07 Jan 2013

Potpourri

David R. Henderson, Potpourri, Steve Landsburg 74 Comments

==> Jeffrey Karl made up this cartoon based on the numbers I calculated for the so-called fiscal cliff.

==> You can’t imagine how many people sent me this link about Krugman for Treasury Secretary.

==> Steve Landsburg disagrees with David R. Henderson’s (limited) defense of the recent budget deal.

74 Responses to “Potpourri”

  1. Matt Tanous says:

    “You can’t imagine how many people sent me this link about Krugman for Treasury Secretary.”

    Oh, no. Another Keynesian as Treasury Secretary? Tell me it isn’t so, Bob.

    On the other hand, there is no way Krugman would accept such a position. Then he wouldn’t be able to explain how the folks in power didn’t *really* do Keynesian policies, and austerity really did happen, and how his policies would work so much better. Can’t really do that when it is your own policies mucking everything up.

  2. Gee says:

    Bob, you recently commended Julie Borowski because her libertarian videos draw 10k+ views on YouTube. And yet you have never once mentioned Trinidad James who has 4 million+ views in only a couple of months. Shame on you!

    http://www.youtube.com/watch?v=7LOZhaxTw0I

    • Bob Murphy says:

      I can’t get tone of voice over the Internet. “Gee,” are you being serious with the “shame on you” or are you cracking a joke?

      • Gee says:

        Sorry, I thought that if you watched the video you’d surely know that I was joking.

        • Ken B says:

          I only knew you couldn’t be serious.

        • Bob Murphy says:

          Ah, I was on a conference call. But I’ve gotten plenty of comments like yours so I couldn’t tell.

    • skylien says:

      Well, now I know what a gold bug looks like.

  3. xgsmmy says:

    Does it really make sense to talk about total spending and not spending cuts as a percent of GDP? This is one of the ways Julie misinforms her viewers as well.

    By the way that Krugman article was written by Mark Weisbrot co-director of CEPR with Dean Baker and who helped write the Oliver Stone documentary South of the Border.

    • Matt Tanous says:

      “Does it really make sense to talk about total spending and not spending cuts as a percent of GDP?”

      Yes, yes it does.

      • xgsmmy says:

        Matt, your comments are always so substantive. But why does it make sense?

        • Matt Tanous says:

          The impact of government on the economy is not relative to GDP. The fact that the economy still manages to grow is not something that means there is no impact or less impact due to government spending.

          Additionally, if money is being wasted (and it is!), then it makes no sense to say “it’s OK to keep wasting money because we are making a bit more now”.

          • xgsmmy says:

            Matt, two things: if the concern is total spending you can’t really know how much money total spending really is without comparing it to something.

            Comparing it too itself does not convey any information, so I asked what is the Austrian assumption that gives this number meaning.

            Presumably people looking at it think it “does something” but I was wondering if this is like the inflation prediction where Austrians apparently have nothing to say and are using a spurious economics justification to further a political end.

            But also if total government spending is large relative to GDP then a “small” cut is also a lot of money. Hence this comparison appears chosen to downplay Keynesian concerns about the effect spending cuts might have on the economy.

            (I’m not saying either of these things was done deliberately in bad faith.)

          • xgsmmy says:

            Oh, and is there actually an Austrian economic argument that says all government spending is 100% wasteful therefore all government spending cuts are good? (If this is what you’re saying. It’s not clear.)

            I find this hard to believe, but perhaps you just mean you think it would be less wasteful or not wasteful at all if not spent by the government.

            However I find it hard to believe this is even a plausible to say “always”.

            Surely even Austrians admit the government might get lucky and accidentally spend some money productively.

    • Major_Freedom says:

      How is it “misinforming” to compare spending, but not spending cuts, as a percent of GDP?

      • xgsmmy says:

        MF, what information do you think that conveys? What do Austrians say happens when the government cuts total spending?

        Even if that is something obvious that I’m ignorant of, it doesn’t address what people like me are concerned about regarding cuts in a depressed economy so when people Julie makes fun of Democrats using total spending she’s attacking a strawman.

        • Major_Freedom says:

          “MF, what information do you think that conveys?”

          It’s self-explanatory.

          “What do Austrians say happens when the government cuts total spending?”

          Depends on which Austrian you ask.

          “Even if that is something obvious that I’m ignorant of, it doesn’t address what people like me are concerned about regarding cuts in a depressed economy so when people Julie makes fun of Democrats using total spending she’s attacking a strawman.”

          But she isn’t trying to refute “Democrats” by attributing to “Democrats” a position “Democrats” do not hold.

          • xgsmmy says:

            MF, could you please respond with less substance next time? I’m feeling overwhelmed here.

            But, no, I’m not asking if saying “total spending going down by this much” means total spending going down by this much.

            So if its informational content is “self-evident” beyond that perhaps you’d care to fill me in.

            Depends on which Austrian you ask.

            I’m utterly perplexed why you’d bother to give such a response. Perhaps you’d care to elaborate or am I to go on a wild goose chase only to find Austrians have nothing to say about total spending and were only being “ironic” when they brought it up.

            But she isn’t trying to refute “Democrats” by attributing to “Democrats” a position “Democrats” do not hold.

            Perhaps you’d care to make an actual argument and not just recite a definition of “strawman”?

            However if you want to say Democrats actually hold the arguments she attributes to them in addition to “the real” argument or that she wasn’t saying those were their arguments about the fiscal cliff, then fine, call it a “weakman” if you want.

        • guest says:

          … it doesn’t address what people like me are concerned about regarding cuts in a depressed economy …

          This should address your concerns about cuts in a depressed economy:

          Keynesian Predictions vs. American History | Thomas E. Woods, Jr.
          http://www.youtube.com/watch?v=6XbG6aIUlog#t=7m25s
          (Start at 07:25)

          The first Keynesian prediction Tom deals with is in regards to what would happen if cuts were made after WW2.

          • xgsmmy says:

            guest, Lord Keynes and Daniel have been addressing this issue on their blogs lately, but suffice to say the U.S. economy was not depressed at the end of World War 2.

            In fact the government implemented rationing and price controls to prevent people from spending during the War.

            However there was a mild recession as the government cut spending but government spending was still higher after the war than before the war.

            Also what I understand the personal savings rate had reached an all time high which is very different from today where savings is low by historic standards.

            • guest says:

              No, World War II Did Not Help the Economy
              http://www.youtube.com/watch?v=71tPBjrTeJU

              Also, personal savings is supposed to be a no-no for Keynesians.

              • xgsmmy says:

                guest, you can say what you want about it “helping” the economy, I just said the economy wasn’t depressed.

                Why would personal savings be a “no-no” for Keynesians? Government spending and savings were very high during the war and after the war both fell. What’s the problem?

                And on the contrary, falling personal savings and higher private investment is a problem for people like John Papola who make misleading videos.

              • guest says:

                War spending isn’t growth. Paying soldiers to fight isn’t employment.

                Rationing and price controls is government screwing with the incentive to produce.

              • guest says:

                And then there’s this issue, as an aside:

                The Pearl Harbor Myth: Rethinking the Unthinkable
                http://lewrockwell.com/rep3/pearl-harbor-myth.html

                “Mr. Victor admits he is an admirer of Roosevelt. While he is clear that Roosevelt manipulated the country into war, he does not condemn him for it:

                “”History has recorded many, many rulers’ manipulations of their people into war without their subordinates blowing the whistle. Presidents James Polk, Abraham Lincoln, William McKinley, and Woodrow Wilson did it before [Roosevelt], and others have done it after him.”"

              • xgsmmy says:

                War spending isn’t growth.

                Whether it’s “growth” or “good” or not is not the issue. Imagine “the war part” of the economy was invisible if you want, the “real economy” was not depressed.

                But what would private defense spending be in anarcho-topia? Or are you a pacifist like Bob?

                Paying soldiers to fight isn’t employment.

                What was it then? It seems they were paid regardless, though.

                Rationing and price controls is government screwing with the incentive to produce.

                In any case the government was trying to keep people from spending, hence the economy was not depresssed.

                As far as whether Roosevelt let Pearl Harbor happen, I don’t know enough to evaluate the claim, but even if it’s true, are you saying Japan attack was justifiable self-defense?

                If not, unless you’re pacifist, I don’t see why it matters whether Roosevelt is a jerk or not.

              • Joseph Fetz says:

                What measure are you using to gauge whether or not the economy was “depressed”? Does this measure coincide with the relative state of utility enjoyed by Americans during different periods between 1930-1950?

              • Joseph Fetz says:

                “In fact the government implemented rationing and price controls to prevent people from spending during the War.”

                This statement doesn’t hold up to even the mildest scrutiny.

                Rationing is not a means of limiting spending, but a means of limiting availability to resources (the actors within the economy can spend all that they want, they just can’t have as many goods). The whole point of rationing is that there are limited resources, and that the government has decided to allot these resources to avenues other than private consumption. In the case of WWII, the purpose of the rationing was to steer those scarce goods toward the war effort. It had nothing to do with spending.

                In the case of price controls, if you set the control below the market price aren’t you in effect encouraging more spending? If you set the control above the market price, aren’t you dictating more spending?

              • Joseph Fetz says:

                Now, I suppose that you could say that if a rationed good also has a price control below the market price, that this would indeed limit spending. But would this not also be evidence of a highly depressed economy, one that is not enjoying the full utility of the resources available? Further, wouldn’t this depressing state be only increased with each further instance of such a case?

              • xgsmmy says:

                What measure are you using to gauge whether or not the economy was “depressed”? Does this measure coincide with the relative state of utility enjoyed by Americans during different periods between 1930-1950?

                No, only whether the economy was operating at full output employment. (Although, I don’t know much about “utility”.)

                Price controls and rationing are responses to supply shocks. Yes, this means welfare is lowered, but it also meant the economy was operating beyond full capacity the opposite of depression.

                You get a similar story in the 1970s with rising wage and oil prices. (I’m wondering what would have happened if they rationed oil and controlled wage growth. Lerner had a plan to raise the tax oil 2 dollars for every 1 dollar increase in price. I’m thinking they could have achieved lower unemployment.)

                But the wartime economy’s priority was winning the war. Talking about it’s hardships or whether the war was worth fighting is besides the point.

              • Lord Keynes says:

                In the war, a high savings rate was required to contract demand to allow more resources for production.

                But the saving rate fell sharply from 1945.

                Many individuals and corporations engaged in dissaving.

                All totally consistent with Keynesian economics.

              • guest says:

                Price controls and rationing are responses to supply shocks.

                A solution to a non-problem, and a situation caused by government in the first place.

                No one is entitled to a specific price of something. So-called “price gouging” results in others going into competition, resulting in greater supply and lower prices.

                So, if the government would have just gotten out of the way, sooner, the economy would have recovered from what they did to us, sooner.

                Remember that a crash is the market attempting to liquidate malinvestment. Price controls interfere with that process, and prolong the depressed condition.

                Why are Keynesians fixated on full employment? The goal is to acquire, not to work. We work in order to acquire.

                And capital in the hands of individuals results in greater production for less work.

                If no one is working, but everyone has what they want, there is no depression; If everyone is grinding every day, due to government price controls and rationing, then that IS a depressed condition.

                There’s a difference between private security and government tricking us into a war that was none of our business for the purpose of creating a command economy.

                Private security can be ditched for increased production, so it fulfills the preferences of individuals. It’s overhead at best; A response to situations which are dangerous to invididual’s property rights.

                At any rate, the difference between government and private security misses the point.

                The issue is that government is trying to claim that the economy wasn’t depressed due to people getting paid to do unproductive things.

                The underlying claim is that as long as everyone is being paid to do anything – whether or not it’s productive – then the economy is doing well.

                Well, I don’t want “full employment” if my employer is making government-induced malinvestments and therefore my employment is a waste of resources and it will make me poorer in the future; or if it’s going to violate other people’s rights by way of government interventions.

                Just get the regulations and price controls off people’s backs, and we’ll figure it out. Not that it’s any of government’s concern.

              • guest says:

                … to allow more resources for production.

                Production of what?

                Besides, people will produce when it’s worth it to them to produce.

                Price gouging would have resulted in production; Competition would have resulted in lower prices.

                Price controls and rationing were unnecessary and destructive.

              • xgsmmy says:

                guest, I think you’re thinking about price-gouging like after a hurricane. Well in this case the hurricane hit the whole world. So, in theory at least, there wasn’t any way to increase supply. Hence the rationing.

                And again this wasn’t a crash, but a boom.

                The idea behind full-employment is you run the economy at its full potential. This means you’re producing and therefore acquiring as much as you can.

                Unemployment measures exclude those who leave the workforce and don’t want jobs so there is no necessary imperative to work if you have no use for it.

                I’m not sure I agree with your opinion of private systems of defense and law. (Those systems, in my opinion, effectively become the state for those individuals who are forced to deal with them.)

                And I don’t agree with your opinion of the war in question. While I feel thankful I’m under no obligation to fight such a war and concede I don’t know how I would respond in such a situation, and certainly many innocent people died on both sides of the war, I do think the seemingly near universal agreement about and belief in the immorality of the Nazi’s actions is something I find a great deal of hope in. And whatever the costs of the war and unintended consequences of its resolution I believe the world is a better place today for it’s outcome to most counterfactuals I can imagine barring perhaps it being unnecessary to fight to begin with.

                However that certainly doesn’t mean every particular decision was the correct decision but you get my point.

                But private security cannot be ditched unless you’re a pacifist, but even so then private “aggressors” cannot be ignored.

                You’re imagining an unnecessary action or war and so ignoring the counterfactual of an existential threat, “necessary war”, or even unjust war that results in a medium or long term better outcome.

                So you’re saying the things were unproductive but even in an unnecessary war not all war spending is unproductive. Not everything that goes into war is a bomb, the technologies and skills needed to make the bomb can potentially be re-purposed.

                I’m not sure there is any such thing as “malinvestments” (though I need to read more about it).

                But even if there is, It seems to me that followers of Austrian economics have abused the term to be synonymous with anything the government can be said to touch. There seems to be a conflation between libertarian rights arguments and the supposed economic argument.

                But the principle of non-aggression is hardly fool-proof and obvious. Libertarianism is apparently the new Maxism in that it imagines the end of history and the withering away of the state.

                I even saw something about “transpartisanism” yesterday or the day before that sounds suspiciously like dialectics.

              • Ken B says:

                “private systems of … law”

                Here’s where the ancaps are so fair. In the ancap world, the law in all its majesty would permit the rich and poor alike to hire police.

              • Lord Keynes says:

                Guest,

                High saving rates were necessary in the war to reduce demand and free up resources for production of war materiel.

              • guest says:

                Well in this case the hurricane hit the whole world. So, in theory at least, there wasn’t any way to increase supply. Hence the rationing.

                The hurricane hit the whole world because of the Fed:

                Neoconservative David Frum Hearts the Fed
                http://www.youtube.com/watch?v=1d1rcaX-lzU

                And you’re not SUPPOSED to increase wasteful spending – capital needed to be liquidated, and all the phony credit needed to evaporate. They were malinvestments.

                Just because a factory CAN produce doesn’t mean that it can produce profitably. If I’m making a bunch of stuff that wont sell for the price that would justify my investment in the capital, then I’m destroying wealth, on net.

                The factory has to be liquidated; either sold for scxrap or sold at below the value that was payed, to someone who can afford the now lower-priced factory.

                It would be a mistake to for would-be central planners to socialize the costs of subsidizing the operation of that on-net wealth-destroying capital.

                The idea behind full-employment is you run the economy at its full potential.

                “Full potential” as defined by who?

                The point of trading is to fulfill individual preferences. Some do better than others. There is nothing inherently amiss about that.

                But everyone is poorer when government intervenes in the economy; Or, at least those on whom we pass our inflation are made poorer.

                I do think the seemingly near universal agreement about and belief in the immorality of the Nazi’s actions is something I find a great deal of hope in.

                Rethinking the Good War
                http://www.lewrockwell.com/vance/vance181.html

                And setting aside for another moment the folly of U.S. intervention in World War I, which prevented a dictated peace settlement and paved the way for the harsh terms of the Treaty of Versailles, thus facilitating the rise of Hitler: Was it necessary that tens of millions were slaughtered to prevent Hitler from slaughtering millions? Was it wise to join forces with a brutal dictator like Stalin, who had already killed millions, with the result that he enslaved half of Europe under communism?

                It is time to rethink the Good War.

                The Soviet Union’s aggressive territorial expansion was greater than that of Germany. In light this, was it wise to ally with Stalin against Hitler?

                And not only did the Soviet Union join Germany in the rape of Poland and execute thousands of Polish army officers and intellectuals in what is known as the Katyn Forest Massacre, the Soviets had their own concentration camps. And as contemporary historian Norman Davies relates: “The liberators of Auschwitz were servants of a regime that ran an even larger network of concentration camps of its own.” In light of this, was it wise to ally with Stalin against Hitler?

                AP Exclusive: Memos show US hushed up Soviet crime
                http://bigstory.ap.org/article/ap-exclusive-memos-show-us-hushed-soviet-crime

                We are WORSE off for having stuck our nose in someone else’s wars. Our fiat money system is destroying our liberties at home and our foreign interventions are causing other nations to rush to that fiat money, thereby allowing us to export our inflation.

                Roosevelt was a Progressive, by the way. There are Progressives on the right, to be sure, but it ain’t free markets that give rise to Empire.

              • guest says:

                … free up resources for production of war materiel.

                That’s my point. People weren’t saving for themselves, but for someone else’s purposes.

                Therefore it doesn’t count as productive spending. The economy WAS depressed.

              • xgsmmy says:

                That’s my point. People weren’t saving for themselves, but for someone else’s purposes.

                Who else? Presumably everyone couldn’t have been saving for someone else, right?

                Therefore it doesn’t count as productive spending. The economy WAS depressed.

                No, I don’t think that the economy not being depressed has anything to do with whether the spending was productive or not.

                The only thing that matter is whether it’s at full capacity.

                You could have rising productivity outside of full employment and falling productivity at full employment.

                So if you want imagine the war was a series of earthquakes and the government a series of tsunamis. (If you must.)

                So that the disasters are lowering the private economies real potential capacity.

                The economy was still operating above full capacity.

                You might say without the tsunami the potential would be higher, but imagine the Japanese had invaded or controlled shipping lanes or something, the real potential might have been lower.

              • guest says:

                No, I don’t think that the economy not being depressed has anything to do with whether the spending was productive or not.

                The only thing that matter is whether it’s at full capacity.

                If government isn’t even going to pretend like its goal is to be productive, then what sense does it make to allow it to tax me?

                Why would I need government to spend my money for me?

                So if you want imagine the war was a series of earthquakes and the government a series of tsunamis. (If you must.)

                Imagine me turning my home into a fortress and there not being a government subsidizing of insurance so as to encourage people to build in flood-prone areas.

              • xgsmmy says:

                guest, you’re the one who was saying the government can’t be productive.

                I was just accepting your premise for the sake of argument.

                I don’t know what could be more obvious about “letting” a government tax you during a war, though.

                In any case I already offered up the possibility of invasion or loss of trade routes as a reason in this case.

                Imagine me turning my home into a fortress and there not being a government subsidizing of insurance so as to encourage people to build in flood-prone areas.

                guest, I was using my example as a metaphor. I was trying to show that even if the government is totally wasteful then you could still be at full-employment.

                I’m not sure what to make of your response, though.

                I feel once again you’ve changed the subject to natural rights. And so are saying you’d rather just take your chances in the state of nature, right?

                Well, I’ve got bad news, guest. You already are in a state of nature. So have at it.

              • guest says:

                I don’t know what could be more obvious about “letting” a government tax you during a war, though.

                A war that was instigated by your own government?!

                Besides, if I don’t want to fund a war anymore, then it’s not entitled to my money.

                I was trying to show that even if the government is totally wasteful then you could still be at full-employment.

                My point was that it currently *claims* to be productive, which is part of the justification for forced taxation.

                You’re saying that full employment is beneficial whether the government is being productive with your money or not.

                So, for you, it would appear that government is just supposed to exist for its own sake.

                I don’t believe it does anything productive, because taxes require violations of individual liberty;

                But it concerns me that there are people, such as yourself, who think that it would have a purpose even if, according to your own worldview, it wasn’t being productive.

                That’s why I phrased it in that way.

                Well, I’ve got bad news, guest. You already are in a state of nature. So have at it.

                In a sense, you’re right. That’s what the Second Amendment is for, after all.

                But if the government would just come out and say that it doesn’t care whether it’s productive or not, then restoring our liberties would be pretty straight-forward.

                But we’re TRYING to make the case that the government CAN’T be productive, and has actually DELIBERATELY been destructive to our lives and liberty, so that we can avoid a war against our offending state and federal elected representatives.

                “Have at it” is not a particularly thoughtful response; not that you would have to care, if you’re not an elected official.

              • xgsmmy says:

                guest, you’re saying it was an unjust war? Even if it was “instigated” as you claim it doesn’t mean you weren’t better off for it. Perhaps you might at least entertain the premise.

                It really doesn’t matter if you think the state is “entitled” to tax you. Taxes really aren’t optional. You can pay them willingly or you can choose not to pay them, but you might be at war with the state. But maybe the taxman will choose not to collect.

                You’re saying that full employment is beneficial whether the government is being productive with your money or not.

                guest, try to understand this the private sector doesn’t need the government to be at full-employment, you can have full-employment without a government. So this sentence doesn’t make sense. I think full-employment is probably good full-stop.

                So, for you, it would appear that government is just supposed to exist for its own sake.

                guest, I don’t what this is supposed to mean, but I can only assume you’re confusing your assumption that government is not productive that I accepted for the sake of argument with my assumptions about government.

                I do not think the government can’t be productive. However, I suppose the government may do a few things that are good “for their own sake,” but let’s leave that aside for now.

                My point was that it currently *claims* to be productive, which is part of the justification for forced taxation.

                I don’t know what tax is not “forced”, but from the state’s perspective they’re taxes you owe not taxes you give them. When you don’t pay them you’re stealing from the public.

                I don’t believe it does anything productive, because taxes require violations of individual liberty;

                This is a non-sequitur.

                But it concerns me that there are people, such as yourself, who think that it would have a purpose even if, according to your own worldview, it wasn’t being productive.

                Let’s say you were severely handicapped: do you have purpose even though you’re not “productive”?

                But again, I haven’t said the state isn’t “productive” or can’t do productive things. That was your view, which you’ve imputed to me.

                But we’re TRYING to make the case that the government CAN’T be productive, and has actually DELIBERATELY been destructive to our lives and liberty, so that we can avoid a war against our offending state and federal elected representatives.

                So you’re trying in bad faith to argue the state shouldn’t exist so you don’t “have to” wage war.

                It’s bizarre you think the state is illegitimate but somehow it provides you with the second amendment in which to wage war against it in the event you fail to abolish it entirely.

                “Have at it” is not a particularly thoughtful response; not that you would have to care, if you’re not an elected official.

                What would be a thoughtful response? You’re apparently an absolutists committed to abolishing the government of the country in which I live. Including apparently taking some sort of revenge against “elected officials”.

                Oh, and I’m not exactly a foreign policy expert but that Lew Rockwell quote seems pretty crazy to me.

                So we shouldn’t have allied with the Soviets against Hilter? Should we have allied with Hilter against the Soviets? Or maybe nuked Russia when we nuked Japan? I’m guessing he doesn’t think so, so it appears he’s arguing in bad faith. We can’t do everything, so we should do nothing. We should have surrendered not only all of Germany to the Soviets but perhaps France and Italy too?

              • guest says:

                I don’t know what tax is not “forced”, but from the state’s perspective they’re taxes you owe not taxes you give them. When you don’t pay them you’re stealing from the public.

                Declaration of Independence:

                That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed

                You said:

                It’s bizarre you think the state is illegitimate but somehow it provides you with the second amendment in which to wage war against it in the event you fail to abolish it entirely.

                Federalist 28
                http://www.constitution.org/fed/federa28.htm

                If the representatives of the people betray their constituents, there is then no resource left but in the exertion of that original right of self-defense which is paramount to all positive forms of government, and which against the usurpations of the national rulers, may be exerted with infinitely better prospect of success than against those of the rulers of an individual state. In a single state, if the persons intrusted with supreme power become usurpers, the different parcels, subdivisions, or districts of which it consists, having no distinct government in each, can take no regular measures for defense. The citizens must rush tumultuously to arms, without concert, without system, without resource; except in their courage and despair.

                By the way, I’m actually not an anarchist:

                The Law by Frédéric Bastiat
                http://www.constitution.org/cmt/bastiat/the_law.html

                If every person has the right to defend—even by force—his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right—its reason for existing, its lawfulness—is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force—for the same reason—cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.

              • xgsmmy says:

                guest, once again seemed to have misunderstood me.

                You think the government is illegitimate so you’re going to “try to” prove it is. But if you can’t you “have to” wage war against it.

                Yet you need to demonstrate it is illegitimate first.

                And I’m not sure what you think those quotes prove. Having the consent of governed is not the same as having to have your individual consent. Although of course, and again, you can remove your consent at anytime. However the state may not recognize your right to do so.

                The second quote is no different from anything I said previously.

                And besides not being American, Bastiat’s arugment depending on what his premise entails is just positing something like “Objectivism” which in my view is either a utopian withering away of the state or anarchism.

              • guest says:

                So we shouldn’t have allied with the Soviets against Hilter?

                We can’t do everything, so we should do nothing. We should have surrendered not only all of Germany to the Soviets but perhaps France and Italy too?

                We should have refrained from involving ourselves; Not because “we can’t do everything”, but because it was’t our war – it was none of our business:

                Washington’s Farewell Address
                http://www.heritage.org/initiatives/first-principles/primary-sources/washingtons-farewell-address

                The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible. So far as we have already formed engagements, let them be fulfilled with perfect good faith. Here let us stop. Europe has a set of primary interests which to us have none; or a very remote relation. Hence she must be engaged in frequent controversies, the causes of which are essentially foreign to our concerns. Hence, therefore, it must be unwise in us to implicate ourselves by artificial ties in the ordinary vicissitudes of her politics, or the ordinary combinations and collisions of her friendships or enmities.

                Third Annual Message to Congress by Thomas Jefferson
                http://www.teachingamericanhistory.org/library/index.asp?document=664

                We have seen with sincere concern the flames of war lighted up again in Europe, and nations with which we have the most friendly and useful relations engaged in mutual destruction. While we regret the miseries in which we see others involved let us bow with gratitude to that kind Providence which, inspiring with wisdom and moderation our late legislative councils while placed under the urgency of the greatest wrongs, guarded us from hastily entering into the sanguinary contest, and left us only to look on and to pity its ravages. These will be heaviest on those immediately engaged. Yet the nations pursuing peace will not be exempt from all evil. In the course of this conflict, let it be our endeavor, as it is our interest and desire, to cultivate the friendship of the belligerent nations by every act of justice and of incessant kindness; to receive their armed vessels with hospitality from the distresses of the sea, but to administer the means of annoyance to none; to establish in our harbors such a police as may maintain law and order; to restrain our citizens from embarking individually in a war in which their country takes no part; to punish severely those persons, citizen or alien, who shall usurp the cover of our flag for vessels not entitled to it, infecting thereby with suspicion those of real Americans, and committing us into controversies for the redress of wrongs not our own;

                Also check this out:

                Ron Paul as a Stooge for Adolph Hitler
                http://www.lewrockwell.com/block/block190.html

                First of all, a President Paul would never have foisted an oil embargo on Japan. So, there would have been no attack on Pearl Harbor, and no fighting with the Japanese military would have been necessary. This consideration alone means that hundreds of thousands of innocent people would not have perished. And, also, it would not have been the case that the U.S. would have been the only country in history to have actually used atomic weapons. (Is it not a bit hypocritical for the U.S. to object to Iran having a nuclear weapon on this ground alone?)

                A Paul presidency in 1940 would have meant a war with Germany, but not Japan. However, a President Paul in 1917 would not have encouraged U.S. entry into that conflagration. If he was successful, there would have been no need for any declaration of war against Germany, as there would have been no Adolph Hitler and his Nazis in charge. He would have been, instead, an unknown house painter. With a President Paul at the helm, there would have been no holocaust; no 50 million people perishing during this war; no dropping of atomic bombs on innocent civilians, women and children, to our eternal shame.

            • xgsmmy says:

              The hurricane hit the whole world because of the Fed:

              World War 2 was the hurricane we were talking about. The Fed caused World War 2?

              I’ll assume you mean the housing bubble and financial crisis.

              The Fed didn’t cause it, a number of factors did.

              And you’re not SUPPOSED to increase wasteful spending – capital needed to be liquidated, and all the phony credit needed to evaporate. They were malinvestments.

              Your terminology assume the things that need to be shown. You call it “malinvestments” and “phony credit” and assume you can tell on kind of investment and credit from another.

              How do you know “capital needed to liquidated”? Or is this a natural rights position masquerading as economics?
              It’s not so much how you know, but why you know.

              “Full potential” as defined by who?

              As said a million times, during the war inflation begin to rise because of excess demand and war induced supply shortages. Measured unemployment was virtually non-existent so there’s that too.

              The point of trading is to fulfill individual preferences. Some do better than others. There is nothing inherently amiss about that.

              There is no content is these sentences.

              But everyone is poorer when government intervenes in the economy; Or, at least those on whom we pass our inflation are made poorer.

              How do you know everyone is “poorer” if the economy is growing presumably everyone is “richer” and could only be “poorer” relative to baseline you have in mind. Nevermind how you can square any of this with your calls for liquidation and justification for below full-employment production above.

              We are WORSE off for having stuck our nose in someone else’s wars. Our fiat money system is destroying our liberties at home and our foreign interventions are causing other nations to rush to that fiat money, thereby allowing us to export our inflation.

              Another non-sequitur. And I really don’t know how the Fed is destroying our liberties or why our “foreign interventions” would cause nations to buy dollars, you would think the reverse would be true.

              And a high dollar, means you can buy foreign goods cheaper, so as a nation you’re richer. (I’m not endorsing the trade deficit though.)

              Roosevelt was a Progressive, by the way. There are Progressives on the right, to be sure, but it ain’t free markets that give rise to Empire.

              Free markets good, empire bad? So if we abolish the empire the empire won’t exist. Free markets never give rise to anything because free markets don’t exist.

              Have you considered moving to Somalia?

              • guest says:

                I have an idea.

                You tell me what it would look like if government needed to be reduced, or that it’s doing something it shouldn’t.

                Because I want to see how you would justify it, given statist arguments in favor of its existence.

                For example: Mass murder?

                Well, there were far too many people for the government to efficiently regulate, so we had to reduce the population.

                Ok, so I’ve just justified mass murder using statist arguments, so murder isn’t a bad thing for the state to do.

                Is there ANYTHING that you would oppose the state doing?

                Please tell me, and I’ll justify it with collective arguments to show you the evil you’re defending.

              • xgsmmy says:

                guest, you’ve posited a false dichotomy between yourself and the state, but I am not “the state” the state only exists because we act like it does.

                It’s also not static.

                But it’s beyond comprehension you think there is nothing I would oppose the state doing.

                Do you imagine that I would never vote or something? Because whatever the outcome I would approve?

                I can only guess the trouble we have communicating is because you’ve taken an all or nothing extreme black and white position.

              • guest says:

                Do you imagine that I would never vote or something? Because whatever the outcome I would approve?

                Voting hasn’t stopped the government from

                setting up a central bank,
                implementing an income tax,
                setting up a government school system,
                violating the freedom of the press,
                engaging in unconstitutional wars,
                now going after our guns,
                targeting civilians for murder on the mere suspicion of ties to terrorists,

                and on and on.

                Pelosi: Even If Americans Were “Pleased” With Health Care, It Would Be “Necessary” For Reform
                http://www.realclearpolitics.com/video/2011/01/04/pelosi_even_if_americans_were_pleased_with_health_care_it_would_be_necessary_for_reform.html

                “If everyone in America was very, very pleased with his or her health insurance and had no complaints and had access to quality, affordable health care in our country, it still would have been necessary for us to pass the health care reform care bill because we could not sustain the system,” outgoing Speaker Nancy Pelosi said at a presser on Tuesday.

              • xgsmmy says:

                guest, I’m thinking Pelosi misspoke there.

                I personally think investment in education is one of the things the government should be doing, I’m not sure why you’d be against it.

                The problem with having a central bank is also non-obvious and seems ludicrous to include with the others.

                And to the extent you’re willing to pay taxes and recognize the legitimacy of them an income tax is probably one of the better ways to get tax. (I’m no expert though, and some people have said a consumption tax would in theory be better, but possibly not practical.)

                As far as guns, I’m just going to ask the naive reductio about whether it would be a good idea if every had access to nuclear weapons and vials of black death and ebola.

                It seems to me that there is a practical problem with weaponry that did not exist in the 18th century.

                I don’t think the best reason to be against a war is because it supposedly “unconstitutional”. Presumably you mean congress must vote on the war, right. So I wonder why if congress had the votes to stop the war, they don’t try to pass laws doing just that to setup a constitutional challenge. (I’m not defending the wars.)

                I can’t defend the other two things you mentioned, though. (See, I am against something.)

                But anyway the discussion is moot on whether you disagree with these things or not since you don’t recognize the state’s legitimacy to begin with and in my opinion are logically committed to anarchism. (Possibly you’d recognize feudalism and selling your self into slavery as legitimate.)

              • xgsmmy says:

                The problem with health care right not though is that it’s not affordable and not everyone has access to it.

                It doesn’t make much sense to criticize Pelosi for wanting to reform such a system if you’d be fine with ending the current system entirely.

                But that quote reads like Pelosi just wants to inflict pain on the population for some reason.

              • guest says:

                I don’t think the best reason to be against a war is because it supposedly “unconstitutional”.

                The issue with constitutionality is this:

                Federalist 78
                http://constitution.org/fed/federa78.htm

                There is no position which depends on clearer principles, than that every act of a delegated authority, contrary to the tenor of the commission under which it is exercised, is void. No legislative act, therefore, contrary to the Constitution, can be valid. To deny this, would be to affirm, that the deputy is greater than his principal; that the servant is above his master; that the representatives of the people are superior to the people themselves; that men acting by virtue of powers, may do not only what their powers do not authorize, but what they forbid.

                A Congressional declaration of war was more than just saying “We’re going to war”. The purpose was to clearly define the war’s intent so that the people could know if it was a just war.

                Here’s more on this issue:

                Presidential War Powers: The Constitutional Answer
                http://www.libertyclassroom.com/warpowers/

                The problem with health care right not though is that it’s not affordable and not everyone has access to it.

                It’s not affordable BECAUSE of government intervention:

                Lowering the Cost of Health Care
                http://www.lewrockwell.com/paul/paul339.html

                Guess Who Openly Admits That Gov’t Intervention Increases Prices? Joe Biden
                http://www.theblaze.com/stories/guess-who-openly-admits-that-govt-intervention-increases-prices/

                Obama: My Plan Makes Electricity Rates Skyrocket
                http://www.youtube.com/watch?v=HlTxGHn4sH4

                As far as guns, I’m just going to ask the naive reductio about whether it would be a good idea if every had access to nuclear weapons and vials of black death and ebola.

                The alternative is much worse – governmental mass murder:

                Innocents Betrayed – The History of Gun Control – FULL LENGTH
                http://www.youtube.com/watch?v=nUmKT43j4Tc

                Related, but indirectly so:

                “Why Marxism?” An Evening at FEE with C. Bradley Thompson
                http://www.youtube.com/watch?v=nt58gg1DQGk

      • xgsmmy says:

        Okay, to be fair, it’s not clear whether “the Democrats” can be said to hold a coherent Keynesian position, but it’s not like Julie is making fun of democrats for being against cuts for the wrong reason and then explaining what the right reason is and why it’s wrong.

        • Major_Freedom says:

          “but it’s not like Julie is making fun of democrats for being against cuts for the wrong reason and then explaining what the right reason is and why it’s wrong.”

          You mean you want her to verbalize an economics treatise in her 2 minute youtube videos?

          Give me a break.

          • xgsmmy says:

            You mean you want her to verbalize an economics treatise in her 2 minute youtube videos?

            MF, I don’t know if you troll intentionally or not, and maybe I’m projecting an insecurity onto you, but I have to wonder why, if you’re not trolling, you choose to respond the way you do? And I’m not just asking this rhetorically. I feel I’ll just have to commit to not responding to you, at least directly, because it’s not something I understand.

            However, I didn’t ask for “an economic treatise”. Maybe you’d actually like to explain why you think what “I want” would be impossible in two minutes or why that’s a good excuse for misinforming people.

            • Bala says:

              “However, I didn’t ask for “an economic treatise”.”

              Twist and turn all you want, but you did. Here’s what you asked.

              “but it’s not like Julie is making fun of democrats for being against cuts for the wrong reason and then explaining what the right reason is and why it’s wrong.”

              The answer IS an economic treatise. Whatever-Keynesians are truly hilarious.

              • xgsmmy says:

                Bala, if you know the answer to what it is I’m asking for perhaps you’d care to elaborate on why it’s impossible to achieve in two minutes, let alone require an entire “treatise”.

                You do realize she already has videos on Keynesian economics?

              • Bala says:

                Oh!! So you want an entire economics education on the comment boards of a blog site? Very ambitious, I should say.

                Incidentally, I know the answer but then that’s exactly the economic treatise that MF mentioned up there. The very fact that you do not understand why it is an entire economic treatise explains your behaviour.

  4. Major_Freedom says:

    The more progressive the tax code gets, the more incentive the wealthy have in lobbying the state to give them special privileges. Then, instead of working to provide goods/services for the market, they instead work to provide goods/services for those in the state.

    One of my rules of thumbs is to never hold all else equal when considering government activity. All too often we consider things like progressive tax codes, and then assume the only thing that changes is the distribution of tax collections.

    • skylien says:

      Wait, all else equal just refers to other variables that may change independently (due to other external reasons) from the variable, say ‘X’, that you actually change. You want to track all effects this change of X causes. Not allowing other variables to change due to the change of variable X corrupts your (thought)experiment.

      So all else equal refers only to changes of other variables that have other causes than the change in variable X that was intentional.

      • Dan says:

        Yes, I’m sure MF understands what “all else equals” means. He is pointing out that looking at progressive taxation in that way isn’t appropriate because it misses the push towards fascism that is created by it.

        • skylien says:

          I am sure you are right. The wording is a bit strange though.

          • Major_Freedom says:

            I am not sure I can endorse your understanding of “all else equal”, skylien.

            All else equal, in my judgment, does not mean that other variables are free to change, indeed it means the opposite. They are assumed as held constant, so as to allow the researcher to isolate a given antecedent and consequent relationship.

            For example, if I say “All else equal, a rise in the supply of money will be associated with higher than otherwise prices”, this means that all independent variables that might also affect prices, are held as constant, so as to isolate the money supply and prices relationship.

            Of course, in the real world, “all else equal” rarely holds. For example, in the above argument, the demand for money might also affect prices, which can “corrupt” the considered antecedent-consequent relationship between money supply and prices.

            You said that “Not allowing other variables to change due to the change of variable X corrupts your (thought) experiment”. This seems to suggest that you thought I was holding the consequent (in the antecedent-consequent relationship) as constant. Yes, that would lead to problems, but that isn’t what I meant.

            I just mean that we should not hold political consequences and fallout, or any other consequences constant, in the face of a changed progressiveness to the tax code, if we want to understand the real world of progressive taxation.

            Of course, my argument of a connection between progressive tax codes, and progressive incentives to alter government, is something you can argue with me about, because I don’t think it always occurs, just that I think there is very good reason to believe it can occur.

            • Major_Freedom says:

              Or maybe I am not understanding your posts either.

              • Dan says:

                I’m pretty sure you both are on the same page.

              • Dan says:

                Well, you would be if you knew what you were saying to each other. Or maybe I am missing both your points and this is just a clusterf*** of confusion.

              • skylien says:

                Yeah it seems it is just a cluster of confusion. I think we are on the same page.

                It just confused me when you said “One of my rules of thumbs is to never hold all else equal …”

                Now I take from it that you merely wanted to express that people often apply “all else equal” wrongly, by holding variables constant not only for other variables that are supposed not to change but also for variable X.

                What I mean is: You want to know how a change in X affects Y. Yet you know (or maybe don’t know) Y is also affected by A,B and C. Anyway you will need to hold them constant.

                The problem is that that X might not only affect Y directly but also indirectly by affecting say C first which will act as proxy to affect finally Y.

                Now you are in the dilemma that you cannot allow C to change for whatever other reason, but you still need to give it the freedom to change because of a change in X.

                So when I speak of “all else equal” then I mean not allowing any change that was not induced by a change of X. That is way I was confused by your statement.

              • skylien says:

                Forgot to add:

                Yet I would still argue that I am keeping all else equal.

  5. Davis says:

    Yes i can imagine how many people sent you that link. I’m imagining 5 people sent you that link. See? Easy.

  6. Bob Roddis says:

    In my usual warm, fuzzy and meticulously diplomatic style, I explain to Bob Wenzel why I support Krugman for treasury secretary.

    http://www.economicpolicyjournal.com/2013/01/krugman-responds-to-petition-calling.html?showComment=1357577188435#c6024933524206229979

  7. Tel says:

    Not related to any topic yet presented (other than “Potpourri” but in Rothbard’s “Case Against the Fed” book, he makes a number of claims that I’m uneasy about.

    His first point is that Richard Cantillon explained to us that, although ideally money is a “veil over barter” (*) should a counterfeiter exist, the normal economic activity becomes distorted by a stealthy wealth transfer away from various other people and towards the counterfeiter. This wealth transfer results in a Cantillon effect of distorted prices, creating confusion that would not be possible in a pure barter economy.

    I’m OK with all of that, but then Rothbard goes on to claim that such Cantillon effects are permanent, and even when the counterfeiter has been tracked down and put out of business, the Cantillon effect will not fade away. Is that right? Intuition suggests that it should fade over time, probably not instantaneously. This doesn’t sound right to me.

    (*) Money is more correctly, a tool to make a barter economy more efficient by making calculation and exchange easier, but let’s leave those aspects for now.

    • Matt Tanous says:

      I took it as saying that if I as a party that falls somewhere near the middle of the Cantillon effect chain, gain some amount of things by selling things at artificially high prices and buying things at prices that have still not risen, I have permanently increased my wealth.

      The removal of the counterfeit money will create Cantillon effects itself, but these will not counteract the first case.

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