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Posts Tagged ‘capitalism’

Protecting the public from entrepreneurial snow-shovelers

Posted by Richard on February 14, 2015

The northeastern US is being pounded with yet another snowstorm this weekend, so it seems appropriate to call out the latest “Nanny of the Week” story at as a cautionary tale for any ambitious young entrepreneurs in that part of the country.

Matt Molinari and Eric Schnepf, both 18-year-olds from Bound Brook, N.J., were going door-to-door in their neighborhood Jan. 27, handing out homemade flyers that offered snow-shoveling services. School had already been canceled for the next day, when a winter storm was expected to bury their portion of the Garden State under several inches of cold white powder.

But their offer of a free exchange of services for cash caught the attention of the local police force.

According to local news reports, the cops told the kids they weren’t allowed to solicit business by going door-to-door without a permit from the local government.

To get a permit for door-to-door solicitation in Bound Brook, Molinari and Schnepf would have had to pay the borough $450 (and the government-issued permission slip is only good for 180 days at a time, which is fine if you’re trying to run a snow-shoveling business, but not so great if you’re trying to offer services year-round).

At that cost, they’d have little chance of making any profit — unless the fine folks of Bound Brook are willing to pay $100 to have their driveways and front walks cleared.

A similar incident was reported in the Philadelphia suburb of Lower Merion on Jan. 28 as the snow was falling up and down the east coast. Police reportedly told two men they were not allowed to engage in door-to-door solicitation of snow-shoveling services without permission from local officials.

Supposedly, such door-to-door solicitation rules protect people from scams, “distraction robberies,” and the like. But if that were true, then why not prohibit all door-to-door distribution of flyers (not just charge a permit fee) in order to protect people from dishonest roofers, driveway sealers, lawn aerators, assorted handymen, and fraudulent charities? I’m pretty sure a $450 fee won’t prevent roofing or home repair scams that bilk scores of people out of thousands of dollars each, but it sure puts the kibbosh on teens offering to shovel snow, rake leaves, or mow lawns.

For that matter, why don’t we just prohibit people from walking through their own neighborhoods between 9 AM and 3 PM, when most home burglaries occur? Think of how much safer we’d all be!

SMDH (shaking my damn head).

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Happy birthday, Milton Friedman

Posted by Richard on July 31, 2012

Today is the late, great Milton Friedman’s 100th birthday. In honor of that, here’s a 2:24 video clip of Friedman schooling Phil Donahue on the subject of capitalism and greed. Masterful!

[YouTube link]

(HT: Rush Limbaugh)

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Boeing opens South Carolina Dreamliner assembly plant

Posted by Richard on June 12, 2011

On Friday, ignoring a lawsuit brought by the Obama thugs running the National Labor Relations Board, Boeing opened its new $750 million final assembly plant in North Charleston, SC:

Under a blistering sun and facing a heated court battle, Boeing snipped the ribbon Friday on its new 787 Dreamliner assembly plant in North Charleston six months ahead of schedule.

Company officials, politicians and workers hailed the aerospace giant's $750 million production facility as the start of a new era in the Lowcountry.

"Everybody is so geared up," said Raffie King, of Summerville, who works in Boeing's emergency operations. "This is our house. That's what we call it."

To the loud roar of applause from the hundreds of workers and guests seated and standing outside the cavernous facility the size of 11 football fields, Boeing Vice President and General Manager Jack Jones said, "This building is open for business."

The building is something else. It can hold two rows of four jumbo jets. 

One thing rarely mentioned in the media coverage of the NLRB-Boeing story: the new Charleston location, like the existing Everett, Washington, assembly plant, is just where final assembly of the planes takes place. The incredible array of components that make up the plane is manufactured at Boeing and subcontractor facilities throughout the country (North Carolina, Texas, Connecticut, Kansas, Oklahoma, Iowa, Arizona, Minnesota, …) and across the globe (Canada, Japan, UK, Sweden, Italy, France, Australia, …). We live in a global economy, folks, and we're all better off because of it (per Ricardo's law of comparative advantage).  

In fact, the aft quarter of the 787's revolutionary fiber composite fuselage is built by Vought Aircraft Industries right next to the new Charleston plant:

The first pieces of the 787 wide-body jet, other than the aft and mid-body sections built next door, will arrive next month as 4,000 workers already hired begin to piece together the first completely assembled model of the airplane outside of Washington state.

"This is the first time we are actually going to send an aft and mid-body across the street instead of 3,000 miles away," Jones said. "Lots of good things are going to happen. This is history."

Boeing is still hiring in South Carolina. And in Washington, too, as this looks to be the most successful commercial jet ever, with over 800 already on order. South Carolina, Washington, the whole country — heck, the whole world — will gain from this.

Unless there's truth to the rumor that the President is going to appoint Wesley Mouch as his new Economic Opportunity Equalization Czar, and Mouch will then declare the Dreamliner "a national resource."  

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Michael Moore vs. Abraham Lincoln

Posted by Richard on March 4, 2011

Fat cat (no pun intended) movie mogul Michael Moore, interviewed on something called Grit TV, has declared that the money of wealthy Americans isn't theirs, it's a "natural resource" that the government should seize and redistribute. I can't help but wonder why the interviewer didn't ask what Moore has done to redistribute the tens of millions of dollars of this "natural resource" that reside in his bank accounts.

[YouTube link]

Moore and those like him are guilty of two egregious errors. The first is an error of ignorance (willful ignorance, I'm tempted to say). They seem to believe that wealth (or money, which they seem to think is the same thing) is just a fixed pile of stuff that somehow, magically, exists — and that all that's necessary is deciding how it should be distributed. 

The second error is even more egregious, and it rests on the first — because it requires one to be ignorant of (or indifferent to) how and why wealth is created and even of the fact that there are those who create wealth. It's the moral error of believing that it's OK to take wealth from those who've created it to give it to someone else. As I noted, people like Moore can believe and justify this because they don't view those who've created the wealth as its creators, and thus don't view them as its rightful owners. Wealth just exists, or appears magically like manna falling from heaven, so it's a "natural resource" that we all collectively own.

Peter Wehner contrasted Moore's perspective with that of Abraham Lincoln, and quoted Lincoln: 

I don’t believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else. …. I want every man to have the chance — and I believe a black man is entitled to it — in which he can better his condition — when he may look forward and hope to be a hired laborer this year and the next, work for himself afterward, and finally to hire men to work for him! That is the true system.

Allowing individuals the chance to better their condition is a legitimate moral claim that citizens demand of government. Government’s goal should be to ensure equality of opportunity instead of equality of outcome; to work toward a society where everyone has a fair shot rather than one where government enforces equality.

This issue — equality of opportunity vs. equality of outcome — is one of the great dividing lines between modern conservatism and liberalism. If given the choice between the philosophy of Michael Moore and the philosophy of Abraham Lincoln, my hunch is that the public will side with Lincoln.

I think the public sided with Lincoln in last November's elections. I think — I hope — enough people understand that increasing the total wealth of our society depends on ensuring that people have the opportunity to create wealth. And that the redistributionist philosophy of Moore and those like him destroys that opportunity. And thus makes us all poorer in the long run. 

Besides, it's not just that it would do more harm than good — it's just plain wrong. The person who creates something that didn't exist before is the rightful owner of that creation. Calling it a "natural resource" and redistributing it is theft, plain and simple. 

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Free markets save miners, command economies kill them

Posted by Richard on October 20, 2010

Frank Warner:

A few pseudo-liberals tried to blame capitalism for the Chile mine cave-in, which trapped 33 men for two months before they were rescued. But if by “capitalism” the critics meant a free market with the reasonable regulations of a democracy, they were dead wrong.

The worst mine disasters have been in command-economy dictatorships, China being the most obvious example. (And by the way, if by “capitalism” you mean industrial monopolies without serious safety regulation, you are talking about China, Cuba and the other Communist-brand economies.)

On Saturday, Oct. 16, three days after the 33 Chileans were brought back safe and sound, a Chinese coal mine explosion killed 37 miners. Two years earlier, 23 Chinese were killed in the same mine. This is normal in China, where the coal mine fatality rate, per 1 million tons mined, is 37 times the U.S. miner death rate.

Protective freedom. As the Chinese dictatorship has loosened Communist control over the economy over the last two decades, mine safety has improved. And when China is free politically, safety is likely to improve a whole lot more. Never underestimate the protective, creative and healing power of liberty.

(HT: Instapundit)

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Defending the rich

Posted by Richard on July 3, 2010

On the way home Thursday, I caught the tail end of Hugh Hewitt's interview of Ziad K. Abdelnour, President and CEO of Blackhawk Partners, a venture capital firm. I was impressed and made a note to look up the post by Abdelnour that they were discussing. Tonight, I finally got around to it. If you're only going to read one thing on the Internet this weekend, I urge you to read "Why we need the rich: A message to Americans – and our leaders in Washington DC – on wealth creation by a wealth creator." It begins thus:

It has an often repeated axiom that a person can learn a whole lot about a society by how it treats its poor. But just as much can be learned by looking at how that society treats its rich. Indeed, the economic future of the poor – and our nation – will be determined in the coming decades by how we treat the people in this country who create great wealth. It will be determined by our understanding of the so-called rich. And our ability to protect this minority. 

Please, please, please go read the whole thing. But if you won't, at least think about this: 

Socialist regimes try to guarantee the value of things rather than the ownership of them. Thus socialism tends to destroy the value, which depends on dedicated ownership. In the United States, on the other hand, the government normally guarantees only the right to property, not the worth of it. The belief that wealth consists not in ideas, attitudes, moral codes, and mental disciplines but in definable and static things that can be seized and redistributed is the materialist superstition.

It stultified the works of Marx and other prophets of violence and envy. It betrays every person who seeks to redistribute wealth by coercion. It balks every socialist revolutionary who imagines that by seizing the so-called means of production he can capture the crucial capital of an economy. It baffles nearly all conglomerateurs, who believe they can safely enter new industries by buying rather than by learning them. Capitalist means of production are not land, labor, or capital but minds and hearts.

The wealth of America isn't an inventory of goods; it's an organic, living entity, a fragile, pulsing fabric of ideas, expectations, loyalties, moral commitments, visions, and people. To vivisect it for redistribution would eventually kill it.

I'm reminded of Francisco D'Anconia's "Money Speech" from Atlas Shrugged. You should really read that, too. Please!

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Market entrepreneurs vs. political entrepreneurs

Posted by Richard on March 5, 2010

Daniel Henninger thinks we need to bring back the "robber barons." Well, some of them. Drawing on the insights of Hillsdale College historian Burton W. Folsom in his book, The Myth of the Robber Barons: A New Look at the Rise of Big Business in America, Henninger pointed out the difference between market entrepreneurs and political entrepreneurs. It's the former that we need, and the latter that we're getting more and more of:

Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world's dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.

Political entrepreneurs, by contrast, made money back then by gaming the political system. Steamship builder Robert Fulton acquired a 30-year monopoly on Hudson River steamship traffic from, no surprise, the New York legislature. Cornelius Vanderbilt, with the slogan "New Jersey must be free," broke Fulton's government-granted monopoly.

If the Obama model takes hold, we will enter the Golden Age of the Political Entrepreneur. The green jobs industry that sits at the center of the Obama master plan for the American future depends on public subsidies for wind and solar technologies plus taxes on carbon to suppress it as a competitor. Politically connected entrepreneurs will spend their energies running a mad labyrinth of bureaucracies, congressional committees and Beltway door openers. Our best market entrepreneurs, instead of exhausting themselves on their new ideas, will run to ground gaming Barack Obama's ideas.

Read the whole thing. And then read Francisco D'Anconia's "Money Speech" from Atlas Shrugged. Read the whole thing, but here's a relevant excerpt: 

… Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

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Who but the mindless

Posted by Richard on December 30, 2009

Dan Freeman at argued that the novels of Ayn Rand, in particular Atlas Shrugged, can explain the insane rush toward collectivism by the Obama administration. The country is being run by mystics of muscle:

Recent headlines seem lifted directly out of an Ayn Rand novel. President Obama decries the “fat cat bankers on Wall Street”. Harry Reid attacks insurance companies for making too much profit. House Democrat leaders call Tea Partiers “Racist, Nazi, Gun Nuts”.  How about this nauseating statement made by Army General George Casey after the Muslim terrorist attack on Ft. Hood?

As great a tragedy as this was, it would be a shame if our diversity became a casualty as well

Each of these headlines might well have been uttered by an Ayn Rand character. Rand, whose father’s pharmacy was confiscated by the Soviets during the communist revolution of 1917, and who came to America in 1926, seems uniquely able to speak to us about the inverted morality of our times. Virtue is to be apologized for. Depravity commands respect. Success is cast as evil and punished while failure is blamed on others and rewarded. Rand’s insights into the psychological state of collectivists—those who demand that we sacrifice our individual freedom and happiness for the sake of the state—explain what often seems incomprehensible to thinking people.

Read the whole thing. Please!


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A couple of gift ideas for liberty lovers

Posted by Richard on December 16, 2009

If you're looking for a last-minute gift for a liberty lover (maybe yourself?), the Independence Institute, Colorado's free-market think tank, offers a couple of interesting options.

For someone in this area, there's the upcoming winter seminar, Free People, Free Markets: The Foundations of Liberty. It's two Saturdays (Jan. 30 and Feb. 13) at the Independence Institute offices in Golden, eight hours each, and costs $75 (non-credit; college credit is available at a higher cost). Previous attendees of this seminar have lavished praise on it. 

For that potentially special someone anywhere (hopefully with a sense of humor), there's the "Noble" Prize for their future accomplishments, a lovely medallion that will set you back only $25. But hurry on that one — "Quantities are EXTREMELY limited!"

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Thanking the producers again

Posted by Richard on November 26, 2009

The first ThanksgivingThis time each year, I get lots of hits on my 2006 post The real Thanksgiving story, and a smaller bump on my 2007 post This Thanksgiving, celebrate the producers. Please check them out (and please read T.F. Stern’s comment and my reply on the latter). This year, courtesy of Doug Fabian, I bring you another thanks to the producers, this one from Jim Woods:

This Thursday is Thanksgiving, and I suspect that most of you reading this have plans to spend time with friends and family feasting on a sumptuous meal. I know I will be gourmandizing on various gastronomic delights, not the least of which will be of the fine fermented variety.

Now, amidst tomorrow’s day of celebration, I undoubtedly will be bombarded by numerous television news spots aimed at making me feel guilty for my bounty. Although not directed specifically at me, the purpose of these stories will be to remind me that I should feel fortunate to have a roof over my head, warm clothes on my back and a hot meal on my plate. Because, these stories will imply, it could be me — or any one of us — who suffers the indignity of poverty, hunger or homelessness.

The plight of those less fortunate, shown to us via remote telecast from the nearest homeless shelter or inner city soup kitchen, is supposed to be a stark reminder that those whose lives aren’t immersed in peril should be thankful for all that we have.

Well, to this I ask, thankful to whom? Who are the people responsible for providing us with the tremendous bounty most Americans enjoy?

This year, I want you to give thanks to those who truly deserve it.

This year, I want you to thank the men (and women) of genius who first discovered how to harness fire and how to forge tools for hunting. I want you to thank the men of genius who discovered how to cultivate crops and how to ferment grapes and create wine.

I want you to thank the men of genius who are responsible for creating the planes, trains and automobiles that delivered the bounty to your table. And I want you to thank the men of genius who, throughout history, plied their various trades — often in the face of unimaginable opposition — to help lift us all out of a squalid state of nature and into the magnificence that is 21st-century America.

And finally, I think we should all give extra thanks to the real unsung heroes, the capitalists, who put their money and their livelihoods at risk to fund the various enterprises throughout the ages that made modern life possible.

To all of the great capitalist heroes, I thank you from the very core of my own productive mind. I can offer you no greater tribute this Thanksgiving than to enjoy, without the slightest hint of guilt, the life-sustaining bounty you all have made possible.

This Thursday, we need to thank the men and women of genius, both past and present, who truly deserve the gratitude, yet who so often get nothing but condemnation in exchange for their tremendous achievements.

I toast you all in the name of the best within us. 



Cheers to you, Jim, and to Doug for sharing your fine comments with us. And thank you, dear visitor, for dropping by. I hope you have a wonderful Thanksgiving dinner with family and friends, and as I said in 2007, remember to thank the producers who made it possible — including yourself!

If you’re religious, by all means thank God for giving humans the faculties that make our achievements possible. But don’t forget that we have free will. It’s the choices we’ve made — and that countless others alongside us and before us have made — that are responsible for the bounties for which we’re thankful today. We have to choose to exercise those faculties productively and to establish and maintain societies in which such exercise is not just possible, but encouraged and rewarded. The incredible riches all around us aren’t the result of wishes or prayers, they weren’t just handed to us — they exist because of the creativity and hard work that countless people chose to exercise. And they will disappear if people stop making those choices.

So say thanks also to William Bradford and the Pilgrims, and their Massasoit Indian friends. And to the patriots of the American Revolution. And to the Founding Fathers. And to all the scientists and entrepreneurs and capitalists and laborers who’ve created this incredible modern world in which we live. And to all the people proudly and productively working to create more every day. I bet you’re one of them, so in the words of Debi Ghate, “selfishly and proudly say: ‘I earned this.'”

On a more somber note, don’t forget that today is also the first anniversary of the Jihadist attack on Mumbai. In recent years, our friends in India have joined us in embracing freedom, opportunity, progress, and modernity. For their achievements, they were brutally punished by 7th-century barbarians. There are those who will not rest until they destroy everything we value and the wealth, freedom, and opportunity for which we give thanks. Don’t forget that.

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Atlas Shrugged sales booming

Posted by Richard on March 16, 2009

I just checked The "Centennial Edition" paperback of Atlas Shrugged is #208 in book sales. Many authors would be thrilled to see their latest work ranked that high (especially if it's fiction; the list of top sellers is heavily laden with self-help and other non-fiction books).

Rand's magnum opus is available in multiple editions, and the others are selling well, too. The mass-market paperback is #292, and the "Centennial Edition" hardback is #800.

Yaron Brook, writing in the Wall Street Journal, observed that Atlas Shrugged is selling faster right now than at any time in the 51 years since it was published. And with good reason: 

… In "Atlas," Rand tells the story of the U.S. economy crumbling under the weight of crushing government interventions and regulations. Meanwhile, blaming greed and the free market, Washington responds with more controls that only deepen the crisis. Sound familiar?

The novel's eerily prophetic nature is no coincidence. "If you understand the dominant philosophy of a society," Rand wrote elsewhere in "Capitalism: The Unknown Ideal," "you can predict its course." Economic crises and runaway government power grabs don't just happen by themselves; they are the product of the philosophical ideas prevalent in a society — particularly its dominant moral ideas.

Read the whole thing. And if you haven't read Atlas Shrugged — or read it decades ago and no longer have a copy to reread — this would be a good time to order a copy. has plenty.

HT: Ari Armstrong

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A businessman defends profits

Posted by Richard on August 16, 2008

After Exxon Mobil reported a record 2nd-quarter profit, economic illiterates, Democrats, and leftist demagogues (but I repeat myself) fell all over themselves denouncing earnings that Obama called "outrageous." Republicans and capitalism's half-hearted, timid defenders (but I repeat myself again) mostly ducked for cover and acted as if this profit was something for which to apologize. This is unfortunate, as Investor's Business Daily noted (emphasis added):

When capitalists fail to defend the system that's done more than any other to end human misery, they make a fatal mistake. That's why it's so encouraging to see Exxon Mobil's CEO stand up for his business.


Too often, business leaders choose to duck when the arrows of outrage come flying. But Exxon Mobil CEO and Chairman Rex Tillerson made an unusual and courageous stand Wednesday, appearing on ABC's "World News" with Charles Gibson.

"I saw someone characterize our profits the other day in terms of $1,400 in profit per second," Tillerson told Gibson.

"Well, they also need to understand we paid $4,000 a second in taxes, and we spent $15,000 a second in cost. We spend $1 billion a day just running our business. So this is a business where large numbers are just characteristic of it."

We can't think of anyone who would be willing to pay $4,000 in taxes for every $5,400 they earn in salary or wages. Yet many in our country believe it's OK, even desirable, for oil companies to do just that.

What's needed here is a bit more perspective, a sense of proportion. Though Exxon Mobil set a record for nominal profit, the oil industry isn't actually making the biggest profits.

In the first quarter of this year, the profit margin for oil companies was 7.4%. That trailed the electronic equipment industry (12.1%) and the pharmaceutical and medical industry (25.9%).

Last year, 63 industrial groups posted bigger profit margins than the oil industry.

Good for Tillerson. We need more business leaders willing to stand up for capitalism, defend profit, and speak out forcefully against their critics.

And clearly, judging by Exxon Mobil's falling share price, the oil giant needs a higher profit margin, not more taxes. 


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How the field of economics has changed

Posted by Richard on July 30, 2008

When I was working on my Econ degree in the 70s, the field was full of contending schools, and the dominant ones seemed to be the Keynesians and the socialists. Occasionally, I encountered a neo-classical professor who conceded that monetarism (the Chicago School) deserved to be taken seriously.

A grad student friend told me about a faculty member who spoke approvingly of Hayek, but she moved on before I could take one of her classes. The professors I had mostly sneered at Friedman and Hayek. When I cited von Mises' argument for why socialism cannot calculate, I was informed that he was theoretically discredited in the 20s, and the Soviet Union's decades of great economic growth proved empirically how wrong he was. When I brought up the Austrian School to another professor, his rejoinder was, "That's not a school, it's a cult."

The field has changed a lot, according to Guy Sorman, writing in the Summer 2008 City Journal:

When the Soviet Union crumbled, the socialist model that it embodied imploded, too—or, more precisely, the Soviet Union fell because the socialist economic system proved unworkable. Now only one economic system exists: market capitalism. Virtually everywhere, the public sector has given ground to privatization; currency has escaped state control, to be governed by independent central banks; competition has taken wing, thanks to the deregulation of markets and the opening of borders; taxation has become less progressive, so as to encourage entrepreneurs and create jobs.

The results have been breathtaking. Opening economies and promoting trade have helped reconstruct Eastern Europe after 1990 and lifted 800 million people, many of them in China, Brazil, and a now-license-free India, out of poverty. Even in Africa and the Arab Middle East, nations that have embraced capitalism have begun to escape from the terrible underdevelopment that has long plagued them.

Behind all this unprecedented growth is not only the collapse of state socialism but also a scientific revolution in economics, as yet dimly understood by the public but increasingly embraced by policymakers around the globe. The revolution began during the sixties and has finally brought economists to a broad, well-founded consensus about what constitutes good policy. …

If economics is finally a science, what, exactly, does it teach? With the help of Columbia University economist Pierre-André Chiappori, I have synthesized its findings into ten propositions. Almost all top economists—those who are recognized as such by their peers and who publish in the leading scientific journals—would endorse them (the exceptions are those like Joseph Stiglitz and Jeffrey Sachs, whose public pronouncements are more political than scientific). The more the public understands and embraces these propositions, the more prosperous the world will become.

The overwhelming majority of the academic economists I encountered during my long tenure as a professional student would have rejected more than half of Sorman's ten propositions. It is, as he says, a very good thing that that has changed.

If you're at all interested in or curious about economics, read the whole thing. If you're of the Austrian persuasion, don't let the reference to algorithms and mathematical models at the start turn you off. No, we Austrians haven't won the day, and there is plenty to quibble with in Sorman's propositions. But the state of the profession has certainly changed for the better.  

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Is failure no longer an option?

Posted by Richard on July 22, 2008

Last week, Larry Kudlow went on a great rant against bailouts:

Why does it seem to me that all Washington ever seems to talk about these days is bailouts? Bailout Freddie Mac. Bailout Fannie Mae. Bailout Wall Street. Bailout homeowners. Is it possible in America today that no one is allowed to fail?

You know, Phil Gramm was right. We are a nation of whiners. No one wants to believe that failure is an option anymore. Whatever happened to personal responsibility? Or learning from your mistakes? Or going through transformative difficulties that just might change your life and your behavior? But it seems like failure is off the board nowadays and that it’s government’s job to rescue everybody.

Read the whole thing.

But Larry shouldn't be surprised. Ever since the 60s radicals grew up (if you can call it that), they've been trying to eliminate grades, scorekeeping in sports, valedictorians, … They strive to eliminate all risk, embrace the "precautionary principle," and keep an army of litigation lawyers employed trying to make sure someone pays for every unfortunate event in the universe.

They argue that those who succeed in our economy are just "winners of life's lottery." So clearly, those who fail are just "losers in life's lottery." And they see government's primary purpose as eliminating (or at least ameliorating) the difference between the "winners" and the "losers."

They either are ignorant of or reject Joseph Schumpeter's argument that "Creative Destruction is the essential fact about capitalism" and the critical factor in its success. Most of them, even if persuaded that Schumpeter was right, would gladly give up the additional wealth and far higher standard of living for everyone that creative destruction makes possible, righteously preferring that we all be poorer, but more equal.

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Protecting freedom of choice

Posted by Richard on March 8, 2008

Today's Wall Street Journal featured a fine opinion column defending freedom of choice and challenging paternalistic efforts to address three current issues. The author addressed three things in the news lately: subprime mortgages, health insurance, and payday loans. In each case, he argued, efforts to protect people from themselves with more regulation are wrong-headed and counter-productive.

Regarding the "mortgage crisis," the author argued that liberal credit, subprime loans, and adjustable-rate mortgages made home-ownership possible for countless people who otherwise couldn't have achieved it. And for most of them, this was and still is a very good thing: 

According to the national delinquency survey released yesterday, the vast majority of subprime, adjustable-rate mortgages are in good condition,their holders neither delinquent nor in default.

There's no question, however, that delinquency and default rates are far too high. But some of this is due to bad investment decisions by real-estate speculators. These losses are not unlike the risks taken every day in the stock market.

The real question for policy makers is how to protect those worthy borrowers who are struggling, without throwing out a system that works fine for the majority of its users (all of whom have freely chosen to use it). If the tub is more baby than bathwater, we should think twice about dumping everything out.

Regarding health care, the author argued that paternalism has denied people access to affordable options and restricted them to "gold-plated health plans" that they don't want and can't afford:

Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It's as if states dictated that you had to buy a Mercedes or no car at all.

Regarding payday loans, the author noted that these services, although expensive, allow people of modest means to cope with emergency needs at a far lower cost than the alternatives of bouncing checks or missing payments. The effort to restrict, regulate, or outlaw these services could cause great harm to their supposed victims:

Anguished at the fact that payday lending isn't perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who's familiar with the law of unintended consequences should be able to guess what happens next.

Researchers from the Federal Reserve Bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.

The "less pleasant options" also include loan sharks with mob connections who break legs when payments are late.

The author concluded with words that made me cheer:

Since leaving office I've written about public policy from a new perspective: outside looking in. I've come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.

Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don't operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

If you're reading this on your computer, you're probably already seated. Good. If not, sit down. The author of this wonderful column? George McGovern. Yes, the George McGovern.

Now, listen up, all you doom-and-gloom libertarians and libertarian-conservatives. You whine about how we're losing more and more of our freedoms, about the inexorable growth of Leviathan. You think we're losing the battle for liberty. You speak with contempt about the "sheeple" among whom you live, who are all too eager to "trade their birthright for a mess of pottage." You're wrong. In terms of the intellectual climate, the culture, the prevailing values and beliefs, we've made tremendous progress in the last 40 years.

No, we're not yet on the verge of a libertarian nirvana or a shining city on the hill. But we're not descending into darkness, either. Things have changed, and they've mostly changed for the better.

Except for in a few primitive backwaters and on college campuses, the superiority of "free minds and free markets" is almost universally acknowledged (even if grudgingly, by some). 

And the most radical leftist in my lifetime to be a major-party presidential candidate, the man who in 1972 advocated essentially democratic socialism and a cradle-to-grave welfare state, is today arguing for economic liberty and freedom of choice in a column entitled "Freedom Means Responsibility."

I think that's just way, way cool. Thanks, George! And cheer up, my friends — we're winning the war of ideas, and the future is bright!

(This message brought to you by Denver's most Pollyanna-ish curmudgeon — or curmudgeonly Pollyanna. Something like that. A tip of the hat to Rick Sincere, who had some good comments of his own.) 

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