Topic: Political Philosophy

Your Apropos-of-Nothing Observation of the Day

Fun with juxtaposed quotes:

Durkheim taught that in religious worship, society adores its own camouflaged image. In a nationalist age, societies worship themselves brazenly and openly, spurning the camouflage.

-Ernest Gellner, Nations and Nationalism (Ithaca, NY: Cornell University Press, 1983), p. 56.

and

Addressing Congress [in 2003], Bush declared that “the course of this war is not known, yet its outcome is certain. Freedom and fear, justice and cruelty, have always been at war, and we know that God is not neutral between them.” A form of religious nationalism permeated the whole address. Bush took words from a hymn, “There’s Power in the Blood,” to refer to the “power, wonder-working power,” of “the goodness and idealism and faith of the American people” — words which in the hymn are used of the lamb, Jesus Christ.

-Anatol Lieven, America Right or Wrong: An Anatomy of American Nationalism (Oxford: Oxford University Press, 2004), p. 128.

Crazy as I thought those days were at the time, the more you think about it, the crazier they seem. You’d think American Christians would have found this sort of thing mindblowingly offensive. Yet, they sort of seem to have dug it.

Nationalism. Powerful stuff.

Time to Think about the Gold Standard?

Back in 2007, presidential candidate Ron Paul generated a lot of talk, especially among libertarians, about monetary policy, the Federal Reserve, and the gold standard. As a longtime believer in sound money, I was surprised to discover how many smart young libertarians thought that talk of the gold standard was nutty. And perhaps more surprised to discover that they thought it was unnecessary now that the problem of central banking had been solved. As two of them wrote when I asked about their objections,

“The gold standard is the solution to no actual problem that is of concern to anyone. I think it’s a mistake to take a relatively professional and independent central bank for granted, but we have one. Inflation is low and predictable. The monetary climate is stable and amenable to savings and investment, etc.”

“What’s the beef with the Fed?  By my estimation, it’s been one of the most effective, restrained government agencies over the last twenty five years.  They’ve dramatically reduced the volatility of the business cycle while achieving low, reasonably constant inflation.” 

Well. How’s that confidence in central banking looking now? I’m reminded of Murray Rothbard’s comment in 1975 about what the era of Vietnam, Watergate, and stagflation had done to trust in government:

Twenty years ago, the historian Cecelia Kenyon, writing of the Anti-Federalist opponents of the adoption of the U.S. Constitution, chided them for being “men of little faith” – little faith, that is, in a strong central government. It is hard to think of anyone having such unexamined faith in government today.

Partly in response to such criticisms of the gold standard, in February 2008 Cato published a paper by Professor Lawrence H. White, “Is the Gold Standard Still the Gold Standard among Monetary Systems?” White argued:

The gold standard is not a flawless monetary system. Neither is the fiat money alternative. In light of historical evidence about the comparative magnitude of these flaws, however, the gold standard is a policy option that deserves serious consideration.

In a study covering many decades in a large sample of countries, Federal Reserve Bank economists found that “money growth and inflation are higher” under fiat standards than under gold and silver standards.

A gold standard does not guarantee perfect steadiness in the growth of the money supply, but historical comparison shows that it has provided more moderate and steadier money growth in practice than the present-day alternative, politically empowering a central banking committee to determine growth in the stock of fiat money. From the perspective of limiting money growth appropriately, the gold standard is far from a crazy idea.

And he quoted a devastating line from an essay (p. 104) by Peter Bernholz:

A study of about 30 currencies shows that there has not been a single case of a currency freely manipulated by its government or central bank since 1700 which enjoyed price stability for at least 30 years running.

In February 2008 White’s study didn’t get much attention. Most people still thought the Greenspan-Bernanke Fed was doing a great job, so why talk about alternatives to fiat money? But now, after the crash of 2008 and the growing realization that Dow 14000 was the product of a cheap-money boom that led to the inevitable bust, maybe it’s time to think about the gold standard or other constraints on politicized money creation.

When the Goverment Robs Peter to Pay Paul, It Violates the Constitution

The Supreme Court’s 2005 decision that the government could use its eminent domain power to transfer private property to a different private actor – which promised to use it to generate more tax revenue – touched off a firestorm of criticism and created a movement to strengthen property rights.  (For the story behind that case, Kelo v. New London, I recommend Little Pink House: A True Story of Defiance and Courage, for which Cato hosted a book forum in January.)   On Friday, Cato filed a brief urging the Supreme Court to review a decision ratifying a similar, even more blatant, government taking of private property for a non-public use.

In Empress Casino v. Giannoulias, the Illinois Supreme Court upheld a statute transferring money from private riverboat casinos – and at that only the certain politically disfavored ones located in and around Chicago – to private horseracing tracks.  The state high court found that the Fifth Amendment’s Takings Clause does not apply to exactions of money from private entities, which ruling the casinos are asking the U.S. Supreme Court to review.

Cato’s brief argues that the Court should grant certiorari for yet another reason: The Illinois statute (which coincidentally appeared in the transcript of the Blagojevich sting) is in clear violation of the Takings Clause’s “public use” requirement, impermissibly eroding protections for private property even under Kelo’s (flawed) standard. The statute does nothing more than rob Peter to pay Paul, a result that cannot be squared with the Fifth Amendment, which permits government takings only for public use, and then only if just compensation is paid. This case instead involves a naked transfer of the casinos’ revenues to the racetracks, with no meaningful restriction on how the racetracks use those funds — and does not remotely resemble any public use approved by the Supreme Court.

Permitting such a statute to stand will only encourage federal, state, and local governments to exact funds from one private actor for the exclusive benefit of another, transgressing the very property rights and economic liberties that inspired the Declaration of Independence and Constitution.

Calling All Harvard Alumni

As my colleague Dan Mitchell has noted, Harvard is about to hold a conference about how the “free market ideology has dominated  legal discourse and lawmaking the last few decades.”  That’s a dubious narrative (to say the least (pdf)).

In any event, Harvard alums who read this blog should know that Cato adjunct scholar Harvey Silverglate  is running for a position on Harvard’s Board of Overseers.  Pass the word to all the Harvard alumni you may know.  Additional background here.

Cato Scholars Address Obama’s First Speech to Congress

President Barack Obama’s first address to Congress laid out a laundry list of new spending contained within the stimulus legislation and provided hints as to what will be contained in the budget - a so-called “blueprint for America’s future” - he’ll submit to the legislature. Cato Institute scholars Chris Edwards, Jim Harper, Gene Healy, Neal McCluskey, David Rittgers, John Samples and Michael D. Tanner offer their analyses of the President’s non-State-of-the-Union Address.

Subscribe to Cato’s video podcast here and Cato’s YouTube channel here.

Is Libertarianism a Sign of Mental Illness?

I don’t know whether this belongs in the comic-relief category or the future-threats category, but the Harvard Law School is having a conference to analyze the “free market mindset.” The basic premise of the conference seems to be that people who believe in limited government are psychologically troubled.

The conference schedule features presentations such as “How Thinking Like an Economist Undermines Community” and “Addicted to Incentives: How the Ideology of Self Interest Can Be Self-Fulfilling.” The most absurd presentation, though, may be the one entitled, “Colossal Failure: The Output Bias of Market Economies.” According to the description, the author argues that the market “delivers excessive levels of consumption.” Damn those entrepreneurs for creating so much wealth!

In the good old days of Soviet dictatorship, the regime classified dissidents as being mentally ill (after all, only a nutcase would fail to see the glories of communism).

Now that leftists at Harvard want to portray laissez-faire philosophy as being somewhat akin to a mental disorder, maybe the next step will be re-education camps for Cato staff? Maybe the next “stimulus” bill could include a few earmarks for such facilities? I’m keeping my fingers crossed that I get sent some place warm.