Freedom Chatter Blog

Do Not Do That. Instead, Explain

By David Burns on March 8, 2010

Hatred toward, or paranoia about, a person’s government is not a trait monopolized by any one ideological group. It is an individual’s reaction to a real or perceived threat to control over his own destiny. While there is a long history of persons of various ideological backgrounds attacking the State, from the Reddist Reds to the most ardent Libertarians to moderates of both the Left and the Right to Christians, Muslims and Atheists; there is one thing they all have in common: they perceive that the existing power structure exercises control over their own life.

Hardly anyone would contest that the State does not exert some level of influence over the lives of every one in its given territory. Only a few would even claim that the State has never overstepped its bounds and trampled the lives and rights of various individuals from time to time. It is always a matter of conjecture, however, when trying to ascertain whether or not the State has acted unfairly or criminally towards the individual that lashes out. It is also not worth contemplating, for the individual who lashes out violently in reaction to the State is wrong. There is only one justification for using violent means against the State: in self defense. In other words, only when the State is using violent aggression against your life or the lives of your family is it ethically acceptable to retaliate. Perceiving that your life and well being are in danger is not enough. You can run. You can escape. You can live, breathe, write, speak, and educate. You may not be completely free, but neither are the oligarchs of the State. Call it even and work on the ideas of freedom as you work on gaining your own freedom.

Over the last month, two events have shaken the Libertarian crowd. Joe Stack, an enterprising engineer, flew a small plane into the IRS office in Austin, Texas after apparently suffering 25+ years of tax troubles. John Patrick Bedell, an outspoken critic of the government and 9/11 truth advocate, opened fire at an entrance to the Pentagon. Both Bedell and Stack left behind testimony that indicates a trail of State abuse, some real and some imagined. Both acted criminally. That Bedell was a registered Democrat does not ease my concerns. That people of all ideologies have committed similar crimes and are equally likely to lash out at any time makes me no less outraged. That the State engages in murder on a daily basis, cloaked in the veneer of democratic multinational interventionism, makes me no less ashamed.

Both outbursts of violence should be roundly condemned by the Libertarian community, yet I have seen no such condemnation. Perhaps I missed it. In lieu of such response from a well known writer, I offer you mine.

Naked aggression against the lives of others, no matter who they work for, is a violation of the Non Aggression Principle. It serves no purpose except to exercise the immature outrages of a frustrated person and can bring about no permanent change in society. Ideas make society and not the other way around. If your ideas allow for the drawing of blood, or worse explicitly, call for blood to purge various evils you think are confronting you, then a society of blood thirsty revolutionaries will be your tribute. This lesson has been learned the hard way by Reds and Libertarians, though it is still lost on those who think Democracy can be spread by the sword.

Tu ne cede malis sed contra audentior ito.

One way to proceed boldly against evil is to fight in the battlefield of ideas. You can not expect, nor should you desire, to make the world all over again by yourself. That is a popular delusion often used to inspire hope while shielding the con artist’s true intentions from the public. If you only help one person to understand the beauty of liberty, the idea has survived for another day, another life. That is all you can expect of this world. Today, we can accomplish so much thanks to the democratization of ideas over the Internet, and we are winning victories in the minds of Americans every day. If people will not listen, perhaps it is you that is the problem. Perhaps you are just not very good at explaining those ideas which you intuitively grasp. Perhaps, like the natural division of labor in society, there are other specializations in which you excel. Educating others is just one of an infinite number of ways to make the world better.

Never forget that liberty is not the only thing which makes this world great. Even under the yoke of authoritarianism people can love their families, work together, and share joy. Even in the worst of circumstances, people can still make the world tolerable.

Naked aggression, however, does not make our world better.

David Burns

March 8th, 2010 | Posted in Current Events, Government, Media | No Comments »

The Peter Gibbons School of Economics

By David Burns on March 7, 2010

When Peter Gibbons (Ron Livingston) wasn’t hammering out TPS reports or watching Kung Fu with his soulmate Joanna (played by the lovely Jennifer Aniston), he was plotting the downfall of the evil Initech Corporation. Peter and his buddies, Micheal Bolton and Samir Nagheenanajar, would plant a computer virus in Initech’s accounting software that would take the fractional remainder of the company’s banking transactions and siphon them off into an account they had set up. If the caper worked, they would be set for life and no one would ever know the money was missing. The movie, Office Space (1991), became an instant classic and remains one of my favorites.

Unbeknownst to Peter, his plan would have been perfectly legitimate if he were the Chairman of the Federal Reserve rather than a lowly programmer, working long weekends under Bill Lumberg’s micromanaging eye.

The Peter Gibbons School of Economics has a simple premise:

- There is money available for the public good.
- That money is being hoarded by an evil entity, the capitalist class.
- Taking that money, if done in very small amounts spread acoss a large number of transactions, has no negative impact on the public good.
- On the contrary, by placing that money in the hands of spenders, the money will flow through the economy, stimulating more demand and employment.

Sounds familiar, doesn’t it?

In case you are still fuzzy on how this all works, Peter explains the concept brilliantly to his skeptical girlfriend (I apologize that I don’t have the exact lines, but I’ve seen the movie enough times that my memory is pretty close):

Peter: It’s like the tray at the store with all the pennies.
Joanna: You mean the cripple tray?
Peter: No, I mean the Take-A-Penny Leave-A-Penny tray. That’s all we’re doing. And it’s just a fraction of penny, only we’re doing it from hundreds of trays, thousands of times a day.
Joanna: And how is that not stealing?
Peter: It’s not stealing.

Replace Peter with either Alan Greenspan or Ben Bernanke and replace Joanna with Ron Paul and you have the crux of every debate they’ve had over the last 20 years.

An Interesting Read

Outside of Garet Garrett, my favorite libertarian writer might be Henry Hazlitt. Even though his time covered the New Deal and the post WWII reconstruction, his insights into the workings of modern political economy ring true today. His observations are brilliant and his logical analysis of the various government schemes for economic planning are devastating. Unfortunately, those familiar with his work know that no one in government has ever paid any attention to Mr. Hazlitt. They repeat the same fallacies over and over and over again.

The Illusions of Point Four (pdf) is a lengthy essay (48 pages) cutting through the fantastical promises of foreign economic aid. Specifically concering a plan by Harry Truman called the Point Four Program, Hazlitt’s analysis applies to all American efforts to improve the well being of foreign peoples through government aid. He exposes economic fallacy after fallacy that make up the core of the aid program and also brings to light the Communist origins of foreign aid programs in general.

One of the best passages concerns the idea of privatizing profits for American investors while socializing losses for American taxpayers. Ha! Where have you heard that before?

Private enterprise is to be “encouraged.” How? By authorizing the Export-Import Bank to “guarantee United States private capital against the risks peculiar to those [foreign] investments Some investments may require only a guarantee against the danger of inconvertibility, others may need protection against the danger of expropriation and other dangers as well.”

What is the President here proposing? He is proposing that in order to induce American private investors to risk their funds abroad, we are to allow these private investors to keep the profits of their investment, but to force the American taxpayers to assume the losses. - Hazlitt, The Illusions of Point Four, page 31.

I am reminded of Jorg Hulsmann’s opening remarks at Mises University this past summer:

I love you….. and I hate government.

Have a great week!

David Burns

March 7th, 2010 | Posted in Economy, Government, Historic Analysis, Media, Monetary Policy | 1 Comment »

I Have My Limits

By David Burns on March 4, 2010

When it comes to listening or reading bad economics, I have my limits. I have thought about penning daily responses to the various bootlicking hacks that operate in the blogosphere, most notably Krugman’s little sister Berkeley economist Brad DeLong. Too bad I have discovered there is a limit to how much nonsense I can take.

The other day on DeLong’s blog, Brad was reviewing an article summarizing the struggles currently facing our economy. Among the author’s conclusion was that if wages were allowed to fall, the economy would be in much better shape going forward. DeLong, like every good scientific socialist, is a champion of shedding crocodile tears for the working man. He rejected that idea. What solution does he propose instead? If you guessed “bigger deficits,” you get a star. In typical Keynesian fashion he reasons that running larger deficits would boost employment and aggregate demand without the nasty trade-off of reducing “real wages.”

Stop right there.

Before we can understand why DeLong is misguided it’s important to understand the Keynesian view of The Great Depression. So as not to take apart a strawman, feel free to add a correction if needed in the comment section. In the typical Keynesian view, Hoover was a laissez faire “do nothing” President. Often, you will hear DeLong call him a “liquidationist,” a supposedly derogatory term that means he wanted to liquidate the bad assets. According to Keynesians, the market could not self correct because wage earners did not or could not find work at lower wages (”sticky wages.”) Along comes FDR, he solves the sticky wages problem by running a huge federal deficit, employing millions in public works programs, and the economy starts to turn around by 1937. Then FDR makes the mistake of reducing the deficit, caving to the “nihilists” that were worried about spending, and the economy tanks again. Only the massive federal spending of the war brought America out of Depression.

That’s pretty much the story. So what’s wrong with this picture?

1. The idea that Hoover was a liquidationist comes not from Hoover, but from Hoover’s aides, many of whom urged Hoover to allow the market to self-correct. In his memoirs, Hoover brags about how he ignored them and ran up the deficit anyway. Hacks like DeLong and Krugman like to quote the people around Hoover to imply that Hoover acted the same way. Hoover was a proud Progressive, a hyperinterventionist, and at every level of government service he attempted to meddle in the economy. Hoover ran the largest deficit in American history up to that point. FDR actually campaigned against Hoover’s deficits, claiming that Hoover’s administration was out of control.

Here are 21 Hoover interventions that helped turn the depression of 1929-1930 into The Great Depression. I urge you to click the link in the previous sentence if you are under the impression that Hoover was a do-nothing President.

2. The second sticking point in the Keynesian story is that the economy was turning around by 1937. This might be true. It might not be true. But is that really a great story? Compare that with the Depression of 1920-1921. In 1920, the economy contracted at a sharper rate than in late 1929-1930. President Harding slashed federal spending and the economy fully recovered in less than two years. That doesn’t fit very well with the Keynesian story. How did America avoid a Great Depression in 1920 without increasing the deficit, if the The Great Depression was caused by not increasing the deficit? That doesn’t make a whole lot of sense. Bad economics does not make sense.

3. I’m too bored to discuss the ridiculous idea that human slaughter is good for an economy. You are taking the Broken Window Fallacy and extrapolating it into the Broken Country Fallacy to believe such nonsense. Like I said, bad economics does not make sense.

4. That brings us to “sticky wages.” If I take money from Paul to pay Peter to dig a ditch, Peter no longer has a sticky wage problem. But what happened to Paul? And what happens to the value of all wages when you engage in public works projects? All wages, in the long run, will lose their purchasing power as the value of the dollar plummets. This is why FDR had to take America off the gold standard, by confiscating private gold holdings in 1933, and then resetting the standard at $35. (That’s right, an American President stole his citizens’ private gold holdings and yet historians hail him as a hero. Strange.) Everyone’s standard of living went down. That’s what hapens when you rob Paul to employ Peter. Say it again, bad economics does not make sense.

Can you tell that Keynesianism bores me? It’s like studying witch craft. It’s exciting for the first few minutes, but then you realize the whole thing is kinda silly and the witch doctor takes his practice a little too seriously. It stops being cute.

Which brings us back full circle. Do you understand now why Keynesians like DeLong believe we should be running huge deficits, that Obama is not doing enough, and why they hate the current Republican obstructionism? Do you get why Ron Paul and libertarians, particularly free market supporters like our friends at Mises and Cafe Hayek, consistently draw their most hateful venom?

I get it. I’ve had enough of Keynesianism.

David Burns

March 4th, 2010 | Posted in Economy, Government, Historic Analysis, Public Policies | No Comments »

Peak Oil: Did You Know?

By David Burns on March 2, 2010

Did you know that U.S government technocrats have been predicting the end of oil production since oil was first discovered in America in Titusville, Pennsylvania in 1866?

In 1866, shortly after the Pennsylvania discovery, the U.S. Revenue Commission told that nation that once oil production ended in America, as it expected, there would be no need to worry about the availability of “synthetics.”

In 1909, the U.S. Geological Survey (USGS) warned that if the U.S. petroleum industry continued “the present rate of increase in production, the supply would be exhausted by about 1935.”

In 1922, the same agency forecast that oil supplies would dry up by 1942 at the latest.

In 1885, the USGS said there was little or no chance of finding oil in California.

In 1891, the USGS said there was little or no chance of finding oil in Texas.

In 1908, the USGS forecast the maximum future oil supply as 22.5 billion barrels.

In 1914, the U.S. Bureau of Mines warned that there were only 5.7 billion barrels of oil left.

In 1939, the U.S. Department of the Interior predicted that the United States would run out of oil by 1952.

In 1949, the Secretary of the Interior warned that the “end of U.S. oil supplies is in sight.”

In 1951, the U.S. Department of the Interior revised their prediction that oil supplies would run out by 1964.

In 1947, the Department of State warned that “sufficient oil cannot be found in the U.S.”

Is Peak Oil a valid theory?
Read more…

Join the forum discussion on this post - (1) Posts

Tags: Department of Energy, Energy, Gasoline, Jimmy Carter, Oil, Peak Oil, Petroleum, Production, William E. Simon
March 2nd, 2010 | Posted in Business, Economy, Government, Historic Analysis, Public Policies | No Comments »

What is an Olympic Gold Medal Worth?

By Jake Towne on February 27, 2010

“Paper money eventually returns to its intrinsic value — ZERO.” – Voltaire (1694-1778)

The world champion athletes at the Winter Olympics receive gold, silver, and bronze medals that contain roughly the same amounts of metal as the last Summer Olympics.

A gold medal contains 550 grams of silver and is layered with just 6 grams of gold.
A silver medal has 509 grams of silver and about 41 grams of copper.
The bronze medals likely contain about 450 grams of copper and 50 grams of mostly tin and zinc.

At current market prices, a gold medal is exchangeable for about $494, a silver for about $260, and a bronze for just $3. If the gold medal was solid gold with the same mass, it would be exchangeable for almost $20,000.
Read more…

Join the forum discussion on this post - (1) Posts

Tags: Copper, Currency, Dollar, Federal Reserve, Franklin Roosevelt, Gold, Great Depression, Money, Olympics, Precious Metals, S&P 500, Silver, Stocks
February 27th, 2010 | Posted in Current Events, Economy, Historic Analysis, Investing, Public Policies | 1 Comment »

When It Comes to Deflation, You Are Walking Into a Trap

By David Burns on February 26, 2010

There is a buzz going through the Interwebs. Deflation is back, they say. The core CPI numbers declined for the first time since 1982, down 0.1%

I’m going to discuss 5 topics today so let’s dive right in.

1 Why Deflationists are always wrong.
2. Why deflation, in normal circumstances, is a great thing.
3. Why the CPI is a useless statistic
4. A realistic assessment of current price levels
5. Why the Federal Reserve wants you to worry your poor little head about a 0.1% drop in price.

Why Deflationists are always wrong

According to deflationists, falling prices are right around the corner. The inflationists, on the other hand, predict rising prices but often say that the rise may not come for some time. You won’t hear a deflationist predicting prices falling by massive amounts. They can’t tell you how long it will last or how severe it will be. You never hear the term “mass deflation.”
Read more…

Tags: Austrian Economics, banking, Bubble, Capitalism, Consumer Price Index, CPI, Deflation, Free Market, Gary North, Inflation, Murray Rothbard
February 26th, 2010 | Posted in Business, Current Events, Economy, Government, Historic Analysis, Public Policies | No Comments »

Statement on Joe Stack and the IRS Austin Plane Crash

By Jake Towne on February 25, 2010

“Whenever you have truth it must be given with love, or the message and the messenger will be rejected.” – Gandhi

“You can chain me, you can torture me, you can even destroy this body, but you will never imprison my mind.” – Gandhi

These are just two of the many lessons it appears that Joseph Stack, aged 53, never learned. For those unaware, Mr. Stack set fire to his family’s home and crashed a private plane into the IRS Austin branch during the workday, killing one other person, injuring 13, and two of the injured are in critical condition. While full details surrounding this incident are still unclear, the FBI believes that his suicide note is genuine. Accounts from Stack’s friends indicate his acts were completely unexpected.
Read more…

Join the forum discussion on this post - (1) Posts

Tags: Capitalism, Income Tax, Internal Revenue Service, Joseph Stack, Karl Marx, Mohandas Gandhi, PATRIOT Act, Protest, Terrorism
February 25th, 2010 | Posted in Current Events, Government, Historic Analysis | No Comments »

That Pesky First Amendment

By Nicholas Adam Taylor on February 23, 2010

Enjoy!

Fight the Power,

Nicholas (aka Dare)

Join the forum discussion on this post - (1) Posts

Tags: Barack Obama, Bilderberg, Constitution, First Amendment, Hate Speech, New World Order, Petition, Ridiculous
February 23rd, 2010 | Posted in Current Events, Media, Public Policies | No Comments »

Avatar and the Principles of Libertarianism

By David Kretzmann on February 21, 2010

James Cameron’s Avatar has shaken the entertainment industry in the past couple months, raking in more than $2.3 billion so far in the box office worldwide. I first saw the film in January and was blown away by the incredible visuals, a detailed exploration of the Na’vi culture, and what I thought was a masterfully told story (as common or predictable as it may be to some). Unfortunately, some conservative and libertarian writers condemn the movie as a wackjob combination of pro-Green, anti-military, and anti-capitalist thinking wrapped into a movie. However, when I saw the movie I thought it strongly reinforced the importance of private property, individual rights, and protection against central force.

Consider the planet Pandora, where the “savage” Na’vi tribes have made their residence for generations. Their planet is their property. When a human corporation backed by hired mercenaries (hardly a constitutional military used for national defense) establishes itself on the planet to further the exploration and mining of a valuable mineral called Unobtanium, they face severe blowback from the tribes. One of the first scenes in the movie shows a massive vehicle returning to base with several arrows stuck in the tires. The tribes understandably felt threatened and saw the human tactics as an invasion of their property. Is this really an attack on the principles of peaceful exchange common in a free market?

The Omiticaya tribe that is prominent in the film does not need anything the humans offer in return for the mineral whether it be roads, education, medicine, etc. Is this really unreasonable? Does an owner of a product not have the right to negotiate the terms of a transaction? The Na’vi are not being selfish, the humans simply do not have a product or service that is more valuable than the land itself is already worth to the Na’vi. It is the same as if someone was offering $10 for a family heirloom that you will never give up. Just because you refuse their offer doesn’t mean they can take that item by force, as the mercenaries in Avatar did. Once again, this reinforces peaceful and voluntary exchange in a free market.
Read more…

Join the forum discussion on this post - (1) Posts

Tags: Avatar, Capitalism, Choice, Community, cooperative, environment, exchange, Free Market, Freedom, Green, Hollywood, Individual, James Cameron, libertarian, Military, Mining, na'vi, Pandora, Principle, Property, spirituality, Spirtual, voluntary
February 21st, 2010 | Posted in Business, Current Events, Economy, Featured, Government | 1 Comment »

Yes, Virginia, There Are No Reserve Requirements

By Jake Towne on February 14, 2010

In Part 1, Fractional Reserve Banking in Pictures, we saw how the banking system creates fraudulent money by creating new money on top of old. The reserve requirement limit used in the example, 10%, is the figure usually given, which means that from a $10 deposit the banking system could generate $90 of new money. Also, the FED uses Open Market Operations to create new money by writing a check upon itself.
Read more…

Tags: banking, Banks, Citibank, Currency, Federal Reserve, Fractional Reserve, open market operations, virginia
February 14th, 2010 | Posted in Business, Government, Monetary Policy | No Comments »

<< Previous

Freedom Chatter Blog

Do Not Do That. Instead, Explain

The Peter Gibbons School of Economics

I Have My Limits

Peak Oil: Did You Know?

What is an Olympic Gold Medal Worth?

When It Comes to Deflation, You Are Walking Into a Trap

Statement on Joe Stack and the IRS Austin Plane Crash

That Pesky First Amendment

Avatar and the Principles of Libertarianism

Yes, Virginia, There Are No Reserve Requirements

Categories

Latest Posts

Official Contributors

Recent Comments

Archives

Latest Discussion

Blogroll