Quote of the Day: Enough is Enough. No Endorsement to State Plunder of People Through Elections

Austrian economist Robert Higgs posted at his Facebook page:

I realize that the suspense may become unbearable unless I make the following announcement, so here it is: I will not be endorsing any of the candidates seeking the Republican or Democratic Party nominations for president nor any of those seeking nomination by the minor parties. Indeed, I will not be endorsing the election itself. Finally, I will not be endorsing the continued existence of the nation-state over which these aspirants seek to preside. Enough is enough. I will not give my endorsement to politics as usual, a process by which competing parties seek to gain control the state's powers in order to plunder and bully the people at large for the sake of their principal supporters. Oh that all other people would join me in withdrawing their endorsement -- indeed, their acquiescence and blessings. Decent people ought to flee the whole diabolical process, leaving only the criminally inclined to go to war exclusively against one another without sacrificing the bodies, souls, and wealth of innocent parties.

Quote of the Day: Why the Worst 'Politicians' Get on Top: The Comparative Advantage

Austrian economist and Senior fellow at The Independent Institute Robert Higgs discuss the modern day application of the great FA Hayek's “Why the Worst Get on Top” from his classic the Road to Serfdom.

The rise of reprehensible individuals to the top of the political heap is precisely what anyone with a realistic view of history and a bit of education in public choice theory would expect.

Consider first that politics is a competitive endeavor. In this realm, office seekers and program promoters strive to gain their objectives, each at the expense of others similarly striving to promote themselves, their programs, and their other governmental aims. What sort of person is most likely to succeed in this competition?

When prize fighters compete, they first learn how to avoid, ward off, or soften the opponent’s blows while landing the most and the strongest punches themselves. This form of competition is not for the weak or the timid. Besides having a natural fearlessness and training for personal combat in the ring, the prize fighter must possess a capacity for aggressive assault and battery on another human being. Beating a man senseless is all in a successful day’s work. Those incapable of or averse to such conduct cannot succeed in this line of work.

Likewise, given the institutional, psychological, ideological, and economic realities of the current electoral system in the United States (and many other countries), no one can succeed if he or she is too fastidious about violating a host of moral and legal strictures. Imagine a presidential aspirant who insisted on always telling the truth, speaking clearly without evasion or distortion of the issues; on proposing only feasible and rational policies to promote the public’s general interest, rather than the self-serving plans of powerful special interests; and on steering clear of unnecessary involvement in the affairs of other countries or engagement in quarrels abroad that do not jeopardize the security of Americans in their own territory. To imagine such a candidate is to imagine practically the exact opposite of the present candidates. These malodorous persons are so far from being morally upright, honest, and forthright—not to mention being simply decent by ordinary standards—that claiming they are basically good people seems only to evince how out of touch with reality one is.

Why is it, then, that the virtues and decencies that we generally expect people to have in their private life are so manifestly absent in the people who succeed best in politics and government? The answer lies in the nature of government itself—at least, government as we currently know it all over the world, a system of imposed, involuntary, monopoly rule whereby the system’s kingpins use military and police power along with ideological enchantment to plunder and bully innocent people—and to get away with doing so year after year. Just as only physically tough, fearless, aggressive persons succeed as prize fighters, so only dishonest, slick, evasive, power-hungry, unscrupulous, and vicious persons have what it takes to succeed in a system whose very foundations—violence, aggression, extortion, and misrepresentation—are completely at odds with private standards of just and virtuous conduct.

If someone like me—elderly, small, weak, timid, and untrained—were put in the ring to fight for the heavyweight boxing championship, you would not expect me to survive more than a few seconds. Likewise, if someone like me—someone who respects other persons’ natural rights to life, liberty, and property and who abhors dishonesty, extortion, aggression, and unnecessary violence—were thrown into the political or governmental arena, I would scarcely last much longer. There’s a reason why today’s leading campaigners are such morally ugly individuals: they have a comparative advantage in taking the kinds of actions one must take in order to reach the pinnacle of government power.

Quote of the Day: Politicians are Inveterate Liars

Writes Robert Higgs, Senior Fellow in Political Economy at The Independent Institute (source of the below quote) and editor at Large of the Institute’s quarterly journal The Independent Review: (bold mine)

Between the would-be, public office-holder on the one hand and the citizen in general and voter in particular on the other, lies a huge barrier that precludes the establishment of any rational connection. Think of genuine “representative government” on anything other than a very small scale as a practical impossibility. Many reasons explain the existence of this barrier, including the logical impossibility of an agent’s accurately representing each member of a group of principals who do not agree among themselves, but certainly one of the most fundamental factors is that the office seekers often lie to the public, or at least obfuscate and hedge about their statements in a way that makes them de facto lies.

Thus, Mr. Blowhard promises that if you elect him, he will do X. After he is elected, however, he does not do X, but offers an endless litany of excuses for his misfeasance or malfeasance in office. In any case, the essential reality is that no one can hold the successful office seeker to account for his infidelity in carrying out his promises. Everyone is stuck with him until the next election, in anticipation of which he will spew out another ridiculous series of lies and worthless promises. The office-seekers’ lies cover pretty much the whole ground of their speech. Of course, they are not forthcoming about past defalcations, de jure and de facto bribe takings, and personal peccadilloes. They almost invariably misrepresent their true reasons for seeking office, putting the shiniest possible public-service gloss on their raw ambition and lust for power. And they rarely if ever reveal truthfully the actual coterie to which they will be ultimately beholden, normally the largest and most influential supporters in their electoral campaign. Instead, they ludicrously declare that they will invariably “serve all the people.”

In policy matters, they lie about everything, although some of their lies may actually spring at least in part from their ignorance of how the world works and from their ideological blindness, rather than from deliberate, knowing attempts to misrepresent themselves and situations they will have to deal with in office. The lies about domestic policy are perhaps somewhat less blatant because many members of the public have personal acquaintance or contact with various aspects of such government action, which limits how big a whopper a politician can hope to get away with, whereas in defense and foreign-policy policy the office-seekers, regardless of their personal preferences or knowledge, can always rely on the general public’s near-complete ignorance of foreign lands and the political, social, and economic conditions that prevail there, and hence there is no practical limit to the enormousness—and the enormity—of the lies they can tell in regard to these types of issues.

In the case of past presidents seeking reelection, it is a simple and oft-performed exercise to document the lies they told to gain reelection, usually by representing themselves in some fashion as “peace candidates,” even while in some cases they were actively maneuvering to involve the United States in foreign quarrels that might well have been avoided if the office-seekers/office-holders had been concerned with the nation’s genuine security and well-being, as opposed to their place in the history books as “great presidents” or “world saviors.” These cases are illustrative, too, of the uselessness of elections as checks on office-holders’ departures from their campaign promises. Voters who cast their ballots for Woodrow Wilson in 1916, for Franklin D. Roosevelt in 1940, and for Lyndon B. Johnson in 1964 in a quest to help elect the self-represented “peace candidate” must have been sorely disappointed by the actions these men took immediately after their reelections, but what could the voters do once so much fat was in the fire? By the time the next election came around, the world had been utterly transformed—and millions of lives had been lost, as well.

So, what possible intelligence can voters exercise in casting their ballots? They can vote in accordance with the appeal a particular candidate’s promises hold for them, but relying on candidates to carry out their promises would be childishly foolish. Anyone who pays the slightest attention to politics knows that politicians are inveterate liars; many would sooner lie than speak truthfully even if the truth did not thwart their purposes, because lying would be more congenial to their true, dishonest character. Thus, voters can do nothing more than throw ideological darts, casting their ballots for the candidate who makes the most appealing noises, has the handsomest face, or displays peacock-like the most fabulous partisan posturing.

To perceive any fixed and reliable link between what the candidates promise and what they deliver in office would be wildly counterfactual. Politicians have no more backbone than an earthworm. Even if they could not be bought—and most obviously can be—they are constantly at auction for rent, and the bidding never ceases. Thus, we can count on them with complete confidence in only one regard: their mendacious shilly-shallying.

Quote of the Day: The Scarcest Ability Among Economist is Good Judgment

I am thinking that you may well share my view, which I have held for a very long time, that the scarcest ability among economists (and others who purport to have expertise about economic matters) is good judgment. Many economists are obviously very smart, in the sense that they are good at math and can wheel and deal with pretty complex mathematical models and econometric exercises. But this sort of technical ability may — and sad to say, usually does — have little or nothing to do with actually understanding how the world works. What I call good judgment about economic reality seems to depend much more heavily on a combination of (1) mastery of basic applied price theory, the theory of how changes in incentives and relative costs affect actions taken at the margin(s); (2) substantial knowledge of economic history and the institutional context of economic actions; and (3) a level-headedness that keeps the economist from falling in love with what is merely possible (usually in a fairly other-worldly model) and losing sight of what is likely. In other words, most economists and other purported economic experts, notwithstanding their cleverness and mathematical prowess, have no “feel” for how the economy works at all. It’s as if they never see past the trees of technicalities and possibilities to the forest of real economic actions and interactions, not to mention having an appreciation of the relative magnitudes of various factors. This aspect of economics, as the great majority of economists practice the craft, has always put me off, ever since I was an undergraduate; and, if anything, it puts me off even more now, after I have spent half a century trying to do economics right.

(bold mine)

This is from Austrian economist Robert Higgs’ who contributes to what makes for a good economist as published at the Café Hayek (hat tip Mises Blog).

As I have been saying, statistical analysis doesn’t make for economic analysis.

Quote of the Day: The police don’t work for us

The police don’t work for us, if by “us” we mean you, me, and at least 95 percent of the rest of the population. On the contrary: we work for them, literally; we work to earn money and acquire wealth that they take forcibly from us for their own support, either by taxation or by outright confiscation (civil forfeiture). The cops don’t work for us; they never worked for us. They work now, as they have always worked, for the government, which is to say, for the small part of the population that has any nonnegligible control over the government at any level — federal, state, or local. Certainly no more than 5 percent of the population has any such control. More likely the percentage is 1 percent or less of the population.

This is from economist Robert Higgs at the Mises Blog

Quote of the Day: From Socialism to Economic Fascism

The philosophy of socialism — in essence, the naked claim that one should have what another has produced — is as old as mankind. The societal implementation of this philosophy in the form of full-fledged state ownership and control of the major means of production and central planning of resource and output allocations, however, occupied only a brief historical span. Owing to its intrinsic inability to solve problems of calculation, knowledge, and motivation, socialism in practice consumed previously accumulated capital and impoverished billions of people caught up in the experiment, killing hundreds of millions in the process, and by now it has been abandoned almost everywhere it was tried. The underlying philosophy, however, has weakened not a whit. Now, in practically every country of any consequence, a system of economic fascism — a system with severely compromised private property rights, but some room for entrepreneurial maneuver — serves as a more viable replacement and as the context in which the age-old sin of envy drives politico-economic action as strongly as it ever did in the USSR and Maoist China.

This is from economist, author and Senior Fellow at the Independent Institute Robert Higgs (source Lew Rockwell Blog)

Quote of the Day: The Myth of “Failed” Policies

Many people, for good reason, have concluded that the surest test of whether a politician or public official is lying is to ask, Are his lips moving? An equally simple test may be proposed to determine whether a seemingly failed policy is actually a success for the movers and shakers of the political class. This test requires only that we ask, Does the policy remain in effect? If it does, we can be sure that it continues to serve the interests of those who are actually decisive in determining the sorts of policy the government establishes and implements. Now, as before, “failed” policies are a myth in regard to all policies that persist beyond the short run. The people who effectively run the government, whether from inside or outside the beast, do not run it for the purpose of hampering the attainment of their own interests; on the contrary. Everything else in the policy process is, as Macbeth would put it, “a tale told by an idiot [augmented by economists, lawyers, and public-relations flacks], full of sound and fury signifying nothing.”

(bold mine)

This is from Austrian economist Robert Higgs at the Independent Institute Blog

Robert Higgs: Don’t Rely on a Quack Doctor

A wonderful must read parable from Austrian economist Robert Higgs at the Independent Institute Blog (hat tip Mises Blog)

A man goes to his doctor for a routine checkup. The doctor performs a perfunctory examination and informs him that unless he receives an experimental treatment the doctor has devised, he will soon become disabled. “What’s it cost, Doc?” the man asks. “Well, unfortunately it’s not cheap, Mr. Smith, and I can’t tell you exactly how much the total cost will be until the entire treatment has been completed, but unless you get this treatment, you will soon be in big trouble.”

The man agrees to undergo the treatment. He has to sell some of his possessions and go deeply into debt to pay for it, but, relying on the doctor’s advice, he believes that the alternative to getting the treatment would be catastrophic.

After the treatment, however, the man actually feels worse than before. So he visits his doctor and is startled when the doctor reports that he has relapsed and must undergo the same treatment again or he will probably die. As before, the doctor cannot say in advance how much the treatment will cost.

So, the man sells more of his possessions and goes even further into debt to finance the treatment. To his surprise, shortly after its completion, he feels even worse, and the doctor informs him that he has relapsed again and will have to undergo the treatment again lest he die shortly.

The man sells his remaining possessions, exhausts his capacity to borrow, begs money from his relatives, and has the treatment a third time. After its completion, he feels horrible. Once more, the doctor reports that his condition has not been improved and therefore he will have to undergo a fourth round of treatment.

This time, however, the man is completely broke, so he resigns himself to his imminent demise, puts his personal affairs in order, spends as much time as possible with close friends and family members, and waits to die.

But he doesn’t. Indeed, after a year, he is still alive and feels much better than he did immediately after his treatments. To everyone’s astonishment, he returns to work, feels fine, and considers himself lucky to have had a spontaneous recovery from a disease that threatened to take his life.

Having repaired his financial condition after ten years of normal, happy, healthy working life, the man’s curiosity gets the best of him and he visits a different doctor, an old Austrian, who examines him thoroughly and reports: “There is absolutely nothing wrong with you; nor do I see any indication that anything was seriously wrong with you before you began the treatments. You appear to have been misdiagnosed and treated for no good reason, and the treatments made you sick. When the treatments stopped, you returned to your previous, normal, healthy condition.”

(The foregoing is a parable about government intervention in the economy.)

Quote of the Day: Elections Are and Always Mostly a Sham

Scholars have been slow to appreciate that elections are and always have been for the most part a sham – a mere ceremony intended to make people believe they have some control over their fate even as they are mercilessly bullied, bamboozled, and fleeced by their rulers.

This is from Robert Higgs’s 2004 volume, Against Leviathan; particularly from the “Escaping Leviathan?” as quoted by Professor Don Boudreaux at Café Hayek

Quote of the Day: The Taxman is My Shepherd

The IRS is my shepherd; I shall live in want. It maketh me to lie down with expensive accountants; it leadeth me to consort with disreputable lawyers. It crusheth my soul; it leadeth me in the paths of avoidance and evasion to preserve my wealth. Yea, as I walk through the valley of the shadow of penalties and interest charges, I will fear its evil; for it is with me; its code and its staff they torment me. It preparest a table before me in the presence of U.S. attorneys: it bruiseth my head with its reporting requirements; my cup of patience runneth out. Surely goodness and mercy shall be strangers to me all the days of my life; and I will dwell in the house that a plundering state has made forever.

This is from Austrian economist Robert Higgs at the Independent Institute.

Quote of the Day: Price controls Create a Population of Liars

Economists are trained in theory, statistics, modeling, and other skills. Historians are trained in the careful scrutiny and interpretation of historical sources. Neither economists nor historians, unfortunately, are trained to use common sense in their work. Postwar proponents of the reimposition of price controls have often pointed to the success of such controls during the war. Yet, despite thousands of employees and an army of volunteer monitors associated with the Office of Price Administration and despite the U.S. Attorney General’s prosecutory zeal in hauling alleged violators into court, the government’s price-control efforts during World War II failed to stem the tide of rising prices set in motion by the huge contemporary increases in the money stock.

Price controls, at most, only create a population of liars. True prices continue to do what the existing economic conditions cause them to do. No one can control the amount of precipitation by passing a law against reporting more than a stipulated amount of rain and snow.

This is from Austrian economist Robert Higgs at the Independent Institute on the evils of Price Controls

Robert Higgs: Strategy for Winning People Over to Libertarianism

Austrian economist Robert Higgs at the Independent Institute articulates on how the ideals of libertarianism can be won through the premises of consequentialism (utilitarian) and deontology (ethics) 

[bold mine, italics original]

In any event, after the more recent decades of my libertarian journey, I am now struck by a different aspect of this longstanding debate, which has to do with our strategy for winning people over to libertarianism. Strategy 1 is to persuade them that freedom works, that a free society will be richer and otherwise better off than an unfree society; that a free market will, as it were, cause the trains to run on time better than a government bureaucracy will do so. Strategy 2 is to persuade people that no one, not even a government functionary, has a just right to interfere with innocent people’s freedom of action; that none of us was born with a saddle on his back to accommodate someone else’s riding him.

In our world, so many people have been confused or misled by faulty claims about morality and justice that most libertarians, especially in the think tanks and other organizations that carry much of the burden of education about libertarianism, concentrate their efforts on pursuing Strategy 1 as effectively as possible. Hence, they produce policy studies galore, each showing how the government has fouled up a market or another situation by its ostensibly well-intentioned laws and regulations. Of course, the 98 percent or more of society (especially in its political aspect) that in one way or another opposes perfect freedom responds with policy studies of its own, each showing why an alleged “market failure,” “social injustice,” or other problem warrants the government’s interference with people’s freedom of action and each promising to remedy the perceived evils. Anyone who pays attention to policy debates is familiar with the ensuing, never-ending war of the wonks. I myself have done a fair amount of such work, so I am not condemning it. As one continues to expose the defects of anti-freedom arguments and the failures of government efforts to “solve” a host of problems, one hopes that someone will be persuaded and become willing to give freedom a chance.

Nevertheless, precisely because the war of the wonks—not to mention the professors, pundits, columnists, political hacks, and intellectual hired guns—is never-ending, one can never rest assured that once a person has been persuaded that freedom works better, at least in regard to situation X, that person has been won over to libertarianism permanently. If a person has come over only because of evidence and argument adduced yesterday by a pro-freedom wonk, he may just as easily go back to his support for government intervention tomorrow on the basis of evidence and argument adduced by an anti-freedom wonk. As John Maynard Keynes once cleverly replied to someone who asked him about his fluctuating views, “When the facts change, I change my mind. What do you do, sir?” If libertarians choose to fight for freedom solely on consequentialist grounds, they will be at war forever. Although one may accept this prospect on the grounds that “eternal vigilance is the price of liberty,” this kind of war is deeply discouraging, given that the anti-freedom forces with which libertarians must contend possess hundreds of times more troops and thousands of times more money for purchasing munitions.

In contrast, once the libertarian has persuaded someone that government interference is wrong, at least in a certain realm, if not across the board, there is a much smaller probability of that convert’s backsliding into his former support for government’s coercive measures against innocent people. Libertarianism grounded on the moral rock will prove much stronger and longer-lasting than libertarianism grounded on the shifting sands of consequentialist arguments, which of necessity are only as compelling as today’s arguments and evidence make them. Hence, if we desire to enlarge the libertarian ranks, we are well advised to make moral arguments at least a part of our efforts. It will not hurt, of course, to show people that freedom really does work better than state control. But to confine our efforts to wonkism dooms them to transitory success, at best.

If we are ever to attain a free society, we must persuade a great many of our fellows that it is simply wrong for any individuals or groups, by violence or the threat thereof, to impose their demands on others who have committed no crime and violated no one’s just rights, and that it is just as wrong for the persons who compose the state to do so as it is for you and me. In the past, the great victories for liberty flowed from precisely such an approach—for example, in the anti-slavery campaign, in the fight against the Corn Laws (which restricted Great Britain’s free trade in grains), and in the struggle to abolish legal restrictions on women’s rights to work, own property, and otherwise conduct themselves as freely as men. At the very least, libertarians should never concede the moral high ground to those who insist on coercively interfering with freedom: the burden of proof should always rest on those who seek to bring violence to bear against innocent people, not on those of us who want simply to be left alone to live our lives as we think best, always respecting the same right for others.

Mr. Higg’s proposition of libertarians making “moral arguments at least a part of our efforts” has been the bedrock of my “policy analysis” which some have mistakenly construed as being partisan.  

For clarity purposes, libertarianism is a cause to advance a free “non-aggression based” society and not to promote superficial and delusory "personality based politics" predicated on the principles of aggression.

Robert Higgs: How Economic Warfare Provoked Japan’s Attack on Pearl Harbor

71 years ago December 7, the Japanese government bombed Pearl Harbor. This “day of infamy” has been portrayed by the mainstream as having been a “good war”. 

In truth, there is more than meets the eye. America’s entry to World War II had been a contrivance.

Austrian economist Professor Robert Higgs in a recent talk narrates of how US president Franklin D. Roosevelt baited the Japanese into attacking the US, that paved way for America’s participation in World War II.

The gist from Mises Institute (bold mine)

When Franklin D. Roosevelt became president in 1933, the U.S. government fell under the control of a man who disliked the Japanese and harbored a romantic affection for the Chinese because, some writers have speculated, Roosevelt's ancestors had made money in the China trade. Roosevelt also disliked the Germans in general and Adolf Hitler in particular, and he tended to favor the British in his personal relations and in world affairs. He did not pay much attention to foreign policy, however, until his New Deal began to peter out in 1937. Thereafter he relied heavily on foreign policy to fulfill his political ambitions, including his desire for reelection to an unprecedented third term.

When Germany began to rearm and to seek Lebensraum aggressively in the late 1930s, the Roosevelt administration cooperated closely with the British and the French in measures to oppose German expansion. After World War II commenced in 1939, this U.S. assistance grew ever greater and included such measures as the so-called destroyer deal and the deceptively named Lend-Lease program. In anticipation of U.S. entry into the war, British and U.S. military staffs secretly formulated plans for joint operations. U.S. forces sought to create a war-justifying incident by cooperating with the British navy in attacks on German U-boats in the northern Atlantic, but Hitler refused to take the bait, thus denying Roosevelt the pretext he craved for making the United States a full-fledged, declared belligerent—a belligerence that the great majority of Americans opposed.

In June 1940, Henry L. Stimson, who had been secretary of war under William Howard Taft and secretary of state under Herbert Hoover, became secretary of war again. Stimson was a lion of the Anglophile, northeastern upper crust and no friend of the Japanese. In support of the so-called Open Door Policy for China, Stimson favored the use of economic sanctions to obstruct Japan's advance in Asia. Treasury Secretary Henry Morgenthau and Interior Secretary Harold Ickes vigorously endorsed this policy. Roosevelt hoped that such sanctions would goad the Japanese into making a rash mistake by launching a war against the United States, which would bring in Germany because Japan and Germany were allied.

The Roosevelt administration, while curtly dismissing Japanese diplomatic overtures to harmonize relations, accordingly imposed a series of increasingly stringent economic sanctions on Japan. In 1939, the United States terminated the 1911 commercial treaty with Japan. "On July 2, 1940, Roosevelt signed the Export Control Act, authorizing the President to license or prohibit the export of essential defense materials." Under this authority, "[o]n July 31, exports of aviation motor fuels and lubricants and No. 1 heavy melting iron and steel scrap were restricted." Next, in a move aimed at Japan, Roosevelt slapped an embargo, effective October 16, "on all exports of scrap iron and steel to destinations other than Britain and the nations of the Western Hemisphere." Finally, on July 26, 1941, Roosevelt "froze Japanese assets in the United States, thus bringing commercial relations between the nations to an effective end. One week later Roosevelt embargoed the export of such grades of oil as still were in commercial flow to Japan."  The British and the Dutch followed suit, embargoing exports to Japan from their colonies in Southeast Asia.

Roosevelt and his subordinates knew they were putting Japan in an untenable position and that the Japanese government might well try to escape the stranglehold by going to war. Having broken the Japanese diplomatic code, the American leaders knew, among many other things, what Foreign Minister Teijiro Toyoda had communicated to Ambassador Kichisaburo Nomura on July 31: "Commercial and economic relations between Japan and third countries, led by England and the United States, are gradually becoming so horribly strained that we cannot endure it much longer. Consequently, our Empire, to save its very life, must take measures to secure the raw materials of the South Seas."

Because American cryptographers had also broken the Japanese naval code, the leaders in Washington also knew that Japan's "measures" would include an attack on Pearl Harbor. Yet they withheld this critical information from the commanders in Hawaii, who might have headed off the attack or prepared themselves to defend against it. That Roosevelt and his chieftains did not ring the tocsin makes perfect sense: after all, the impending attack constituted precisely what they had been seeking for a long time. As Stimson confided to his diary after a meeting of the War Cabinet on November 25, "The question was how we should maneuver them [the Japanese] into firing the first shot without allowing too much danger to ourselves." After the attack, Stimson confessed that "my first feeling was of relief . . . that a crisis had come in a way which would unite all our people."

Read the rest or the start of his talk here

This explains the "coincidence" or “the stroke of luck” on why none of the three US aircraft carriers stationed at Pearl Harbor where present during the time of strike.

[Updated to add: Also think about how political leaders lack the compunction to even offer their citizens as sacrificial lambs (Pearl Harbor casualties 2,402 deaths 1,282 injured) in order to pursue personal political agenda.]

Today, the same strategy of economic and financial sanctions has been slapped on Iran.

The great French proto-Austrolibertarian Frédéric Bastiat was right, if goods don’t cross borders, armies will.  Protectionism is an act of war.

Quote of the Day: Participatory Fascism

For thirty years or so, I have used the term “participatory fascism,” which I borrowed from my old friend and former Ph.D. student Charlotte Twight. This is a descriptively precise term in that it recognizes the fascistic organization of resource ownership and control in our system, despite the preservation of nominal private ownership, and the variety of ways in which the state employs political ceremonies, proceedings, and engagements—most important, voting—in which the general public participates. Such participation engenders the sense that somehow the people control the government. Even though this sense of control is for the most part an illusion, rather than a perception well founded in reality, it is important because it causes people to accept government regulations, taxes, and other insults against which they might rebel if they believed that such impositions had simply been forced on them by dictators or other leaders wholly beyond their influence.

For the rulers, participatory fascism is the perfect solution toward which they have been groping for generations, and virtually all of the world’s politico-economic orders are now gravitating toward this system. Outright socialism is a recipe for widespread poverty and for the ultimate dissolution of the economy and the disavowal of its political leadership. Socialism is the wave of the past; everywhere it has been tried seriously, it has failed miserably. Participatory fascism, in contrast, has two decisive advantages over socialism.

The first is that it allows the nominal private owners of resources and firms enough room for maneuver that they can still innovate, prosper, and hence propel the system toward higher levels of living for the masses. If the government’s intervention is pushed too far, this progress slows, and it may eventually cease or even turn into economic regress. However, when such untoward conditions occur, the rulers tend to rein in their plunder and intervention enough to allow a revitalization of the economy. Of course, such fettered economies cannot grow as fast as completely free economies can grow, but the latter system would preclude the plunder and control that the political leaders now enjoy in the fettered system, and hence they greatly prefer the slower-growing, great-plunder system to the faster-growing, no-plunder one.

Meanwhile, most people are placated by the economic progress that does occur and by their participation in political and legal proceedings that give them the illusion of control and fair treatment. Although the political system is rigged in countless ways to favor incumbent rulers and their key supporters, it is far from dictatorial in the way that Stalin’s Russia or Hitler’s Germany was dictatorial. People therefore continue to believe that they are free, notwithstanding the death of their liberties by a thousand cuts that continues day by day.

Participatory fascism’s second great advantage over socialism is that when serious economic problems do arise, as they have during the past five years, the rulers and their key supporters in the “private” sector can blame residual elements of the market system, and especially the richest people who operate in that system, for the perceived ills. No matter how much the problems arise from government intervention, it is always possible to lay the blame on actors and institutions in the remaining “free enterprises,” especially the biggest bankers and other apparent top dogs. Thus, fascistic rulers have build-in protection against popular reaction that the rulers in a socialist system lack. (Rulers under socialism tend to designate foreign governments and capitalists and domestic “wreckers” as the scapegoats for their mismanagement and inability to conduct economic affairs productively and fairly.)

(bold emphasis mine)

This is from Austrian economist Robert Higgs at the Independent Institute

Regime Uncertainty and US Employment Woes

Dr. Ed Yardeni’s noteworthy perspective on the recent ‘conspiracy theory’ controversy over US employment data: (bold added) 

The employment gain was attributable to an increase of 838,000 in full-time employment, while part-time employment fell 26,000. What’s odd is that among those working part-time (which edged down slightly), there was a 582,000 increase in those working part-time for economic reasons. In other words, lots of people found full-time jobs, and lots of people who wanted to work full time could only find part-time jobs. Got that? Even odder is that the payroll survey showed that employment in the temporary help industry edged down by 2,000 in September.

While I doubt that anyone at BLS tampered with the household data for political motives, I’m certain no one even thought to bother with the payroll employment numbers. September’s increase was a measly 114,000. I give much more weight to the revisions to the previous two months, which tend to be upwards when the economy is expanding. They totaled 86,000 during July and August, raising their monthly average gain to 161,500. The oddity here was that upward revisions occurred at the local-government level--mainly the hiring of school teachers (up 77,000)--which nearly matched the revision to overall payrolls…

The debatable question is whether the Obama administration’s policies are creating jobs. The answer, of course, is they didn’t create them. Mitt Romney says he’ll create 12 million jobs if he is elected to be the next president. Presidents don’t create jobs. Profitable companies expand and create jobs, especially small ones that turn into big ones.

So politics could have played a sleight of hand trick in the statistical improvements of US employment conditions.

Well, the real reason for the sluggish job conditions can be traced to concerns of small business which makes up the kernel of employment: growing political uncertainty, as I earlier pointed out here.

Sluggish hiring has been an outcome of lethargic business fixed investment…

…which can be traced to REGIME UNCERTAINTY

As Professor Robert Higgs writes, 

I have argued for years that this anemic investment recovery evinces, at least in part, the prevailing regime uncertainty brought about by the Fed’s and the Bush and Obama administrations’ massive, ill-advised, and counter-productive interventions in the economy during the past five years. These interventions are continuing, however, and continuing to prolong the recovery. The idea that these actions will ultimately succeed if only the authorities persist in them long enough and on a sufficiently great scale was a bad idea from the start, and its bankruptcy became fairly evident a long time ago even to many observers wedded to mainstream economics and conventional economic policy making.

Policy makers have cost the U.S. economy a decade or more of normal economic growth. How long will people in their capacities as political and financial actors continue to tolerate this foolish, destructive policy making? I do not know, but I believe I know what the result of these misguided ongoing experiments will be—economic stagnation at best, relapse or another bust at worst.

The bottom line is that in contrast to the quack idea that Presidents "create" jobs, the reality is Presidents “unmake” or “destroy” jobs from repeated interventionism-inflationism which only engenders regime uncertainties or from a political environment which have been antagonistic or hostile to businesses.

Progressive Ideology: The 10 Paths to Nirvana

Progressives or the neo-liberalsm who account for populist politics in the US, unwaveringly embrace big government

Professor Robert Higgs enumerates the Progressives’ 10 paths to nirvana.

An economist notes in particular that progressive ideology now embraces the following default conclusions:

1. If a social or economic problem seems to exist, the state should impose regulation to remedy it.
2. If regulation has already been imposed, it should be made more expansive and severe.
3. If an economic recession occurs, the state should adopt “stimulus” programs by actively employing the state’s fiscal and monetary powers.
4. If the recession persists despite the state’s adoption of “stimulus” programs, the state should increase the size of these programs.
5. If long-term economic growth seems to be too slow to satisfy powerful people’s standard of performance, the state should intervene to accelerate the rate of growth by making “investments” in infrastructure, health, education, and technological advance.
6. If the state was already making such “investments,” it should make even more of them.
7. Taxes on “the rich” should be increased during a recession, to reduce the government’s budget deficit.
8. Taxes on “the rich” should also be increased during a business expansion, to ensure that they pay their “fair share” (that is, the great bulk) of total taxes and to reduce the government’s budget deficit.
9. If progressives perceive a “market failure” of any kind, the state should intervene in whatever way promises to create Nirvana.
10. If Nirvana has not resulted from past and current interventions, the state should increase its intervention until Nirvana is reached.

The foregoing progressive predispositions, and others too numerous to state here, provide the foundation on which the state justifies its current actions and its proposals for acting even more expansively. Progressives see no situation in which the best course of action requires that the government retrench or admit that it can do nothing constructive to help matters. They see the state as well-intentioned, sufficiently capable, and properly motivated to fix any social and economic problem whatsoever if only the public allows it to do so and bears the costs.

The Philippine social democracy version can be reduced into three: namely, change the leader, tax and regulate, and finally, throw money at the problem. Anything beyond these have been deemed as blasphemy.

I wrote about them here.

Brain Dead Economics: Wars as Economic Stimulus

Marketwatch columnist and former war veteran Paul Farrell is aghast at politicians who are agitating for war in the guise of ‘stimulating the economy’

Mr. Farrell writes, (bold original)

Yes, I’m mad as hell again. I just read some bad news that should make every American mad as hell. In fact, two bad news items.

First, as a U.S. Marine vet, I got angry reading that there have been more military suicides than war deaths the past decade. Yes, more Iraq and Afghan war vets have killed themselves than were killed by America’s enemies in combat. And more are expected as we had more than two million serve in the two wars.

A soldier from the U.S. Army's Charlie Company, 1/12 Infantry, 4th Brigade Combat Team, 4th Infantry Division scans across the border at houses in Pakistan during a Sunday patrol near Dokalam village in Afghanistan's Kunar Province.

Second, if the economic, psychological, political and moral consequences of the past two wars aren’t bad enough, many politicians and candidates — some of whom never served in the armed forces — are proposing that the full Congress pass the Ryan budget and force Pentagon generals to spend billions more than they requested.

Mr. Farrell questions the underlying motives for such calls… (bold italics mine, bold original)

Treating war as an economic stimulus program became clear a decade ago in the early years of the Iraq war. That fact was stressed in a Huffington Post interview with Oliver Stone. Ryan Grim said that in a 2004 meeting President George W. Bush said to the Argentine prime minister: “All the economic growth that the U.S. has had, has been based on the different wars it had waged.”

Apparently that same ideology remains strong in today’s election politics.

Let’s put all this in the larger macroeconomic context. War should be about national defense. Wars should have nothing to do with scoring domestic political points. And yet, increasing the Pentagon budget has become a political hot button in today’s election drama.

This is insane: Do politicians plan to start new wars?

Ask yourself, are they already itching for a new war? After two exhausting wars? Eleven years? We put 2.3 million in Iraq and Afghanistan; 800,000 served multiple deployments, one of the big reasons for vet suicides. So why demand bigger budgets? Why in a time of national austerity? Why when they’re complaining about high taxes?

No, war shouldn’t be about domestic politics, but it is. And that’s bad news for taxpayers, for investors, for America’s values.

Somebody’s got to pay for all this. The taxes of all Americans will go up if the Senate passes the Ryan budget plan, forcing Pentagon generals to spend $554 billion in 2013, billions more than they requested. Plus it’ll add $6.2 trillion new debt and taxes over the next decade.

Yes, this is insane. A few private contractors will get richer but taxpayers will suffer in this zero-sum economics game.

National defense? No, it’s about getting rich, the rest pay the price

America is on a dangerous and costly path. Not just politicians. Americans love war, it’s in our genes. Congress spends over 50% our tax dollars on the Pentagon war machine. America spends 47% of the total military budgets of all nations in the world.

Why does the public tolerates such absurdities? Why do we hide this insanity deep in our collective conscience? Why are we planning new wars? Why do we see war as an economic stimulus program? The Iraq-Afghan “economic stimulus” strategy got us in the mess we’re in; are we really crazy enough to try it again?

Forget all the campaign rhetoric about national defense. That is not why our politicians want to spent trillions more on the Pentagon war machine. Politician are interested in reelection not national defense. They need votes and will keep military bases open because that means local jobs, satisfied voters.

They need campaign cash. Military contractors are great donors. Cutting war-related jobs is political suicide. So they pass big military budgets, waste billions on outdated weapon systems. Keep throwing money at the Pentagon war machine. Anything to get reelected. National defense is not a first priority; their job, their reelection is.

I share Mr. Farell’s revulsion

For me, it’s only politically brain dead people who really argue that destruction (war or natural catastrophes) serves as economic ‘stimulus’.

Post destruction economic activities extrapolates to REPLACEMENT and NOT VALUE ADDED. Yet loss of lives CANNOT be replaced. And deaths along with incapacitated citizens, decreases productivity. This is essentially the Broken Window Fallacy.

And it would be a mistake to relate war with creative destruction. Innovation or advances of technology, which renders obsolete old products or business models, is the outcome of markets in pursuit of consumer satisfaction.

During war, consumers become subordinated to the political forces, particularly through taxes, price controls and rationing, as in World War II.

The point is in war, the economy produces guns, tanks and warplanes and NOT TVs, telephones, private cars. This simply shows how naïve and absurd any such supposed economic comparison is. And this also shows of the dangers of making analysis based on statistical aggregates which tend to discount the real costs, particularly the human factor.

During the World War II, Keynesian economists worried about what would happen to the US economy once the war would culminate.

Then the Keynesian high priest Paul Samuelson quoted by Professor David R. Henderson

When this war comes to an end, more than one out of every two workers will depend directly or indirectly upon military orders. We shall have some 10 million service men to throw on the labor market. [DRH comment: he nailed that number.] We shall have to face a difficult reconversion period during which current goods cannot be produced and layoffs may be great. Nor will the technical necessity for reconversion necessarily generate much investment outlay in the critical period under discussion whatever its later potentialities. The final conclusion to be drawn from our experience at the end of the last war is inescapable--were the war to end suddenly within the next 6 months, were we again planning to wind up our war effort in the greatest haste, to demobilize our armed forces, to liquidate price controls, to shift from astronomical deficits to even the large deficits of the thirties--then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced. [italics in original]

Of course, the end of World War II turned out in total contrast to Samuelson’s prediction, the US economy boomed.

Today, brain dead economics turn the table to tells us that the boom that followed World War II had been due to ‘stimulus’. This is a wonderful example of verbal manipulation.

On moral grounds, how is it righteous for people to wish ill for the others? People who really see war as economic growth ought to go to the battlefront, along with their families, and fight the wars themselves. The reason for their chutzpah is because they know someone else will do the dying for them. The same applies to any destruction as stimulus. Talk about pretentious moral high grounds.

Politicians urge for war because war is the health of the state. Aside from the war as the origin the state, wars provide the pretext for the expansion of the state or the “ratchet effect” as coined by Professor Robert Higgs.

Professor Art Carden explains,

In Crisis and Leviathan, Higgs argues that during a crisis a "ratchet effect" produces net increases in government discretion that are not completely reversed after the crisis. Two things happen when government intervenes. First, the bureaucracy naturally tends to expand beyond its stated goals — mission creep. Second, intervention alters incentives; that is, the creation of a bureaucracy to address some problem also spawns a rent-seeking pressure group with interests that will prevent reversion to the status quo ante.

The bottom line is that war as stimulus has never been about economics but about propaganda to expand the power of the state and of the economic interests of those attached to the state or the political clients or the cronies.

For those wishing for war, be reminded of the Golden rule (Matthew 7:12)

Therefore all things whatever you would that men should do to you, do you even so to them: for this is the law and the prophets.

If not they deserve this.

Quote of the Day: Hatred is the Essence of Politics

In politics and government, however, the institutional makeup fosters hatred at every turn. Parties recruit followers by exploiting hatreds. Bureaucracies bulk up their power and budgets by artfully weaving hatreds into their mission statements and day-to-day procedures. Regulators take advantage of artificially heightened hatreds. Group identity is emphasized at every turn, and such tribal distinctions are tailor-made for the maintenance and increase of hatred among individual persons who might otherwise disregard the kinds of groupings that the politicians and their supporters emphasize ceaselessly.

That’s from economist Robert Higgs.

Political hatred, which stems from group identity (us against them), is actually groupthink fallacy. People become easily manipulated when they surrender individual thinking to the collective.

I previously quoted a study at my earlier post, Groupthink fallacy has the following traits

1. Illusion of invulnerability –Creates excessive optimism that encourages taking extreme risks.

2. Collective rationalization – Members discount warnings and do not reconsider their assumptions.

3. Belief in inherent morality – Members believe in the rightness of their cause and therefore ignore the ethical or moral consequences of their decisions.

4. Stereotyped views of out-groups – Negative views of “enemy” make effective responses to conflict seem unnecessary.

5. Direct pressure on dissenters – Members are under pressure not to express arguments against any of the group’s views.

6. Self-censorship – Doubts and deviations from the perceived group consensus are not expressed.

7. Illusion of unanimity – The majority view and judgments are assumed to be unanimous.

8. Self-appointed ‘mindguards’ – Members protect the group and the leader from information that is problematic or contradictory to the group’s cohesiveness, view, and/or decisions.

These can be summed up to "seeking comfort of the crowds".

And politicians, mainstream institutions and media pander to the gullible public through groupthink fallacy (e.g. nationalism) by sowing hatred (us against them mindset) to advance their interests.

Quote of the Day: World War II Did Not End the Great Depression

Unemployment fell during the war entirely because of the buildup of the armed forces. In 1940, some 4.62 million persons were actually unemployed (the official count of 7.45 million included 2.83 million employed on various government work projects). During the war, the government, by conscription for the most part, drew some 16 million persons into the armed forces at some time; the active-duty force in mid-1945 numbered in excess of 12 million. Voila, civilian unemployment nearly disappeared. But herding the equivalent of 22 percent of the prewar labor force into the armed forces (to eliminate 9.5 percent unemployment) scarcely produced what we are properly entitled to call prosperity.

Yes, officially measured GDP soared during the war. Examination of that increased output shows, however, that it consisted entirely of military goods and services. Real civilian consumption and private investment both fell after 1941, and they did not recover fully until 1946. The privately owned capital stock actually shrank during the war. Some prosperity. (My article in the peer-reviewed Journal of Economic History, March 1992, presents many of the relevant details.)

It is high time that we come to appreciate the distinction between the government spending, especially the war spending, that bulks up official GDP figures and the kinds of production that create genuine economic prosperity. As Ludwig von Mises wrote in the aftermath of World War I, “war prosperity is like the prosperity that an earthquake or a plague brings.”

That’s from the economist Robert Higgs who debunks the popular myth.

Common sense tells us that it would be foolish to ever think that society prospers from death and destruction, despite what statistics say. Yet many fall for sloppy generalizations, which has been founded on the post hoc fallacy and the broken window "war prosperity" myth.

Again Professor Art Carden on the Broken Window Fallacy

America’s Growing Dependency on the Welfare State

Proof that Americans have become less a representative of “the land of the free” has been the deepening trend of dependency on the welfare state.

From the Wall Street Journal Blog

The pool of Americans relying on government benefits rose to record highs last year as an increasing share of families tapped aid in a weak economy.

Some 48.6% of the population lived in a household receiving some type of government benefit in the second quarter of 2010, up a notch from 48.5% in the first quarter, according to Census data…

The largest chunk of benefits flowing to families came from means-tested programs. In the second quarter, 34.4% lived in a household benefiting from food stamps, subsidized housing or Medicaid, among others.

That number is up from 32.8% a year ago (when a total of 46.8% of the population lived in a home receiving benefits). The biggest increases came from an uptick in those turning to food stamps and Medicaid.

Nearly 15% of Americans lived in a household receiving food stamps in mid-2010; Almost 26% had access to Medicaid.

Only a small share of the population accessed cash welfare benefits as the 1990s overhaul made it more onerous in many cases to receive and maintain those payments. Some 1.9% of the population lived in a household that received welfare in the second quarter of 2010.

I previously had Robert Higgs perspicacious and highly relevant insight as my quote of the day. [bold emphasis added]

As the ranks of those dependent on the welfare state continue to grow, the need for the rulers to pay attention to the ruled population diminishes. The masters know full well that the sheep will not bolt the enclosure in which the shepherds are making it possible for them to survive. Every person who becomes dependent on the state simultaneously becomes one less person who might act in some way to oppose the existing regime. Thus have modern governments gone greatly beyond the bread and circuses with which the Roman Caesars purchased the common people’s allegiance. In these circumstances, it is hardly surprising that the only changes that occur in the makeup of the ruling elite resemble a shuffling of the occupants in the first-class cabins of a luxury liner. Never mind that this liner is the economic and moral equivalent of the Titanic and that its ultimate fate is no more propitious than was that of the “unsinkable” ship that went to the bottom a century ago.

Any wonder why US politicians has unflinchingly been pushing for many arbitrary laws?