Parallel Lives: Liberty or Power?

Mises Daily: Friday, July 09, 2010 by Llewellyn H. Rockwell Jr.

llewellyn_rockwellThis is the tale of two economists who lived parallel lives, and then pursued two different and contrary goals. One was devoted to liberty and one was devoted to the state.

The first remained a teacher during his entire life, never in any prestigious institution and never exercising any power. Indeed, he used his post teaching against the exercise of power, and became the world’s most powerful intellectual voice for radical liberalism or libertarianism. This man who loved liberty died in 1995 and his work has taken flight the world over. His books are selling as never before, all of them, and his star is rising by the day.

His name was Murray N. Rothbard.

The second one became the most powerful and influential economist in the world, practically running the world for a very long time. While in power, he was revered by everyone who was anyone. His every utterance could cause hundreds of billions to be made or lost in the market. But he will live out the rest of his days under a cloud of derision and discredit, defending himself against the perception that he created history’s largest financial calamity.

His name is Alan Greenspan.

greenspanandrothbardLet us track these two lives and consider the choices they made.

As Charles Burris has pointed out, they were both born in New York City, in 1926. Rothbard was born on Tuesday, March 2. The following Saturday, March 6, Alan Greenspan was born. They had a similar background and upbringing, Greenspan of German-Jewish heritage and Rothbard of Russian-Jewish heritage. Both attended private schools and pursued their respective passions.

It is after high school their lives diverged. Whereas Rothbard followed a very mainstream path in academic economics — one that would seem to set him up as a giant in the profession — Greenspan went to the Julliard School of Music to pursue his true love, which was the clarinet.

As remarkable as it may seem today, Greenspan was not interested in economics or banking or any technical field. His interests were the arts, at least initially. There is nothing wrong with that, and indeed music has long been considered a foundation of a great education.

I mention this because it is an implausible beginning for the man who would later take the helm of the institution that would purport to manage the world reserve currency — a man after whom a professorship at New York University has been named.

Meanwhile, Rothbard chose to attend Columbia University. He was not an economics major. His passion was mathematics — and this was even before the full mathematicization of the profession. At Columbia, he studied under the famed statistician Harold Hotelling. It might have been Hotelling who led Rothbard to economic studies, but very early on, Rothbard the mathematician could see what was wrong with that application of statistical methods to economic theory. He would later build on Mises to construct a systematic theory of economics rooted in logical deduction in the manner of 19th-century theorists. All the while, his libertarianism was also in strong formation from early in his youth.

As implausible as it may seem today, Rothbard’s biography would seem to be exactly that which would make for professional triumph with the mainstream of opinion and with the powers that be. What made that impossible were the choices he made — choices made on principle and for the love of truth and liberty.

Greenspan, for his part, declined to carry out his musical dreams. His grades were only average so he departed to play with the Henry Jerome Orchestra, playing saxophone or clarinet as necessary. He traveled the country on buses between engagements. Soon he tired of that life and in 1945 changed both his school and his major to economics.

The school was New York University, where Mises had begun teaching that very year. But Greenspan did not study with Mises, whom he might have regarded as a washed-up old man who could do nothing for his primary concern, which was his career. Instead, he chose the division called “the factory”: 9,000 students competed in various fields of specialization in business. He graduated with honors in 1945 and enrolled in the masters program, graduating in 1948.

At this point, the lives of Rothbard and Greenspan briefly intersect in an interesting way: at Columbia University. Two years earlier, Rothbard had received his own masters in economics from Columbia, and had enrolled in the PhD program. Professor Arthur Burns was the most prominent faculty member. Burns would later become Eisenhower’s head of the Council of Economic Advisers and head of the Federal Reserve. One might say that he was the Greenspan of his day.

Greenspan dropped out of the Columbia economics program to follow Burns to Washington and model himself after his tendency toward chasing powerful positions and powerful people. Greenspan watched Burns carefully, very impressed at how economics in an age of positivism can be used in the service of state-connected careers.

Rothbard meanwhile stayed behind at Columbia, writing and studying. One of his seminal articles in this period was published in a book in honor of Mises — that supposedly washed-up old man who just so happened to have a penchant for speaking truth to power.

Just as Burns became Greenspan’s model, Mises had become Rothbard’s model. Two more opposing career paths can hardly be imagined. Mises had been tossed out of two countries for his principled stance, and even forfeited a prestigious position in the profession for being unwilling to go along with the Keynesian revolution.

Rothbard would follow a similar path. His article written in honor of Mises, published in 1956, was a reconstruction of utility and welfare economics along nonmathematical lines.

Here we have the graduate student doing what a principled person does: he was pursuing truth through research and writing. He might have chosen to echo the rising Keynesianism and positivism of his day. Certainly he was intellectually capable of become the master of both fields. Instead, he rejected them intellectually and took a different path along lines laid out by Mises.

And what was Greenspan doing? He was running around Washington pandering to the big shots, watching their every move, striving to be like them, and attempting to follow in their footsteps by cultivating press contacts and relationships to people in high places.

Read the rest of this article [here]

This article is posted with permission from the Creative Commons Attribution 3.0 License

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Posted in Battle for Liberty | Tagged , , , , , , , , , , | 1 Comment

Obama Blocked Clean Up of BP Oil Spill By Friendly Countries

For Freedom’s Sake is not in the business of pointing fingers at political parties or particular president’s but this tragedy cannot be overlooked by anyone who is shocked by the political decisions being made at this time by this president regarding the BP oil spill. Please read the following article and pass it along.

by Hans Bader
June 14, 2010 @ 2:16 pm at OpenMarket.org

obamaCrucial offers to help clean up BP’s oil spill “have come from Belgian, Dutch, and Norwegian firms that . . . possess some of the world’s most advanced oil skimming ships.” But the Obama administration wouldn’t accept the help, because doing so would require it to do something past presidents have routinely done: waive rules imposed by the Jones Act, a law backed by unions.

“The BP clean-up effort in the Gulf of Mexico is hampered by the Jones Act. This is a piece of 1920s protectionist legislation, that requires all vessels working in U.S. waters to be American-built, and American-crewed. So . . . the U.S. Coast Guard . . . can’t accept, and therefore don’t ask for, the assistance of high-tech European vessels specifically designed for the task in hand.”

The law itself permits the president to waive these requirements, and such waivers were “granted, promptly, by the Bush administration,” in the aftermath of hurricanes and other emergencies. But Obama has refused to do so, notes David Warren in the Ottawa Citizen. Instead, Obama rejected a Dutch offer to help clean up the spill, noted Voice of America News:

“The Obama administration declined the Dutch offer partly because of the Jones Act, which restricts foreign ships from certain activities in U.S. waters. During the Hurricane Katrina crisis five years ago, the Bush administration waived the Jones Act in order to facilitate some foreign assistance, but such a waiver was not given in this case.”

“After the Obama administration refused help from the Netherlands, Geert Visser, the consul general for the Netherlands in Houston, told Loren Steffy: ‘Let’s forget about politics; let’s get it done.’” But for Obama, politics always comes first: “The explanation of Obama’s reluctance to seek this remedy is his cozy relationship with labor unions. . . ‘The unions see it [not waiving the act] as … protecting jobs. They hate when the Jones Act gets waived.’”

Read the rest of the article by clicking [here]

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Posted in Enviro Politics | Tagged , , , , | Leave a comment

The Constitution of Liberty, by F. A. Hayek

Reviewed by Irving Kristol From issue: April 1960

constitutionoflibertyIt is generally forgotten that Edmund Burke and Adam Smith were both Whigs. In our textbooks of political theory, they are segregated from, and opposed to, one another: the romantic exponent of tradition, authority, and the organic community, as against the individualist liberal who believed in laisser-faire. The antithesis is anachronistic : it reflects the later dissolution of Whiggery into “conservative” and “liberal” ideologies. In their own day, despite their markedly different casts of mind, Burke and Smith were united in affirming the two major propositions of the original Whig synthesis: (1) liberty is the most precious of political goods, and (2) civilization is the result of human action but not of human design. Burke never called himself a “conservative,” and Smith never used the phrase laisser-faire.

Professor Friederich Hayek, who is usually thought of as a conservative and laisser-fairist, can be more accurately regarded (and clearly defines himself) as the last surviving Whig. As is generally the case, the last of the line is not its most perfect or most vigorous representative. Professor Hayek’s Whiggery has too much the shrillness of doctrine, too little the calm assuredness of a living faith. In political theory, it is much easier to be right than to be relevant; and the greatest temptation for the critic is to rest in self-righteousness. This temptation Professor Hayek is not immune to; he too often gives the impression that he considers reality to be one immense deviation from true doctrine. Nevertheless, The Constitution of Liberty is a book that is noble in its proportions, often profound in its insight, learned in its commentary, and usefully provocative in its argument.

Professor Hayek may be doctrinaire, but he is not a dogmatist. The particular charm of this volume is not that he attempts to answer the objections of his critics (he doesn’t, really), but that he takes it upon himself to state the limitations inherent in his own position. It is, intellectually, that rare thing: a modest book. Unlike certain other thinkers, Professor Hayek does not claim that a reliance on free enterprise will deliver unto us all the goods of this world and the next. He does not assert that, if we all submit ourselves to the rigors of a free market economy, we shall in the end get our just desserts. Indeed he specifically denies it:

There is perhaps no more poignant grief than that arising from a sense of how useful one might have been to one’s fellow men and of one’s gifts having been wasted. That in a free society nobody has a claim to an opportunity to use his special gifts, and that, unless he himself finds such opportunity, they are likely to be wasted, is perhaps the gravest reproach directed against a free system and the source of the bitterest resentment.

To this reproach, Professor Hayek makes a twin rejoinder. First, it is by no means certain that people would be happier if they knew their condition in life to correspond to their true capacities—life might be intolerable if one had to assume full responsibility (and blame) for one’s fate. Second, no human being, or class of human beings, has the ability to make a fair or comprehensive judgment of a man’s potentialities—or even to define them.

This last point is the crucial one. The Constitution of Liberty is one long (570 pages) argument from ignorance. “Human reason,” Professor Hayek insists, “can neither predict nor deliberately shape its own future. Its advances consist in finding out where it has been wrong.” Here, too, the influence of Professor Hayek’s vocation as an economist is visible. For the single premise of all modern economic thought is that philosophical wisdom (or what used to be considered as such) is impossible: no one can know better than a man himself what he most truly wants, and therefore a market economy is the most reasonable of economic arrangements. (It is interesting to observe that Professor Hayek’s “liberal” critics do not openly reject this premise; they simply deny that the free market any longer exists, or that it can be reconstituted.)

Again and again, the book reiterates the thesis that our ignorance is far greater than our knowledge; that the more we know, the more we know we do not know; that all our actions have unforeseeable consequences; that the senselessness of coercing men to “build a better world” lies in the certainty that our children will detest this world. Professor Hayek no longer insists (as he once did) that economic planning is impossible. He now insists only that it is incompatible with a progressive society. We can, by organizing knowledge and mobilizing men, achieve fixed goals more effectively than by encouraging individual initiative and liberty. But we shall then have made it far more difficult to discover new goals, new wants, new knowledge of goals and wants. If we attempt to make society adequate to our present knowledge of it, we run the risk of freezing our knowledge at the point where it is merely adequate to the present state of our society.

This kind of reasoning will have little appeal to those who are so passionately indignant at the specific inequities (and iniquities) of the world we live in that they blindly identify liberty with power—the power to dominate and revise the status quo. It is not intended to. Professor Hayek is concerned to establish so firmly the rule of law, of the self-limiting State as this has been defined by traditional liberalism (and in this he is liberal rather than Whig), as to render such passion impotent:

Not only is liberty a system under which all government action is guided by principles, but it is an ideal that will not be preserved unless it is itself accepted as an overriding principle governing all particular acts of legislation. Where no such fundamental rule is stubbornly adhered to as an ultimate ideal about which there must be no compromise for the sake of material advantages—as an ideal which, even though it may have to be temporarily infringed during a passing emergency, must form the basis of all permanent arrangements—freedom is almost certain to be destroyed by piecemeal encroachments. For in each particular instance it will be possible to promise concrete and tangible advantages as the result of a curtailment of freedom, while the benefits sacrificed will in their nature always be unknown and uncertain. If freedom were not treated as the supreme principle, the fact that the promises which a free society has to offer can always be only chances and not certainties, only opportunities and not definite gifts to particular individuals, would inevitably prove a fatal weakness and lead to its slow erosion.

Even for those of us who do believe that there is much in American life that stands in need of reformation, who are not persuaded that traditional liberalism is the very epitome of civilization itself, who are as much worried by the present impact of scientific knowledge as by its hypothetical future sterility, such a warning may yet be worth listening to. Moreover, in his shrewd analyses of taxation, education, social security, city planning, and the administrative bureaucracy of the welfare state, Professor Hayek makes us realize how thoughtless (literally thoughtless) has been much of our activity in these fields; how grossly insensitive we have been, in our haste and enthusiasm, to possibilities excluded and opportunities foreclosed. Above all, his book encourages us to take another look at our welfare state, which—lacking any general idea of “welfare”—is coming more and more to resemble a monstrous pork-barrel.

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Posted in Austrian Economics | Tagged , , , , | 1 Comment

“What Sort of Despotism Democratic Nations Have to Fear”

sheldon-richmondby Sheldon Richman Posted on The Freeman, June 2010 • Volume: 60 • Issue: 5

I took that title from volume 2, section 4, chapter 6 of Alexis de Tocqueville’s Democracy in America (1840). Considering what has been happening legislatively (and not just in the last year-plus), it seems like a good time to revisit Tocqueville’s writing about democratic despotism.

He notes that despotism in a constitutional republic would be different from what it was in the Roman empire. How so? “[I]t would be more extensive and more mild; it would degrade men without tormenting them.”

Specifically: “Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood. . . .”

alexis_de_tocqueville-216x290But that is not its object. Rather, “it seeks, on the contrary, to keep them in perpetual childhood. . . . For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?”

He goes on with an almost spooky prophecy:

After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

Tocqueville also sees the paradoxes of democracy. How relevant they still are:

I have always thought that servitude of the regular, quiet, and gentle kind which I have just described might be combined more easily than is commonly believed with some of the outward forms of freedom, and that it might even establish itself under the wing of the sovereignty of the people.

“Our contemporaries are constantly excited by two conflicting passions: they want to be led, and they wish to remain free. As they cannot destroy either the one or the other of these contrary propensities, they strive to satisfy them both at once. They devise a sole, tutelary, and all-powerful form of government, but elected by the people. They combine the principle of centralization and that of popular sovereignty; this gives them a respite: they console themselves for being in tutelage by the reflection that they have chosen their own guardians. Every man allows himself to be put in leading-strings, because he sees that it is not a person or a class of persons, but the people at large who hold the end of his chain. (Emphasis added.)

Tocqueville concludes, “Thus their spirit is gradually broken and their character enervated. . . . It is indeed difficult to conceive how men who have entirely given up the habit of self-government should succeed in making a proper choice of those by whom they are to be governed; and no one will ever believe that a liberal, wise, and energetic government can spring from the suffrages of a subservient people.

“A constitution [that is] republican in its head and ultra-monarchical in all its other parts has always appeared to me to be a short-lived monster.”

Tocqueville might have had his timing off, but with a fiscal crisis on the horizon—the product of a bloated welfare state, an aging population, and a lackluster economy mired in corporatism—the “monster” is in trouble. Is it too late to turn things around?

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Posted in Democracy | Tagged , , , | 1 Comment

The Flat Tax: How it Works and Why it is Good for America

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Posted in Economics 101 | Tagged , , | 1 Comment

Six Reasons Why the Capital Gains Tax Should Be Abolished

Great new video lesson explaining saving, investment and the taxation of your money. Great job Dan.

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Posted in Economics 101 | Tagged , , | 1 Comment

The Great Global Warming Blunder: How Mother Nature Fooled the World’s Top Climate Scientists

April 20th, 2010 by Roy W. Spencer, Ph. D.

Today (April 20) is the official release date of my new book entitled: “The Great Global Warming Blunder: How Mother Nature Fooled the World’s Top Climate Scientists“, published by Encounter Books.

About one-half of Blunder is a non-technical description of our new peer reviewed and soon-to-be-published research which supports the opinion that a majority of Americans already hold: that warming in recent decades is mostly due to a natural cycle in the climate system — not to an increase in atmospheric carbon dioxide from fossil fuel burning.

blunder-cover-mediumBelieve it or not, this potential natural explanation for recent warming has never been seriously researched by climate scientists. The main reason they have ignored this possibility is that they cannot think of what might have caused it.

You see, climate researchers are rather myopic. They think that the only way for global-average temperatures to change is for the climate system to be forced ‘externally’…by a change in the output of the sun, or by a large volcanic eruption. These are events which occur external to the normal, internal operation of the climate system.

But what they have ignored is the potential for the climate system to cause its own climate change. Climate change is simply what the system does, owing to its complex, dynamic, chaotic internal behavior.

As I travel around the country, I find that the public instinctively understands the possibility that there are natural climate cycles. Unfortunately, it is the climate “experts” who have difficulty grasping the concept. This is why I am taking my case to the public in this book. The climate research community long ago took the wrong fork in the road, and I am afraid that it might be too late for them to turn back.

NATURE’S SUNSHADE: CLOUDS
The most obvious way for warming to be caused naturally is for small, natural fluctuations in the circulation patterns of the atmosphere and ocean to result in a 1% or 2% decrease in global cloud cover. Clouds are the Earth’s sunshade, and if cloud cover changes for any reason, you have global warming — or global cooling.

How could the experts have missed such a simple explanation? Because they have convinced themselves that only a temperature change can cause a cloud cover change, and not the other way around. The issue is one of causation. They have not accounted for cloud changes causing temperature changes.

The experts have simply mixed up cause and effect when observing how clouds and temperature vary. The book reveals a simple way to determine the direction of causation from satellite observations of global average temperature and cloud variations. And that new tool should fundamentally change how we view the climate system.

Blunder also addresses a second major mistake that results from ignoring the effect of natural cloud variations on temperature: it results in the illusion that the climate system is very sensitive. The experts claim that, since our climate system is very sensitive, then our carbon dioxide emissions are all that is needed to explain global warming. There is no need to look for alternative explanations.

But I show that the experts have merely reasoned themselves in a circle on this subject. When properly interpreted, our satellite observations actually reveal that the system is quite IN-sensitive. And an insensitive climate system means that nature does not really care whether you travel by jet, or how many hamburgers or steaks you eat.

CARBON DIOXIDE: FRIEND OR FOE?
The supposed explanation that global warming is due to increasing atmospheric carbon dioxide from our burning of fossil fuels turns out to be based upon little more than circumstantial evidence. It is partly a symptom of our rather primitive understanding of how the climate system works.

And I predict that the proposed cure for global warming – reducing greenhouse gas emissions – will someday seem as outdated as using leeches to cure human illnesses.

Nevertheless, despite the fact that scientific knowledge is continually changing, it is increasingly apparent that the politicians are not going to let little things like facts get in their way. For instance, a new draft climate change report was released by the U.S. yesterday (April 19) which, in part, says: “Global warming is unequivocal and primarily human-induced … Global temperature has increased over the past 50 years. This observed increase is due primarily to human-induced emissions of heat-trapping gases.”

You see, the legislative train left the station many years ago, and no amount of new science will slow it down as it accelerates toward its final destination: forcibly reducing greenhouse gas emissions.

But in Blunder I address what other scientists should have the courage to admit: that maybe putting more CO2 in the atmosphere is a good thing. Given that it is necessary for life on Earth, the amount of CO2 in the atmosphere is surprisingly small. We already know that nature is gobbling up 50% of what humanity produces, no matter how fast we produce it. So, it is only logical to address the possibility that nature — that life on Earth — has actually been starved for carbon dioxide.

This should give you some idea of the major themes of my new book. I am under no illusion that the book will settle the scientific debate over global warming.

To the contrary — I am hoping the debate will finally begin.

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Posted in Enviro Politics | Tagged , , | 1 Comment

Kelsey Grammer on Right

HT to Lawrence Reed from the Foundation for Economic Education.

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Posted in Uncategorized | 1 Comment

Political Economy Wisdom on ESPN

There are some bright spots in the midst of the seemingly unstoppable growth of government. Citizens of every stripe are beginning to wake-up to the dangers and stupidity of the meddling in private affairs of this current administration. And for all of my sports fans who don’t think much about government, economics and the constitution maybe Boettke and Kornheiser can change that. HT to Peter Boettke, GUM economics guru from their great blog Coordination Problem.

tonykornheiserListening to ESPN radio yesterday while stuck in local traffic,Tony Kornheiser argued that he was tired of local politicians announcing their broader domestic policy agenda, let alone their foreign policy position. Who cares what the mayor thinks about those issues? All we should be concerned about are the 3 S’s: Schools, Safety, Services. We want quality schools, we want to walk our streets without worry, and we want our garbage picked up. Other than that, Kornheiser reasoned, and government need not be meddling in our lives.

On the same show Kornheiser attacked the populist rhetoric used to denounce “hedge-fund managers” who have made significant money over the past year. Kornheiser argued that these guys didn’t get any TARP money and didn’t ask to be bailed out, but instead worked hard to figure out how to make money for their clients and in doing so earned every penny they have gotten.

I realize that the probability that Kornheiser is John Stossel in sports clothing is very low, but his 5 minute rant did make my frustration due to insane local traffic temporarily go away.

Posted by Peter Boettke on April 02, 2010 at 08:33 AM

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Posted in Economics 101 | Tagged , , , | 1 Comment

WARNING: Guam In Danger Of “TIpping Over!”

In an amazing video from last Friday’s House Armed Services Committee, Congressman Hank Johnson (D-GA) worries that Guam may tip over if the military sends more troops to be stationed there. He says: “My fear is that the whole island will become so overly populated that it will tip over and capsize.” Give credit to Admiral Robert Willard, Commander of the Navy’s Pacific Fleet, for keeping his composure, saying “We don’t anticipate that.”

My concern is that NYC, with 12,000,000 people, might do the “flip” before Guam causing a Tsumani and wiping out Atlantic City. Has Senator Schumer done anything to warn New Yorkers.

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Posted in Political Lunacy | Tagged , | 3 Comments