Consulting by RPM || Free Advice Blog

Defending Coolidge and Libertarianism

At Mises.org this week I was a defense attorney. First for Calvin Coolidge:

As far as federal income-tax rates, it’s true that Coolidge took the advice of his Treasury Secretary, Andrew Mellon, to cut them. But that was because they had been raised to an absurd level during World War I. As this history shows, even the rate on the lowest bracket jumped from 1 percent in 1913 to 6 percent by 1918. Moreover, someone who made $20,000 in 1913 paid 1 percent in federal income taxes, but because the brackets were redefined, someone earning the same money income in 1918 paid a whopping 20 percent in federal tax. (Note too that from June 1913 to June 1918 the Consumer Price Index rose 50 percent, so that a given money income purchased far less in actual goods and services.)

In contrast to this onerous burden created under Woodrow Wilson, during the Coolidge years the bottom bracket’s tax rate was brought down to 1.5 percent by 1926, while an upper-middle-class (though hardly “filthy rich”) household earning $20,000 saw its tax rate slashed to 9 percent.

As far as fiscal responsibility, Coolidge was superlative, perhaps second only to Andrew Jackson, who literally paid off the national debt (as well as slew the central bank). Coolidge had a much more modest success, in that he ran budget surpluses every year he was in office.

Then today I defend libertarianism from Christopher Beam’s critique:

The standard moral objections to theft and killing don’t magically disappear just because a group of professional liars reclassifies them as “taxation” and “national defense.”

Ron Paul vs. NYT Guy on Colbert

HT2 Viresh Amin.

The main argument from the NYT guy is that you can’t have a weak economy and rising prices at the same time.

BTW this clip beautifully demonstrates the power of Ron Paul. He obviously “gets” what is going on, but he takes the opportunity to get his message out. By the end the crowd is with him.

Daily Show Rips Happy Meal Ban

This is almost as delicious as a McDouble–and even cheaper. Make sure you watch the exchange starting at 3:00.

Scott Sumner: Fool or Genius?

In a recent post, “Does Finance Deserve Its Earnings?” Scott Sumner writes:

Many economists (even some relatively free market economists) have begun to question the high returns flowing to the financial industry in recent years. It’s not that people don’t understand that finance is important, or that it plays a critical role in our economy, but rather the claim is that finance is much more generously rewarded than in the past, and that those extra earnings are at least partly unmerited.

Today I’d like to defend finance….[E]ven in the absence of policies such as Too Big To Fail, you would expect the share of income going to finance to be rising sharply, as compared to earlier decades.

Now I’ll be honest: I thought I was going to be able to pounce on Sumner for this one. I mean, Scott has refused to admit–even though I’ve asked him point-blank twice (I believe)–that accountants serve a purpose in a market economy. I know, I know, you think I am exaggerating, but please go re-read my exchanges with Scott when he says that the very concept of “income” is useless.

As I say, I was getting ready to level a back-breaking blow; how the heck can Scott say financiers are useful, if he thinks accountants don’t really do anything? But then I saw his elegant escape hatch: Scott is talking in this post about “earnings” and “share of income.” Two meaningless concepts, if we are to believe his earlier posts.

Hence, Scott Sumner has performed the macroeconomic equivalent of Jesus’ famous, “Render unto Caesar what is Caesar’s.” The man is a force of nature. Look what he did to the last guy who tilted at the Sumnerian Worldview a bit too recklessly.

Krugman Once Again Pines for the Bubbly

Unfazed by his 2006 (qualified) endorsement of Greenspan’s housing bubble, yesterday Krugman wrote:

I’ve noticed many people overreacting to recent good economic news…I worry that policy makers will look at a few favorable economic indicators, decide that they no longer need to promote recovery, and take steps that send us sliding right back to the bottom.

So, about that good news: various economic indicators…suggest that the great post-bubble retrenchment may finally be ending.

We’re not talking Morning in America here. Construction shows no sign of returning to bubble-era levels, nor are there any indications that debt-burdened families are going back to their old habits of spending all they earned.

I’ve isolated and put in bold the money quote for effect; by all means go look at the context if you are suspicious. But I really don’t think he is saying that with irony.

One Week For “Anatomy of the Fed”!

This may be the only chance we have to offer this class, before Ron Paul Ends the Fed. Learn its anatomy so you can identify the parts that leak out onto the floor.

Perhaps more plausible, is the goal of hitting 300 enrolled students by next week (the first class). As I explained in the infomercial, everybody gets a free copy of the textbook (Rothbard’s Mystery of Banking) if that happens, including shipping and including foreign students. (!!)

Right now we are at 140 enrolled students, and in our experience enrollment basically doubles in the week before a new course opens. So it’s a nail biter. If you’ve already signed up, get your friend(s) to join you.

This class will not assume any prior economics or banking knowledge. However, it will not be merely theoretical. I will show you how to look up stuff on the Fed’s balance sheet, and we will go over some of the logistics like, “How does the Fed actually go about buying $600 billion in government securities?”

Doctor’s Orders

You know how when you were a purist, you couldn’t understand why Hollywood would ruin a perfectly great movie, by cranking out ever more variants of the same thing? Yet when you get older, you realize that as long as you can pull in more marginal revenue from yet another sequel, it makes sense.

Victory From Defeat

I may have posted this before but repetition is good for you… Also this is a-biblical but I hope not anti-biblical…

The way I currently see the world, the Devil’s mission in life is to trick you into making decisions that are harmful to both you and others, and in fact would horrify you if you fully realized what you were doing. He does this (a) to rebel against God, Who loves you and wants only the best for you, and (b) because the Devil hates you with a passion and enjoys your suffering for its own sake, particularly if it is self-inflicted. Think of the cruelest, most sadistic person you have either known personally, or read about, and realize that the Devil was that person’s muse.

Now then, some 2,000 years ago, a Man walked around, teaching people to love each other, and not to worry about the trivial things of this life because paradise awaits. Oh, He also fed hungry people and cured hundreds (?) of their illnesses. Thus this Man catered not only to spiritual and philosophical needs but also those of the body. You literally could not imagine someone who was more useful or a better friend.

OK, so somehow, the Devil convinced these people to demand that this Man be tortured and then nailed to a piece of wood so that He could die an agonizingly slow death.

Note that I am not talking here about the religious elders and government authorities that concocted and then executed this plan. No, I am talking about the public–us–who cheered it on. These people weren’t being threatened by Jesus’ bold words in any way. No, I am sorry to guess that the main reason they demanded His death was simple bloodlust. The juxtaposition of their praising Jesus as a king earlier that week probably made their sin that much more delicious. (We all love it when a previous role model is brought down to our level.)

Well now, that is hands down the most abominable crime imaginable: The Son of God Himself comes down to teach and help us, and we repay him with torture, ridicule, and murder. The Devil would have every reason to believe that he had just won. What more could he do, to demonstrate the depravity and worthlessness of the human race?

And yet Jesus was able to say, at the Devil’s moment of apparent victory: “No you don’t win, because I forgive them.”