The Fed and the Ratchet Effect
I apply Bob Higgs’ justly-famous metaphor (or is it an analogy?) to the Fed’s recent announcement that it would replace its maturing MBS holdings with more Treasury debt. My favorite part:
Say what you will about Bernanke, he’s one crafty fellow. (As Bob Wenzel warns, “Don’t play poker against Bernanke.”) Whether through luck or design, he has managed to hand over hundreds of billions of dollars to some of the most powerful people on the planet, and he has maneuvered the Fed into a position to hold $2 trillion in Treasury debt, all without spooking the markets into expecting massive price inflation.
This last point is important: If Bernanke ever announced, “I just talked with Tim Geithner, and he tells me the Fed needs to loan the government $1 trillion to pay for healthcare reform,” then US interest rates would spike. Investors around the world would scream, “The Fed’s monetizing the debt!!”
Yet somehow, Bernanke has managed to implement this exact policy, without anyone blinking an eye. In fact, the usual suspects — on both the left and the right — are upset at the Fed’s timidity.
Russ Sobel on Gangs
Russ Sobel is the featured EconLib writer this month, and his article is pretty neat. His intro:
Street gangs, such as the famous Crips and Bloods, are often viewed as a cause of crime and violence. Popular media coverage on TV and in the newspapers often portrays the brutal activities of such gangs. This is understandable for the simple reason that areas with more violent crime also have more youth street gangs. The implication would seem clear: to reduce crime, just break up gangs.
However, an article I recently coauthored with Brian J. Osoba, “Youth Gangs as Pseudo-Governments: Implications for Violent Crime,” calls this conventional wisdom into question. Our analysis suggests not that gangs cause violence, but that violence causes gangs. In other words, gangs form in response to government’s failure to protect youths against violence. The surprising implication of our insight is that efforts to reduce gang activity could actually increase violent crime.
However, I think Sobel accepts some of the “truisms” about government that don’t hold up to scrutiny. In particular, he writes:
These findings are also consistent with the literature on mafia activities, which shows that the mafia tends to emerge when state policing power is weak or there is a lack of strong governmental enforcement of rights.
As I elaborate in this article, I don’t think this typical claim makes sense. Currently, where does the mafia (or organized crime, more generally) thrive? In those areas subject to extensive government regulation.
In other words, I claim that the reason the mafia is involved in narcotics, is NOT that rival drug dealers can’t call 911 when they get robbed. If that were the reason, then we would also have expected the mob to control merchant shipping back when the Law Merchant developed, and we would expect the mob to currently control eBay. But no, we currently see the mob involved in precisely those activities where the government has a HUGE presence. It is totally wrong to say that the government doesn’t “enforce” anything when it comes to cocaine markets.
(For a fuller explanation of my point, read my article.)
New Gig at Mises.org
Starting this week, I will be writing a regular Thursday “current events” column at Mises.org. In other words, not only will I regularly have an article on Thursday, but they will allow me to submit the columns that week, so that I can be responding to fairly recent events.
Just when Krugman thought it was safe to blog on timely issues…
Stephen Hawking vs. the Clergy
I think Dick Clark (the Younger) once said to me, “Christians are their own worst enemy,” and after this Stephen Hawking incident I can generalize it to, “Monotheists are their own worst enemy.” This article was making the Facebook rounds (HT2 Mario Rizzo), much to the amusement of skeptics:
Religious leaders in Britain on Friday hit back at claims by leading physicist Stephen Hawking that God had no role in the creation of the universe.
In his new book “The Grand Design,” Britain’s most famous scientist says that given the existence of gravity, “the universe can and will create itself from nothing,” according to an excerpt published in The Times of London.
“Spontaneous creation is the reason why there is something rather than nothing, why the universe exists, why we exist,” he wrote.
“It is not necessary to invoke God to light the blue touch paper [fuse] and set the universe going.”
But the head of the Church of England, the Archbishop of Canterbury Dr. Rowan Williams, told the Times that “physics on its own will not settle the question of why there is something rather than nothing.”
He added: “Belief in God is not about plugging a gap in explaining how one thing relates to another within the Universe. It is the belief that there is an intelligent, living agent on whose activity everything ultimately depends for its existence.”
Williams’ comments were supported by leaders from across the religious spectrum in Britain. Writing in the Times, Chief Rabbi Jonathan Sacks said: “Science is about explanation. Religion is about interpretation … The Bible simply isn’t interested in how the Universe came into being.”
Oh man. I don’t even know what to make of that statement. It would be one thing if the rabbi had said, “Religion isn’t interested in how the Universe came into being.” But no, he said the Bible isn’t interested in that question. That’s a bit like saying the movie Star Wars isn’t interested in how Princess Leia came to need help from Obi Wan.
My religious views are like my political ones: you either believe your principles or you don’t. I can’t stand it when “conservative” Republicans say, “We’re against Obama’s plan for socialized medicine! That’s why we recommend a one-year freeze on Medicare spending, and new HSA accounts where you can contribute up to $2,000 tax-free per year.”
By the same token, I can’t stand it when Christians say, “I don’t take the Bible literally. No, Jesus didn’t actually walk on water, or come back from the dead. But he was a very wise man who loved people, and we should follow his example.”
I understand why modern American Christians don’t want to appear unscientific and dogmatic. Believe me, I have cringed when hearing a lot of “Bible-thumpers” talk about the second law of thermodynamics, and how it “disproves” Darwin. (No it doesn’t, just like it doesn’t prove that solar-powered calculators are impossible.)
Even so, you either believe the stories about Jesus or you don’t. If nothing miraculous actually happened, then the gospels are about 50% lies. And then that makes you wonder whether the writers got Jesus’ sermons correct, too.
Coming back to the rabbi’s statement: It is crucial that God created the universe de novo. Not only is that how the Bible literally opens, but it is a theme running throughout the book. For example, in the book of Job God’s “explanation” at the end of the book is simply to remind Job of who he’s dealing with. And God doesn’t say, “You should trust my plan for your life, because I am benevolent and loving.” No, God says, (paraphrasing), “I created everything long before you were born. Are you still so sure you want to question me?”
Another example, in Jonah 1: 8-10 the sailors are terrified because of a great storm. They think somebody has done something that has brought wrath upon them, and they ask Jonah about his background. He says, “I am a Hebrew and I worship the LORD, the God of heaven, who made the sea and the land.”
So my point is, the Genesis claim isn’t some interesting little anecdote in the beginning of a book, that then turns into a morality tale. No, a central part of who God is is the fact that He is the Creator of the universe. God’s mighty deeds–His creation of the heavens and the earth, and His liberation of the Israelites from the Egyptians–are stressed over and over again in (what Christians call) the Old Testament. So it is particularly surprising that the rabbi would say the Bible isn’t interested in how the universe came into being.
Before turning to Hawking, let me add one disclaimer: When I say, “You either believe the Bible or you don’t,” I am not necessarily claiming that a devout Christian must endorse the literal interpretation of every single passage. For example, I am personally not wed to the idea that the creation of the universe took six twenty-four hour days.
This is because the writer of Genesis presumably had a divinely inspired vision of what happened, and then wrote it down. So I think it is entirely possible that a human, with our puny minds, seeing a vision of the literal creation of the universe itself, might fumble for the words adequate to describe the vision.
In contrast, if the guys who actually walked around with Jesus recorded that He raised Lazarus from the dead, well then, either He did that, or they are liars, or someone later on altered the manuscript. So if you don’t actually think that Jesus raised someone from the dead, then you can’t really be sure He claimed to be the Son of God, and that He promised if we believe in Him, we will live with Him in paradise. Yet if you don’t believe that, then it’s confusing if you call yourself a Christian.
OK some quick remarks on Hawking. I am sorry but does anyone else find this laugh-out-loud funny?
Hawking’s book — as the title suggests — is an attempt to answer “the Ultimate Question of Life, the Universe, and Everything,” he wrote…
His answer is “M-theory,” which, he says, posits 11 space-time dimensions, “vibrating strings, … point particles, two-dimensional membranes, three-dimensional blobs and other objects that are more difficult to picture and occupy even more dimensions of space.”
Logically speaking, you can’t have an ultimate answer to everything. If you say, “We exist because God created us,” then that begs the question, “Who or what created God?”
But by the same token, it’s no solution to say, “We exist because of the laws of nature are thus-and-so.” That begs the question of why they are like that.
I am aware that a lot of scientific atheists like to invoke the many-universes answer. That is, there are an infinity of universes, and in at least one of them, the conditions are just right for human life to evolve. So then we shouldn’t be surprised that we are alive, looking around and asking, “Why?”
This post is already very long, so all I’ll say about the many-universe theory, is that it’s pretty ironic coming from people who (generally) cling to falsifiability and Occam’s Razor as the hallmarks of science.
An Introduction to Libertarianism
Chad Everson is helping me promote my online Mises Academy class on Principles of Economics (which starts September 8!). He asked me to explain how libertarianism fits into the conventional Republican/Democratic political establishment in the United States, because it often seems as if libertarians straddle the fence.
This is a common reaction when people begin encountering libertarian positions on hot-button issues. What I want to argue is that it is the libertarian who offers a consistent worldview, whereas the typical conservative/liberal or right-winger/left-winger or Republican/Democrat (though we can all see there is hardly any difference in this last “spectrum”) often uses arguments that conflict with each other.
Before diving in, let me give the disclaimer that I obviously can’t speak for all self-described libertarians, since they don’t all agree on every issue. There is also the difference between “big-L” Libertarians who are part of an actual third political party, versus “small-l” libertarians who embrace it as a philosophy but don’t focus on the ballot box as the means of achieving freedom.
Libertarians value liberty as the highest political goal, and view it as an end in itself. They think that people should have the legal right to do whatever they want with their own private property, so long as their actions don’t interfere with the ability of other people to use their property.
A common way of summarizing the libertarian position (in the context of American politics) is to say a libertarian is “conservative on economic issues but liberal on social issues.” This is because the libertarian tends to favor tax cuts, government spending cuts, deregulation of business, no minimum wage laws, etc. On the other hand, the libertarian also tends to oppose the drug war, laws against prostitution, the military draft, laws against homosexuality, etc. So generally speaking, the libertarian is allied with right-wing conservatives on fiscal/business policy recommendations, but the libertarian is allied with left-wing liberals on civil liberties issues.
Far from being inconsistent, the libertarian finds these positions to be perfectly straightforward: The libertarian quite consistently champions individuals and their use of private property, and opposes arbitrary government interference with such use. For example, the libertarian opposes the minimum wage because (a) politicians have no right to tell two consenting adults how much one has to pay the other, and (b) free-market economics shows that minimum wage laws actually hurt poor people.
But in a quite analogous fashion, the libertarian opposes laws against prostitution because (a) politicians have no right to tell two consenting adults how much one has to pay the other (for sex–in most places the only officially allowed price is $0), and (b) free-market economics shows that the crackdown on prostitution actually leads to more venereal disease and other social problems.
To the libertarian, it is ironic to hear the Left and Right discuss the US government. Depending on the issue, the government is either an incredibly evil, bumbling, and dangerous institution, OR it is the fount of aid, mercy, and intelligence.
For example, if we’re debating the Iraq War, the Patriot Act, or Guantanamo Bay, the typical left-wing liberal will accuse the US federal government of outright war crimes, and of being like Nazi Germany. In contrast, the typical right-wing conservative will defend the honor of US troops, the competence of intelligence agencies to keep Americans safe, and the motivations of the people who ordered the invasion.
Yet when we switch to socialized health care, all of a sudden the same liberals will wax eloquently about the government’s duty and ability to help the poor, to rationally plan the entire health-care infrastructure, and to make life-and-death decisions about how much care elders will receive. In contrast, all of a sudden the same conservatives will be very suspicious about the motives of the people in DC, and will complain about socialist power grabs, comparing Obama to Hitler.
The libertarian looks at such debates and says, basically, “You’re both right.”
Robert P. Murphy has a PhD in economics from New York University. He is the author of a new textbook, Lessons for the Young Economist, which can be downloaded for free. Starting September 8, he will teach a 10-week online course on the Principles of Economics at the Mises Academy.
Privacy and IP (Intellectual Property)
In the “office hours” for my online class on private law & defense today, one of the students asked, “What if there were a satellite that could record everything that happened inside people’s houses?” His question was, what recourse (if any) would the homeowners have legally? Could they sue the company that owned the satellite?
I had to confess that I wasn’t sure. Some cases of “invasion of privacy” would be easy to handle. For example, if they developed x-ray goggles that allowed people to look at others naked, then shopping malls, apartment complexes, etc. could just say, “If you come onto our property, you agree not to wear x-ray goggles.”
But I’m not so sure about satellites in space, especially if they work “passively” just by examining the light waves that naturally emanate from the house.
What does Stephan Kinsella say about all this? Come to think of it, why does he oppose the government body-scanners at airports? Do we own the arrangement of pixels on a screen that looks like the profile of our bodies?
Callahan Adds to the PhD Glut
I can still remember my huge sigh of relief when Mario Rizzo said, “Congratulations Dr. Murphy!” (To me, not to Gene. That wouldn’t have made any sense.)
Glenn Greenwald Describes Obama’s America
It’s even worse than what American liberals thought under George W. Bush’s America:
The lawsuit — captioned Al-Aulaqi v. Obama — was filed in federal court in the District of Columbia, and names Barack Obama, Leon Panetta and Robert Gates as defendants. Among other relief, the Complaint asks the court to (a) “declare that the Constitution [along with ‘treaty and customary international law’] prohibits Defendants from carrying out the targeted killing of U.S. citizens, including Plaintiff’s son, except in circumstances in which they present concrete, specific, and imminent threats to life or physical safety, and there are no means other than lethal force that could reasonably be employed to neutralize the threats”; (b) “enjoin Defendants from intentionally killing U.S. citizen Anwar Al-Aulaqi” unless they demonstrate the applicability of those narrow circumstances; and (c) “order Defendants to disclose the criteria that are used in determining whether the government will carry out the targeted killing of a U.S. citizen”…
Just how perverse is the Obama administration’s assassination program is reflected in the rights Awlaki is forced to assert. He alleges — as the Complaint puts it — that the Government is violating his “Fifth Amendment Right Not to be Deprived of Life Without Due Process.” Just re-read that and contemplate that in Barack Obama’s America, that right even needs to be contested. The Complaint also alleges that using lethal force against a U.S. citizen in these circumstances violates the Fourth Amendment’s guarantee against unreasonable searches and seizure, and also violates the Alien Tort Statute, which bars “extrajudicial killings.” Reading Awlaki’s Brief in support of his request for injunctive relief is almost surreal, as one witnesses an American citizen try to convince a federal court to stop the Government from trying — far away from a battlefield and without any violence used to resist apprehension — to murder him without due process…[Bold by RPM]
But it gets even crazier. Can you believe that the following is in a lawsuit against the U.S. federal government? Ten years ago, if you read this in a dystopian novel titled 2010 (like 1984, not like the Roy Scheider movie), wouldn’t you have thought it was ridiculous? Yet here is a portion of the lawsuit:
That the government has kept secret the standards under which it targets U.S. citizens for death independently violates the Constitution: U.S. citizens have a right to know what conduct may subject them to execution at the hands of their own government. Due process requires, at a minimum, that citizens be put on notice of what may cause them to be put to death by the state.
Is that so much to ask? President Obama, after you pay for my mortgage and avert global warming, can you please let me know the list of things I have to avoid, so that you don’t order me assassinated? Thanks.
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