Thursday, July 31, 2014

Poland Fails to Learn from History



(Technically, the political leaders of Poland fail…)

Casual students of World War II history will recall the guarantees by Britain and France in favor of Poland against any foreign aggression (which turned out to mean aggression by Germany, but not aggression by the Soviets).  Pat Buchanan, in his wonderful book “Churchill, Hitler, and The Unnecessary War: How Britain Lost Its Empire and the West Lost the World,” has described this guarantee by the British as one of the bigger blunders of diplomacy leading up to the war.

It turns out that Roosevelt may have been behind the push to make the guarantees, as relayed by Herbert Hoover in his magnum opus, “Freedom Betrayed: Herbert Hoover's Secret History of the Second World War and Its Aftermath.”  (There are even backstories to this backstory, as Poland apparently made no friends with its neighbors during the interwar years in any case, as documented by Gerd Schultze-Rhonof in his book “1939 – The War That Had Many Fathers.”)

Clearly, political leaders in Poland have not learned from this history – the history offering a clear demonstration that a) a guarantee from western leaders is nothing more than a tool for western provocation and for western purposes, b) as a diplomatic strategy, cozying up to distant powers is not nearly as effective as making nice with neighbors, most importantly with Germany and Russia, and c) going out of one’s way to make enemies out of powerful neighbors is never a good idea.

First, some background: the backdrop is the Ukraine.  NATO, a military institution without a purpose (a very dangerous entity) is talking tough, talking expansion, and talking permanent:

General Philip Breedlove, NATO's top commander in Europe, has proposed that the Polish city of Szczecin expand its existing base to help the military alliance respond faster to any threat posed by Russia. (1)

He said that NATO needs to position resources forward on its eastern flank in response to the concerns of nations close to Ukraine. (2)

“Pre-positioned supplies, pre-positioned capabilities and a basing area ready to rapidly accept follow-on forces,” he said. “And how we man that in a rotational or nonpermanent basis is what we’re looking at now to propose in NATO and we will be looking at that with the (North Atlantic Council).” (2)

NATO's top military commander, U.S. Air Force General Philip Breedlove, said last month NATO would have to consider permanently stationing troops in eastern Europe. (3)

Permanently stationed troops in Poland.  (As an aside, I wonder if the intent is to keep the Russians out, or keep the Germans in.)

American allies (specifically Britain) seemingly want in on the action:

According to the Atlantic Council, a Washington-based think-tank close to NATO, Britain and other NATO allies backing the general’s plans to place supplies — weapons, ammunition and ration packs — at a new headquarters in eastern Europe, to enable a sudden influx of thousands of NATO troops to be ready for action in the event of a crisis. (1)

Thousands of troops, supposedly as a check on Russia.  Thousands (against Russia) does not equal deterrence; it equals provocation.  Does this dawn on Polish leaders?

Wednesday, July 30, 2014

Like Shooting Fish in a Barrel




This is what it amounts to, every time Israel decides to send a message to the Palestinians (or whatever it is that the Israeli government is trying to do).  The barrel is Gaza:

The territory is 41 kilometers (25 mi) long, and from 6 to 12 kilometers (3.7 to 7.5 mi) wide, with a total area of 365 square kilometers (141 sq mi).

The population density is about 13,000 per square mile; compare this to Chicago at about 12,000 per square mile.

Certainly, the government of Israel and the government of the United States would like you to believe that the residents of Gaza call hell down upon themselves.  Perhaps…all 2 million of them.

I just keep in mind who has the position of power in the relationship.  Israel has the military grade hardware; Israel controls the exits; the United States vetoes every resolution.

The residents of Gaza are fish in a barrel.  Good for being shot because they are easy to shoot; and, like fish in a barrel, unable to escape.

Tuesday, July 29, 2014

Timeline to War Update

This update includes relevant dates from the book "Roosevelt and Stalin: The Failed Courtship," by Robert Nisbet, as well as other minor additions.  Most of the updates begin 1939 and thereafter.


Sunday, July 27, 2014

The Intellectual Offspring of Thick Libertarians



This is the natural outcome of those who suggest libertarian thought must (or even should) embrace something more than the non-aggression principle and the associated rights to property.  Introducing Andrew Cohen, writing at Bleeding Heart Libertarians:

In this post, I explain why libertarians—or at least minarchist BH-libertarians—ought to endorse parental licensing.  The basic idea is simple: parental licensing could reduce overall regulations, regulatory bodies, and governmental interventions in private life, while also significantly reducing the harms to children, providing better respect for their rights. 

Reducing harm; pragmatic arguments.  All of the garbage of thick libertarianism in two sentences. 

I’m writing a paper on the topic, so serious objections are welcome.

Please.  I am not going to bother tackling this one – the many objections and horrific ramifications are so obvious as to not even need comment. 

The Andrew Cohens of the world are the intellectual offspring of Jeffrey Tucker, Sheldon Richman, and the like. 

Jeffrey and Sheldon, stand up and be counted. Deal with this mess – if not a mess of your creation, at least of your support.

Thursday, July 24, 2014

So Much Wrong About Inflation



Austrians are more and more noticed in the mainstream.  You don’t get much more mainstream than Paul Krugman; he has written a short blog post (HT EPJ) critical of Austrians and their supposedly creative use of the term “inflation.”  Referencing a Noah Smith post, Krugman writes:

Noah Smith has a funny piece on the hermetic system that is Austrian economics, with its multilayered defenses against any kind of criticism. What gets me in particular, because I’ve noticed it a lot lately, is this:

3. “Inflation” doesn’t mean “a rise in the general level of consumer prices,” it means “an increase in the monetary base”, so QE is inflation by definition.

So when Austrians were predicting runaway inflation, they didn’t actually mean consumer prices?

Insisting that the term “inflation” means something else in your private language is just pathetic.

… [Austrians] could have called a general rise in the CPI a banana. Were they predicting a banana? Of course they were. And they were wrong.

In order to avoid confusion through the remainder of this post, I will use the following definitions (to which Krugman will disagree, but I expect to be proven correct):

Banana = price inflation
Inflation = an increase in the monetary base


To the extent some Austrians and others have predicted runaway- and even hyper-banana to occur, so far they have been wrong.  One might debate the actual increase in consumer prices, but runaway or hyper-banana would be overtly noticed via protests on the street.  No such protests have materialized.

A Dose of Reality (Yes, Krugman is Pathetically Wrong…Again)

What of Krugman’s charge (and he goes somewhat beyond Smith in this) that Austrians have invented the definition of inflation out of whole cloth?  It took me all of one minute to find a source that Krugman could not so easily disparage, The Federal Reserve Bank of Cleveland: On the Origin and Evolution of the Word Inflation, by Michael F. Bryan. 

Unlike Krugman, Bryan actually considers history:

Inflation is the process of making addition to currencies not based on a commensurate increase in the production of goods.
Federal Reserve Bulletin (1919)

This idea of “a commensurate increase in the production of goods” can be found in the original Federal Reserve Act, regarding the discounting of commercial paper:

Upon the indorsement of any of its member banks, with a waiver of demand, notice and protest by such bank, any Federal reserve bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes…. (P. 263, emphasis added)

Inflation was a term used to describe the relationship of currencies to goods – something backing the currency; it had nothing to do with prices.  Just ask the Cleveland Fed and Bryan:

For many years, the word inflation was not a statement about prices but a condition of paper money – a specific description of a monetary policy.  Today, inflation is synonymous with a rise in prices, and its connection to money is often overlooked.

Certainly overlooked by Krugman.

This Economic Commentary considers the origin and uses of the word inflation and argues that its definition was a casualty in the theoretical battle over the connection between money growth and the general price level.  What was once a word that described a monetary cause now describes a price outcome.  

It was a purposeful casualty – macro-economists don’t want you to look at the cause; they only want to direct your gaze to the effect of their choosing.

Bryan offers some history; apparently the term “inflation” (in its original sense) began to gain traction about two centuries ago:

Tuesday, July 22, 2014

The Junk Science of Modern Macro-Economics



John Mauldin has published another almost-there Thoughts from the Frontline: GDP: A Brief But Affectionate History.  I say “almost-there,” because like many of Mauldin’s pieces, he gets almost-there – almost to the truth about economics and economists – without going all the way to the evident conclusion.

In this piece, he questions the cornerstone macro-economic statistic, GDP; to set the stage, he first offers a definition of “pure science” by Gauri Shankar Shrestha:

“Measurement theory shows that strong assumptions are required for certain statistics to provide meaningful information about reality.  Measurement theory encourages people to think about the meaning of their data.  It encourages critical assessment of the assumptions behind the analysis.

“In ‘pure’ science, we can form a better, more coherent, and objective picture of the world, based on the information measurement provides.  The information allows us to create models of (parts of) the world and formulate laws and theorems.  We must then determine (again) by measuring whether these models, hypotheses, theorems, and laws are a valid representation of the world.”

Mauldin then goes on to apply this observation to macro-economics:

The problem we have today in economics is that many people, and not a few economists, seem to regard economics as “pure science,” as described above by Gauri Shankar Shrestha.  If you delve deep into measurement theory, you find that all too often the way in which you measure something determines the results obtained from your experimental model.

…if you’re using models, as we do in economics, to determine policies that govern nations, your efforts can result in economic misdirection that seems for a time to work but that all too often can lead to a disastrous Endgame.

Mauldin casually offers the reason for macro-economics as it has developed over the last 75 years or so – “to determine policies that govern nations,” as if this is a natural condition.  It is central planning.

He goes on to explain the fallacies behind the targets that are utilized in this all-encompassing method of central planning:

…GDP is a relatively late-to-the-party statistic, thoroughly malleable in its construction and often quite contentious in its application.

“Thoroughly malleable,” and I will add, thoroughly meaningless.

Mauldin points out the direct issue at hand – the issue with GDP in this instance, and, in my opinion, with all measures of macro-economic activity:

What we are going to find is that developing the concept of gross domestic product was more than a dry economic and accounting undertaking.  At its very core, GDP is John Keynes versus Friedrich Hayek writ large…. The very act of measuring GDP as we do gives the high and easy intellectual ground to those of the Keynesian persuasion.

It is Keynesianism versus Austrianism; it is central economic planning versus free markets, subjective value, and imperfect knowledge; it is automatons versus human action.  Unfortunately even here, Mauldin doesn’t get it quite right:

Thursday, July 17, 2014

Sheldon Richman Comments on Proportionality



His commentary is worth a read for those interested in this topic.  To summarize:

For reasons too obvious to need elaboration, a system of justice aimed at restitution makes eminently good sense, especially from a libertarian perspective. Someone is wronged, so the perpetrator should, to the extent possible, make things right.

…the principle of restitution undercuts the case for punishment, correction, and deterrence as direct objectives of the justice system. The point isn’t to make perpetrators suffer or to reform them or to make potential perpetrators think twice. What good are those to the present victim? Correction, deterrence, and even some suffering (say, shame and embarrassment) may be natural byproducts of a system of restitution, but they are not proper objectives, for where could a right to do more than require restitution come from?

He concludes that restitution is as far as the NAP allows; one of my concerns with this view is that it offers basically a free-ride to the offender – if the offender is caught, all he loses is the property he never would have otherwise had in the first place (setting aside aggressions against the physical body, which opens up a different set of issues).  Heads, I win; tails, I don’t lose.

Richman, however, deals with my concern by leaving room for dealing with repeat offenders:

…a perpetrator who presents a continuing and persistent threat to others might legitimately be confined for reasons of community self-defense, not for punishment, reform, or deterrence.

In my previous post on this topic, I offered definitions to some of these terms and others – terms that describe more than restitution when considering the proper response to violations of the NAP.  While rejecting these alternative ends, Richman offers a situation where something more than restitution is acceptable: when faced with a repeat offender, locking him up is acceptable when done for the purpose of self-defense.

It seems to me that this still leaves the interpretation and application to the standards agreed upon within a given community.  A “continuing and persistent threat” is a subjective criterion that must be put into objective form – a jail cell is completely objective, after all.

The objective form given to this subjective criterion must be one acceptable to the community, else it will not last. So, while I thank Richman for helping to sharpen my vision a bit on this topic, in the end I am at the same place where I have been almost from the beginning of this journey – ultimately the response to a violation of the NAP must be acceptable to the larger community, else the community will not thrive and may not survive.