Disqus - Latest Comments for Michael Smith

Re: Capitalism vs. Central Banking

Michael Smith — Fri, 06 Mar 2009 08:54:54 -0000

Martin Brock wrote:

We've had no capitalism without central banking for a century, and capitalists like Morgan and Rockefeller essentially established the U.S. central bank, so the idea of some great epic battle between Capitalism and Central Banking seems absurd. The idea certainly persuades no one out outside of a narrow ideological clique. Outside of this clique central banking is part and parcel of "capitalism".

The fact that some alleged capitalists pushed for a central bank does not mean that the definition of capitalism includes central banking. If certain individuals calling themselves doctors began to practice witchcraft and voodoo, that would not mean that the field of medicine would suddenly be defined to include voodoo and witchcraft -- it would simply mean that some doctors have begun practicing something other than medicine.

Thus the notion that a central bank is part and parcel of laissez-faire capitalism -- in the same way that socialism is an inherent part of communism -- merely because certain capitalists pushed for it, is false.

Laissez-faire capitalism (LFC) means a system in which there is a complete separation of economics and state -- in the same way and for the same reasons as a separation of church and state. Under such a system, the functions of government are limited to a police force to protect the citizens from criminals, a system of courts for resolving contractual and economic disputes and an armed force for national defense against foreign invaders.

Under LFC, neither the government nor anyone else has the power to dictate the use of a fiat money and to regulate the supply of that fiat money. So any system that features fiat money and a central bank is most definitely NOT laissez-faire capitalism.

Re: Capitalism vs. Central Banking

Michael Smith — Fri, 06 Mar 2009 02:48:07 -0000

Thank you, Professor, for the excellent letter.

Whenever I hear someone refer to "the economic power of the private sector to exploit ways to take money" -- as Gallington did -- I want to remind them that the only legal "power" the private sector possesses is the power to offer a value in exchange for another value.

For instance, the private sector can offer a wage in exchange for one's labor -- or offer a product or a service in exchange for one's money -- or offer a loan in exchange for repayment plus interest -- etc.

But in no case does the private sector have the power to force anyone to accept these offers -- and in no case does the private sector have the legal power to take money from anyone by force.

It is only government that has the legal power to use force to take money out of the economy -- or to put it in.

Re: Re: At Last…The Wire Gets What it Deserves

Michael Smith — Sat, 08 Mar 2008 14:55:36 -0000

Simon is an idiot.

Here is the truth: Leftist/liberal/progressive politicians, aided by the pathetically ineffective Republican party, long ago destroyed American capitalism and replaced it with an advanced welfare state, with massive government regulation strangling virtually every aspect of economic activity and invading virtually every aspect of our private lives.

It is freedom and individual rights that are now devalued -- it is the man of ability, the man of reason, the man of competence, the man of creativity and innovation that is devalued -- devalued and sacrificed to the irrational, the lazy, the shiftless, the worthless, the good-for-nothing, those who have never done a decent days work and never intend to. It is the triumph of "need" over justice.

Re: “Jim Crow Energy Policies”

Michael Smith — Sat, 31 May 2008 08:31:35 -0000

Bravo to Niger Innis for having the courage to stand against the environmentalists that want us to commit economic suicide.

Make no mistake about it, these jokers want mankind reduced to a bare subsistence level of existence. They are now the greatest threat to civilization we face.

Re: Paulson's failure

Michael Smith — Sat, 15 Nov 2008 09:27:14 -0000

The problem isn't liquidity. It's uncertainty.

Bravo to Professor Roberts for identifying this fact.

However, in fairness we must say that the uncertainty is not attributable solely to Paulson's erratic, ever-changing and near-hysterical efforts to manipulate the market.

There is also the specter looming of a president-elect who’s talked openly of "spreading the wealth" -- of seizing the profits of entire industries like "big oil" and the pharmaceutical companies -- of introducing cap and trade legislation so draconian that electricity costs will “skyrocket”, to use his term, and any attempt to build a coal-fired power plant is doomed to bankruptcy -- of mandating ever-more employee benefits such as 7 days minimum paid sick leave per year -- of forcing all employers to pay 100% of their employee’s healthcare premiums -- of completing the nationalization of the healthcare industry -- of increasing the capital gains tax and the top tax rate and of imposing some sort of new tax on companies that outsource jobs overseas -- of granting unions the power to intimidate workers into agreeing to a union without that pesky secret ballot -- just to name a few of our president-elect’s proposals.

One wonders who, under these conditions, dares to invest in anything?

Re: Bankrupt Assertion

Michael Smith — Tue, 16 Dec 2008 06:22:34 -0000

Not only does a "bailout" make no economic sense, nothing on earth justifies the notion that some individuals should be made to pay for the consequences of the actions of other individuals -- actions in which the first individuals did not participate and over which they had no control. Yet that is precisely what is done when the taxpayers are forced to “bailout” the management and the employees of the Big Three. Punishing the innocent for the mistakes of the guilty is the very definition of an injustice -- and nothing can justify an injustice.

Robbing innocent Peter to prop up guilty Paul is not only impractical but thoroughly unjust and immoral as well.

Re: Higgs on the Great Depression

Michael Smith — Tue, 16 Dec 2008 06:29:16 -0000

There is no mystery about how and why Roosevelt got re-elected even as his policies kept the nation in the grips of a depression: he bought the elections through a careful use of federal money and patronage.

This is detailed extensively in Burton Folsom's book, "New Deal or Raw Deal".

Re: Bankrupt Assertion

Michael Smith — Wed, 17 Dec 2008 03:16:39 -0000

muirgeo claimed:

Likewise you forget that the people in the states where the foriegn auto makers are located have paid tons of subsidies to support those automakers.

In the first place, a cut, deferral or suspension of taxes is NOT a subsidy. If an armed robber decides not to take your money, he is in no way subsidizing your existence.

What's more, even if some auto companies HAVE been granted such a cut in taxes, that certainly does not justify seizing my money to give to other companies that were not granted such cuts. Nothing on earth justifies the notion that the mistakes -- or the misfortunes -- of some should be paid for by others, others who played no part in causing the problem and who thus bear no responsibility for it.

Fundamentally, “muirgeo” your desire to loot my earnings to pay for your doctor bills, your retirement, etc. is no different from that of any criminal who seeks to exist at my expense, with just this exception: your moral status is even LOWER than his. The criminal, at least, can claim credit for a willingness to do his own dirty work, to do his own robbing, thereby running the risk that I might be armed and fight back, as well as running the risk that he might be caught and imprisoned. YOU, by contrast, want the government to do your looting for you, allowing you to cash in on unearned and undeserved benefits without any effort or risk on your part at all.

You’re an intellectually impotent, useless little parasite, fit only to regurgitate leftist talking points on cue, with no more grasp of the meaning and content of ideas than a screeching parrot. The parrot, at least, knows its place.

Re: Gwartney on Greenspan

Michael Smith — Fri, 02 Jan 2009 05:07:38 -0000

Alan Watson asked:

I know there has been considerable political pressure on the banks and GSEs to increase affordable housing, but can you or any of your readers point to any convincing evidence that private-sector lending standards would have resisted this deterioration in the absence of government pressure?

Private-sector lending standards had not deteriorated for decades prior to the unleashing of this political pressure, so why would they have suddenly done so in the absence of said pressure?

The Federal Housing Authority, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Community Reinvestment Act -- all were created precisely to insure that loans would be extended to less qualified borrowers than the market would otherwise accept.

The Clinton Justice Department launched a “fair lending initiative” in 1992. Here are the words of Janet Reno speaking to the National Community Reinvestment Coalition in 1998:

“You've noted that since the inception of our fair lending initiative in 1992 the Department has filed and settled 13 major fair lending lawsuits. We are going to continue these efforts under the Acting Assistant Attorney General Bill Lann Lee in every way that we possibly can. We will continue to focus on discrimination in underwriting, the process of evaluating the qualifications of credit applicants.”

You can read the whole speech at: http://www.usdoj.gov/archive/ag/speeches/1998/0...>

What’s more, when the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act and allowed commercial and investment banks to merge, when that law was passed Clinton insisted it contain a specific clause giving regulators the power to reject any mergers if any of the entities had a “less than satisfactory score” under the CRA.

So, yes, there was considerable “pressure” to reduce lending standards.

But as to the topic of this post -- namely, to what extent is the Fed to blame -- I offer this point. Regardless of the lowering of standards, the housing bubble could not have formed without people who were willing to accept the loans and purchase the house. Obviously, low interest rates were a factor in inducing people to cease being renters and become owners. Who created those low interest rates? The Fed.

What’s more, the decision to purchase a home is no doubt influenced by the near-universal belief by Americans that a house is “a good investment”, i.e. the belief that housing prices will rise indefinitely. This belief exists for one reason only: the Fed’s long-term, relentless inflating of the money supply in an attempt to “stimulate economic growth”.

Re: Gwartney on Greenspan

Michael Smith — Fri, 02 Jan 2009 05:26:20 -0000

Xmas wrote:

In hindsight, the Fed kept their foot on the gas too long. I'm not sure about the handling of the tech-bubble bursting. The Feds response to the 9/11 attacks was appropriate though.

So...they shouldn't have dropped interest rates so much when the tech bubble burst, which would have given them more wiggle room to drop and then restore interest rates after September 11th.

The flaw in your thinking is that you’ve accepted the premise that we should have a fiat money supply under the control of a centralized planning agency -- the Fed -- who manipulates the money supply to achieve economic growth.

In the first place, centralized planning doesn’t work. See the history of the U.S.S.R. In the case of the Fed, there is no way for a single individual, or a group of individuals, to determine the ideal interest rate for an economy comprising millions of individual decision makers.

In the second place, the whole Keynesian notion that consumption -- “consumer demand” -- drives economic activity, and that economic growth can thus be insured by expanding credit to stimulate consumption, is false. See Say’s law for an explanation of why demand can only come from production.

Centralized planning based on false economic ideas is a double dose of economic poison bound to sicken us sooner or later. And it has.

Re: Tax cuts all around

Michael Smith — Mon, 05 Jan 2009 03:04:16 -0000

Bret quoting Vickery:

"Deficits add to the net disposable income of individuals, to the extent that government disbursements that constitute income to recipients exceed that abstracted from disposable income in taxes, fees, and other charges. This added purchasing power, when spent, provides markets for private production, inducing producers to invest in additional plant capacity, which will form part of the real heritage left to the future.”

This is a fallacy; government has no power to create additional “purchasing power”.

Deficit spending is either:

1) The spending of money borrowed from the citizens, in which case it is merely money spent by the government instead of being spent by those citizens -- so it does not constitute an increase in “purchasing power“, rather, it’s merely a transfer of purchasing power from one entity to another.

Or:

2) It is the spending of new money printed up by the Fed, in which case it is spending that reduces the purchasing power of all the other dollars in existence via inflation; since this inflation takes some time to work its way through the economy, this type of deficit spending is merely a reduction of future private sector purchasing power for the sake of increasing the government’s purchasing power in the short term. Again, we are only looking at a transfer of purchasing power, not the creation of additional purchasing power.

J.B.Say taught us over 200 years ago that an increase in “purchasing power”, i.e. an increase in demand, can only come from an increase in production. Borrowing fiat dollars from one party so they can be spent by another party -- or printing up new fiat dollars -- does not constitute the creation of new demand.

Re: Tax cuts all around

Michael Smith — Mon, 05 Jan 2009 03:20:39 -0000

Bret said:

Savings in this case is simply the opposite of spending.

Actually, saving is a form of spending. Unless you are hoarding your money under your mattress, your savings are being loaned out to people who spend those funds on everything from capital goods purchases to automobile purchases to vacations, etc.

Re: Tax cuts all around

Michael Smith — Mon, 05 Jan 2009 08:33:09 -0000

Bret wrote:

“To save is to spend, iff there are others who are interested in taking those savings and doing something with them (i.e., investing in production). Since short term interest rates are hovering near zero and long term rates are surprisingly low (to me), currently, few people are willing to invest. As a result, currently, to save is to not spend and we have the rare situation where the Paradox of Thrift is a factor.”

Borrowing has gone down, but it has not stopped. Housing sales have declined, but they have not gone to zero; people are still taking out mortgages. Automobile sales have declined, but they have not gone to zero, either; people are still borrowing money to buy cars. Nor have credit card purchases stopped; they may have decreased, but again not to zero.

Do not forget that due to our fractional reserve banking system, a dollar of savings can become much more than a dollar's worth of spending.

And let us not confuse ourselves about the root cause of our economic problems. The problem we have right now did not occur because people saved too much -- it occurred, because certain people were enticed to borrow too much and, in many cases, they cannot pay back what they borrowed. If, now that we have a recession, people are starting to save more, then that is an effect of the recession, not a cause of it.

Re: To stimulate or not to stimulate

Michael Smith — Tue, 06 Jan 2009 05:21:34 -0000

Muirgeo wondered:

“I'd be curious what the non-interventionist expect to create economic growth.”

Go stand in a Wal-Mart and look at the vast array of products for sale there. Who created those products?

Who conceived of them, designed and tested them, figured out how to produce them, figured out how to package them, did the necessary market studies to determine the appropriate pricing and how much production capacity would be needed, set-up the required production equipment, built the necessary tooling, found the facilities in which to house the equipment, procured the necessary raw materials for production, hired and trained the workers to build them, set-up the appropriate quality control procedures, arranged for shipment, set-up all the accounting procedures for keeping the necessary books, and arranged the financing to cover all the costs until sales revenues begin flowing in?

Who invented steel refining, copper production, aluminum refining, concrete manufacturing, the internal combustion engine, the automobile, the mass-production assembly line, steam turbines for electricity production, the incandescent light bulb, the airplane, the helicopter, the diesel locomotive, the electric dynamo, alternating current, refrigeration, fertilizers, insecticides, antibiotics, vitamins, enriched bread, xerography, the telephone, radio, television, the transistor, the microchip, oil derricks, oil refineries, air conditioning, refrigeration, the microwave oven, the cell phone, radial tires, anti-lock brakes, air bags, the jet engine, jet airplanes, supertankers for transporting oil, the electron microscope, contact lenses, laser surgery, Ipods, pocket calculators, organ transplants, x-ray machines, magnetic resonance imaging machines, coronary pace-makers, coronary by-pass shunts, power tools, cordless tools, frozen dinners, fast food restaurants, food preservatives, blood pressure medicine, artificial insulin, hypodermic syringes, fluorescent lighting, anti-perspirants, toothpaste, electric toothbrushes, dental floss, anti-bacterial soap, shampoo, cosmetics, plastics like nylon, polyester and polyethylene, permanent press clothing, instant photography, digital cameras, compact discs, laporscopic surgery, chemotherapy, personal computers, ink jet printers, laser printers, fiber optics -- just to name a few things.

Who creates and makes possible this vast flow of products and services that make your life so safe and comfortable?

Government bureaucrats? No.

Government regulators? No.

Elected officials? No.

Unions? Not a bit of it.

Private, profit-seeking entrepreneurs, creators, inventors, scientists, investors and businessmen did it -- despite all the obstacles, strangling regulations, theft-taxes and controls erected by government to slow and prevent it.

You want to know how to “stimulate” the people and the process that creates this life-saving and life-enhancing stream of products -- not a single one of which you are capable of ever conceiving and creating? In Atlas Shrugged, John Galt has told you what to do, with a single statement to all the parasite-looters and blood-sucking government bureaucrats and planners of the world:

“Get the hell out of my way!”

Re: Macro question

Michael Smith — Tue, 06 Jan 2009 05:39:26 -0000

I agree with Randy and Rex. Obama's stimulus plan will be every bit as successful as was Hoover's, Roosevelt's and Bush's.

The government does not have the power to create demand or "purchasing power" -- it has only the power to shift it around from one sector or person to another.

Re: The new stimulus package

Michael Smith — Tue, 06 Jan 2009 11:47:36 -0000

Muirgeo wrote:

I guess the supply siders expect demand just to occur out of thin air.

Demand comes from production. If we lived in a barter economy you would be able to see this.

Suppose, for instance, you lived in a barter economy wherein you produced potatoes to trade to the baker for bread and to trade to the tailor for clothing. Under these conditions, it would be immediately apparent to you that the ONLY way for you to EVER increase your demand for bread or clothing is to first produce more potatoes with which to trade for more bread or more clothing. It would be equally obvious to you that if you stopped producing potatoes, your ability to demand any bread or any clothing would go to zero. There would be absolutely no doubt in your mind that demand comes only from production.

What’s more, it would be equally obvious to you -- under these conditions -- that if a man comes along and simply steals a portion of your potatoes without offering anything in trade, this does not constitute an increase in the demand for potatoes and doesn’t leave you better off.

Now suppose our little economy agrees to move away from our barter system and instead starts exchanging paper dollars for products at mutually agreed-upon prices. So now you sell a pound of potatoes to the baker and the tailor for a dollar, and they in turn sell you respectively 5 loaves of bread for a dollar and a pair of socks for a dollar.

Note that the existence of money has changed nothing. If you wish to increase your demand for bread or clothing, you will still have to produce more potatoes to sell to raise more money to purchase more bread or clothing. Demand still must come from production.

Now suppose one day the baker’s oven blows up and he can no longer make bread. Since he can no longer sell bread to acquire money, he can no longer purchase potatoes and clothing. Since production has gone down, demand for potatoes and clothing has gone down.

The baker is now “unemployed”. Since bread is no longer being baked, economic output has fallen and we have a “recession”. Prices for potatoes and clothing fall because of the fall in demand. We have “deflation”.

Now, would this problem be solved if the unemployed baker stole enough money from the potato farmer and the tailor that he could once again start purchasing their products? Would that restore the “lost demand” and correct the “economic contraction“?

No, that would simply be analogous to the man who stole potatoes from the barter economy. The new purchasing done by the unemployed baker -- using the money he stole from the potato farmer and tailor -- would simply be a case of returning the potato farmer‘s and the tailor‘s money to them, with the unemployed baker acquiring some potatoes and clothing in the process. No new production has occurred. No new employment is created. All we‘ve done is impoverished some to help others. Yet, at root, this is the exact essence of the government’s “economic stimulus” plan, except it‘s the government that will do the stealing.

This is why the “stimulus“ plan is doomed to fail. Only an increase in production can result in an actual increase in demand. Anything else is merely reshuffling and redistributing.

Re: Winning the debate

Michael Smith — Fri, 16 Jan 2009 04:56:24 -0000

A central feature of global warming theory -- as is indicated by all the climate models, by the climate scientists and by the IPCC -- is that it predicts that the maximum warming will occur in the tropical troposphere, at an altitude of about 200 - 400 millibars. To repeat: Warming at that altitude in those latitudes is expected to exceed the warming at the surface. This claim is absolutely central to the whole theory of how global warming works.

Well, there is just one problem. According to multiple satellite measurements as well as radiosonde measurements from balloons, such warming is NOT occurring. Go here and see for yourself: Satellite Measurements of the Tropical Troposphere

Now, what do the global warming people say about this? They say those satellites measurements do not disprove global warming theory, because out of the 13 major climate models they are using, some of those models predict little or no warming. Think about that for a minute.

So their explanation for the satellite data depends on the fact that their collection of models includes some models that predict little or no actual global warming. Go here and read this if you don’t believe me: LINK

Re: Today's Economy in Perspective

Michael Smith — Sat, 17 Jan 2009 03:37:20 -0000

What's even worse than the exaggeration over the state of the economy is the perception of what has caused the problem.

Bush, the Federal Reserve and the Congress have spent the last 8 years following an aggressively liberal economic policy that makes anything attempted by Lyndon Johnson pale into insignificance.

For instance, the last 8 years has seen the following:

1) Massive increase in the welfare state through the establishment of a vast new entitlement program, the prescription drugs for seniors, as well as ongoing increases in spending for Medicaid and SCHIP. Health expenditures in the last 8 years have increased 85.6%, an increase of $327.1 billion.

2) Massive increase in Federal spending on Education, up 103.3%, an increase of $34.6 billion

3) Expansion of farm subsidies. Agriculture expenditures up 26.2%, an increase of $19.7 billion

4) Substantial increase in Federal spending on public housing and urban development. Housing and Urban development spending is up 69.8%, an increase of $21.5 billion.

5) Huge increase in spending on Transportation, which is up 65.1%, an increase of $27.1 billion.

6) Total Federal spending has increased 63.8%, an increase of $1.149 TRILLION per year.

Source: Federal Spending Pages 78 - 79

7) We’ve had a continuation of the “Affirmative action mortgage loan program” that was given teeth by the Clinton administration. Government-sponsored entities Freddie and Fannie have purchased trillions of dollars in questionable loans, while Democrats in Congress assured us there was no risk from these agencies.

8) Along with the spending increases, the income tax system has gotten even more “progressive”. Despite some tax rate cuts, the upper income earners are paying more of the tax burden than ever before.

* The top 1% of income earners pay 39% of all income taxes, up from 37% when Bush took office.

* The top 25% of all income earners now pay 86% of all income taxes, up from 84% when Bush took office.

* Individual income tax collections are up 21.4% and corporate tax collections are up 66.6% since Bush took office.

Source: Tax Collections Page 31

9) Along with the spending and tax increases, government regulations have increased enormously. The Code of Federal Regulations (CFR) -- the master set of books containing all the federal regulations -- occupies 25 feet of shelf space at the library of Congress and has over 73,000 pages. It's pages of regulations -- which are double-columned, double-sided, fine print -- would stretch 4.5 miles if laid end to end.

Over 51,000 new regulations have been added since 1995, when Republicans took control of Congress. The Bush administration has added over 30,000 of these. So much for "Republican deregulation.

Right now, some 50+ federal agencies, commissions, departments etc are working on finalizing over 3000 additional regulations.

Source: Competitive Enterprise Institute

These regulations are promulgated and pushed by regulators and bureaucrats from over 100 federal agencies and commissions, the most well-known of which include, besides the IRS, the FRB and FDIC, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, FNMA, FHA and the FLMA.

In addition to these economic regulatory agencies and their interference, we have a fiat money supply under the control of a central bank with virtually unlimited power to manipulate that currency as it sees fit. First Greenspan, and then Bernanke, piloted the Fed on a relentless course of expanding the money supply and credit.

And now that we are at the end of Bush’s administration, all the Democrats, liberals and leftists want us to believe that because Bush has an “R” after his name, the last 8 years have been an orgy of “laissez-faire” “deregulation“, cutting of government services and spending, “tax cuts for the rich” and “tax cuts for big business”.

And what do they think we need to solve our problems? More government spending and more regulation!

How many times does this have to fail before they will give up on it?

Re: Where do the American people stand on the stimulus?

Michael Smith — Mon, 19 Jan 2009 08:54:06 -0000

I am somewhat amazed -- and a little encouraged -- that as many as 36% think the economic stimulus plan is a bad idea.

When you consider that officials from both parties along with the great majority of economists and virtually all media people are clamoring for the stimulus, it's interesting that more than 1 in 3 appear to realize that it is a bad idea indeed.

Re: The Declaration of Dependence

Michael Smith — Fri, 23 Jan 2009 02:54:54 -0000

Trumpit asserts:

I have no problem with small government if that is what the people want. I just want the rich to pay for it no matter what size it is.

And what will you do after you've looted the rich of all their earnings or after they've fled to another country where looters such as you can't get to them? What's your economic game plan for the day after the rich are no longer around?

Re: Business as usual

Michael Smith — Thu, 29 Jan 2009 09:56:41 -0000

What an entity like "TrUmPiT" needs and deserves is a one-way ticket to a place where the economic system prevents people from getting rich. I have in mind Cuba, North Korea or any other hell-hole that consistently practices socialism/statism.

Re: Good Point

Michael Smith — Thu, 29 Jan 2009 10:19:29 -0000

This "stimulus" bill is the single largest looting of the American people in the nation's history. It is nothing less than a declaration that the government -- not us -- owns our money, and that if we are not spending as much of our money as the government thinks we should, it will simply seize the money and spend it for us.

What's more, Obama's demand that Congress approve the stimulus without even having time to understand it makes a mockery of the seperation of powers. If the Executive branch can demand that legislation be passed without time to review it, for what do we need Congress? Just dissolve it and let Obama write the laws he wants.

Re: Stimulating Reading

Michael Smith — Mon, 02 Feb 2009 09:26:01 -0000

We've just witnessed the results of a multi-year government effort to stimulate an important part of the economy -- the housing market. And Obama is so impressed with the success of that program, he wants to spread its benefits to the economy as a whole.

Re: Stimulating Reading

Michael Smith — Tue, 03 Feb 2009 03:13:57 -0000

dg lesvic asked:

Again, Mr Muir, if I try to explain the error of your thinking, will you respond, or, as usual, just ignore what you cannot answer?

Have you ever gotten an intelligent response from this entity? I understand your benevolent desire to explain and educate; but the problem is that what you are dealing with here is NOT "the error of your thinking" -- what you are dealing with is what long ago replaced "their thinking": namely, the swallowed-whole and memorized leftist talking points that are regurgitated on cue, much as a parrot squawks when someone enters the room.

A very wise man said, “You cannot reason a person out of a position he did not reason himself into in the first place.” However, I fully understand your desire to try. There are, after all, others reading these comments who may NOT be impervious to reason and who may be influenced by your efforts.

Re: Stimulating Reading

Michael Smith — Tue, 03 Feb 2009 03:22:59 -0000

Oil Shock brings up a really good point:

BTW, I will ask you a non-rhetorical question, what was the specific fiscal policies of the Harding administration that prevented the sharpest 1 year deflation ever recorded in American history fro becoming a great depression? Yes I am talking about the really short depression of 1921, so short that so few people have heard about it.

Economist and Objectivist George Reisman makes the point that by not intervening and by allowing both wages and prices to fall, the deflation of 1921 proved to be remarkably short.

Reisman’s point is mathematically simple and unrefutable. If the money supply contracts from “X” to “½ X”, then if both wages and prices are allowed to fall to ½ their previous levels, the lower monetary base can support the same level of economic transactions as before. Labor’s wages will be lower but their purchasing power will be unchanged because of the fall in prices. Businesses will experience lower profits but the purchasing power of those profits will be the unchanged for the same reason: lower prices.

In the Great Depression, however, first Hoover and then Roosevelt fought to keep both wages and prices from falling. Hence, a one year contraction became a decadal disaster.

Re: Stimulating Reading

Michael Smith — Tue, 03 Feb 2009 04:24:09 -0000

Kevin, I don't know the answer to your question about 1921. But Reisman pretty much agrees with you that deflation today would be very dangerous.

He has a very illuminating article on it here: LINK

Re: Barack Hoover

Michael Smith — Wed, 04 Feb 2009 08:00:18 -0000

Good letter, Professor. (Is that the appropriate way to address you?)

You might also mention Hoover's White House Conferences with business leaders wherein he urged them to maintain wages and increase/accelerate capital spending plans. Here is a fascinating 5-page article on the conferences from the December 2, 1929 issue of Time magazine: LINK

The history of the Hoover administration was re-written to cast him as a "laissez-faire" or "do nothing" President by the same history writers that cast Roosevelt as the savior who rescued us from the Depression.

A similar re-writing or distortion of history is being concocted even now as the left claims that our current economic problems are a result of Bush's "laissez-faire" "deregulation" of the economy. Of course, this claim is preposterous. No such “deregulation” took place -- and our economy is far closer to fascism than it is to “laissez-faire” capitalism. But, barring some huge change in our culture, our children will be taught the left’s narrative of current events.

Re: Barack Hoover

Michael Smith — Thu, 05 Feb 2009 06:53:04 -0000

Don't forget that Hoover had the top tax rate increased from 25% to 63% -- in 1930 if I recall correctly.

It will be argued that the top rate affected only a small portion of the population -- and that is true. But it is a small portion of the population that creates and sustains employment. A tax on the rich is a tax on the very funds that account for a great deal of the investment necessary for economic growth and job creation.

Re: Jim Crow Was a Product of Government

Michael Smith — Mon, 16 Feb 2009 03:08:59 -0000

Geoih points out:

Muirgeo: "unfettered free markets ....don't exist."

Geoih: And yet you continue to cite them as the major cause of all of our problems.

When a mind voluntarily swallows blatant contradictions -- such as the notion that a system of freedom (capitalism) causes the elimination of some people's freedom (slavery) -- the effect is to render that mind impervious to reason, facts, evidence and logic -- for it is precisely reason, facts, evidence and logic that must be turned off and evaded if the contradiction is to be absorbed. What you are left with then is a mind that is completely untroubled by contradictions, including its own.

Re: Limnulus

Michael Smith — Thu, 26 Feb 2009 03:21:52 -0000

The term I propose for this bill is âlootimusâ, for the only thing it is stimulating is the looting of Americaâs taxpayers. This bill is not merely a one-time transfer of a trillion or so dollars out of the pockets of those who earned it and into the pockets of those who did not -- itâs also a commitment to expanding the looting of our children and their children.

By the way, for an excellent presentation on the genesis of our current financial crises, I invite you to watch a presentation by John Allison, chairman of the board of BB&T, a $137 billion financial services and banking company. This is the first time Iâve heard an âinsiderâ discuss the causes of this crises. You can see the presentation here: LINK

Re: I guess it depends on what you mean by "responsibility"

Michael Smith — Thu, 26 Feb 2009 10:15:26 -0000

Professor Robertâs quotes from Obamaâs speech:

We arrived at this point as a result of an era of profound irresponsibility that engulfed both private and public institutions â¦â¦..This irresponsibility precipitated the interlocking housing and financial crises that triggered this recession.

Irresponsibility?

Who irresponsibly lowered interest rates to record lows and held them there, thereby creating a vast flood of cheap credit? Not the private sector.

Who has irresponsibly followed so persistent a pattern of inflation as to convince virtually every American that asset prices will always rise -- that purchasing a home is automatically a âgood investmentâ? Not the private sector.

Who irresponsibly insisted on the lowering -- and in some cases, the outright elimination -- of credit worthiness standards such that riskier and riskier loans would be made? Not the private sector.

Who irresponsibly created a vast secondary market for these âsubprime loansâ so as to enable lenders like Countrywide and Wamu to pass the junk loans on to someone else so they could make still more junk loans? Not the private sector.

Who irresponsibly created the cartel of rating agencies that rated securities containing these junk loans as âAAAâ -- and who is irresponsibly keeping these same rating agencies safe from any competition -- and who is irresponsibly forcing financial institutions to continue using these same agencies? Not the private sector.

Who has irresponsibly -- and repeatedly -- bailed out obviously incompetent financial enterprises, thereby allowing them to pass the costs of their bad decisions on to the taxpayers? Not the private sector.

Who irresponsibly wiped out the Washington Mutual debt holders -- thereby telling all investors that any investment in a bank is subject to disappear at the whim of banking regulators -- thereby effectively closing the capital market to banks? Not the private sector.

Who has irresponsibly reduced the capital requirements of the commercial and investment banking system such that the former are leveraged over 10 to 1 and the latter 30 to 1? Not the private sector.

Who irresponsibly instituted new accounting rules 2 years ago that prevents a financial institution from valuing its assets based on rationally expected return on investment -- and instead forces it to use âmarket valueâ -- even when no market exists? Not the private sector.

Who is irresponsibly preventing the overbuilt housing market from clearing its excess inventory by preventing foreclosures? Not the private sector.

Who even now is irresponsibly sending the message that those who are struggling to keep their mortgages current need not do so, because government will help them if they default? Not the private sector.

Who is irresponsibly rescuing some firms, while letting others fail? Who is irresponsibly announcing âdesperately neededâ bailout plans one day -- then completely abandoning that plan the next day -- followed by the announcement of still-yet another plan the day after that -- thereby creating deadly financial uncertainty? Not the private sector.

Who owns the monetary system and has total control over its operations, its regulations, its practices and its accounting methods? Not the private sector.

The private sector doesnât have the power to create a mess like this, President Obama. Only those of you in government have such power.

Re: I guess it depends on what you mean by "responsibility"

Michael Smith — Fri, 27 Feb 2009 03:54:29 -0000

Obamaâs fundamental problem is that he is very much like muirgeo -- he has swallowed whole and undigested all the leftâs fallacies, lies, distortions, equivocations and myths and only knows how to regurgitate them on cue, albeit regurgitate them quite adroitly and smoothly. He has no capacity to think independently. He is completely impervious to facts, reason, logic or evidence. His mind is turned off.

Thatâs why he is able -- with a straight face -- to propose a 1.75 trillion dollar deficit and call it a âreturn to responsibilityâ. Thatâs why he is able -- with an equally straight face -- to claim that consuming wealth creates wealth. Thatâs why he is able -- with that same straight face -- to claim that punishing production encourages production. Only an active mind is troubled by the existence of contradictions.

Obamaâs spending, taxation and environmental regulations will crush the economy and leave us -- in all probability -- in the worst of all economic situations: a hyperinflationary depression, i.e. a situation of mass unemployment accompanied by exploding prices -- with massive environmental restrictions on energy production preventing any possibility of recovery.

Unless we figure out some way to stop him, Obama will fulfill the leftâs lifelong dream of destroying the last remnants of American capitalism. He is leading what Ayn Rand called âThe Anti-Industrial Revolutionâ. He will go down in flames. Unfortunately, he is likely to take us all with him.

Re: The Perils of Government-supplied Universal Health Care

Michael Smith — Fri, 27 Feb 2009 04:45:31 -0000

In my opinion, it is a mistake to speak of "government-supplied" health care -- because it feeds into the fantasy that government can somehow supply goods and services that are "free". In fact, to "supply" any good or service one must first produce it. But government produces nothing.

So "government-supplied" health care really means government-controlled health care -- which means, government control of the entities that DO produce health care -- doctors, nurses, hospital administrators, pharmaceutical companies, etc. -- as well as government control of the entities consuming health care -- which is basically everyone.

In America, we've already got government-controlled health care for the elderly and for those below an arbitrarily-selected income level. In both cases, the results have been exactly what one would expect: astronomically rising costs, falling levels of service, increasing taxation of those too young or too financially successful to qualify for the program -- with both programs on an unsustainable path that will end in the bankruptcy of the system or the imposition of draconian, economy-killing levels of taxation.

But nothing encourages the left more than seeing the abject failure of their ideas -- and the greater the failure, the harder they will push for more of the same. Thus, their response to seeing two of their programs headed for the cliff is to demand that we start a third rolling in the same direction.

Re: LET THEM FAIL

Michael Smith — Fri, 06 Mar 2009 11:06:07 -0000

I agree we should let them fail.

But the members of the Obama administration -- at least in terms of their economic policies so far -- are best described as clowns with wrecking balls.

Re: Tiny Tim

Michael Smith — Mon, 09 Mar 2009 08:15:09 -0000

Citigroup, General Motors, American International Group -- these are all wounds to the economic body, bleeding and wasting capital. A bailout is a decision to use the taxpayerâs money as a transfusion so the wound can remain open and the bleeding can continue. Bankruptcy is a decision to cut off the blood supply so the wound can be closed and the bleeding stopped.

Comrade Geithner, however, cannot grasp this. Evidently, he has consumed too much of comrade Keynesâs tonic. Or else his boss has simply told him that the votes of the employees of those firms are too important to risk losing.

For a more rational analysis of our economic problem and what needs to be done to solve it, I highly recommend this two-part article by George Reisman:

Part I

Part II

Re: Tiny Tim

Michael Smith — Mon, 09 Mar 2009 08:25:47 -0000

Well, I see the links I posted are not working. So here are the two addresses:

http://georgereisman.com/blog/2009/02/economic-recovery-requires-capital.html

http://georgereisman.com/blog/2009/02/economic-recovery-requires-capital_22.html

Re: Tiny Tim

Michael Smith — Mon, 09 Mar 2009 09:12:27 -0000

Look it took 8 years for this mess to be created, and it will take time to resolve it; but "remain calm" because as Congressman Evan Bayh said on a talk show this weekend: "we are moving aggressively" to resolve them.

Yes, I've heard the same argument. But, in fact, what they are "moving aggressively" to do is to prevent the resolution of the problem. Thatâs the whole point of the bailouts and the so-called âstimulusâ bill.

Bailouts simply guarantee that the sick entities will stay in business and come back for more bailouts in the near future. I believe Citigroup has now been bailed out three times. AIG has already come back for more bailout money. And GM will be asking for more in the near future.

And the "stimulus" bill is nothing less than an attempt to keep the American people spending at levels they cannot afford and cannot sustain.

It's a flight from reality -- and straight over a cliff.

Re: Not so fast

Michael Smith — Tue, 10 Mar 2009 06:40:46 -0000

I understand your point, Jason O, but let's remember that a businessman has no power to coerce anyone. He has only the power to offer a value -- a wage -- in exchange for a value -- a person's labor -- with workers being free to accept the offer or reject it and seek a better offer elsewhere.

Re: Greenspan vs. Taylor

Michael Smith — Thu, 12 Mar 2009 05:13:16 -0000

John Allison is the CEO of BB&T -- in fact, he is the longest tenured CEO of all the major financial institutions. Here is a link to a presentation wherein he shows precisely how the government caused this crises:

Allison on the Crises

Re: More on Aggregate Demand and Micro-level Coordination

Michael Smith — Sun, 15 Mar 2009 05:48:42 -0000

Here's a fact I never hear discussed by the Keynesians.

Prior to Hoover's and Roosevelt's economic interventions beginning in 1929, the government's policy during recessions, depressions and "panics" (and there were a number) was pretty much laissez-faire -- not completely and purely, to be sure, but in general, the federal government prior to 1929 made little effort during economic crises to "stimulate" economic activity, little effort to "bail-out" banks or other private institutions and little effort to âsave jobsâ, keep wages up, etc.

Yet every one of those pre-1929 recessions, depressions and panics was resolved by the (mostly) free market that existed at that time -- and usually resolved within a year or two. Certainly none of them (AFAIK) turned into a depression that featured double digit unemployment for over a decade. And none of them turned into years of âstagflationâ or a âlost decadeâ like the Japanese have experienced.

If Keynes was right, and capitalism is not capable of curing high unemployment on its own, how is it possible that those recessions, depressions and panics were resolved without massive Keynesian interventions? I think the question answers itself.

Re: More on Aggregate Demand and Micro-level Coordination

Michael Smith — Sun, 15 Mar 2009 12:19:05 -0000

Muirgeo wrote:

From 1854-1933 there were 20 downturns lasting on average

22 months with the length of expansion between cycles lasting on average only 25 months. From 1933-2001 there were 12 downturns lasting on average 10 months with the length of expansion between cycles lasting on average 64 months.

In the first place, you are counting the 1929 - 1933 "downturn" as if it occurred under the "laissez-faire", non-Keynesian approach of earler times. This is false -- and you know it.

Numerous times at this website you've been shown that Hoover was every bit the interventionist Roosevelt was and that many of the programs of the "New Deal" were actually started by Hoover. But you dishonestly continue to pretend otherwise.

The full period from 1929 - 1945 was one long period of decreased economic activity and high unemployment. Industrial production of consumer useable goods and services -- and civilian employment -- didn't return to 1928 levels until after WWII was over. The entire miserable period belongs strictly on the interventionist, Keynesian side of the ledger.

Counting that period the proper way would change the numbers considerably.

However, those numbers are really beside the point, because this fact remains: if Keynes were right we should never have gotten out of any of those pre-1929 "downturns". Yet we did.

Re: More on Aggregate Demand and Micro-level Coordination

Michael Smith — Sun, 15 Mar 2009 13:37:03 -0000

Oil Shock is right.

In 1944, Paul Samuelson published an article in "The New Republic" titled, "Unemployment Ahead: The Coming Economic Crisis". In this he wrote:

This means we must embark upon a substantial program of income maintenance via welfare payments, social security, etc. We must exercise the greatest ingenuity in overcoming the technical delays to reconversion along with effective prosecution of the war. We must be planning more on a state and national scale for a vast expansion of useful public construction, for its own sake, and for maintenance of income and employment.

Fortunately, the unemployment crises did not occur, despite huge decreases in federal spending after the war.

Re: More on Aggregate Demand and Micro-level Coordination

Michael Smith — Mon, 16 Mar 2009 04:11:17 -0000

Muirgeo wrote:

No, no , no.. how about YOU GUYS supply the data/ evidence for YOUR initial claim that, "every one of those pre-1929 recessions, depressions and panics was resolved by the (mostly) free market that existed at that time -- and usually resolved within a year or two."

Since it is self-evident that we DID, in fact, recover from those recessions, depressions and panics, what are you actually questioning here?

Absent a central bank and a fiat money supply that it can control -- and absent the vast Federal regulatory apparatus constructed since 1929 -- the government's ability to intervene and manipulate the economy was only a shadow of what it became after those things were created. So it is also self-evident, then, that the government's influence in ending those economic crises that occurred before fiat money, the central bank and federal regulatory apparatus was constructed was substantially less -- if it had any at all.

What other data or evidence do you want?

Re: More on Aggregate Demand and Micro-level Coordination

Michael Smith — Mon, 16 Mar 2009 04:27:58 -0000

Regarding Hoover, Murigeo claimed:

I can go back and read the old papers and the sentiment was that Hoover was doing nothing. And indeed he did nothing your historical rewriting aside.

Since you are impervious to reason and evidence, I won't waste much time responding to you. But for those interested, here is an article from the December, 1929 issue of Time magazine describing a series of meetings Hoover held at the White House with business and government leaders to outline what would be done in response to the deepening economic contraction.

It's a five page article detailing increased public spending by federal and state governments, increased private spending by businesses, pledges to maintain wages, etc. -- all done in an effort to end the economic crises. Read this (remember to go through all 5 pages) and decide for yourself if Murigeo is right that "Hoover did nothing".

Here is the link to the article:

LINK

These White House meetings, of course, were only the beginning -- not the end -- of Hoover's interventions.

Re: More on Aggregate Demand and Micro-level Coordination

Michael Smith — Mon, 16 Mar 2009 04:47:08 -0000

Continuing from my last post, I thought it would be useful to post a partial list of the legislation pushed through by âdo nothingâ Hoover:

Hoover hit businessmen, farmers and investors with a array of interventionist agencies and acts, including the Federal Reserve (whom Hoover refused to restrain even as it was disastrously contracting the money supply), the Agricultural Marketing Act, the Federal Farm Board, the disastrous Smoot/Hawley tariff, the Norris-La Guardia Anti-Injunction Act, the Timber Conservation Board, the Federal Oil Conservation Board, the Reconstruction Finance Corporation, the National Credit Corporation, the Reconstruction Finance Corporation, the Federal Employment Stabilization Boar, the Emergency and Relief Construction Act and the Glass-Steagall Act.

Only the sort of mind that sees any economy less controlled than Stalin's communist U.S.S.R. as "laissez faire capitalism" can see Hoover as a "do nothing" president.

Re: The rule of men

Michael Smith — Wed, 18 Mar 2009 03:58:15 -0000

What level of tax will be applied to the $100,000+ campaign contribution that Obama received from AIG?

Re: Free Trade is Common

Michael Smith — Sat, 28 Mar 2009 08:15:50 -0000

Muirgeo wrote:

I don't feel like I'm trading with a Chinese person when I buy something from Walmart. Nations nor people trade.... multinational corporations do and they set the rules.

When you make a purchase at Walmart, you’ve engaged in a trade with an organization. An organization of what? An organization of people -- comprising employees, managers, shareholders, etc. -- but people nonetheless.

Re: I Am a Liberal

Michael Smith — Sun, 29 Mar 2009 05:18:55 -0000

Martin Brock wrote:

U.S. citizens already have capitalism. Capitalism is what real capitalists do, not some Rothbardian utopia.

And he wrote:

"Capitalists" govern capital (means of production) by definition.

This approach to defining the meaning of a term is nonsense -- it essentially renders the term meaningless.

Some of those who “govern capital” create vast fortunes, generate millions of jobs and produce life-enhancing products, and do so through sheer productive, competitive effort with no special help from government -- others who “govern capital” waste fortunes, dissipate jobs and defraud investors -- still others who “govern capital” seek to live without competition and use government to crush their competitors -- still others who “govern capital” funnel their profits to Islamic terrorists seeking to impose a totalitarian theocracy -- while still others who “govern capital“ become drunks or drug addicts.

Obviously, if “capitalism” is whatever those who “govern capital” happen to do, then “capitalism” means anything and everything -- which is only another way of saying it means nothing in particular.

Why do you seek to evade the fact that “capitalism” has a specific meaning -- and that what we see today in the U.S. is not “capitalism”?

Re: Social Engineering Vs. Piecemeal, Competitive Creation

Michael Smith — Wed, 01 Apr 2009 04:15:32 -0000

Don wrote:

I was attracted to economics for a reason quite the opposite of the one that appealed to Mr. Krugman, namely, because it helps explain how incalculably complex and productive social orders emerge from billions of individual actions, where no one of these actions is meant to achieve anything more than improvement in the welfare of the individual actor.

A fundamental reason why this productive social order emerges is that when physical force is banned from all relationships, men must deal with one another by voluntary, mutually-beneficial trade, exchanging value for value in a transaction that leaves both parties better off as a result. The cumulative effect of these on-going exchanges is the gradual, but steady, improvement in the standard of living of all those individuals willing to put forth the effort to produce (or earn) a value for which others are willing to trade.

At root, what the social-engineer wannabes like Krugman seek is the power to veto these voluntary exchanges and impose their own terms and conditions on the exchange -- thereby substituting by force of law their judgment for the individual trader‘s judgment. So make no mistake about it -- the desire to “tinker” in the economy, to “push buttons” -- is at root a lust for power over other men’s lives, no matter what macro-ecospeak jargon is used to justify it.

Re: Big Media

Michael Smith — Sat, 04 Apr 2009 02:57:09 -0000

Good letter.

Using the term "big" to discredit an organization (or someone associated with it) is a cheap and lame smear tactic that only works on those who ignore the essential facts of the situation.

For instance, a "big" gangster like Stalin, who murdered millions of people, and a "big" genius like Edison, who showered the world with beneficial inventions, are NOT morally equal. “Bigness” is not automatically immoral, independent of what it is that’s “big”.

That obvious fact is evaded by the millions who subscribe to the belief that “big business, big pharma, big oil” are robbing them blind -- all while claiming that the solution is make ever-bigger and ever-more powerful the only entity with a monopoly on the legal use of force -- government.

Re: Responsibility for Health Care

Michael Smith — Sat, 11 Apr 2009 05:26:47 -0000

Nothing on earth justifies the notion that some individuals are entitled to free (or reduced cost) economic goods and services to be provided by the involuntary labor of other individuals. We fought a huge and horrific civil war to eliminate an institution based on that notion.

There can be no such thing as the "right" to the product of another man's labor -- because there is no such thing as a right to ANY amount of involuntary servitude.

Suppose the white plantation owners in the southern U.S. had proposed the following in, say, 1860:

“There is no need for a war on this matter -- we agree to end the system of slavery. No longer will the blacks be required to work our cotton fields compensated only by the room-and-board prison in which we keep them. Instead, from this day forward, they will be free men -- PROVIDED they agree to henceforth turn over to us 39.6% of their earnings each and every year. You see, we NEED that 39.6% -- otherwise, we cannot pay our doctor bills, we cannot properly feed and cloth our children, we cannot educate them, we cannot pay the mortgage on this plantation. You must pay this, or we and our innocent children will suffer greatly“.

Would anyone have accepted this as a proper, moral and just solution to the system of slavery? No? Why, then, it is acceptable to impose precisely this same principle on the nation’s most productive, innovative, rational and entrepreneurial of men? If it is evil to impose even a part-time scheme of involuntary servitude based on skin color, how evil is it to impose a partial scheme of involuntary servitude based on human ability, rationality, work ethic and energy?

The truth is the welfare state is rotten to the core -- it’s a monstrously unjust system of punishing the rational for the mistakes of the irrational -- of making the wise and honest pay for the consequences of the lazy, the shiftless, the stupid, the foolish, the ignorant, those who’ve never done an honest day’s work and those who never intend to.

You are now seeing this principle of injustice applied on a grand scale as everything from the irrationality of GM and Chrysler and the UAW to the irrationality of AIG’s executives becomes YOUR burden, to come out of YOUR hide -- so that YOU, who are innocent of any wrong-doing or bad judgment in these matters can be made to pay so that the GUILTY can escape the consequences of their errors.

Re: Responsibility for Health Care

Michael Smith — Sat, 11 Apr 2009 05:40:05 -0000

Richard wrote:

If guaranteeing minimal standards of health assistance for some people is a public good, than you have to live with the fact that the solution has to be "collective".

There is no such thing as “a public good” -- because there is no such entity as “the public”. All that actually exist are individual human beings.

The “good” is an aspect of reality evaluated in relation to the needs of a living being. Nutritious food is “good” for man because it supports his life; poison is “bad” because it retards, damages or even ends his life. So the concept of “good” has meaning only in relation to individual human beings.

Thus, the concept of a “public good” can only mean the good of particular individuals. In practice, anything done for “the public good” always means something done that benefits some individuals at the expense of other individuals. It means granting some individuals special rights that are denied to other individuals -- it means that some receive while others surrender, that some benefit while others lose.

You tell me, Richard, what justifies the notion that some of us possess rights denied to others, rights that we must pay for? Why does one man deserve free medical care -- while another man must pay not only his own doctor bills, but those of the first man to boot?

I say nothing justifies it. If a gunman robs you, it does not matter what he proposes to do with the proceeds of the robbery -- it's still a robbery and he's still immoral, even if he uses the money to pay his sick mother's doctor bills. One man's "needs" do not entitle him to another man's property.

Re: On the Scottish Enlightenment

Michael Smith — Mon, 13 Apr 2009 12:08:22 -0000

Excellent point, Don.

Daniel Kuehn attempts to evade the issue you’ve raised by accusing you of “polarizing” the situation. Here is what Ayn Rand said about the accusation of “polarizing”:

An anti-concept is an unnecessary and rationally unusable term designed to replace and obliterate some legitimate concept. The use of anti-concepts gives the listeners a sense of approximate understanding. But in the realm of cognition, nothing is as bad as the approximate . . . .

One of today’s fashionable anti-concepts is “polarization.” Its meaning is not very clear, except that it is something bad—undesirable, socially destructive, evil—something that would split the country into irreconcilable camps and conflicts. It is used mainly in political issues and serves as a kind of “argument from intimidation”: it replaces a discussion of the merits (the truth or falsehood) of a given idea by the menacing accusation that such an idea would “polarize” the country—which is supposed to make one’s opponents retreat, protesting that they didn’t mean it. Mean—what? . . .

It is doubtful—even in the midst of today’s intellectual decadence—that one could get away with declaring explicitly: “Let us abolish all debate on fundamental principles!” (though some men have tried it). If, however, one declares; “Don’t let us polarize,” and suggests a vague image of warring camps ready to fight (with no mention of the fight’s object), one has a chance to silence the mentally weary. The use of “polarization” as a pejorative term means: the suppression of fundamental principles. Such is the pattern of the function of anti-concepts. From “Credibility and Polarization” in the “Ayn Rand Letter”

Rand’s last paragraph identifies precisely what Daniel Kuehn seeks to do with his accusation of “polarization”: he seeks to evade any discussion of the fundamental principle discovered by the Scottish Enlightenment thinkers -- namely, that freedom is the necessary precondition of a productive society and that government controls and planners inevitably lead to tyranny and poverty.

The whole purpose of denouncing “polarization” and demanding a “nuanced” view is to evade the fact that our basic choice is between capitalism and socialism -- between freedom and tyranny - between economic prosperity and economic impoverishment. The historical record of socialism -- in any of its forms, from communism to fascism to the welfare state -- is so awful and so horrific that the only way to push it is to pretend that one is really pushing something else. And the only way to do that is to prevent any discussion of fundamentals.

A debate on fundamentals -- a thoroughly “polarizing” exposure of exactly what is being advocated by the Obama administration -- is desperately needed. Please continue stating the issues as clearly and fundamentally as possible -- and let those who seek only “non-polarizing” views go elsewhere.

Re: More Enlightement from Adam Smith

Michael Smith — Mon, 13 Apr 2009 12:47:28 -0000

Daniel Kuehn asked:

What evidence do you have that Obama and the world renowned economic advisors in his administration mysteriously missed the boat on the single most important insight in the history of economics?

Here are the things Obama promised to do during the presidential campaign:

1) Raise the top income tax rate.

2) Raise the corporate tax rate.

3) Raise the dividend tax rate.

4) Raise the capital gains tax rate.

5) Create a new tax on businesses that outsource jobs overseas.

6) Punish the oil companies by seizing a portion of their profits.

7) Punish the pharmaceutical companies by seizing a portion of their profits.

8) "Spread the wealth around" with a scheme whereby those who don’t currently pay taxes will receive a rebate funded by those who do pay taxes -- a scheme which Obama calls a “tax cut”.

9) Eliminate the secret ballot in union elections and allow union organizers to bring intimidation and threats to bear directly on anyone who dares to oppose a union.

10) Raise the minimum wage by 50%.

11) Impose "cap and trade" limits on CO2 emissions that will, in Obama’s words, "cause electricity rates to soar" and "bankrupt anyone who builds a coal-fired power plant".

12) Force all businesses to pay 100% of their employee's healthcare costs.

13) Complete the nationalization of the healthcare industry.

14) Impose protectionist trade restrictions by "renegotiating" existing free trade agreements.

15) Commit America to funding U.N. anti-poverty programs, so that American taxpayers are not only bled to fund our home-grown bums and deadbeats, but the whole world’s as well.

Obama thinks that doing all of the above will spur economic growth and the production of wealth. You tell me what he's missed.

Re: More Enlightement from Adam Smith

Michael Smith — Mon, 13 Apr 2009 13:40:37 -0000

Daniel Kuehn wrote:

So PLEASE try to differentiate your disagreement with him on what the available options are from your disagreement with me that given his understanding of his options, Obama is choosing the non-interventionist route.

Obama is choosing the non-interventionist route? Preposterous.

Your argument amounts to the claim that since Obama thinks the only options open to him are interventionist, he is choosing the non-interventionist route when he picks one of those "lesser" interventions.

That's exactly like arguing that a criminal, who sees no alternative to supporting his life by theft, is taking the "non-criminal" route if he chooses shoplifting over bank robbery.

Re: The State of Manufacturing in the United States

Michael Smith — Tue, 21 Apr 2009 03:34:29 -0000

Daniel Kuehn wrote:

We do have a manufacturing crisis in this country - but people should just take care to note that it it's not a production crisis, or a productivity crisis, or a value crisis - it's a jobs crisis……

We do have a manufacturing crisis in this country…..

This is typical of your posts -- it begins with and rests upon an unsupported assertion. Why is the situation with manufacturing employment a “crises”? What is your definition of a “crises”? You don’t explain or show -- you merely assert.

I also not what you don’t mention -- namely, that if the loss of employment is due, as you claim, to improved productivity, then it means either: 1) higher wages for the remaining workers, and/or: 2) Higher profits for the owners of the businesses, and/or: 3) Lower prices for the consumers that purchase the goods now produced at higher productivity. In all three cases, someone’s purchasing power has increased, which means greater business for other enterprises thereby increasing their employment. Is this gain in employment elsewhere to be ignored so that you may declare a “crises”?

You also wrote:

Because losing your job is a very hard and disruptive experience, and most of these people entered these careers when there was no prospect of losing them to competition.

Again, this is simply an unsupported assertion. What is the evidence that the people who’ve lost manufacturing jobs “entered these careers” when there was “no prospect” of losing them to competition? When, and in what fields of employment, has there ever been a time of “no prospect” of loss of employment to competition? Under what conditions is anyone entitled to view their jobs as completely “safe” from competition?

If you work at a government-imposed monopoly -- like the Post Office -- then one might have grounds for claiming that there was “no prospect” of loss of employment to competition -- until someone comes along and invents e-mail. But in a free market (or even in a non-free, highly regulated market like we have), I can see few situations when one could legitimately claim a right to view a “career” as having “no prospect” of loss to competition.

You also wrote:

I think we can be concerned about them without abandoning trade, though.

I'm the type of moderate that you need J

As a rule, your type of “concern” usually means advocating the use of government force to extort benefits from some to transfer to these unemployed -- or the use of government force to limit, prohibit, constrain or otherwise make impossible the sort of competition and/or productivity gains that caused the job loss -- or some other force-based government intervention, regulation, controls, etc.

Since -- judging from your other comments in other threads -- your definition of a “moderate” is anyone who advocates anything less than the immediate imposition of a Stalin-style totalitarian dictatorship, what do you advocate with respect to manufacturing employment in the U.S. -- this alleged “crises” you’ve declared -- what do you want done, beyond merely expressing your concern?

Re: Cardboard Characters

Michael Smith — Mon, 27 Apr 2009 14:20:47 -0000

tarran wrote:

It's also a great description of Ayn Rand's books (the simplistic worldview, the cardboard cutout characters etc). ;)

You’re entitled to your opinion, and so am I -- so I’ll state mine: Atlas Shrugged is the greatest work of fiction in world history. It has a sweeping theme, a dramatic plot and its scope touches on virtually every aspect of human existence.

Its cast of characters, including Wesley Mouch, Eugene Lawson, Dr. Robert Stadler, Dr. Floyd Ferris, Mr. Thompson, Fred Kinnan, James Taggert, Orren Boyle, Ivy and Gerald Starnes, Paul Larkin, Lillian Rearden, Francisco D'Anconia, Ragner Danneskold, Hank Rearden, Dagny Taggert, Ellis Wyatt, Eddie Willers, Midas Mulligan and yes, John Galt, are hardly "cardboard cutouts" -- rather, they are men of many different philosophical premises whose personalities and character reflect the fundamental logic of those premises.

There is a reason why the book remains a best-seller over 50 years after its publication, and why a Reader’s Digest survey found it the second most influential book in history, trailing only the Bible in people’s statement of what books most affected them.

You may dismiss Rand’s work as “simplistic” if you wish; there are millions of us who disagree.

P.S. -- Obama is exactly like Mr. Thompson, the man who was Head of the State at the end in Atlas Shrugged.

Re: Hocus-Pocus Indeed

Michael Smith — Fri, 01 May 2009 14:57:40 -0000

Muirgeo claimed:

And still you can provide NO, NONE , NADDA evidence that if we followed YOUR rules liberty, freedom and the economy would thrive... NONE just hearsay.

Oh baloney. If you think there is no evidence that demonstrates that statism doesn't work -- that socialism, in any of its forms, including communism and fascism -- leads to economic disaster if practiced consistently -- then you are evading the major events of the 20th century.

And that's all you ever do, Muirgeo, you refuse to either accept an argument or refute it -- you simply pretend that it doesn't exist as you regurgitate your baseless claims.

Re: Costs Are Not Benefits

Michael Smith — Sun, 03 May 2009 15:22:02 -0000

K Ackerman wrote:

That would be the extent of the problem except for a couple of little things that lead to a runaway positive feedback loop with increasing temperatures.

This is false. The climate is dominated by negative feedbacks that prevent the sort of "runaway" positive feedback loop you attempt to frighten us with. The proof of this is that in the past, CO2 levels have been as much as 17 times higher than at present, with global temperatures 10 degrees hotter -- yet there was no "runaway".

What's more, the case for global warming is seriously weakened by certain data the main stream media never talks about or publicizes. Let me acquaint you with just one fact.

All of the global climate models that form the backbone of the predictions about the effects of rising CO2 on temperatures show that the greatest heating will occur in the tropical troposphere. Here the heating is -- according to these models -- expected to be significantly greater than the heating that shows up in the surface record.

Yet all of the satellite and weather balloon observations of the tropical troposphere taken since 1979 -- when the first satellites went into service -- show that tropical troposphere temperatures today are NO HIGHER than they were 30 years ago when the satellites first started measuring it. Go here to see a graph of these temperatures for yourself:

http://www.climateaudit.org/?p=5756
</p>

The expected heating of the tropical troposphere has not occurred.

The graphs shown by the popular media is almost always the surface temperature record, which does show about .7 ( that’s 7/10ths of 1 degree) warming over the past 100 years. However, there are problems with this record. For one thing, it is still contaminated by urban heat island effects. A survey of the weather stations used to take these readings show that in many cases, the thermometers are located in the middle of paved parking lots. The man who heads up this surface record, the notoriously biased James Hanson, claims that all UHI effects have been “adjusted out” -- yet, he refuses to release any details on exactly how these adjustments have been done. And if you study the temperatures before and after his “adjustments”, you find more stations adjusted UPWARD than downward -- the exact opposite of what should occur if one is correcting for urban heat island effect.

Another problem with the surface record is the loss of thousands of reporting stations in the 1990s. These stations were lost when the U.S.S.R. collapsed and could no longer afford to staff these stations. Most of the lost stations were -- you guessed it -- in places like Siberia. So the entire network of stations was shifted toward a mix that contained far more stations in warm areas than in cold.

So what you are always shown is this flawed, questionable surface record -- when the real place that should be showing the most heating, the tropical troposphere, which shows no heating over the last 30 years -- is never shown to you.

This is only the tip of the iceberg of dishonesty one can find with even a little study of the alleged “science” of global warming.

And as for the claim that there is a strong “consensus” among scientists, here is a web site where over 31,000 American scientists have signed a petition disagreeing with global warming theory. Here is the web site:

http://www.petitionproject.org/

Be sure to read the petitioner's article titled “Summary of Peer-Reviewed Research”, available at this link:

http://www.petitionproject.org/review_article.php

Global warming from human CO2 emissions is far, far from proven -- and is contradicted by most of the available evidence.

Re: Costs Are Not Benefits

Michael Smith — Sun, 03 May 2009 18:31:14 -0000

Ackerman asked:

In your mind, are those temperature readings that you didn't link to conclusive proof that global warming is not/will not take place?

I would never claim that temperatures "I didn't link to" prove anything. I didn't claim that global warming is NOT occurring -- I simply noted that it is not PROVEN -- despite the fact that it is generally proclaimed to be -- and that the facts, in many cases, contradict the global warming claims.

He also wrote:

Let see... what could keep the troposphere temperature constant in the face of larger concentrations of heat-retaining gasses in the atmosphere?

Some unknown explaination.

Some unknowable explaination, such as God.

Maybe higher wind speeds would improve heat convection to the stratosphere, or take a larger volume of air over the poles.

Maybe more frequent and severe storms would dissapate energy.

I did not -- and would not -- -propose any of those (mostly) fallacious and foolish “straw man” “explanations” you offer in a lame attempt to discredit the facts I offered -- instead I offer the simpler explanation -- that the surface record is distorted and that the global climate models that predict tropical troposphere warming underestimate NATURAL variability and fail to account for natural, i.e. non-man-made, causes of climate variations.

You then followed up with this claim:

Someone would tell us if the measured temperatures have been warmer at the poles, and we would notice things like more frequent and severe storms.

Sure, someone would tell us. But would those who tell us arctic temperatures hit “new highs” also tell us that Antarctic ice is increasing? See here for that story: http://www.iceagenow.com/Growing_Antarctic_Ice_...>

Or just “Goggle” it for yourself. You’ll find lots of stories -- and lots of scientists -- showing the Antarctic ice thickness is increasing.

You then continued:

As for past ice core readings, did they find any signs that humans were contributing to those elevated readings? I only ask because maybe they were events that caused spikes, but then flattened out because there was no year-after-year sustained elevations of CO2. That's just a thought.

No “year-after-year sustained “elevations of CO2”? Are you kidding? There were CENTURIES of “sustained, year-after-year of CO2 elevations”. But two facts stand out -- first, that the increases in CO2 levels seen in the ice core samples, throughout the historical record, CAME AFTER, and FOLLOWED, the increase in temperatures, by some 800 years. This is one of Al Gore’s most egregious lies -- he shows the CO2 levels rising along with temperatures, but he glosses over, and evades, the fact that temperature changes occurred LONG BEFORE the CO2 concentration began to change.

There is a good, and logical, explanation for this phenomena, known to all climate scientists. If the world warms, for ANY reason, even for a reason having nothing to do with CO2, then as the oceans warm, they will release CO2 into the atmosphere. Warm water holds less of any dissolved gas, including CO2, so as the oceans warm in response to atmospheric warming, they will emit CO2, and its concentration will rise.

The exact opposite will happen, during periods of cooling. And the record shows this as well -- as global temperatures decline, CO2 levels decline -- beginning some 800 years AFTER temperatures start to fall -- and they do so because the cooling oceans can hold more CO2.

So, the ice core data, if is proves or indicates anything, shows that CO2 levels FOLLOW -- and RESULT FROM -- temperature changes, as opposed to causing those temperature changes.

Ackerman concluded:

Also, if a CO2 event could in fact cause dramatic changes, one has to wonder if sustained CO2 elevations might cause even more dramatic changes.

It's just a thought, but I'm not saying you have to think about.

Trouble is, the historical record -- as I’ve just pointed out -- indicates that CO2 changes lag behind -- and thus trail -- and thus cannot cause those “dramatic changes” you’d love to link them to.

Once again, we see that a (mostly) cursory examination of the data and the facts shows the fallacies in the global warming theories -- as well as exposing the dishonesty of its promoters.

Re: For the record

Michael Smith — Wed, 06 May 2009 03:10:05 -0000

What the Obama administration is doing to the economy isn't "steering" it -- it's stealing from it; and it hasn't brought us back from an "abyss" -- it's taken a multi-trillion dollar bite out of our ASSets.

How long will it take the taxpayers of this country to realize that when government spends, it is spending THEIR money -- and that when government increases its expenditures, it does so only at THEIR expense?

The notion that only the richest 5% will pay for all this spending is a fantasy -- just like Obama's crazed fantasy that he can pass economy-killing "green" cap-and-trade legislation that will become a net economic benefit. Obama is like a cannibal chief telling his nervous tribe that they can all feed themselves merely by eating only the fattest 5% -- the smarter among the tribe wonders what will happen when they once again grow hungry and the fattest 5% are gone.

The naked truth is this: Obama is the power-lusting cannibal/looter-in-chief of an administration that is stealing us blind for purposes of granting ever-more unearned economic benefits to the undeserving coalition of parasites -- namely, today's Democratic party -- that voted this particular gang into office. Krugman is merely a useful-idiot lap dog who, on cue, barks out the intellectual clap-trap that provides a transparent veneer of rationalization for this orgy of looting.

We can only hope that the mid-term elections deal a knee-capping backlash against this massive money-and-power grab. That might buy us some time -- and slow down this tidal wave of fascism on which Obama is surfing his way through all of our life savings as well as those of our children.

Re: Dog bites man

Michael Smith — Fri, 08 May 2009 02:56:26 -0000

The looter-in-Chief Obama and his power-lusting administration obviously think the American people are really, REALLY STUPID if it believes we will fall for this alleged "budget cutting" effort or be impressed by the recent boast that Obama will "cut the deficit in half".

We can only hope that enough Americans are awake to deliver a serious knee-capping to this gang of thieves in the mid-term elections. Otherwise, our goose is cooked. We can't survive four full years of this level of looting and destruction.

Re: Politicians' 'Principles'

Michael Smith — Sat, 16 May 2009 03:40:09 -0000

Bush never had any "free market principles" -- because Bush is a firm believer in the morality that holds that all men have a duty to sacrifice for the sake of the needy, with government on hand to enforce that duty if necessary.

Such a morality is what drives the relentelss expansion of the welfare state and the contraction (and eventual extinguishment) of our right to the pursuit of our own happiness, by means of our own honest effort.

Here, for example, are some quotes from Bush's first inaugural address:

“Where there is suffering, there is duty. Americans in need are not strangers, they are citizens, not problems, but priorities.” George Bush.

(Got that? The loafer who lives next door to you and won’t earn enough to pay his doctor bills is a “priority” that you will be forced to tend to, whether you like it or not -- because your right to your own life and property are simply not a priority.)

“I ask you to seek a common good beyond your comfort….. I ask you to be citizens: building communities of service …..” George Bush

“Americans are generous and strong and decent, not because we believe in ourselves, but because we hold beliefs beyond ourselves.” George Bush

“Our duty is fulfilled in service to one another.” George Bush

The moral justification of a free market rests in the view that one’s life -- and the fruits of one’s efforts -- belong to the individual, who must be free to keep his property or engage in voluntary trade with others as he sees fit. If, instead, one holds the moral view that one has a duty -- which government is there to enforce by means of taxes, rules, laws guns and jails -- to surrender one’s property for the sake of the needy, then any “free market” advocacy will be mere lip service, to be abandoned as soon as the next moocher waves his sores in our faces and declares himself “in need”.

Bush is not alone in his dedication to this morality of forced sacrifice and duty. Even the sainted Ronald Reagan endorsed it -- and thereby torpedoed any chance he had at his alleged goal of “reining in” government. In a speech to the nation just a few weeks after his election, Reagan said the following:

“We will continue to fulfill the obligations that spring from our national conscience. Those who, through no fault of their own, must depend on the rest of us -- the poverty stricken, the disabled, the elderly, all those with true need -- can rest assured that the social safety net of programs they depend on are exempt from any cuts.”

In that one statement, Reagan concedes the moral premise of the entire welfare/regulatory state. What’s more, he gives the welfare worshippers an invaluable gift with the notion of a “social safety net” -- a concept that concedes and neatly summarizes the left’s view that capitalism is dangerous and risky, and that those that succeed are largely lucky while those who find themselves poor are merely the unlucky one’s who tripped and fell off capitalism’s high-wire act.

Capitalism and free markets cannot be defended until we find the courage to denounce the morality of sacrifice and duty -- and declare, as did our founders, that all men possess the unalienable right to exist for their own sake, with each of us free to pursue our own happiness, by means of our own honest effort.

We must declare that one man's "need" does not entitle him to initiate the use of force to steal one penny of another man's money -- or have the government do the stealing for him.