefty $3.1 billion) and Microsoft has now learned what to do when you don’t get your way in the voluntary marketplace… Microsoft Urges Antitrust Officials to Scuttle DoubleClick Deal:

In an interview today, Bradford L. Smith, Microsoft’s general counsel, said that the purchase of DoubleClick by Google would “combine the two largest distributors of online advertising” and thus “substantially reduce competition in the advertising market on the Web.”

Learn about more films with libertarian themes at the Mises Film Page.

Sophie Scholl: The Final Days (2005)

On February 22, 1943, Sophie Scholl, her brother Hans Scholl, and their friend Christoph Probst were beheaded for treason by the Nazi regime. Sophie Scholl was 21. They had committed no violence but had secretly written and distributed pamphlets criticizing the regime. In court, Sophie said “Somebody, after all, had to make a start. What we wrote and said is also believed by many others. They just don’t dare express themselves as we did.”

This film focuses on Sophie Scholl’s last five days beginning with her group’s last distribution of tracts during which her and her brother are caught and arrested. Five days later they are given a very brief trial, sentenced and executed the same day. There are a number of striking details for the libertarian that the film brings out. At several stages in the process she is berated for being unthankful to the regime that was providing her (socialist) university education. Evidently, there are strings attached to these state “services”. Notably, they are charged with breaking a law having to do with not “supporting the troops”.

The scene with Judge Roland Freisler, who was also the judge in the trial of the July 20 assassination plotters later on, is really remarkable. Any pretense of a legal system independent from the political rulers is completely gone in this reductio ad absurdum of state “justice”. Freisler rants and raves at the accused, cutting them off and insulting them. The DVD has a short clip of actual footage of Freisler in action as a bonus feature. If not for that clip, I wouldn’t have believed that any “judge” would behave in such a manner.

Finally, though Sophie acquits herself most remarkably before this maniac of a judge, her brother Hans gets in one telling line: “If you and Hitler weren’t afraid of our opinion, we wouldn’t be here.” Despite how small these isolated resistors seem in the face of the regime, Hans is right. The regime is in stark terror of public opinion turning against them.

But over and above all these details is Sophie Scholl herself: courageous, articulate, stubborn. Once it becomes clear that they are truly found out, she does not beg for mercy but instead speaks the truth again and again with inspiring boldness. She is a standing rebuke to those who would keep silent merely to further a career or curry favor with the establishment. In German with English subtitles. Also see The White Rose.

Mystery solved. I first heard about the deadly flu pandemic of 1918 in an obscure blues song from that era. As I learned more about it, like that it was the worst pandemic in world history, I wondered why there was relative silence about this horrifying event, relative to, say, World War I and the Great Depression about which any schoolchild learns. Garrison Keillor’s Writer’s Almanac gives this rather strong clue:

Historians believe at least 500,000 people died in the United States alone. That’s more than the number of Americans killed in combat in all the wars of the 20th century combined…

No one is sure exactly how many people died, because it wasn’t even clear at the time what the disease was. World War I was currently under way, and there were rumors that German soldiers had snuck into Boston Harbor and released some new kind of germ weapon. One of the strangest aspects of the pandemic in this country was that it was barely reported in the media. President Woodrow Wilson had passed laws to censor all kinds of news stories about the war, and newspaper editors were terrified of printing anything that might cause a scandal.

So as the flu epidemic spread across the country. In large cities, people were dying of the flu so rapidly that undertakers ran out of coffins, streetcars had to be used as hearses, and mass graves were dug. The newspapers barely commented on it. In the fall of 1918, doctors tried to get newspapers to warn people in Philadelphia against attending a parade. The newspapers refused. In the week after the parade, almost 5,000 Philadelphians died of the flu.

The shipping of soldiers from base to base around the country seemed to have helped spread the infection. [This sentence is in the audio broadcast but not in the notes on the web page.]

So here is my hypothesis. The statist establishment has determined that various pro-state lessons can be drawn from WWI and the Depression so these events are discussed ad nauseam. The Influenza Pandemic, though, is largely forgotten as it rather obviously teaches different lessons:

• The state distorts health information, either playing down something truly serious as in this case or playing up something that is actually no big deal as with the recent bird flu hysteria.
• War, as it has been through the ages, is strongly associated with disease.
• The mass media is not always a vigilant watchdog of the state. It is sometimes, in fact, a rather craven lapdog of the state.
• The state’s latest crusade is more important to it than responding to actual threats to the American people.

This film is in theaters now, but unfortunately not for long. Please get out to see this film! This is our story, a libertarian story.

See more films about liberty and the state at the film page.

Amazing Grace (2007)

What could be more opposed to the principle of self-ownership than slavery, an institution that is, very possibly, older than the state? And what, therefore, has been a greater victory in the modern age than the peaceful (outside of the U.S.) abolition of slavery? This movie tells the first crucial part of that inspiring tale: the abolition of the deadly slave trade led by William Wilberforce.

The story begins with Wilberforce wanting to leave politics for religious reasons. John Newton, a reformed slave trader (and the author of the hymn “Amazing Grace”), urges Wilberforce to remain in politics to fight for the abolition of the slave trade. Wilberforce and other abolitionists work feverishly to gather evidence against the slave trade so they can present a bill against it. When the bill goes up for a vote it is easily defeated. This disheartening failure leads them to realize that they are going to have to change public opinion first before political change will happen. Thus the battle of ideas begins.

Who are the enemies in the film? Of course there are the businessmen in the slave trade and the politicians in bed with them. But there is also a conservatism that stands by the unjust institution simply because it is old. There are even wrong-headed economic arguments, like that the prosperity of Britain is built on slavery, (as opposed to, say, the industrial revolution). But the enemy that looms over the whole long crusade is simply despair. It is hopelessness and the desire to give up that Wilberforce struggles with most when initial efforts fail.

As one would hope from the story of one of the greatest libertarian victories, strategic lessons abound:

• The abolitionists are radical but patient.
• Gradualism is not an aid to attaining abolition, it is deployed to slow it down.
• The fundamental argument is a moral one, based on an appeal to natural law.
• The abolitionists carefully document and publicize the violence and brutality of the system.
• Public opinion can win even against massive entrenched interests.
• War is a strategic obstacle to liberation and a support for entrenched interests.

Murray Rothbard noted some years ago, somewhat ruefully, the connection between science fiction and libertarianism in his comments on the “modal libertarian”. But, well, what other genre of literature can be argued is fundamentally libertarian? Eric S. Raymond, known because of his role in the open source movement and his seminal essay The Cathedral and the Bazaar, has a fascinating essay on The Political History of SF (Science Fiction).

The strong binding between hard SF and libertarian politics continues to be a fact of life in the field. It it is telling that the only form of politically-inspired award presented annually at the World Science Fiction Convention is the Libertarian Futurist Society’s “Prometheus”. There is no socialist, liberal, moderate, conservative or fascist equivalent of the class of libertarian SF writers including L. Neil Smith, F. Paul Wilson, Brad Linaweaver, or J. Neil Schulman; their books, even when they are shrill and indifferently-written polemical tracts, actually sell — and sell astonishingly well — to SF fans.

…It’s worth asking, then: is the intimate historical relationship between libertarian political thought and SF a mere accident, or is there an intrinsic connection?

He then goes on to make an intriguing argument for an intrinsic connection. The argument is worth reading. Here are some teasers:

…In the narratives at the center of SF, political power is the natural enemy of the future.

…Ideological fashions come and go, and the field inevitably rediscovers itself afterwards as a literature of freedom.

A fascinating interview with playwright/screenwriter/director David Mamet by Charlie Rose (jump to 29:00) features his comments on economics and Hollywood (jump to 36:00). The interview is about his book Bambi Vs. Godzilla: On the Nature, Purpose, and Practice of the Movie Business. He says that he has been studying economics and has been fascinated with the film industry as an exemplar of the free market. He explicitly rejects central planning of culture, “the commissar of culture” (state theaters, etc.) and celebrates the entrepreneur who he says must have “arrogance or, to put it differently, self-assurance” as they push for their vision while always keeping an eye on the audience. See Theatre and the State by Hans Frank for a brief overview of central planning of culture in the U.S. [Thanks Filmspotting]

David Beito at the Liberty & Power Blog recommends the film The Pursuit of Happyness with Will Smith which is currently in the theatres. He writes:

I hereby give Pursuit of Happyness a glowing endorsement. It is a compelling, energetic, and unabashed celebration of free markets, individual responsibility, and old-fashioned pluck. Based on a true story, Will Smith plays Chris Gardner, a man who never lets up in his dream of becoming a stockbroker despite the responsibilities of a young son and the lack of a college education.

While the critics have generally praised the film, it has rubbed some of them the wrong way. More than a few have found it hard to stomach the novelty of a sympathetic black character in a major Hollywood film who aspires to be a stockbroker and quotes Thomas Jefferson without irony or apology.

The film got good marks for quality from the great Filmspotting podcast. I haven’t seen it myself yet, but it sounds like a film for the Film Page.