Getting Real Again
Monday, September 19
The big noise is, again, President Obama's job's plan that will require a tax on the rich, the so-called "Buffet Plan." Now, I'd be ticked pink if all the Warren Buffets of America could be taxed out of their dirty business. What has Mr. Buffet ever manufactured, what has he ever done worth doing? He is a money-manipulator like George Soros, the sort of person our ancestors despised. Take all their money, I say, and leave real businessmen--who make, distribute, and sell things--alone.
That would not get us very far, as Rush Limbaugh has been saying. Successful people in general pay far more than their share of the taxes, and squeezing the porno-kings, Ponzi-schemers, and Warren Buffets who pay too little will not put us into the black. Mr. Limbaugh thinks we should tax the Democrats, but that is both short-sighted and unimaginative. If we started taxing Democrats, we'd quickly run out of them, and then who would be left for the Republicans to blame?
Rush is right about the basic point though, and this is a subject I have been meditating on for years. Justice demands that the guilty, not the innocent pay, and the guilty parties to the national debt are the congressmen and officials of both parties who took bribes and pandered to the lobbyists and ward heelers. When elected legislators and bureaucrats go into debt, it is their fault as much as it is the fault of the board of directors and managers of a business. Let the responsible parties be held accountable. If every member of Congress and White House flunkey who got us into this mess were held responsible, we'd have about 500 people to pay back the trillions of debt they--not we--owe.
Oh, yes, they'd whine, but they were happy enough to take credit for passing all these boondoggles. Now it is their turn to pay. But that is just a one-time deal. What we need is a system by which all elected officials are held responsible for the debts they run up. Naturally, we would then require them to put down a deposit, of some hundreds of thousands for local offices and some tens of millions for a state-wide office, some billions for the Presidency. Of course, if they went over the limit we had established, they would have to pay that, too, and no bankruptcy relief for politicians, nosiree!
"But then the only people who would get elected to high offices would be the rich and their flunkeys!" As if that were not the case now. Under my plan, at least they would have to buy their licenses to steal, and it would be fun watching them squirm. We should also have to make one minor adjustment in our system of jurisprudence. Politicians being politicians, the presumption would be guilt, and the dirty politicos would have to prove their innocence. Ron Paul and a few others would go Scot free; the rest would go where they belong.
Imagine Mitch McConnell joining Harry Reid, doing life at hard labor.
I turned 91 in prison
Doing life without parole.
"No one could steer me right,"
Obama cried, Obama cried,
"Ron Paul tried to learn me better,
But his pleading I denied.
And now I'm breaking rocks
Because I lied"
Entries(RSS)
Now, I’d be ticked pink if all the Warren Buffets of America could be taxed out of their dirty business.
Of course Warren Buffet would still avoid it all by donating, as he does, nearly all his wealth to wasteful charities. What we need is an end to tax deductions on charitable contributions and an end to "non-profit" status for any institution that does not serve primarily as a cemetery, a house of worship or a regular school.
If I may cite the Isley Brothers, "Now wai-ai-ait a minute." We here who survive on the kindness of tax-exempting donors have to be careful about endorsing a plan that would put us out of business. In general, though, I agree that all organizations that seek to act as change-agents, as say the big foundations did from the beginning, should be stripped of their tax-exempt status.
This is a response to "Jobs Go Out Like the Tide" by Tom Piatak. The comments link won't open there. If this can be moved there, please do so. Thanks.
Please accept my apology for my post. I did not mean to offend any members of the Rockford Institute, its contributors, or its readers. From Dr. Fleming’s response, I can tell that I did this. If it was thought that I care more about economic theorizing than people who are actually struggling to live in this distorted world, please know that I do not. It is because of my concern for each citizen that I wrote what I did. I am certainly no Liberal. I did flirt with Libertarianism when an undergraduate. But the influence of I’ll Take My Stand, Russell Kirk, T.S. Eliot, and many others, and the thinking I did convinced me of the fallacies of both. No society worth living in will survive either ideology.
Dr. Fleming suggested an ignorance of history. I plead guilty, but not so ignorant as far too many today. Let me recite a piece of history, though. When the stock market crashed in October of 1929 unemployment rose to 9% immediately following the debacle. By the end of the first month following, it began declining. In less than a year, it had fallen to about 6%. Then the government acted. They enacted the Smoot-Hartley Tariff Act. Unemployment rose to double digits. Why won’t history repeat itself?
My argument, made too briefly I now realize, was not rebutted with an argument, but with rhetoric. Allow me to adapt that rhetoric. Democrats say that Conservatives assume, 1) that we do not and should not care more about ordinary people, the poor, and minorities than we do about the rich and white people, and 2) that the current winners in society, white people and the rich, should be made to give back to those they’ve exploited. I trust Chronicles readers will recognize that rhetoric says nothing substantive about the causes of, or solutions to, any social problems.
The argument against tariffs is not historical. It relies on simple arithmetic. For example; let’s say you have a family and have $500 of disposable income each month. Further, let’s assume that this month you want to replace a TV set, buy two dress shirts, and take a weekend trip to the country. You budget $250 for the TV (on sale at Radio Shack), and $35 for the two dress shirts. The rest is for the trip. Now let’s set the scene with tariffs in place. Those shirts you were going to buy for $40 will now have a tariff imposed, increasing their price to $60. The TV, after allowing for the $150 tariff, will now be $450. It won’t be on sale since the absence of competition will not necessitate it. American TV manufacturers will be back in business at prevailing wages, so will American shirt makers. But what will the result be for your family? If you buy the TV, you will have $50 left over. You will have to forgo the shirts and the weekend trip. The hotel, restaurants, and entertainment venders you would have traded with will not get your business, and you will not have enjoyed a break from your routine. The shirt-maker will not get your business, either. If you go on vacation and buy the shirts, you won’t buy the TV. The electronics company will have to do without your purchase. Oh, and since the hotelier and restaurateur, as well as shopkeepers and entertainment vendors will likewise be paying more for shirts and TVs, they will have raised their prices to compensate, since they have control over them. So your trip will cost more. Those not in a position to raise their prices or wages will be out of luck. They will have to get along with less.
This will happen every month. Whatever Americans have as disposable income each month will not go as far because they will be paying higher prices for the goods they wish to buy with it. Like the hotelier and restaurateur above, they will not get business. Each family’s disposable income will cover fewer goods because the price of those goods will increase without a corresponding increase in wages for that family. In effect, our family, our merchant(s), and the millions like them across the US will be subsidizing manufacturing. We could achieve the same end (more money in the pockets of those who lost their manufacturing jobs) by having the government redistribute income from the rest of us to those who lost their jobs, and continuing to buy our products from overseas.
I hope you won’t reply that the tariffs the government collects will be used to offset the loss. No tariffs will be collected because we will no longer buy goods from China when American goods are less expensive. We also won’t be selling anything we make to China as we will be excluded from their markets when they retaliate. We will likely also be excluded from the markets of anyone China has great influence over.
What will happen to the tourist dollars that flow into the US from all the foreigners who can afford to travel here because of “free trade?”
The only way our overall standard of living will not decline is if we suddenly begin being more productive at non-manufacturing jobs, or produce more higher-valued products and services than we currently do so as to make our total product worth more than it currently is. How will tariffs enable us to do that? Will a tariff turn a person whose skill set only qualifies him to be a clerk at K-Mart into a software engineer? How large will the market for software be if we are systematically excluded from large foreign markets?
The same question may be asked of all other industries that are not manufacturing.
Laws and taxes cannot make us more productive or more prosperous. Wages and prices adjust to new inputs. The belief that laws and taxes can alter this has been demonstrated to be false by every history lesson there is. For tariffs to work, you are going to have to answer one question: how are everyone else’s wages going to increase to offset the higher prices the tariffs will bring? If you can answer that question, please do so. I am more than willing to learn. And, by the way; if we can all become much more productive so simply, why don’t we all do so and continue to buy our shirts and TVs from China?
If I may cite the Isley Brothers, “Now wai-ai-ait a minute.” We here who survive on the kindness of tax-exempting donors have to be careful about endorsing a plan that would put us out of business. In general, though, I agree that all organizations that seek to act as change-agents, as say the big foundations did from the beginning, should be stripped of their tax-exempt status.
Dr. Fleming, the last thing I want to do is to put you out of business.
Still, though, you have to admit there is something maliciously wrong with a system in which a man who does the sorts of things you do for a civilization must do so through a non-profit think tank. In good times there would be no think tanks and you, along with Dr. T. and perhaps some others here, would have been an Oxford patriarch. In polemicizing I occasionally do cross into the realm of fantasy, but it is, in my opinion, good that we remind ourselves that we are working within an evil system as a pure necessity: I'm sure the last thing you want is for TRI to become a sprawling, self-sustaining viral agent such as the Heritage Foundation.
I said to a Front National candidate for the National Assembly (the French House of Representatives) not long ago that one of my plans for governmental reform involved abolishing senators' and assembly deputies' salaries as well as all their travel expenses except for transport to and from the provinces they represented. "So that they stop grubbing our tax money," I said, and, echoing a poster on one of these pages here, "and so that serving in government becomes, as it used to be, a resented duty, with time off for good behavior."
"Nah, you don't have to go THAT far!" he protested, without explaining why. Mind you, he's a good guy (he really is) and I wouldn't want to deny a good guy who has a good family a decent salary. Still, though, this whole mess seems to underscore just how rotten a state we're in.
I’m sure the last thing you want is for TRI to become a sprawling, self-sustaining viral agent such as the Heritage Foundation.
I forgot to add "resource-sucking" to that list of qualifiers. No, I believe TRI to add value to the world. 98 percent of think tanks, however, do not simply not add value but destroy it.
Mr. Hyams,
Perhaps part of the answer lies in a rejection of the consumerism that is so prevalent in this country.
Let me suggest an alternative allocation for your illustrative family:
Do not replace the boob tube. For the family, this could mean saving not only the purchase price of the idiot box, but also saving money by avoiding a monthly cable bill.
Buy one quality dress shirt and a good sewing kit to use in mending shirts that might otherwise be discarded.
Stay home and enjoy a good meal, a good book, and one another's company.
Save the bulk of the $500 towards a down payment on a small place in the country - eventually obviating the need to flee the hell of urban living on weekends.
Both duopoly parties are guilty as hell of fiscal irresponsibility and only a dim ideologue could argue the point. I laugh when I hear Rush or another 'conservative' talker tell us over and over every day that we need to elect Republicans to restore fiscal responsibility. I read somewhere in the past few days that the Bush Jr. drug plan for seniors will cost the taxpayers somewhere close to $7-8 trillion dollars for the baby boomer generation....and let's not forget the trillions down the drain in useless wars in godforsaken and flea ridden countries and a military with the three largest air forces in the world. Can you believe it when GOP candidates debate about rebuilding our military after 10 years of continuous war? We live with 20% unemployment, foreclosures rising and these dunces want more missiles, ships and billion dollar fighters. Finally, it was Bush and Goldman Sach's Henry Paulson who printed trillions in the 'too big to fail' bailout in 2008 even before the wonder boy from Indonesia and parts unknown was elected. The choice between Democrats and the GOP is similar to asking a person to choose if he wants to die of dementia (Dems) or leprosy (GOP). In the end the results are just the same.
I remember Al Lewis, Sam the grandpa from the Munsters and a sometime anarchis,t describe the rich as being "smarter than we are. which is why they are rich and we are not". Obviously we loathe to think that Mr. Buffett or godforbid Mr. Soros is smarter than us. However, when they call upon the government to tax themselves, we can only conclude that they are up to no good. In what novel and brilliantly pernicious way they should profit from this, I will lose sleep over.
But Dr. Fleming, isn't the national debt just a pure accounting fiction? Nobody really owes it or is owed to, some of the time. Just to review what I know, and anyone is free to correct me if I am completely wrong -
All that happens is that a central bank "buys" bonds from the government, by simply writing any arbitrary number into the government's electronic checking account. All that happened was that there was a number on written records, and it was changed.
Then these bonds are "sold". I still use quotations, because the government is still the biggest buyer of its own bonds. Specifically, the state governments, who buy T-bonds from the central bank in order to "pay back" federal loans. Again, pure accounting fiction.
In cases where that money is actually raised from investors, the central bank "sells" the bonds it "bought" and takes their money from them. By "takes" their money, I mean, they just reduced a sum from many bank balances on electronic records. So they really just reduced the money supply after raising it earlier.
So you don't owe it, the Congressmen don't owe it, nobody owes it. It's called a "debt", just as an analogy or a metaphor for what is normally used for households and businesses. Otherwise, all that is really happening is that funny words and analogies are used for a system where...basically...government just spends whatever money it wants in order to obtain whatever resources it wants or pay off whomsoever it wants.
"Then why do taxes exist?" This is the point where many more knowledgeable folks explain to me, and where I now explain to others: taxes are just a political tool. They are not actually needed for government solvency. Absurd, yet true.
By the way: those bondholders who do willingly buy bonds do so at 2.5% p.a. yields. Adjusting for inflation, they are just paying the government to take their money. So why not let the government keep borrowing from these people? Why raise taxes on anybody, even Buffett, when there is a large pool of people ready to throw their money to the government WILLINGLY?
"More knowledgeable folks"--please get me in touch with them because I would like to borrow some money. You or they entirely misconceive the nature of wealth, indeed of human reality. You seem to think that by changing the vehicles and mechanisms of exchange, say, from bushels of wheat to ounces of gold to pieces of eight to bills of exchange to numbers in a computer, reality has been altered. And what is the reality? That goods and services, received in exchange for other goods and services, are purchased and consumed by someone. If I trade a bushel of wheat to you for an ounce of gold or a piece of paper promising an ounce of gold, I can use your gold or paper to purchase the wine I need from a third party. If you tell me I must give you wheat, cloth, wine, steel, tanks, planes, manpower in exchange for nothing, I have been robbed. So long as the pyramid of tax-payers continues to grow, we can pretend that nothing is owed, but let it falter or shrink and we have panic.
I should have thought that the rather small panic we have been going through would be enough to shake your confidence in the story you have been handed by these "knowledgeable people. Why is it that everyone who has made and held onto a lot of money is concerned with deficits and debts? The burden of proof always lies upon the shoulders of those who teach a new doctrine, and merely citing unknown people as responsible authorities gets you exactly nowhere.
This is not the first time in the history of the world when very rich people have made money out of government folly, but the last act in the farce of John Law is only pleasant for those who get out of the scheme in time.
That's true, Dr. Fleming, that governments can get anything for nothing. (As long as they are outside the Eurozone.) And it's true that for some practical purposes, it seems the equivalent of fooling and robbing people. Except that's exactly what has been the case in the US since the Federal Reserve Act of 1913. World War II? That actually was a whole war where the government got something for nothing. The US government never paid back its WWII loans. It just doubled down its borrowings so much, until this WWII debt is a small part of what it owes. (This piece of economic history is often cited by Princeton's Paul Krugman.)
Anyway, I am just speaking about what has been often said by Paul Davidson, Warren Mosler, L. Randall Wray, and James Galbraith. During the debt ceiling crisis, they gave - what I felt - was a very convincing view of the reality of this system works today. We need not like this system, but we just have to now understand that it is the reality today. I'll give the links below.
And your own good acquaintance, Paul Craig Roberts has said the same as them. In one of his Counterpunch columns on the debt ceiling crisis, he said that the US government can't go bankrupt, because a sovereign government can and does spend as much money as it wants.
The rules say we refrain from posting hyperlinks, but just this once:
http://www.youtube.com/watch?v=qZUgLvN-tpU
http://shout.lbo-talk.org/lbo/RadioArchive/2011/11_07_23.mp3
http://econ.bus.utk.edu/faculty/davidson/dollarsandsenseJPKE.pdf
Addendum: The wealthy people who worry about deficits worry about it more for inflation purposes than concerns about the government going bankrupt (which it technically can't). And that kind of inflationary situation is more likely, under a supply-side shock than just by printing money alone. As you can see from Japan's case, their government borrows and prints a lot of money, but inflation remains super low there (around 0.5% p.a.). OTOH, Zimbabwe and Weimar were largely supply-side shocks mixed with Japan-style money-printing. http://bilbo.economicoutlook.net/blog/?p=3773 However, it's also not true that "everyone who has made and held onto a lot of money is concerned with deficits and debts". Wall Street yawned as deficit projections soared under Reagan (bond prices were rising) and was yawning even recently before the debt ceiling showdown (bond prices were then still rising).
I fear you still do not take my point. While it is perfectly true that governments can confiscate wealth to their hearts content, but it is equally true that they cannot create it. If they take my food, which I value at $1 per pound and pay me in paper that is only .90 when I cash it in, they have stolen my wealth. Eventually I shall quit selling them food and services.
This past year the Federal Government clipped me for about $30,000. It hardly matters to me that the portion used to service the debt is paid in gold, paper, or numbers in a computer. They have my money, which represents a great many hours worked. Next year they will take more and they will take even more from my children. I really don't care very much about the mechanisms--they should be boring to everyone not involved in gaming the system--people otherwise known as brokers, money managers, or those who run arbitrage shell games. Tell you what: Give me $30,000 in gold, and I'll be happy to pay you back in government credits.
Of course the US cannot go bankrupt, but neither can Greece. They can, however, go out of business. Economists, by the way, are a lot like English professors. They substitute theory for reality. As a successful banker once explained to me, there is no science of economics, only economic history.
Default or bankruptcy would be welcomed and quite properly by many people. The late and sainted Murray Rothbard used to argue that we should repudiate all US debt held by foreigners. One effect would be that no one would lend us money again.
Years ago Sam Francis wrote in America's most perceptive culutural journal: "The economic trend in the United States today, aided by the political trend of the federal government, is toward the concentration of economic and political power in fewer and fewer hands".
Years before Sam Francis noticed this everlasting plague, another cultural observer noticed its effect on the English. "The evil has gone so far"that the creation of new and effective immediate machinery [to counteract it] is impossible." Therefore, the restoration of property - whether it be in the shape of families farming small parcels of land, self-reliant businesses, independent craftsmen, and so on - must be the result of a new mood and "must everywhere be particular, local, and in its origins at least, small."
This thread of our dear civilization will not go away and those having known and loved it will pursue it regardless of odds because it provides the independence and respect for property that is so much talked about today by libertarians but so little respected by them. The Southern Agrarians were cute and thoughtful men for these types;they were much more than that and will remain so because they hit a chord that Western men have loved to listen to for thousands of years. Those who admire independence and creativity in their daily lives are miserable men in an age such as ours,but such a state will not last forever. There are aspiring, peaceful and ingenious folks using the present cover fire of political chaos to carve a nitch of sanity as we speak. It has always been so and will always remain so because it is consonate with the abiding truth of what one poet desribed as "the deep hearts core."
Understood, understood.
Your old friend Rothbard used to cite the repudiation of Reconstruction Era debt by Southern governments as an example. Is that also what you have in mind when you consider modern day repudiation?
While it is perfectly true that governments can confiscate wealth to their hearts content, but it is equally true that they cannot create it. If they take my food, which I value at $1 per pound and pay me in paper that is only .90 when I cash it in, they have stolen my wealth. Eventually I shall quit selling them food and services... Of course the US cannot go bankrupt, but neither can Greece. They can, however, go out of business... The late and sainted Murray Rothbard used to argue that we should repudiate all US debt held by foreigners. One effect would be that no one would lend us money again.
That gets to the heart of the flaw in the notion that "the US government can’t go bankrupt, because a sovereign government can and does spend as much money as it wants." Sovereigns are not (usually) subject to bankruptcy tribunals in their own jurisdictions, so if they default, they may avoid the legal consequences but as all Christians know, law--and unfortunately in this case by "law" I mean "good law"--is not always commensurate with reality.
To Dr. Fleming's excellent points I'll just add an analogy that I made when arguing with a friend on the same point: if you loan me a flashy new Mercedes and I give it back to you beat up and smashed, I doubt you or anyone else who knows us would ever loan me a car again. So when people say that the government can just inflate its way out of a default, that is effectively returning the borrowed goods (money) in a damaged (worthless) state, and the practical consequences are the same as those of a technical default.
I don't believe economics is any worse off as a social science than is any other field. The problem stems from the unwillingness of the economists to see anything other than the controlling factors they happen to like. But of course it is hard to be unbiased in a game in which you yourself have stakes in how people perceive the outcome (c.f. above, my argument that MPs should not be paid and an otherwise sensible MP's hasty dismissal of my argument).
While it is perfectly true that governments can confiscate wealth to their hearts content, but it is equally true that they cannot create it. If they take my food, which I value at $1 per pound and pay me in paper that is only .90 when I cash it in, they have stolen my wealth. Eventually I shall quit selling them food and services…
One more thing on this: if you quit selling them your food and services, they are most certainly not above resorting to corvée at that point. Too much of that, however, and the risk for social unrest and open revolt becomes too hot to handle. The next thirty years will be very interesting to watch.
The bottom line: we live in the real world, and everyone is subject to limitations. Including Muhammad.
If you are on the payroll of The Rockefeller Foundation - like Von Mises was during his career in America - you can get the reputation of a genius.
If you are poor Catholic, like Hilaire Belloc of Mr Fleming, and you talk sense about economics, you are considered a know-nothing.
Kudos, Mr Fleming. You absolutely nailed it.
By the way, Mr. Moses, I feel that not paying people who work in the government is a bad idea.
Because you really might end up getting your money's worth. And it's very much a taxpayer's matter. A person paid nothing to manage a budget might squander more money than a slightly smarter person who is only willing to manage the budget for a salary.
For a pay of 0 euros a year, you might get somebody who causes the council treasury to leak 10 million euros a year. For a pay of 1 million euros a year, you might get somebody who minimizes that wastage to 2 million euros. It's not about what you pay those people, but what you lose from not paying those people.
Mr. Sanjay, just a precision, in case there is any doubt: I am not talking about functionaries but legislators. And history is not on the side of paying MPs. I do not think Britain ever came even close to outspending the contemporary U.S. or for that matter any contemporary developed country back in the day when serving in Parliament was a resented and unpaid duty.
If you really want to see some fireworks,beside tarriffs, we can always prohibit noncitizens from owning American securities and/or property. Give them say 4 years time to dispose of it all. Anyone?
Proposals like that are generally pure political posturing, with no actual use to anybody. Dada Idi Amin tried that in Uganda, by the way.
Of course, you nicely reveal the shattered dreamworld in which economic nationalists live. Even if Toyota liquidates its American holdings, and lots of US workers lose their jobs because of your proposal, you can be happy that you at least earned some nationalism.
Of course, you can't eat, drink, or use economic nationalism, but nationalism is an ends and not a means for the nationalist ideologue. Let the world fall apart, but just leave a little nationalism one way or another for pure emotional satisfaction.
Point well taken, Prateek, but it is not as though most American auto workers for Toyota are anywhere near as gainfully employed as they would have been in the heyday of GM, Ford or Chrysler. It is also true that real estate speculation has not been good for ordinary people, and that while plenty of domestic speculators played a role, the international dimension of the bubble has severely exacerbated matters by swelling the number of potential speculative buyers for a limited amount of land.
Not that I think such a proposal is necessary. We could of course free up housing for about 20 million people by enforcing immigration laws and reinstating some good old fashioned controls...
But a speculator buys because he intends to sell.
If speculation alone made something more expensive that would have been cheaper otherwise, then the speculator only lost his money on something whose price was going to fall anyway. It's only because prices were already going up much before and much after speculators stepped in that speculators bought at all.
I don't believe in blaming flying vultures for the fact that there are carrions on the ground.
On another note, limited amount of land in US? I am not sure. Were we speaking of France, maybe. But United States? This country is so huge, that only 5% of it is human inhabited. Land is in anything but premia there. One-third of North Carolina is even used as a fictional country in which Special Forces practice military coups under Excercise Robin Sage.
"If speculation alone made something more expensive that would have been cheaper otherwise, then the speculator only lost his money on something whose price was going to fall anyway. It’s only because prices were already going up much before and much after speculators stepped in that speculators bought at all."
Mr. Sanjay, wasn't it the speculation that drove up housing prices in the first place? Is it not the same mechanism that caused the famous Dutch tulip bulb bubble? People drove up the price of tulip bulbs to extreme, unsustainable levels because they bought them as an investment, not to grow tulips. Likewise, the housing bubble was caused by people buying houses as an investment, not as a place to live. It is similar to a Ponzi scheme. You need follow-on investors willing to pay more than previous investors. When everyone recognizes that the price level is unsustainable, the prices fall to their natural level based on, in this case, the actual demand for houses to live in.
Mr. Sanjay, first, let me say, please excuse me for so rudely addressing you by your first name. I did not mean such disrespect at all; I was still groggy and not thinking one little bit. I am quite embarrassed to see that I could have made such a laps.
If speculation alone made something more expensive that would have been cheaper otherwise, then the speculator only lost his money on something whose price was going to fall anyway. It’s only because prices were already going up much before and much after speculators stepped in that speculators bought at all.
It's not one speculator who causes the values to rise dramatically or one unloader who causes them to plummet. It's the sum total. And there were tons of speculators/unloaders over the past 15 years, trust me. I'm from South Florida, arguably the most outrageously distorted market during the boom and the area that saw the most dramatic collapses. I worked in the international community and I saw what the expats were doing and how they behaved. Latin Americans I talk to in Europe say they don't like Miami because it gives Latinos a bad name. That's only because Latinos are the most numerous of the bunch: the Europeans, Americans-not-from-Florida and others who go to Miami behave exactly the same way.
On another note, limited amount of land in US? I am not sure. Were we speaking of France, maybe. But United States? This country is so huge, that only 5% of it is human inhabited. Land is in anything but premia there. One-third of North Carolina is even used as a fictional country in which Special Forces practice military coups under Excercise Robin Sage.
This argument has been thrown out way too many times and it needs to be put to rest once and for all.
First of all, back when geography was taught in schools, as was pointed out from a VDare reader from NYC several years ago, students learned about a concept called the ecumene. The is the inhabitated or, more importantly, habitable part of a given area. And the ecumene of the United States is MUCH, MUCH lower as a proportion of its total land mass than is that of France or Britain.
Second, thanks to the robber-barons who have hollowed out the traditional U.S. society, economy, infrastructure since World War II, it is almost unthinkable for a young up-and-coming fellow in America to start a career anywhere outside a handful of at least respectably-sized cities. And as the thickening urban population can no longer withstand the traffic nightmare that derives from sprawl, people compete for ever-scarcer tracts of urban property just to get a pace of life that is even remotely livable.
I saw a lot of good people consigned to this nightmare when I lived in Miami. Yes, it is theoretically possible to break free, but for many people it is very difficult and involves considerable and painful sacrifices.
Here's how the VDare reader in question began wrapping up his letter:
There's plenty of empty space in America and even more in Canada. And that will never change because there will never be enough resources to settle people at uniform density. Three hundred million U.S. residents is plenty.
It's a conspicuous but melancholy symptom of a dying age - any dying age mind you - , that every few years (such is the morbid and stultified intellectual costiveness of a period of decline) a new theory of money is propounded and the barely-opened volumes of prattling reformer dissertations little read and even less understood, unfathomable and useless financial trigonometry, and unwieldy new-modelled systems, so many spent hours of self-conceited hair-splitting and quackery, sink for ever beneath the horizon of public consciousness. It should be much simpler: what do you owe, and to whom do you owe it? What do you want, who has it, and how will you get it? (For clearness' sake, I indeed assent completely to Dr Fleming's summation of the matter as it really stands).
However, I've found that against Dr Fleming's true account the contrary opinion is held by a great many groups (which are naturally related to one another), and not just economists, e.g. university students, Western upper middle-class know-it-alls, barnyard quadrupeds, and statisticians.
(This piece of economic history is often cited by Princeton’s Paul Krugman.)...Anyway, I am just speaking about what has been often said by Paul Davidson, Warren Mosler, L. Randall Wray, and James Galbraith.
Shall I tell you who these men remind me of? Those fellas at the back of the newsagent's shop rummaging through the bins, trying to find their fortune by piecing together discarded lottery tickets. As the (now extinct) California youths would say, "Doode? Doode!"
I don't think Mr. Sanjay quite understands what speculation is. There are two common forms: One form is to build a house with no buyer in mind, hoping to make a reasonable profit. This is no different from investing time and money into any project hoping to get a decent return. Then there are various attempts to take a position in a market, hold the commodity or products or options until the market goes up. This is an unproductive activity roughly equivalent to loan-sharking. The point is to take advantage of others by anticipating and influencing changes in the market. Getting a corner on silver, for example, is a speculation. Buying houses for resale is a speculation. The effect is always to drive the prices up for real people who wish to buy a house to live in. Imagine you were a tulip lover who had to experience the tulip mania, and you will begin to understand why speculation is a despicable activity that enriches the drones who engage in it at the expense of normal people. In the 19th century, there were hucksters who made money this way, but decent people were supposed to shun them. I have frequently noticed that free-market/classical liberals who regard themselves as hard-headed pragmatists are often the most naive.
Someone brought up the shrewdness of people like Soros and Buffet. I submit to you that anyone of reasonable intelligence who devoted himself to getting money would have a good chance of success. But then what? People who know only how to get money do not know how to spend it because they do not know how to live. If they are vulgarians, they buy cars, houses, women and behave more or less like a Charlie (Sheen). If they are more disciplined, like Buffet, they become addicted to making money, more and more money. Of the two types, I vastly prefer the Charlies who know at least that money makes no sense except as a means of having a good time.
"...and not just economists, e.g. university students, Western upper middle-class know-it-alls, barnyard quadrupeds, and statisticians."
Muddlehead that I am, I forgot to add a 'fun fact'. I wonder how many here know the proper scientific name (in Latin) for an economist? It's Rodentis pseudo-sophos, roughly translated into English as "sham-philosopher rodent". That's absolutely true. Honest.
Also, when I included university students as a sub-species of homo imbecilis I ought to have specified that I meant politically-dilettante and opinionated university students, you know, the insufferable greasy-haired spotty-faced urchins under 25 who follow poor old Ron Paul around and major in sports marketing, culture and communications, and (my favourite) 'entrepreneurship'. (Why do children presume to have political opinions? Who do they think they are? Someone important?).
(Why do children presume to have political opinions? Who do they think they are? Someone important?)
They like the money. Children are great immitators. They love to immitate by dress, manners and speech their favorite musician, their favorite sports hero, coach, poet, teacher, etc.. Was it not once observed,"Immitation is the highest form of flattery?" It is most evident today in the popular conservative journals where grown children immitate their liberal heroes-lying, cheating, betraying old acquaintances and writing contract hits for money. How else to explain the continued popularity and presence of neo-conservatives who campaigned for the mess in which we find ourselves, yet remain involved in the campaigns now promising to fix it?
Peter Arnold,
"It’s a conspicuous but melancholy symptom of a dying age – any dying age mind you – , that every few years (such is the morbid and stultified intellectual costiveness of a period of decline) a new theory of money is propounded and the barely-opened volumes of prattling reformer dissertations little read and even less understood, unfathomable and useless financial trigonometry, and unwieldy new-modelled systems, so many spent hours of self-conceited hair-splitting and quackery, sink for ever beneath the horizon of public consciousness."
Peter,
For a breath of fresh air from the Middle Ages, I suggest a little article:
"How to Be Good: ANNALS OF IDEAS about the moral philosopher Derek Parfit", in one of the recent back issues of The New Yorker. I hardly ever read that particular journal but my brother does and passed along the above article.
I thought it was very monastic given the times and the wounded thoughtful, atheist it is about. You might enjoy it because I doubt it was written by or for children. If our own popular atheists were as thoughtful and honest as Mr. Parfit, there would still be hope for wonder, the love of wisdom and perhaps even real charity as opposed to what you accurately describe as the endless infatuation with "self-conceited hair-splitting and quackery...
I've read Parfit, and while he seems a nice man he is as close to perfectly clueless as any academic philosophe in the business today. Perhaps he has grown up a bit since I last looked at him, but if the unexamined life is not worth living, Parfit should jump off a bridge.
Well, I must disagree. He is right about Kant, he is right about the the consequentialist and subjectivist and he is right about the deplorable state of what you would call scholarship in the field of conetemporay philosophy. Any person expecting more intelligent commentary than this in these times is living in his mind and mistaking the theological virtue of hope for its human kin folk.
Mr. Moses, feel free to call me Prateek or as you choose. I don't really come from the Western tradition of having last names based on family lineage. My parents just picked any arbitrary name as my last name. Their own parents picked another name at random and made it their last name. It's just for filling forms.
Dr. Fleming, while I won't press on the speculation issue further, I personally don't see one particular side of any issue as the naiive or gullible side. Given enough time and room to hearing any side of any issue, I find there is always some merit to what people think, and a fine line between good but wrong arguments and bad arguments. So it's not like journalists/academics/laymen who are okay with speculation are unaware of reality - many of them know what their opponents think and they have considered their arguments. It's just that they feel there are other nuances to the issue.
I myself don't believe fiscal conservatives who dislike national debts have bad arguments. I just believe they have a good argument, that is quite likely wrong in this **particular age and circumstances** - if real yields on 10-year US T-bonds are MINUS 7.5% p.a. and if UK bonds are also only a little higher, then there is no deficit problem or deficit crisis in the Anglosphere at all. A government that borrows so cheaply is not in a fiscal crisis at all.
Liberal philosophers disagree with each other all the time, but these are family quarrels within the asylum. In his famous "Reasons and Persons" Parfit declared that the history of ethics was just beginning--the typical boneheaded arrogance of the modern perspective--and argues, like all the rest of them, that objective distance is required in ethical decision-making. When he repudiates the entire book--and gets a haircut that makes him look less like the nutcase Bill Galton, I'll be prepared to give him a second look.
I entirely disagree with Mr. Sanjay. There is hardly ever anything useful in what most people argue and say unless they are very simple people living outside the world of abstractions. I repeat, classical liberals do not understand the least little bit of the world they live in because they are blinded by abstractions. Take your declarations against economic nationalism. There is in this world only one alternative, economic internationalism. The choice is not free markets and free trade against the crooks trying to protect their businesses but between the crooks who live in our own country and are theoretically subject to our regulation as opposed to a global conspiracy of crooks who control the World Bank, the IMF, international banking, and transnational corporations. That is why I find your positions entirely naive. Here is the point at which to start, Burke's dictum that "Whatever is the road to power, that is the road that will be trod." If you believe in global free trade, then you must also believe that the route to that condition is along the Yellow Brick Road.
Does it follow that not believing in one ideology leads one down the road of another ideology?
I would say that Mr. Bailey's postion that international investors be thrown out is a very radical prospect. For me to point this out is...itself ideological? One does not even have to be a believer in free trade or globalization to think that there is something wrong with the suggestion. Idi Amin threw out all the foreign investors from Uganda, and now Uganda is poorer than it was 30 years ago. I am certainly not being naive here - I simply look at the history.
I did not propose any radical move. I merely opposed one.
Did Jefferson not attempt autarky in the United States? Did he not stop trade with Britain to oppose Britain's seizure of American sailors? Did this motion not cause a breakdown of so many American businesses and falling wages for so many workers for 10 straight months? Was it worth sacrificing these people to the altar of this pagan god of National Pride? Those workers who went hungry for that long couldn't eat Spite-The-British for dinner every night.
The most I would propose is...not trying to redo and then again relearn from Jefferson's 200 year old mistake or Amin's 30 year old mistake. That is hardly a manifestation of naive classical liberalism. Just plain pragmatism that anyone else might reach.
It is certainly the case that what makes the press as national glory is not always what is actually in the best interest of the people who happen to comprise that nation.
But it is not entirely fair to cite occasional cases of trade embargoes as opposed to the systematic international robber-barony that we see today. The speculators and dumpers are all over the place, all the time, and as Dr. Fleming has showed, they have systematically and for more than 15 years wrecked havoc on the finances of anyone with a net worth lower than that of Liliane Bettencourt.
Dr. Fleming,
I quite agree about the family assylum. As should be expected, it is full of delusions of grandeur --- The End of History, History of Ethics Just Beginning, A New World Order, The Arab Spring, Secular/Government, The Two State Solution, Post Christian Culture, and many others. But when you are in the assylum and find a cigarette, who would not be tempted to smoke it? The most contemporary philosopher I have enjoyed is Josef Pieper and if he was still alive today, he could not be hired as a greeter in any graduate school in America, let alone All Souls.
Mr. Sanjay, I found myself in a similar "kairos" of understanding awhile ago as I pondered the difference between liberal idealism and traditional conservative idealism. Aren't we just trading one for the other?
That's when I realized it was a different thing entirely. You are arguing against economic nationalism, yet no one here is arguing for it as an ideal. The essence of traditional conservatism is dismantling any idealism applied to a universal reality. What would the universal effect be of enacting a pure conservative traditionalism at its appropriate local level but across the entire board? No one knows. But you might know what it would like for your family, friends, community, church, etc.
One of the difficulties in arguing ideals is that you eventually have to site realities. In your examples, which usually include some sort of time constraints (10 months of this, 30 years ago, etc.) those times are completely arbitrary. What will Uganda look like 30 years from now? Is 10 months of correction worth a prosperous and somewhat natural future? In any case, I would argue that Uganda is poor for a lot of reasons and banishing foreign investors is probably not high on the list.
But again, there is no general way to measure such things, no way to distill an ideal into its pragmatic realities. Anytime we measure something, we lose part of it. And ideals anyway affect different localities and peoples differently. See where this is going?
Also, I would argue that the distinguishing elements in most arguments are not the nuances but the starting assumptions.
There is definitely something wrong when I face harsher consequences for breaking minor traffic laws than government officials and shady investors face for destroying the economy or starting wars under false pretenses. I'm often angered that our lawmakers casually ignore the laws that they pass or are sworn to uphold, while the rest of us walk the fine line they set for us. Needless to say, I don't feel responsible for their debts, their wars, or for any of their other wrongs, and I seriously doubt that my congressman would feel any guilt if I committed a crime. I gave up on fairness in life years ago, but I still hold out some hope for justice.
Mark Hyams entertains us with the fairy tale of the big bad tariff causing the Great Depression, a subject recently studied by free-trader Douglas A. Irwin, Peddling Protectionism: Smoot-Hawley and the Great Depression (Princeton, 2011) See James Grant's review in Wall Street Journal (March 16 2011): http://online.wsj.com/article/SB10001424052748704893604576199660599909544.html?mod=WSJ_Opinion_LEFTTopOpinion
The book summary on Amazon.com implies the book is an attack on Smoot-Hawley, tariff and persons. Grant's review makes it plain that Irwin surveys the evidence fairly (although with a snooty tone of voice). Enough of the book can be viewed on Amazon to confirm this, e.g., "The magnitude of the tariff shock in the Smoot-Hawley legislation, which increased the domestic price of imports by 5% at a time when dutiable imports were just 1.4% of GDP, was simply not large enough to trigger the kind of economic contraction experienced after 1930." Irwin mentions from the work of Milton Friedman the central role in causing the Depression of the Fed's reduction in the money supply, which no tariff could overcome. An interesting book remains to be written on how the free traders turned S&H into bywords. (It sure ain't Uncle Miltie's fault.) Friedman proved that it was the policies of the Fed that provoked and deepened the Great Depression in a Monetary History of the United States (Chicago, 1960), as mentioned in the press release announcing his Nobel Prize in Economics 1976.
"His major work, A Monetary History of the United States, 1867 - 1960, is regarded as one of Friedman's most profound and also most distinguished achievements. Most outstanding is, perhaps, his original and energetically pursued study of the strategic role played by the policy of the Federal Reserve System in sparking off the 1929 crisis, and in deepening and prolonging the depression that followed. The critics agree that this is a monumental scientific work, which will long stimulate the re-examination of the course of events during this epoch." from "The Nobel Prize in Economics 1976 - Press Release" http://nobelprize.org/nobel_prizes/economics/laureates/1976/press.html
History shows that the tariff was one condition of American prosperity from the Founding to the Kennedy Round of GATT. After that it has been down hill all the way.
Mr. Kopff,
If you are the Christian Kopff of 'The Devil Knows Latin' fame, I would like to thank you and perhaps someday "shake your hand or buy you a Daniel Webster cigar!"
Mr. Reavis wrote: "The most contemporary philosopher I have enjoyed is Josef Pieper."
On your recommendation, I have checked "Leisure" out from the library. Thanks.
Dr. Fleming, what is your opinion of Pieper?
Pieper is an incomparably clear and coherent writer and thinker. I had the great privilege of meeting him in Chicago, before his death, when we presented him with an award. Dr. Kopff, who was present on that occasion, has beautifully translated a volume of Pieper (I am still waiting for the review, by the way, and complained to the reviewer just two months ago.) I am sure he knows Pieper's work better than I do. Jedge Reavis will have to do better than a Daniel Webster--perhaps a Henry Clay would be appropriate.
I have put up a little note under Cultural Revolutions announcing the biggest mistake ever committed by a London editor. Simon Heffer of The Daily Mail online has set me up with a blog. The Daily Mail is one of the largest circulation papers in the English-speaking world, and its online edition is overtaking the New York Times in circulation. Bloggers include Mary Ellen Synon, Melanie Philipps, Peter Hitchens, and many more people who are sure to go red in the face, when I pull the trigger on my first column. We are hoping this blog to drive traffic to our website. Please comment, but drop the "Dr."
PS I'm not sure how long it will take to get my piece up, though it was posted directly. They should have my bio with a picture, but they are moving very fast. I only agreed this week to do it, got the Typepad link yesterday, and got the green light about noon.
"go red in the face, when I pull the trigger on my first column."
Well, we don't call you "hard right" for nothing!
Wonderful news, Dr. Fleming! I look forward to reading your first post at the Daily Mail.
In theory, this link would take you there:
http://fleming.dailymail.co.uk/2011/09/tiger-blood-and-the-paper-tiger.html
Dr. Fleming, I do not know if you are able to edit the post, but I think I spotted a typo: "If anyone had any doubts about the deterioration of the American character consider the over 69 million frightened and guilt-ridden Americans who voted for Barack Obama in 1968."
2008?
Thanks, and yes I am fixing up a number of other errors.