(Guess which is which.)
On May 22, 2006, Hillsdale College president Larry Arnn had a conversation with Milton Friedman. At the end of this clip, Friedman calls for abolishing the Federal Reserve. He also (as of 2006) thought it was foolish to predict 20 years of 2% inflation. Thanks to BlackSheep for the video.
Hey kids, check out this neat magic trick! (HT2EPJ)
If you go to this page hosted by the Department of Education, the third bullet point says:
Find information about community service organizations and share it with your child. You can begin by going to the Web site for the newly created Freedom Corps— www.usafreedomcorps.gov/—and looking for possibilities for volunteering and community service.
But go ahead and copy and paste that wonderful sounding URL into your browser. (Note that it’s not hyperlinked in the original, either; I transferred it here correctly.) You’ll see that it redirects you to a web page that does not have anything to do with freedom in its title.
In case some of you can’t figure out why so many people like Glenn Beck, here’s probably the best sample you’ll ever get of his show. He goes through and parses remarks that “green jobs czar” Van Jones made back in February, and then at the end plays a clip of Obama saying we need a new domestic security force as strong and as well-funded as the military. And through it all, Beck doesn’t sound like Alex Jones, but instead asks his sidekicks and the audience, “Where am I going wrong here? What am I missing? How is this not evidence of a Marxist takeover of the government?”
Now if you click through the link above, it will take you to a transcript of the segment, but you can also click the audio link which you will need to do, in order to appreciate the Van Jones clips.
In response to a lady asking him if his policies are Marxist (and I couldn’t tell if she meant the question sincerely, or was merely giving him a softball to defuse, the way someone might ask Obama, “Is it true you want to kill old people?”), Van Jones said:
How is that capitalism working for you? How is that capitalism working for you? How is that capitalism working for you this year?
Yes, that’s right, he said that three times in a row. (In fairness, since they were just playing snippets I don’t know if he prefaced that by saying, “No it’s not Marxism I’m advocating.”)
Also, at the end of the Q&A, Van Jones said: “In this stage of the struggle, and I’ll only speak to this stage of the struggle, I’m the best friend capitalism ever had. Thank you very much.” (Note: He might have said “the capitalists ever had,” I’m not sure and don’t want to go find it again. And the transcriber for Beck’s show missed a few other words I noticed, so I don’t want to rely on him/her.) So that’s a little bit creepy, isn’t it? (If you’re not a Marxist, I mean.)
At another point Van Jones said:
And this won’t ‑‑ we have to prepare for this to be a long process even though it probably won’t be. We have to prepare ourselves. We can’t just push the people. We can push the corporations and the politicians, but the people ‑‑ it must be a dance, you know. We have to listen, listen, listen, listen. And then learn. And then co‑lead, try to coauthor a different future with folks. And we have to assume that’s going to take a long time, but sometimes what should have taken another 20 years, Barack Hussein Obama [applause], can take a season.
Now look, let’s take a deep breath here. Just because one particular “czar” in the administration is a self-described communist (and I don’t know if he ever renounced that–here Grist “refutes” the notion by pointing out that Van Jones is currently in charge of government creation of jobs), that doesn’t mean the President of the United States is a communist. I’m trying not to overreact here. For example, suppose Ron Paul had pulled off the impossible and won the election. Presumably he would have sought input from people associated with the Mises Institute, perhaps even putting them on his payroll in some official capacity. Then his opponents would go nuts, saying that the far-right Paul was being given tax advice from self-described anarchists who thought the military and courts should be privatized. In response to the outcry, Paul would truthfully say, “Hey, I’m not an anarchist. The voters know my views; I expressed them on the campaign trail and they put me here in office. Even though I don’t share all the views of [Rothbardian Economist X], he’s a good economist and is helping to ensure that our efforts to scale back the bloated welfare-warfare state go as smoothly as possible.”
So anyway, this is what it is. But if you’ve never really listened to Glenn Beck and are curious to see what the buzz is, I think the clip (and you really have to listen to the audio to appreciate it) linked above is a great sample.
(We also would have accepted, “Actually, the Guantanamo is half full.”)
Just to make sure we understand what it would mean to start from a crazy premise and then run with it using exquisite logical consistency, Scott Sumner leaves his well-developed monetary theories to write:
Before answering this question, let’s first examine what has happened over the past 20 years.
1. The world has gotten much more peaceful. I recall reading that the last couple years were the most peaceful in all of human history (and pre-history for that matter.) Perhaps someone can find the article.
2. The world has gotten much more democratic. The number of democratic countries has soared at the fastest rate in history, by far.
3. The world has gotten much more market-oriented. There has been a huge wave of privatization and deregulation of prices and market access. And this trend extends far beyond the formerly communist countries.
So the obvious choice for most successful prediction is Francis Fukuyama’s 1989 claim that “history was ending,” that the great ideological battle between democratic capitalism and other isms was essentially over, and that henceforth the world would become gradually more democratic, peaceful, and market-oriented.
So you would think that intellectuals would treat Fukuyama as a hero, that he would be figuratively hoisted on our shoulders and paraded around as the prophet of the new age. Just the reverse. I must have seen his name mentioned dozens of times in intellectual outlets like the New York Review of Books. And every single time, without exception, the reference has been derisive, mocking, a sort of rolling of the eyes in wonder than anyone could have believed anything so foolish. So what gives?
Von Pepe sends me this hilarious simulation on the SF Fed’s website. As von Pepe notes in his email, this is basically the Phillips curve with sound effects.
I got fired after my first term as Fed chief. At the first opportunity, I jacked the fed funds target up to 19.0% (the highest setting) and just let it ride. Unemployment had risen to something like 19.4% by the time my term expired (and I was not reappointed). I was expecting the ants in my colony to get used to the 3% deflation (I think that’s the floor), at least after two straight years of it. But nope, unemployment just kept going up and up and up.
This game is really hilarious. You have to click the link above.
"We hold that all men are endowed by their state representatives with certain alienable privileges…"
I’m doing research for the next installment in PRI’s California Prosperity Project, and came across this rather ominous statement on page C-3 in a report [.pdf] from New Jersey’s Treasury:
The Corporation Business Tax imposes a franchise tax for the privilege of having or exercising a corporate charter or doing business, employing or owning capital or property, or maintaining an office in New Jersey.
I grant that maybe this is only related to the special legal privileges that come with incorporation, but they seem to be making a distinction between having a corporate charter versus the other stuff. In any event, it’s a bit disturbing that they are talking about the privilege of owning property in the State of New Jersey.
I just sent Tyler an email saying I was dropping this, because I don’t want to be a stubborn jerk in case I’m just missing something. So I hope it was understood that by “dropping it” I meant, “After I zing you one last time on my blog.”
For the record, I have no idea how Tyler’s posts on Milton Friedman and the Great Depression are consistent (let alone correct). In his first one, he wrote:
(By the way, some libertarians like to pretend that Milton Friedman blames the Fed for “contracting” the money supply by one-third in that period but in reality Friedman blames the Fed for having let the money supply fall by one-third and not having run a bank bailout.)
Now that surprised me; I didn’t remember Friedman ever saying the government (or the Fed) should have bailed out insolvent banks during the early 1930s. Of course, everybody and his brother–possibly even San Fransisco cab drivers [.mp3]–knows that Milton Friedman thought the Fed should have acted aggressively to prevent M1 from collapsing. But Tyler obviously is above saying that libertarians are wrong for thinking he merely said that. OK, good to know. Tyler reads a lot more than I do, so he must know.
But then David R. Henderson had the gumption to call Tyler out on this point, saying that it’s not at all clear that Friedman actually favored bailing out insolvent banks (as opposed to providing a general environment of abundant credit such that the solvent but illiquid banks could slog through). You know what? Let’s quote David just to make sure I’m not seeing what I want to see:
David R. Henderson: [Tyler's] correct that Friedman wanted the Fed to increase the money supply. I don’t think I’m pretending when I say that I don’t think Friedman advocated bailing out banks during the Depression. As I think Friedman would have, last fall I advocated an increase in the money supply while opposing a bailout. Those two, contra Cowen, are separable.
There were some other back-and-forth posts, and Tyler at some point in the comments apologized to David. (I think he was apologizing for his use of “pretend” to describe what libertarians think about Friedman’s position.) Yet today Tyler tells us:
Tyler Cowen: When I perused Friedman’s writings lately, I found that, as far as I could tell, he never discussed how to deal with widespread bank insolvency. I interpret him as believing that [lender of last resort] and loose money and the FDIC could deal with banking crises; furthermore over time his mix of this recipe became successively more libertarian and less interventionist, as David mentioned. But I also think that perhaps he, like I, hadn’t imagined that the insolvency problem would take on the breadth and depth it did.
Now this made me flip out, because here it seems Tyler is saying that Friedman’s views were precisely what the knee-jerk libertarians “pretended” they were, namely that Friedman favored easy money and credit but not actual bailouts of insolvent banks.
So I posted the very first question on the thread, saying: “So did you really mean to write [in your original post], ‘Some libertarians like to pretend that Friedman explicitly denied the efficacy of a bank bailout, when in reality he didn’t say anything about it’? ” (Note the smiley face; we’re all in a big free market lovefest here, kids.)
Then Tyler comes back and says:
Bob, Friedman favored bank bailouts for the GD, he just didn’t consider the exact details of the current environment because he never lived to see it. He never repudiated his support for a vigorous Fed in the GD. That doesn’t *prove* any counterfactual about Friedman, if he had lived longer and seen 2007-8, but it is a piece of evidence.
I have to stop now before I go insane. Why in the world would Friedman have favored bank bailouts–and to this day I don’t think Tyler has ever shown where Friedman did so–if, per Tyler, Friedman never considered the problem of widespread bank insolvency? How could Friedman have ever written the words, “And so the Fed should have injected capital into particular banks” without a discussion of the effects of widespread insolvency?
And moreover, is Tyler saying that we did NOT have widespread bank insolvency during the early 1930s, whereas we have it today?
Is everybody taking crazy pills?!
I started thinking about this last night and had to reboot my mind. After writing this post, I realized that I had left out a huge consideration: risk. Even if the government ends up making an accounting profit on the Capital Purchase Program component of TARP, that doesn’t really prove that it was a good use of taxpayer funds. This is because private investors were afraid of the huge risk involved. (Don’t worry, when I predicted that TARP would lose money, I didn’t mean it in this tautologous/vacuous sense–I meant the government would pay $700 billion for toxic assets that it would end up selling for less than $700 billion down the road.)
To illustrate with a ridiculous example: Suppose Henry Paulson took $100 billion of taxpayer money down to Vegas, and placed it on Black (following Wesley Snipes’ advice). There’s a 47.37% probability of winning, and so it wouldn’t be that unusual for Paulson to walk away with a profit for the taxpayers. But we still wouldn’t say he did a wise thing.
By the same token, investing in the teetering banks last October was a risky move. People weren’t sure–and Paulson and Bernanke couldn’t be, either–what would happen with the financial sector. Yes, everybody knew that the bank stocks (and more particularly, the prices of “toxic” assets) were heavily discounted in the event that things quickly stabilized, but the point was, nobody was sure if the financial market would be stabilized. So buying toxic assets, or more generally investing in US financial stocks, was a high-risk, high-return wager when Paulson decided to go for broke (ha ha).
Anyway, I am just making sure you understand the academic point; I understand that the proponents of TARP would say that was the whole point, that the huge discounts and risk were a self-fulfilling prophecy, and that Paulson’s moves were a primary reason that things stabilized. OK fine, let’s not argue over that right now.
What I want to focus on is this: If you wanted to demonstrate the different risk/return options available, you would normally say, “Well, instead of plunking $700 billion [or $204.4 billion] in financial stocks and warrants, Paulson instead could have parked it in something really safe, like Treasurys.”
But what would that mean? Is it really true that the federal government itself could make a “very safe” investment in its own debt? (This is what made me go cross-eyed.) Obviously, what it would mean in practice is borrowing less from the private sector. So does it all work out to be equivalent?
If so, it’s not obvious to me how. The reason private investors view the US government as very safe, is that the government can just tax the entire class of productive Americans to make its interest payments. So, how does that figure in here? Paulson shouldn’t have put so much money at risk in one sector, when he instead could have reduced the borrowing strain now, thus letting the economy grow stronger for future fleecing?