Not Just Another Pretty Face

Talking heads on TV – news, analysis, political and economic commentary; in almost all cases, individuals selected in these positions fall into one of three categories:

1)      There are the zealots – state-propagandists posing as deep thinking intellectuals.  These are typically found on the Sunday morning talk shows or public television.

2)      Then there are the bombasts – loud, obnoxious, certain of their views and certain that anyone who disagrees is an idiot.

3)      Finally, the pretty faces.  Stick to the script; free-flowing dialogue offers the risk of exposure.

There are only a few who do not fit in any of these categories (frankly, so few that I have found no reason to watch any of it since I saw the light).  One of these few has recently written a book: “Theodore and Woodrow: How Two American Presidents Destroyed Constitutional Freedom,” by Judge Andrew Napolitano.  (Thank goodness for YouTube!)

One thought regularly and often went through my mind while reading the book: Judge Napolitano has within him a breadth and depth not found in many, and virtually non-existent within those whom I will hesitantly label his peers.

Through the actions of Teddy Roosevelt and Woodrow Wilson, Napolitano lays bare the foundation of the disaster that is today’s US government.  He exposes the roots of the ruination as manifest in every avenue of government and political life – legal, financial, monetary, foreign policy, regulatory, propaganda, etc. 

From the Author’s Note:

You can see where we are going in this book.  This is not a biography of either Wilson or Roosevelt.  It does not purport to present them fairly.  This is, quite simply, a case against them. 

I laughed out loud when I first read this; how many hagiographers of politicians and war criminals (but I repeat myself) readily admit their bias?  I only take one exception with Napolitano in this statement, and it is a significant exception: any fair presentation of virtually any president would also be “a case against them.”

But I will easily forgive him this error.

It is clear when reading the book that Napolitano is not a talking head – in him is a mind that has explored and considered the entire expanse of issues on this topic; he has connected these to very specific actions of the two subject presidents. 

For this reason, my review will take a somewhat different approach; I will offer cites from the book with little if any further comment.  My intent is to make evident Judge Napolitano’s depth and breadth of knowledge: his words will suffice; mine will only get in the way.

Your Vote Counts?

Regarding the 1912 Republican Presidential nomination, ultimately won by Taft:

When the [direct-election] primaries were said and done, Roosevelt won 278 delegates, Taft won 48 delegates, and La Follette won 36…. But Taft controlled the boss-controlled primaries, so when the convention came around, neither man had the necessary 540 delegates to secure the nomination.

…the Republican National Committee was firmly behind its man, Taft. The members awarded 235 of the remaining delegates to Taft and only 19 to Roosevelt, putting Taft far over the threshold of 540 needed to secure the nomination. (p. 10)

Roosevelt went on to run under a third-party – the Progressive Party.  He lost, but split enough of the Republican vote to ensure Wilson’s victory.  Napolitano outlines the Progressive Party platform.  It includes national health service, social insurance for the elderly, various workers’ rights, a federal securities commission, an inheritance tax, a federal income tax, women’s suffrage, and direct election of senators. (p. 13) I probably don’t have to mention that every plank of this platform has since been enacted.

Roosevelt actually played spoiler to the candidate he would least want to be president: The Republican incumbent and his former close friend, William Howard Taft. (p. 17)

Donald Sterling and the NAP

My response to a post at EPJ:

“The second lesson that should be taken away from this episode of "He's a racist" is that that there really is nothing wrong with a person wanting to hang around with a group he feels comfortable with and there is nothing wrong with a person having such a conversation with his girlfriend. Nothing.”

Assuming the recording is accurate….

There may be nothing wrong with it, other than stupidity.

Donald Sterling makes his living in an industry that employs blacks.  He sells TV rights to providers whose audience is also composed of blacks.  He sells tickets to many black fans. 

He (and Robert Wenzel) might be technically correct on every point, but the market will decide how they feel about this.  There is no doubt that such comments will come with a backlash to both Sterling and the league – boycotts, pressure via public media, etc.  It may not be technically right, but in this world it is real and in every world such a non-violent backlash would be just (and certainly no violation of the NAP in the backlash).

“He is not violating the non-aggression principle.”

Correct, he isn’t.  But that doesn’t make this smart.  It doesn’t mean he will (or even should) avoid consequences.

The thick libertarians have a point – but not the one they are trying to make.  What many of them are after (the “I-love-everybody” society) must be recognized, just not within the framework of the NAP.  The NAP, after all, does not provide a complete framework for life. 

We still live in this world; ideas and statements (and actions) have consequences.  These consequences must be considered if one wants to survive in this world.

Let’s not go all PC on this.  PC is another gray line; where each of us draws the line is subjective and personal, for example: There is nothing wrong with a photographer not wanting to take wedding pictures of a lesbian couple; there is nothing wrong with an anti-tax protestor not paying his taxes; there is nothing wrong with a few armed men taking on the US government.

However, in all cases, the reality will more often than not be anything but fair.  Each of us must daily decide where we draw lines; each of us realizes that those lines have consequences – on both sides.  This is reality.  How many willingly want to become the next Adam Kokesh, Irwin Schiff, or David Koresh?  Because many choose not to means what, exactly?

Fair very rarely wins in such circumstances.  It is often written that we are in a battle of ideas – until our ideas win, rarely if ever will the photographer, the tax protestor, or the few armed men win.  I write nothing about where to draw your line – this choice is quite personal, as it must be.

Finally, we cannot preclude the possibility that Sterling has violated his voluntary agreement with the league.  He owns a team within a league which has, presumably, a code of conduct and bylaws for its owners.  He is subject to disciplinary actions for violating the code of conduct.  I imagine that both the determination of a violation and the punishment for that violation leaves broad room for subjective judgment.  Twenty-nine other owners will see to the fact that the punishment is a broad and swift as possible.

And this will be in full accord with the NAP.

Are They on the Same Team?

One of the open questions, for me at least, concerning the intent of and coordination amongst those we label the global elite: while they certainly compete at one level, ultimately are they all on the same team?  Are they working together toward a one world government, or is there one faction (e.g. the Anglo-dominated west) working to take control of other factions – against the will of the local elite?

My view, so far, is that centralization has reached and passed its peak – we are seeing too many moves of decentralization: in political terms, the USSR, Yugoslavia, and Czechoslovakia have all come apart.  The EU?  Belgium and Spain?  In information terms, the internet – a greater tool of information decentralization has never been available to the masses.

We have seen the advancement (and attempted advancement) of the Anglo-dominated faction; this is most visible, recently, through actions in the Middle East for example.  Relatively speaking, these were pretty easy pushovers – no military muscle, no developed industry, no way to fight back.  So, the local elite cut the best deal that they could; as long as the local political leaders played nice with their Anglo guardians, everyone stayed content.  A few decided not to play nice, and it didn’t end well for them.

But what of China, as a wonderfully clear-cut example?  Are the political leaders in China serving the purposes of the Anglo-elite, or are they serving the purposes of their own, Chinese elite?  The same question can be asked today of Russia.

I wrote recently of the end of the global war on terror.  Perhaps it has run its course; perhaps it has proven to be a not very useful tool; perhaps – as the war benefited the politicians and elite of only one side (guess which), there was not the necessary interplay that benefitted, for example, the cold war.

It seems to me that the events playing out in the Ukraine (and therefore Russia), and ultimately with China will answer the question – are the elites all on the same team?

For this, I offer the following written by Mike Whitney, entitled “Putin’s Dilemma: Fending Off the United States’ Imperial Hand,” (HT Ed Steer)

The United States is in the opening phase of a war on Russia. Policymakers in Washington have shifted their attention from the Middle East to Eurasia where they hope to achieve the most ambitious part of the imperial project; to establish forward-operating bases along Russia’s western flank, to stop further economic integration between Asia and Europe, and to begin the long-sought goal of dismembering the Russian Federation. These are the objectives of the current policy. The US intends to spread its military bases across Central Asia, seize vital resources and pipeline corridors, and encircle China in order to control its future growth.

This sums up the current situation and recent shift in focus quite well.  As I mentioned, it seems the war on terror has come to an end, in place of a return to (hopefully, for the sake of humanity) only a cold war (not to minimize or ignore the suffering of those on the battle line – the miserable experience of being “freed” by the US Government is not to be wished on anyone).

Whitney cites Zbigniew Brzezinski, from his 1997 book “The Grand Chessboard…American Primacy And It’s Geostrategic Imperatives”:

“America is now the only global superpower, and Eurasia is the globe’s central arena. Hence, what happens to the distribution of power on the Eurasian continent will be of decisive importance to America’s global primacy and to America’s historical legacy.” (p.194) “It follows that America’s primary interest is to help ensure that no single power comes to control this geopolitical space and that the global community has unhindered financial and economic access to it.” (p.148) …” (Emphasis added)

Let’s be clear – there is no such thing as a “global community” in this context.  There are puppet-masters directing the puppets (or placing automatons in key positions, those who have demonstrated that they will act in desired manners).  Brzezinski’s “global community” is nothing more than the global elite – or at least the western ones that he serves.

Brzezinski throws in the obligatory feint:

“The world’s energy consumption is bound to vastly increase over the next two or three decades.” (p.125)

The expansion of empire is not for the purpose of securing energy.  What was Korea?  Vietnam?  Afghanistan? 

It is for control – control of the most productive asset on the planet, the human being.  Control through central banking; control through regulatory democracy (and where democracy is not helpful to the cause, as the population has not been sufficiently brainwashed, control through more overtly forceful means). 

“…how America `manages’ Eurasia is critical. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. …About 75 per cent of the world’s people live in Eurasia…” (p.31)

As a quick aside, note that Brzezinski identifies the population in the region before he (subsequently, and not cited) identifies the “wealth” underground.

But, more to the point of the question asked as the title of this post: who will dominate Eurasia?  The answer to this question will answer if the elite are all on the same team.  Will Russia – but more importantly China – succumb to another cold war (designed to further consolidate power in all spheres) – but this time with the Anglo dominated world immediately adjacent if not even within their respective “spheres of influence”?  Will the political leaders in these two Eurasian giants cooperate with the west, or separate?

The question will be answered by considering one last line from Whitney:

The world’s only superpower does not have to listen to anyone. It is a law unto itself.

We will see.  While doing so will cause considerable harm to their own economies, Russia and China can avoid western elite domination by withdrawing from western economic structures.  There is much talk of this – BRICS nations creating their own trading blocks, currency swapping systems, etc.  I have written about this often – even considering which direction Germany and Japan might head.

In its simplest form: will China pull the rug out from under US Treasury debt?  They could do so – granted, causing significant internal turmoil.  Some have speculated that China could introduce some amount of gold backing for its currency.  While this might have the very short term effect of harming their economy, quite quickly it could turn into a boom.  Most assuredly, it will strangle the US Dollar.

Imagine the shift in scenario if the dollar is no longer considered the world’s reserve currency.  I do not suggest such a possibility is imminent (falling off of a cliff is in no one’s interest), and this may not even be in the cards (exploring this is the point of this post); but if China or Russia chooses not to be swept under Anglo domination, they have choices.

The plan does involve considerable risks, however, (Russia does have nuclear weapons, after all) but the risks are far outweighed by the prospect of unchallenged global dominance for the foreseeable future.

I continue to believe that the elite – whether they are on the same team or not – do not want to risk nuclear war; they cannot survive it much better than any of the rest of us can.

But accidents do happen; in this arena, accidents have almost happened a few times before.  This is no great game.  

So: will China and Russia play along with the west, or will they stand apart?

The answer to this question will answer if the elite are all on the same team or not.  Given that about the only expansion opportunities for the western elite are Russia and China, the time may be near at hand for our answer.

The Concentration of Capital

I am no trained economist – not Austrian, not any other.  I have been able to grasp (I believe) the basics of Austrian economics because the foundations conform to how I understand the world to work: prices are the unifying common language – the single most important signal through which man can productively cooperate with his fellow man; profit and loss sends signals about efficient uses of resources, and further, determine the allocation of further resources to the most efficient; value is subjective, made manifest in an objective price; non-market interventions distort these signals and therefore can only lead to less-than-optimal results for the greater part of humanity.

Clean, simple, easy to understand – and perfectly descriptive of the world I see around me every day.

Economics – especially as it is practiced in the mainstream – causes my eyes to glaze over.  Formulas, econometric models, etc.:  I get it, sort of; if I really spend time I can follow it.  But I look at the world around me – none of the fancy modeling and formulas conforms to or can possibly capture the way people make decisions every day. 

Worse still, it is painfully obvious that the only benefit of such a voodoo science is for the purposes of making policy recommendations – in other words, modern macro-economics exists only to distort markets via government intervention.

This is my long-winded introduction to preface my comments regarding a book by Thomas Piketty, “Capital in the Twenty-First Century.”  I haven’t read the book, and I won’t read the book.  Too many formulas and models.  But, I will review the book!

At the Amazon link (above), I found a very thorough review.  So I will offer a few comments regarding the book based on the review.  Just a few.

First of all, a description of the book:

What are the grand dynamics that drive the accumulation and distribution of capital? Questions about the long-term evolution of inequality, the concentration of wealth, and the prospects for economic growth lie at the heart of political economy. But satisfactory answers have been hard to find for lack of adequate data and clear guiding theories. In Capital in the Twenty-First Century, Thomas Piketty analyzes a unique collection of data from twenty countries, ranging as far back as the eighteenth century, to uncover key economic and social patterns. His findings will transform debate and set the agenda for the next generation of thought about wealth and inequality.

Piketty shows that modern economic growth and the diffusion of knowledge have allowed us to avoid inequalities on the apocalyptic scale predicted by Karl Marx. But we have not modified the deep structures of capital and inequality as much as we thought in the optimistic decades following World War II. The main driver of inequality--the tendency of returns on capital to exceed the rate of economic growth--today threatens to generate extreme inequalities that stir discontent and undermine democratic values. But economic trends are not acts of God. Political action has curbed dangerous inequalities in the past, Piketty says, and may do so again.

A work of extraordinary ambition, originality, and rigor, Capital in the Twenty-First Century reorients our understanding of economic history and confronts us with sobering lessons for today.

To make a long story short, capital is concentrated to an extent greater that annual income; left to the market, this concentration will continue to increase.

Now to the comments from the review.  The reviewer is A. J. Sutter on March 17, 2014.  The comments really are quite thorough – and even this much is more than I care to read on this subject….

The book's main thesis is that economic growth alone isn't sufficient to overcome three "divergence mechanisms" or "forces" that are in many places returning inequality in income and/or capital to pre-World War I levels. The main mechanisms are:

(A)    the historical tendency of capital to earn returns at a higher rate ('r') than the growth rate of national income ('g'), which typically sets a constraint on how workers' salaries grow, symbolized by the mathematical expression, "r > g".

To the extent this is true (and, I am not going to get into the data), it can be so for two reasons that come to mind:

1)      If, over the long term – interest rates / discount rates have declined.  This seems plausible: as markets become more efficient and global, one would expect the price of capital (interest) to reflect this efficiency.

2)      Capital has become more valuable than labor.  This also seems not only plausible, but both true and valuable.  How much better off is the wage earner because capital is accumulated and deployed?  To ask the question is to answer it – go back to a subsistence economy and decide.

(B)    the relatively recent (post-1980) widening spread between salaries, not only between the wealthiest 10% or 1% and the mean, but even within the top 1%.

Nowhere in the review is there any mention of 1971 – the year when the reserve currency of the world became uncoupled, the year when no major international currency was tied to gold.  No mention of the unleashing of full fiat.  Perhaps this has something to do with the divergence – again, assuming that the divergence matters.

(C) an even newer inequality in financial returns, which correlates r with the initial size of an investment portfolio -- i.e., different r for different investors.

I have no comment – I am not sure what this means.

In Part IV of the book, TP considers policy approaches to deal with the three forces of divergence. In short, the answer for all three is a progressive, annual global tax on capital, to be set at an internationally agreed rate and its proceeds apportioned among countries according to a negotiated schedule.

No recommendation to reduce the interventions in the market; no mention of the distortions caused by the interventions.  Just a call for more intervention.

No mention of the value that accumulated capital has on the standard of living of ALL inhabitants of relatively developed economies.

Capital will be taxed annually.  This will be spent, resulting in a net reduction (relatively) of capital.  The re-allocation of the remaining capital will be in the hands of the politically connected, and not in the hands of the efficient market producer.

This will only lower the average standard of living.

Theft is never a solution for theft.  Additional intervention is not the solution for previous intervention.

Absent an acknowledgement of the distortions in the market caused by central banking, lack of free-market money, continuous and increasing regulation, it is difficult to take this work seriously.

That won’t stop many from doing so – such policy recommendations are music to the ears of the politicians and the oligarchs whom Piketty claims to want to attack.

Actual Students for Liberty

Yesterday, Robert Wenzel ran a post regarding what he described as a Bizarre Attack on Lew Rockwell. 

I commented as follows:

Within the broadest spectrum of libertarian thinkers (when one includes the entire pseudo / thick contingent), there are only a handful that hold consistently to the NAP.

In Rothbard's time there was...Rothbard. Today there is Rockwell.

Certainly there are others - Hoppe, Block, Wenzel, etc. (you all know the names). But, and not taking away from any, the central focal point for the last 15 years – THE focal point during the internet age – is Rockwell.

He – and through his efforts, Rothbard – has had more influence than the entire pseudo / thick bunch combined.

“Bizarre Attack on Lew Rockwell”

There is nothing bizarre about it. They see Rockwell as the enemy. They have countless millions of dollars dedicated to their cause – kill the NAP, justify state intervention in the economy and in the military, more efficient government, smarter regulation, etc.

Rockwell symbolizes the NAP. He is the most visible spokesman. He is the manifestation of the idea they want to destroy.

Liberty.

I have been thinking about my approach regarding this recent explosion of articles toward thickening libertarianism beyond all recognition.  I am tired of being so negative; I have decided to look for the positive.  I have found something positive in the students for liberty; after all, they can’t be all bad.

No, not that Students for Liberty; I have some other students in mind – you know, the kind interested in actual liberty. 

The following seminars and conferences offer the finest scholarship on liberty within the tradition of Austrian economics; any of these would be of benefit to students who actually choose liberty, as opposed to some of the mish-mash being offered by others under the guise of libertarianism:

Rothbard Graduate Seminar

June 8-13 2014

The purpose of the Rothbard Graduate Seminar is to provide an intense study of Misesian and Rothbardian economic analytics, along with the substantive conclusions of that research in related fields.

Attendance is limited to a small number of exceptional students who are pursuing graduate degrees in economics, history, philosophy, law, political science, and business disciplines and who seek a career in academia or research.

Mises University 2014

July 20-26 2014

Rooted in the tradition of Carl Menger and Ludwig von Mises, as well as Murray Rothbard and F.A. Hayek, the Austrian School offers a rigorous and logical approach to economics that gives free markets their due and takes full account of the reality of human choice.

More than a field within economics, the Austrian School is an entirely different approach that dissents from the mainstream on method, theory, and policy. It views economic actors as unique, conscious, and freely choosing individuals, not as undifferentiated data to be manipulated mathematically or politically.

Austrian Economics Research Conference 2015

March 12-14 2015

The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition.

Can’t make it to Auburn?  Try this:

Mises Academy

The Mises Academy (founded 2010) is the online teaching service of the Ludwig von Mises Institute (founded 1982), designed for students of all ages. Drawing on the Mises Institute’s expert faculty, and long experience in curriculum design and classroom administration, the Academy advances the scholarship and teaching of liberty using digital media. Classes have an economics focus, but cover history, philosophy, law, politics, literature, and more.

And if you want to design your own curriculum, go wherever your spirit leads you, get in touch with your inner child, and have all the flexibility you could ever ask for in education…all for free:

Literature Library

The most complete online offering of the literature of the Austrian School and libertarian ideas, including books, journal articles, and other writings, sorted by author or any method you choose.

For a student actually interested in liberty, I am not sure why one need look anywhere else.  One could spend a lifetime with only the free books and materials available at the site and never receive a better education in Austrian economics and liberty when compared to anywhere else in the world.

Don’t even want to read?  No problem.

There, I kept it positive!  It wasn’t easy.  On this topic, this will likely be the only time.