Latest Cato Research on Political Philosophy en Grandstanding: The Use and Abuse of Moral Talk Justin Tosi, Brandon Warmke, Aaron Ross Powell, Will Duffield <div class="mb-3 spacer--nomargin--last-child text-default"> <p>We are all guilty of it. We call people terrible names in conversation or online. We vilify those with whom we disagree and make bolder claims than we can defend. We want to be seen as taking the moral high ground not just to make a&nbsp;point, or to move a&nbsp;debate forward, but to look a&nbsp;certain way—incensed, or compassionate, or committed to a&nbsp;cause. We exaggerate. In other words, we grandstand.</p> <p>Nowhere is this more evident than in public discourse today, and especially as it plays out across the internet. To philosophers Justin Tosi and Brandon Warmke, who have written extensively about moral grandstanding, such one‐​upmanship is not just annoying, but dangerous. As politics gets more and more polarized, people on both sides of the spectrum move further and further apart when they let grandstanding get in the way of engaging one another. The pollution of our most urgent conversations with self‐​interested puffery damages the very causes they are meant to advance.</p> <p>Drawing from work in psychology, economics, and political science, and along with contemporary examples spanning the political spectrum, the authors dive deeply into why and how we grandstand. Using the analytic tools of psychology and moral philosophy, they explain what drives us to behave in this way, and what we stand to lose by taking it too far. Most importantly, they show how, by avoiding grandstanding, we can rebuild a&nbsp;public square worth participating in.</p> </div> Mon, 06 Jul 2020 12:41:00 -0400 Justin Tosi, Brandon Warmke, Aaron Ross Powell, Will Duffield William Yeatman discusses Independence Day on The Bob Harden Show Fri, 03 Jul 2020 12:13:55 -0400 William Yeatman An Early Evaluation of the Paycheck Protection Program Diego Zuluaga, Caleb O. Brown <div class="mb-3 spacer--nomargin--last-child text-default"> <p class="MsoPlainText">The Paycheck Protection Program was meant to help firms maintain payrolls during economic disruption caused by the coronavirus. How has it worked out? Diego Zuluaga comments.</p> </div> Thu, 02 Jul 2020 21:17:55 -0400 Diego Zuluaga, Caleb O. Brown I Didn’t Know My Opinion of Walter Duranty Could Fall Any Lower David Boaz <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="0e425ae2-f0a5-4441-9edc-ec36357d81b8" class="align-right embedded-entity" data-langcode="en"> <img srcset="/sites/ 1x, /sites/ 1.5x" width="220" height="330" src="/sites/" alt="Mr. Jones poster British" typeof="Image" class="component-image" /></div> <p>Walter Duranty was the New York Times reporter who won a Pulitzer Prize in 1932 for his dispatches from the Soviet Union — reporting that even the Times now <a href="">declares</a> “largely discredited” and “completely misleading.” His biographer goes further, calling him <a href=";keywords=walter+duranty&amp;qid=1593711396&amp;s=digital-text&amp;sr=1-1"><em>Stalin’s Apologist</em></a>. I knew this story. But a new movie, <em>Mr. Jones</em>, which Kyle Smith approvingly <a href="">calls</a> “a vicious act of celluloid vivisection on Duranty,” portrays him as thoroughly sinister, from his louche and lavish lifestyle to his denunciation of reporters who tried to report the truth. </p> <p>One such honest reporter was Gareth Jones, a young Welsh free‐​lancer who went to Moscow in 1933 to study the Soviet economy. He found his way to Ukraine, once known as the “breadbasket of Europe” but by 1933 a land of <a href="">famine and desperation</a>. He saw starvation, death, and cannibalism. He tried to tell the story but found himself not believed or brushed off. </p> <p><em>Mr. Jones </em>was written by Andrea Chalupa and directed by Agnieszka Holland. The imagery in the movie is dark — shadowy and foreboding. It was, of course, a dark time, in Moscow, in Berlin, and in places where people worried about what might be coming. George Orwell, David Lloyd George, and William Randolph Hearst play small but visible roles in the movie. Blink and you’ll miss Malcolm Muggeridge and Eugene Lyons, young Soviet‐​sympathizing journalists who soon realized the truth, told it, and in later years wrote for William F. Buckley Jr.’s National Review. </p> <p>Anne Applebaum has told the story of the Ukrainian famine, also known as holodomor, in this <a href="">Encyclopedia Britannica article</a> and in her 2017 book <em><a href=";slotNum=0&amp;imprToken=00b9839c-1a34-7fdd-68a&amp;tag=thneyo0f-20&amp;linkCode=w50" rel="nofollow noopener" target="_blank">Red Famine</a></em>. She traces it first to the Communist collectivization of agriculture but also to Stalin’s deliberate requisition of crops and other products to be taken to Russia and to the widespread persecution, deportation, or even execution of those who resisted collectivization. </p> <p>At the end of the movie Duranty says to Mr. Jones, “You can’t make an omelet without breaking eggs” — a phrase he actually used in a New York Times article. The Times now recognizes the truth about Stalin and Duranty. Its <a href="">movie review</a> is titled “Bearing Witness to Stalin’s Evil” and calls Duranty a “Stalin apologist.” </p> <p><em>Mr. Jones</em> was intended for theatrical release but can be found on Amazon Prime now. For a happier historical time, you can also watch <em>1776</em> this Saturday afternoon on TCM. </p> <p>In 2007 I asked, <a href="">Where are the anti‐​communist movies?</a> <em>Mr. Jones</em> is an admirable addition to that too‐​short list. </p> Thu, 02 Jul 2020 14:50:58 -0400 David Boaz Veronique de Rugy discusses the latest jobs numbers on The John Batchelor Show Thu, 02 Jul 2020 12:12:26 -0400 Veronique de Rugy John Hasnas participates in the webinar, “The Failure of the Market Failure Argument,” hosted by the Institute for Humane Studies Thu, 02 Jul 2020 12:11:15 -0400 John Hasnas Human Freedom Index is cited on the ABC News Radio’s RN Breakfast with Geraldine Doogue (Australia) Thu, 02 Jul 2020 10:29:41 -0400 Ian Vásquez, Tanja Porčnik Thomas Sowell at 90 Is More Relevant Than Ever Steve H. Hanke, Richard M. Ebeling <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Yesterday, Thomas Sowell turned 90. And he is more relevant than ever. Sowell, a&nbsp;frequent&nbsp;<a href="" target="_blank">contributor to&nbsp;National Review</a>&nbsp;and prodigious scholar, has delivered yet another insightful and accessible book,&nbsp;<em><a href="" target="_blank">Charter Schools and Their Enemies</a>.</em>&nbsp;It was released on his birthday — a&nbsp;gift from Sowell to the rest of us.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>In his new book, Sowell puts primary sources and facts under the powerful microscope of his analysis. His findings are, as is often the case, inconvenient, not to say explosive, truths. Indeed,&nbsp;<em>Charter Schools and Their Enemies&nbsp;</em>documents how non‐​white students thrive in charter schools and close the performance gap with their white peers. It’s no surprise, then, that there are long waiting lists to enter charter schools. So why aren’t there more of them? Well, public schools and their teachers’ unions don’t like the competition. This, of course, traps non‐​white students in inferior public schools.</p> <p>Just who is Thomas Sowell and why is he a&nbsp;larger‐​than‐​life figure in today’s world? Sowell was born on June 30, 1930, in North Carolina. He grew up in New York City’s Harlem neighborhood and served in the Marine Corps during the Korean War. He earned three economics degrees, one from Harvard (1958), one from Columbia (1959), and a&nbsp;Ph.D. from the University of Chicago (1968). After holding down faculty positions at prestigious universities, Sowell settled at Stanford’s Hoover Institution, where he has been for the past 40&nbsp;years.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>An indispensable voice over the decades speaks to our present moment. </p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>As Sowell recounts in his autobiography,&nbsp;<em>A&nbsp;Personal Odyssey</em>&nbsp;(2000), he considered himself a&nbsp;Marxist during most of his student years. Chicago put an end to that infatuation. But Sowell’s study of classical economists included the works of Marx, and in 1985 he published&nbsp;<em>Marxism: Philosophy and Economics</em>. As anyone steeped in Marx knows, all symbols of the capitalist, exploitive past must be uprooted and destroyed before a&nbsp;workers’ paradise can be constructed. It turns out that Marxism is of the moment: Yes, the removal of statues and the changing of street and building names is straight out of Marx’s playbook.</p> <p>But for those who find Marxism too general and abstract to be relevant for the events of today, we direct you to a&nbsp;treasure trove of books in which Sowell has focused his attention on the problems surrounding race and discrimination both in the United States and around the world. To name just a&nbsp;few of his many works specifically on this theme:&nbsp;<em>Race and Economics&nbsp;</em>(1975),&nbsp;<em>Markets and Minorities&nbsp;</em>(1981),<em>&nbsp;Ethnic America: A&nbsp;History</em>&nbsp;(1981),<em>&nbsp;The Economics and Politics of Race</em>&nbsp;(1983),<em>&nbsp;Preferential Policies</em>&nbsp;(1990),<em>&nbsp;Race and Culture&nbsp;</em>(1995),<em>&nbsp;Migrations and Cultures</em>&nbsp;(1996),<em>&nbsp;Conquests and Cultures</em>&nbsp;(1998),&nbsp;<em>Affirmative Action Around the World</em>&nbsp;(2004),<em>&nbsp;Black Rednecks and White Liberals</em>&nbsp;(2005),<em>&nbsp;Intellectuals and Race</em>&nbsp;(2013),<em>&nbsp;Wealth, Poverty and Politics</em>&nbsp;(2016), and<em>&nbsp;Discrimination and Disparities</em>&nbsp;(2018; rev. ed., 2019).</p> <p>When analyzing race and discrimination, Sowell relishes going after one of his favorite targets: the intellectual elites, or as he refers to them, “the anointed.” The heart of his message is that men are not born with equal abilities. Contrary to the assertions of the anointed, Sowell argues that “empirically observable skills have always been grossly unequal.” Sowell also argues that not all cultures are equal contributors to world civilization. Indeed, he observes that “differences among racial, national and other groups range from the momentous to the mundane, whether in the United States or in other countries around the world and down through the centuries.” Sowell concludes that the world is culturally complex and filled with variety. We still have little understanding of the causes and consequences of that complexity. But markets tend to harmonize the interests of, or at least minimize the friction between, various peoples and cultures, while politics creates conflict, with advantages for some at the expense of others.</p> <p>Much of what Sowell has to say about race is contained in his undeniably controversial&nbsp;<em>Black Rednecks and White Liberals</em>, a&nbsp;collection of essays<em>.</em>&nbsp;In the course of a&nbsp;lengthy examination of identity, culture, and its socioeconomic effects, he looks, among other issues, at what he refers to as “black ghetto culture” (something, he stresses more than once, of which “most black Americans” are not a&nbsp;part) and its particular language, customs, behavioral characteristics, and attitudes toward work and leisure. Sowell argues that it has been heavily influenced by earlier white southern “redneck” culture, although, as he is careful to note, this is not a&nbsp;matter of “simple linear extrapolation.” And indeed it is not.</p> <p>Sowell traces this culture to several generations of Americans mostly descended from immigrants from “the northern borderlands of England … as well as from the Scottish highlands and Ulster” who arrived in the southern American colonies in the 18th century. The outstanding features of this redneck or “cracker” culture — as it was called in Great Britain before and during the emigration years — included, Sowell writes, “an aversion to work, proneness to violence, neglect of education, sexual promiscuity, improvidence, drunkenness, lack of entrepreneurship, reckless searches for excitement, lively music and dance, and a&nbsp;style of religious oratory marked by rhetoric, unbridled emotions, and flamboyant imagery.” It also included “touchy pride, vanity, and boastful self‐​dramatization.” The point to be drawn, he writes, “is that cultural differences led to striking socioeconomic differences among blacks, as they did among whites. In both races, those who lived within the redneck culture lagged far behind those who did not.”</p> <p>Most of the commercial industriousness and innovation in the South in the late 19th and early 20th centuries, Sowell demonstrates, were introduced by businessmen, merchants, and educators who moved there from the North, and especially New England. The culture of work, savings, personal responsibility, and forethought that flourished in the North left the southern United States lagging far behind — a&nbsp;contrast often remarked on by 19th‐​century European visitors.</p> <p>Sowell’s tracing of these past differences brings us back to today. On June 5, the American Economic Association (AEA), the premier professional association for economists since its founding in 1885, issued a&nbsp;<a href="" target="_blank">statement</a>&nbsp;saying that it was time for officers and governance committees within the association to look into racism and racist practices and presumptions within the profession. To that end, the AEA compiled a&nbsp;recommended&nbsp;<a href="" target="_blank">reading list</a>&nbsp;on race and discrimination. Sowell is nowhere to be found on it. Neither is the late Gary Becker, former president of the AEA, who won a&nbsp;<a href="" target="_blank">Nobel prize</a>&nbsp;in 1992 for, among other achievements, his pathbreaking work on the economics of discrimination. This is the blinkered world we live in today.</p> </div> Wed, 01 Jul 2020 08:52:10 -0400 Steve H. Hanke, Richard M. Ebeling Unveiling the New Lib​er​tar​i​an​ism​.org Aaron Ross Powell <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-embed-display-settings="" data-entity-type="media" data-entity-uuid="95e4f430-5349-46d2-bbf0-2288c21d59b2" data-langcode="en" class="embedded-entity"><a href=""> <img srcset="/sites/ 1x, /sites/ 1.5x" width="700" height="524" src="/sites/" alt=" homepage screenshot" typeof="Image" class="component-image" /></a></div> <p>Today it is my pleasure to announce the launch of the new <a href="">Lib​er​tar​i​an​ism​.org</a>. The team has been working on this redesign for six months and we’re really happy with the result. </p> <p>The new Lib​er​tar​i​an​ism​.org isn’t just a fresh coat of paint. While our principled message of justice, prosperity, responsibility, tolerance, cooperation, and peace remains the same, we’ve rethought everything about how we introduce and explore that message and the ideas and history that inform it. You’ll find the site much easier to use and more helpful in guiding you through learning about libertarianism, whether you’re brand new to the ideas of liberty or looking to dig deep into particular topics. </p> <p>This begins with our <a href="">“What is a libertarian?”</a> page, setting out the basics. It introduces the history, and sketches out how libertarians inform public policy. We think this page is the best one out there for people wanting to know what libertarianism is and how it applies to politics and policy. </p> <p>The rethinking of the website continues into the way we’ve organized our vast library of essays, podcasts, videos, and books. We’ve grouped these into <a href="">topics</a>, such as <a href="">individual rights</a>, <a href="">foreign policy</a>, <a href="">taxation</a>, <a href="">capitalism</a>, <a href="">socialism</a>, <a href="">immigration</a>, and <a href="">feminism</a>. Each topic is introduced with an article from the Encyclopedia of Libertarianism and, for many of them, we’ve also selected some of what we think is our best content to help you begin exploring. </p> <p>I think you’ll find the new <a href="">Lib​er​tar​i​an​ism​.org</a> to be the best resource out there for discovering and learning about the philosophy, politics, and history of liberty. I want to thank all of my Cato Institute colleagues who worked to bring this new website to life. And thank you for being part of our mission to make the world a freer, more peaceful, and more prosperous place. </p> Tue, 30 Jun 2020 10:33:40 -0400 Aaron Ross Powell Progress Happens David Boaz <p>Five years ago I&nbsp;<a href="">argued</a> that Princeton’s prestigious Woodrow Wilson School of Public and International Affairs and a&nbsp;residential complex, Wilson College, honored a&nbsp;former president of Princeton who didn’t deserve the distinction. Not only was Wilson a&nbsp;racist who praised the Ku Klux Klan and resegregated the federal workforce, he made the <a href="">most disastrous foreign policy decision</a> in U.S. history. His decision to enter a&nbsp;European conflict turned it into World War I, which arguably led to the Communist takeover of Russia, National Socialism in Germany, World War II and the Cold War. Wilson was contemptuous of the Constitution, preferring a&nbsp;government not with checks and balances but with “unstinted power.”</p> <p>And on Saturday Princeton University <a href="">announced</a> that it would remove Wilson’s name from both the school and the college.</p> <p>Nineteen years ago, I&nbsp;<a href="">urged</a> Mississippi voters to remove the Confederate imagery from their state flag, writing:</p> <blockquote><p>The current Mississippi flag – three bars of red, white and blue along with the Confederate cross – cannot be thought to represent the values of all the people of the state. Indeed, it doesn’t just misrepresent the values of Mississippi’s one million black citizens; it is actively offensive to many of them.</p> </blockquote> <p>And on Sunday the legislature <a href="">voted to do just that</a>.</p> <p>I might even note that 32&nbsp;years ago, in the New York Times, I&nbsp;argued that the United States should <a href="">end the war on drugs</a>, which had caused much crime, corruption, and incarceration. That recommendation has taken longer to bear fruit, and the drug war is by no means over. But 33 states and the District of Columbia have now legalized marijuana in some form, and public opinion has changed so much that the <a href="">Republican Party is denouncing</a> Joe Biden for his long‐​standing support for the war on drugs. Perhaps in 2021 both parties will agree that it’s time for <a href="">real reform</a>.</p> <p>It’s easy to point to things going wrong and getting worse. By many measures government has gotten bigger. Right now we’re overwhelmed with a&nbsp;pandemic, lockdowns, police abuse, and violent streets. But progress does happen, and a&nbsp;longer‐​term view would note the reality of <a href="">moral progress</a> and improvements in <a href="">human well‐​being</a>. As I&nbsp;said in <a href="">a&nbsp;recent speech</a>:</p> <blockquote><p>We have extended the promises of the Declaration of Independence — life, liberty, and the pursuit of happiness — to people to whom they had long been denied around the world. More people in more countries than ever before in history enjoy religious freedom, personal freedom, democratic governance, the freedom to own and trade property, the chance to start a&nbsp;business, equal rights, civility, respect, and a&nbsp;longer life expectancy.</p> <p>War, disease, violence, slavery, and inhumanity have been dramatically reduced.</p> </blockquote> <p>This weekend saw some examples of that.</p> Mon, 29 Jun 2020 10:39:46 -0400 David Boaz The New Deal and Recovery, Part 3: The Fiscal Stimulus Myth George Selgin <p>“[The COVID-19 crisis] wouldn’t be the first time America has resorted to large‐​scale fiscal stimulus in a peacetime emergency. The New Deal of the 1930s, a response to the Great Depression, is probably the most far‐​reaching example.” (Katia Dmitrieva, “The Times America Went Big and Flooded Economy With Federal Cash,” <a href="" rel="nofollow external noopener noreferrer" target="_blank"><em>Bloomberg</em>, March 9, 2020.</a>) </p> <p>*** </p> <p>It may seem perverse of me to begin an appraisal of the New Deal’s bearing on recovery by discussing fiscal policy. After all, FDR came into office in the midst of this country’s worst banking crisis, and this left him little choice but to give immediate attention to monetary policy steps that might end it. Still I want to start with fiscal policy, not because I suppose it belongs first chronologically, but because I’m sure it ranks last in importance. </p> <h4>Fallen Spending, Deflation, and Reflation </h4> <p>The proximate cause of the Great Depression was a dramatic collapse of overall spending, or what economists call “aggregate demand” for goods and services between 1929 and early 1933. In the FRED chart below, that collapse is represented by the green line, showing the nominal value of U.S. Gross Domestic Product (GDP). The red line shows how <em>real</em> GDP fell along with its nominal counterpart, though not as much, and then recovered along with it. I’ve drawn the chart to cover the period from 1929 until July 1942, because the latter date marks the recovery’s completion, when real GDP is supposed to have returned to its underlining, long‐​run trend. </p> <p><strong>Figure 1. United States Real GDP and Nominal GDP, 1929–1942</strong> </p> <figure role="group" class="filter-caption"><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="dc41d649-463f-4439-9fd1-6dc9bff8af99" data-langcode="en" class="embedded-entity"> <img srcset="/sites/ 1x, /sites/ 1.5x" width="700" height="282" src="/sites/" alt="Real and Nominal GDP, 1929-1942" typeof="Image" class="component-image" /></div> <br /><figcaption><div class="figure-caption text-sans-alternate">Source: U.S. Bureau of Economic Analysis, Gross Domestic Product [GDPA], retrieved from FRED, Federal Reserve Bank of St. Louis; <a href="">https://​fred​.stlou​is​fed​.org/​s​e​r​i​e​s​/GDPA</a>, June 28, 2020. </div> </figcaption></figure><p>For all its simplicity, this chart can help us to account for the methods by which the recovery was achieved, as well as for ways in which it might have been hastened. The first and perhaps least obvious of these methods, and also the least reliable, is deflation. When spending declines, the result must be either that fewer goods and services are sold, or that prices decline to allow any given amount of spending to purchase more goods and services, or some combination of both things. </p> <p>It follows that the more completely prices respond to fallen spending, the less sales will suffer. Because falling prices, besides preventing inventories from accumulating, also mean falling input costs, production may also be revived. In the chart, the gap between the red and green lines reflects the extent to which deflation prevented real output from collapsing as much as spending did. It’s therefore conceivable that, had it been possible for prices of all kinds to decline further, the depression would have ended sooner. “Conceivable.” But anything but certain, because deflation would have been of little help either to those struggling to pay debts contracted before it took place, or to their creditors. </p> <p>Instead, those who owed money would still owe as many dollars as ever, while each of the dollars owed would be more valuable than before. Consequently, the greater the extent of indebtedness when demand collapses, the less capable deflation becomes of supplying a way out; and, <a href="" rel="nofollow external noopener noreferrer" target="_blank">as Irving Fisher observed in 1933</a>, “the debts of 1929 were the greatest known, both nominally and really, up to that time.” Under such circumstances, said Fisher in proposing his famous “debt‐​deflation” theory of the depression, </p> <blockquote><p>the very effort of individuals to lessen their burden of debts increases it, because of the mass effect of the stampede to liquidate in swelling each dollar owed. Then we have the great paradox which, I submit, is the chief secret of most, if not all, great depressions: The more the debtors pay, the more they owe. The more the economic boat tips, the more it tends to tip. It is not tending to right itself, but is capsizing. </p> </blockquote> <p>In short, deflation was the least reliable, and therefore the least desirable, of possible remedies for depression. It remains true, nonetheless, that so long as spending itself stayed depressed, policies that prevented prices from falling only tended to make matters worse. As we’ll see in later installments to this series, the Roosevelt administration didn’t always appreciate this unpleasant truth. </p> <p>The more sure‐​fire ways to fight a depression consist of means for reviving spending itself, so as to bring equilibrium prices back to their pre‐​depression levels—a procedure Fisher and his contemporaries called “reflation.” Broadly speaking, there are two ways to do this: expansionary monetary policy, and expansionary fiscal policy. The first consists of policies that increase the money stock—the sum of currency and bank deposits available for the public to spend. The second consists of policies that increase total spending by the government, and especially ones that increase that spending less than they increase taxation, which reduces the public’s spending power. “Fiscal stimulus” is just another name for an expansionary spending policy aimed at combating a recession or depression. </p> <h4>The Fiscal Stimulus that Wasn’t </h4> <p>Although almost everyone assumes that fiscal stimulus played a big part in bringing the Great Depression to an end, the truth is that its contribution was insignificant. </p> <p>Old myths die hard. Yet this one still ought to have died ages ago when it was thoroughly exploded by M.I.T. economist E. Cary Brown in his paper, “<a href="" rel="nofollow external noopener noreferrer" target="_blank">Fiscal Policy in the ‘Thirties: A Reappraisal.</a>” Here Brown reached the now‐​famous conclusion that fiscal policy “seems to have been an unsuccessful recovery device in the ‘thirties—not because it did not work, but because it was not tried.” More specifically, he reported that </p> <blockquote><p>the direct effects on aggregate full‐​employment demand of the fiscal policy undertaken by all three levels of government was clearly relatively stronger in the ‘thirties than in 1929 in only two years—1931 and 1936—with 1931 markedly higher than 1936… The trend of the direct effects of fiscal policy on aggregate full‐​employment demand is definitely downward throughout the ‘thirties. </p> </blockquote> <p>Although the federal government’s fiscal policy was itself “more expansionary throughout the ‘thirties than it was in 1929,” in most years after 1933 it wasn’t sufficiently so to offset reductions in state and local government spending. </p> <p>Brown was hardly alone in concluding that New Deal fiscal policy wasn’t particularly expansionary. He himself quotes <a href="" rel="nofollow external noopener noreferrer" target="_blank">Alvin Hansen, “the American Keynes,”</a> writing to the same effect in 1941: </p> <blockquote><p>Despite the fairly good showing made in the recovery up to 1937, the fact is that neither before nor since has the administration pursued a really positive expansionist program. </p> </blockquote> <p>Save for only one exception I’m aware of—a rather unconvincing paper by <a href="" rel="nofollow external noopener noreferrer" target="_blank">Nathan Perry and Matias Vernango</a><a href="#_ftn1" id="_ftnref1" name="_ftnref1">[1]</a>—more recent scholarship concurs with these earlier findings. This includes <a href="" rel="nofollow external noopener noreferrer" target="_blank">Christina Romer’s especially influential 1992 finding</a> that “fiscal policy contributed almost nothing to the recovery” of the 1930s. <a href="" rel="nofollow external noopener noreferrer" target="_blank">Price Fishback (2010)</a> sums the current consensus up thus: </p> <blockquote><p>A nationwide Keynesian fiscal stimulus was never really attempted in the 1930s. During the Hoover Presidency Congress doubled federal spending and ramped up federal lending through the Reconstruction Finance Corporation. The Roosevelt Congresses then spent nearly double the Hoover levels. But both administrations collected enough taxes in a variety of new forms to maintain relatively small deficits throughout the period. Relative to a Keynesian deficit target designed to return to full employment, the deficits were minuscule. </p> </blockquote> <p>If some readers find this conclusion hard to believe, one of Fishback’s charts, comparing the small size of consolidated (federal, state, and local) real government spending and deficits to the Great Depression decline in real GNP relative to its 1929 level, should help them to overcome their skepticism: </p> <p><strong>Figure 2. GNP minus 1929 GNP, and Federal Expenditures, Revenues, and Budget Surplus/​Deficit in Billions of 1958 Dollars, 1929–1939</strong> </p> <figure role="group" class="filter-caption"><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="90d0d970-a4d9-4d4b-9444-7af280713eed" data-langcode="en" class="embedded-entity"> <img srcset="/sites/ 1x, /sites/ 1.5x" width="700" height="355" src="/sites/" alt="GNP minus 1929 GNP, and Federal Expenditures, Revenues, and Budget Surplus/Deficit in Billions of 1958 Dollars, 1929-1939" typeof="Image" class="component-image" /></div> <br /><figcaption><div class="figure-caption text-sans-alternate">Source: Fishback, Price. “U.S. Monetary and Fiscal Policy in the 1930s.” Oxford Review of Economic Policy 26, no. 3 (2010): 385–415. <a href="">https://​doi​.org/​1​0​.​3​3​8​6​/​w​16477</a>. </div> </figcaption></figure><p>And here, for good measure, is another chart, this time from <a href="" rel="nofollow external noopener noreferrer" target="_blank">an essay by my Cato colleague Tom Firey</a>, showing just how small total government spending in the thirties was in relation to the size of the U.S. economy: </p> <p><strong>Figure 3. U.S. GDP and Government Spending</strong> </p> <figure role="group" class="filter-caption"><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="7ae6996b-97ab-48d5-a997-cdf3295ac209" data-langcode="en" class="embedded-entity"> <img srcset="/sites/ 1x, /sites/ 1.5x" width="544" height="420" src="/sites/" alt="U.S. GDP and Government Spending" typeof="Image" class="component-image" /></div> <br /><figcaption><div class="figure-caption text-sans-alternate">Source: “Budget of the United States Government: Fiscal Year 2009” Historical Tables, Table 1.1; Bureau of Economic Analysis “National Economic Accounts,” Table 1.1.5. </div> </figcaption></figure><h4>The New Deal’s Fiscal Conservatism </h4> <p>Why, despite the New Deal, didn’t government spending—and federal government spending in particular—grow more than it did? And why was the growth of federal deficit spending even more modest? </p> <p>The answer to both questions is that, despite frequent claims to the contrary, the New Deal did not usher in a Keynesian fiscal revolution, or anything close. Instead, as Julian Keliser (p. 125) remarks in <a href="" rel="nofollow external noopener noreferrer" target="_blank">his brilliant essay on the subject</a>, “fiscal conservatism…remained normative for most of the New Deal.” FDR himself held fairly orthodox views about fiscal policy, and then made a point of picking Treasury secretaries whose views were even more orthodox. The chairs of almost all the key Senate and House committees, mostly southern Democrats, were also fiscal conservatives, as were some progressive Democratic representatives. Only after 1938, after the government had been blindsided by the 1937–8 depression and the New Deal was drawing to a close, did the Roosevelt administration finally abandon its commitment to limited spending and a balanced budget. </p> <p>In short, FDR really meant it when, during his campaign, he railed against Hoover’s “reckless spending” (“the greatest spending administration in peacetime in all our history”) and budget deficits. Indeed, if either Hoover or FDR can be said to have initiated a break with the past, Hoover probably deserves the credit. Spending doubled under his administration; and after a decade of year after year government surpluses starting in 1920, Hoover presided over the country’s biggest peacetime budget deficit. </p> <h4>New Deal Spending </h4> <p>Among other things, FDR had pledged to cut government spending by “at least 25 percent”; and he might well have done so had it not been for his commitment to offering relief to the unemployed. Owing to that commitment, FDR’s policy might be defined pithily as consisting of a commitment to a balanced budget plus a “relief valve,” that is, a willingness to tolerate deficits provided they were due to efforts to get money to the unemployed. It was mainly owing to FDR’s unwillingness to limit relief spending, and despite his determined efforts to cut spending of other sorts, that federal spending as a whole increased. </p> <p>The first of those determined efforts came soon after FDR’s inauguration when, on March 11th, Congress passed <a href=",_1933" rel="nofollow external noopener noreferrer" target="_blank">the Economy Act.</a> The bill didn’t quite cut spending as much as FDR had promised to cut it during his campaign, but it did trim the government’s $3.6 billion budget by $500 million by eliminating some government agencies and by cutting government salaries, pensions, and veterans’ benefits. The Act also strengthened FDR’s ability to make further cuts through executive authority. “Too often in recent history,” Roosevelt told Congress in recommending the measure, “liberal governments have been wrecked on the rocks of loose fiscal policy.” Nor was Roosevelt merely pandering to Congress’ powerful fiscal conservatives. According to <a href="" rel="nofollow external noopener noreferrer" target="_blank">Frank Friedel</a>, his first major biographer, far from being “a hypocritical concession” the Economy Act “was an integral part of Roosevelt’s overall New Deal.” </p> <p>In 1936, FDR took another big stab at cutting federal spending, this time by trimming “outlays on relief and public works in a great show of budget balancing” aimed at improving his reelection prospects: as <a href="" rel="nofollow external noopener noreferrer" target="_blank">Bernard Lee</a>, whose words I just quoted, observes (p. 74), and as many may not realize, the very first Gallup poll, taken in September 1935, showed that 60 percent of the American public “thought government expenditures for relief and recovery were ‘too great,’ while only nine percent deemed them ‘too little’.” FDR made his third and last attempt to balance the budget in the spring of 1937, this time by reluctantly cutting relief spending. </p> <p>Notwithstanding these and other attempts at “economy,” New Deal spending was anything but modest by the standards of the time. On the contrary, as a share of GNP, FDR’s spending during the 30s was roughly twice Hoover’s, just as Hoover’s had been roughly twice Coolidge’s. In part, as we’ll see, this happened because Congress eventually managed to pass a Veterans Bonus Bill by overriding a second FDR veto. But it was mostly the result of “emergency” spending on various New Deal relief programs. The 1935 Emergency Relief Appropriations Act, which launched the WPA and PWA (among other programs), alone cost almost $4.88 billion, or almost $1 billion more than <em>total </em>federal expenditures during Hoover’s last year in office! </p> <h4>New Deal Deficits and Taxes </h4> <p>Yet even such prodigies of spending didn’t bring correspondingly impressive deficits. As Fishback reports, “only the deficits of 1934, 1936, and 1939… are much larger than Hoover’s 1932 and 1933 deficits,” and only that of 1936—the administration’s largest—was large enough to have given a substantial boost to aggregate demand. Alas for the theory that FDR was an early pioneer of Keynesian deficit spending, the 1936 deficit resulted from the passage, over his veto, of a $1.8 billion World War I Veterans Bonus Bill that January. <a href="" rel="nofollow external noopener noreferrer" target="_blank">John Hausman</a> puts this singular New Deal instance of fiscal stimulus in perspective by noting that was roughly enough to allow every vet to buy a new Ford V8, and about the same share of GDP (2.1 percent) as President Obama’s 2009-10 Recovery and Reinvestment Act. </p> <p>The prosaic reason for the New Deal’s generally modest deficits is that New Deal tax revenues were also high. But the fundamental reason is that practically no one in government at the time believed in any such thing as “fiscal stimulus.” Instead the prevailing view, <a href="" rel="nofollow external noopener noreferrer" target="_blank">to which FDR himself subscribed</a>, was that a balanced budget served “to instill confidence in consumers, business, and the markets,” and to thereby “encourage investment and economic expansion.” If FDR tolerated massive relief spending, and any deficits that went with it, it wasn’t because he believed in “Keynesian” economics. It was because he didn’t want people going hungry and also (it must be said) because generous relief expenditures, appropriately directed, helped to <a href="" rel="nofollow external noopener noreferrer" target="_blank">improve his odds of winning‐​over swing states in the 1936 election</a>. </p> <p>The non‐​Keynesian motivation behind New Deal spending went hand‐​in‐​hand with efforts by FDR and his Treasury team to fund as much of it as possible through increased taxation. Tax‐​funded spending had also been Hoover’s preference. But both presidents faced stiff Congressional opposition that ultimately caused their budget‐​balancing efforts to fail. The main difference between their tax policies consisted of the alternative taxes each president proposed. Hoover had favored, but was unable to get, a national sales tax, and instead ended up depending mainly on excise taxes that, besides failing to generate sufficient revenue to cover his government’s expenditures, fell most heavily on the poor. <a href="" rel="nofollow external noopener noreferrer" target="_blank">Most New Deal government revenue also came from regressive excise taxes</a>, including a revived liquor tax. Unlike Hoover, FDR tried to supplement these taxes not with a sales tax but by raising income tax rates and introducing other sorts of new taxes.<a href="#_ftn2" id="_ftnref2" name="_ftnref2">[2]</a> </p> <p>Indeed, because high tax rates tended to retard economic growth, FDR’s attempts to balance the budget by resorting to them sometimes backfired. According to Fishback, this seems to have been the result when, by raising the top marginal income tax rate first to 63 percent and then to 79 percent, the Roosevelt administration encouraged aggressive tax avoidance. Various new taxes likewise “led to relatively small amounts of revenue at the cost of chilling some forms of investment activity,” while certain excise taxes, besides continuing to place a disproportionate burden on the poor, discouraged “growth in the leading technological growth sectors in the economy.”<a href="#_ftn3" id="_ftnref3" name="_ftnref3">[3]</a> </p> <h4>Post‐​New Deal Keynesianism </h4> <p>It was, ironically, partly owing to FDR’s efforts to balance the budget that he was ultimately compelled to embrace deficit spending. For besides making aggressive cuts to relief programs to compensate for the Bonus Bill debacle of 1936, FDR introduced several new taxes, including the notorious <a href="" rel="nofollow external noopener noreferrer" target="_blank">undistributed profits tax</a>. The government also began collecting the new social security tax, authorized by the 1935 Social Security Act, in January 1937. Because the government wouldn’t begin paying social security <em>benefits </em>until 1940, the overall result of the 1937 tax was a considerable reduction in the government’s net contribution to overall spending. Steps were also being taken in the meantime, both by the Treasury and by the Federal Reserve, that all but slammed the brakes on growth in the money stock, dampening spending that much further. The combined results of these developments was the devastating depression of 1937–8 that undid much of the recovery achieved during Roosevelt’s first term. </p> <p>The “Roosevelt Recession,” as Republicans especially liked to refer to it, was to alter FDR’s policies in two ways. First, it marked the winding‐​down of the New Deal, properly understood. 1938 saw the last major piece of New Deal legislation, the Fair Labor Standards Act. Second, it marked the beginning of “Keynesian” fiscal policy, first as a matter of necessity, but soon enough as a matter of genuinely revised beliefs. With FDR’s request, in April 1938, for $3 billion in spending for immediate relief efforts, the idea that deficits might actually serve a countercyclical purpose, which certain economists had been urging for years, at last took hold in the halls of power.<a href="#_ftn4" id="_ftnref4" name="_ftnref4">[4]</a> Even then the conversion was far from complete. The New Dealers were still not ready to see tax cuts as a means for achieving fiscal stimulus. “In the late 1930s,” <a href=";context=lcp" rel="nofollow external noopener noreferrer" target="_blank">Joseph Thorndike (2009, p. 122) observes</a>, “the notion of countercyclical tax cuts…remained in the land of economic theory, not political reality.” <a href="" rel="nofollow external noopener noreferrer" target="_blank">Robert Musgrave</a> puts the point even more strongly, saying that expansionary tax cuts were still “unthinkable” then. According to Thorndike, such cuts only gained acceptance “after the fiscal watershed of World War II.” </p> <p>*** </p> <p>That New Deal fiscal policy contributed little to recovery from the Great Depression, and probably contributed to the setback of 1937–8, doesn’t mean that the New Deal as a whole contributed little to recovery. To assess the New Deal’s overall contribution to the recovery, we have to consider the consequences of other New Deal programs and policies, including those that influenced the behavior of the U.S. money stock. I’ll take up New Deal monetary policy next. </p> <p><strong>Continue Reading<em> The New Deal and Recovery:</em></strong> </p> <ul><li><a href="">Intro</a></li> <li><a href="">Part 1: The Record</a></li> <li><a href="">Part 2: Inventing the New Deal</a></li> <li>Part 3: The Fiscal Stimulus Myth</li> </ul><p>___________________ </p> <p><a href="#_ftnref1" id="_ftn1" name="_ftn1">[1]</a> Perry and Vernengo attempt to argue that New Deal fiscal policy mattered more than others have claimed partly on a priori grounds, and partly by questioning extant estimates of the New Deal era fiscal multiplier. But <a href="" rel="nofollow external noopener noreferrer" target="_blank">as Bernard Lee noted in 1982</a> (pp. 69–70), even allowing for a generous multiplier New Deal spending was never sufficient “to support more than a fraction of the vast numbers of jobless and destitute at anything but a minimum level.” As for Perry and Vernengo’s <em>a priori</em> argument, it seems to rest upon a strange dichotomy between growth in the supply or velocity of money and growth in spending. Thus they write that while “recoveries tend to rely both on increasing money supply and increased velocity of circulation,” they “<em>also</em> rely on the expansion of spending (in general a combination of private and public spending)” (my emphasis). That illogical “also” allows them to conclude that an increase in the money stock (or in MV) “is only one of the several elements needed for economic recovery” and that expansionary fiscal policy must, therefore, have played an important part. </p> <p><a href="#_ftnref2" id="_ftn2" name="_ftn2">[2]</a> For more on New Deal tax policy see Mark Leff’s fascinating study, <em>The Limits of Symbolic Reform: The New Deal and Taxation, 1933–1939 </em>(<a href=";isbn=9780521521246" rel="nofollow external noopener noreferrer" target="_blank">Cambridge University Press, 1984</a>). <a href="" rel="nofollow external noopener noreferrer" target="_blank">According to Ellis Hawley</a>, “Leff shows that there were really two New Deal tax systems: a ‘revenue work‐ horse,’ featuring regressive levies so masked as to allow coexistence with Populist and redistributionist rhetoric, and a ‘symbolic showpiece,’ raising insignificant amounts of revenue but serving the New Deal politically by undercutting and diverting attacks from both the Left and the Right. One became the hidden substance; the other produced the image that still persists.” </p> <p><a href="#_ftnref3" id="_ftn3" name="_ftn3">[3]</a> Concerning the adverse effects upon the investment of New Deal tax policies, and of high rates of dividend taxation especially, see <a href="" rel="nofollow external noopener noreferrer" target="_blank">Ellen McGrattan’s painstaking 2012 study</a>. According to it, New Deal tax policies can account for the steep declines in tangible investment both between 1933 and 1935 and in 1937, where the second decline was mainly a result of the undistributed profits tax. </p> <p><a href="#_ftnref4" id="_ftn4" name="_ftn4">[4]</a> On this see William J. Barber, <em><a href="" rel="nofollow external noopener noreferrer" target="_blank">Designs within Disorder</a>: Franklin D Roosevelt, The Economists, and the Shaping of American Economic Policy, 1933–1945</em> (Cambridge University Press, 1996), p. 83. </p> <p>[<a href="">Cross‐​posted from Alt​-​M​.org</a>] </p> Mon, 29 Jun 2020 10:37:51 -0400 George Selgin Thomas Sowell at 90 Gerald P. O&#039;Driscoll Jr. <p>On June 30, 2020, Thomas Sowell turns 90. He is one of the most important economic and social thinkers of the last 50 years. I say that, recognizing that his career overlapped such luminaries as Friedrich Hayek and Milton Friedman. Sowell also has been one of the most prolific social-science writers of his era, as evidenced by the fact that his birthday also marks the publication of his latest book: <em>Charter Schools and Their Enemies.</em></p> <p>Sowell began his career as a conventional economist with a Ph.D. from the University of Chicago. He was a specialist in the history of economic thought and a Marx scholar. He was an assistant professor of economics at Cornell University in 1969 when black students took over Willard Straight Hall. He was appalled by the violence he saw. In the language of the time, one might say he was radicalized by the experience. He left Cornell and, after a stint at Brandeis University, he ended up at UCLA. That is where I met him.</p> <p>I audited his graduate course in the history of economic thought. (I’d completed my coursework and Ph.D. preliminary exams, including the one covering the history of thought. But I had not in fact had the opportunity to take a graduate course in that subject.) It was a fantastic intellectual experience. Although I was a course auditor, he required to me to write a paper. I guess I did a good enough job that he agreed to serve on my dissertation committee.</p> <p>Sowell continued writing on purely economic topics. For instance, in 1974 Princeton University Press published his <em>Classical Economics Reconsidered.</em> It remains a wonderful short introduction to the thinking of classical political economists. (This book is missing from the Wikipedia entry on Sowell.) He began transitioning into issues of race and ethnicity with his 1975 book <em>Race and Economics </em>(David McKay). But <em>Knowledge and Decisions </em>(Basic Books 1980; reprinted 1996) is a straightforward economic text in the Hayekian tradition.</p> <p>Nonetheless, more and more he focused on issues of race and ethnicity, here and around the world. That is true of his many books and articles and his long-time syndicated column. In doing so, Sowell drew a distinction between race and culture, becoming one of the leading proponents of the concept of a “culture of poverty.” This was not an entirely new concept, of course. It was, for instance, one of the primary conclusions of Daniel Patrick Moynihan’s famous 1965 report on <em>The Negro Family: The Case for National Action. </em>(Office of Policy Planning and Research, U.S. Department of Labor, March 1965, Chapter 2): “There is considerable evidence that the Negro community is in fact dividing between a stable middle class group that is steadily growing stronger and more successful, and an increasingly disorganized and disadvantaged lower class group.”</p> <p>Sowell, like Moynihan, distinguished between culture or class, and race. A race comprises different classes or cultures. This is as true for whites as for blacks. Sowell in fact wrote about why the black and white underclasses exhibit similar pathologies: because they share a common culture. (<em>Black Rednecks and White Liberals</em> [Encounter Books, 2005]). In Sowell’s view many of the problems facing inner cities are not tied to race, but culture. The same, he points out, is true for poor, Appalachian whites, as writers such as J. D. Vance and Nancy Isenberg have explored more recently. These cultural issues were exacerbated by President Lyndon B. Johnson’s Great Society, which vastly expanded the modern welfare state as part of its War on Poverty. Sowell pointed out that welfare, untied from work or marriage, created incentives that undermined the black family. The welfare system established means-tested payments to low-income mothers with children that required the absence of a father and breadwinner. In 1950, female-headed households were 18 percent of the black population. Today, according to Shelby Steele of the Hoover Institution, 75 percent of black families have no father present. There is no social program imaginable, nor sum of money, that can make up for the disadvantages the children of single parents will suffer compared to children with two parents.</p> <p>Senator Tim Scott (R-SC) recently underscored this point. Citing Sowell, he said that “If you have two parents in the household, you reduce poverty in the African-American community by 85%. That’s a stunning truth that needs more oxygen.” (<em>Wall Street Journal</em>, June 20-21, 2020).</p> <p>Sowell has also long argued that minorities can achieve economic success even in the presence of severe discrimination. That has been true for blacks in America, as it has been for Jews, Chinese, and Lebanese around the world. African Americans made steady economic progress in the 20<sup>th</sup> century, both absolutely and relative to whites, even before the landmark civil rights legislation of the 1960s. Changing people’s hearts and minds is a very slow process, not certain to succeed, and is reversible. It is laudatory to end bigotry. But it is not necessary for economic progress.</p> <p>Sowell is well known for his criticism of affirmative action. That topic could take up a post of its own. I can summarize his position, however. Affirmative action harms those whom it claims to help. For instance, minorities admitted to elite universities under affirmative action often are unable to perform to the standards of those schools. The minorities then assume they are victims of racism. (That is Sowell’s take on what happened at Cornell in 1969.) Those same students, if they had attended a less competitive college or university, might very well have succeeded at school and in life.</p> <p>In 2015, Sowell wrote a very important book deserving of much attention: <em>Wealth, Poverty and Politics: An International Perspective </em>(Basic Books). It reprised familiar themes and introduced new ones. I wrote an extensive review of it in the <em>Cato Journal</em> (Winter 2016). I refer the reader to that review.</p> <p>The catalyst for Thomas Sowell’s work on race may have been the racial discord of an earlier time, but work has continued relevance today. His new book focuses on charter schools and the importance of education as a road out of poverty for disadvantaged minorities. In an op-ed previewing the book, “Charter Schools’ Enemies Block Black Success” (<em>The Wall Street Journal</em>, June 19, 2020), Sowell zeroes in on New York City’s experience, and finds that most charter schools do “decisively better than the traditional public schools housed in the same buildings with them.” Most students in charter schools are black and Hispanic from poor neighborhoods. They already pass tests in mathematics and English at a higher rate than any public school district in the state. He skewers the argument that charter schools “skim the cream” from public schools by admitting especially motivated students. Admission is by lottery, so the majority of motivated students remain in public schools, where they fail to meet their potential.</p> <p>So why cannot we solve the civil rights issue of our time, the provision of a quality education for low income, black and Hispanic students? Because the vested interests of public school teachers unions and administrators oppose it. They say that what they are doing is “for the sake of the children.” As the title of the op-ed points out, they are in fact blocking success for minorities. Sowell concludes that “only the voters, who hold the ultimate power in a democracy,” can change the system.</p> <p>Of course none of this eliminates the need to root out racism in our society, both individual and structural. But Sowell’s work provides insight into another aspect of this complex debate.</p> <p>Only a full-length intellectual biography of Thomas Sowell can give a complete appreciation of the magnificence of his intellectual contributions. I am happy to report that such a biography is in the works. Jason L. Riley, a senior fellow at the Manhattan Institute who writes the “Upward Mobility” column for <em>The Wall Street Journal,</em> is writing an intellectual biography of Sowell.</p> <p>Happy birthday, Tom.</p> <p></p> Mon, 29 Jun 2020 10:22:00 -0400 Gerald P. O'Driscoll Jr. Johan Norberg participates in the lecture, “Lessons from Sweden”, hosted by The Fund For American Studies Fri, 26 Jun 2020 11:24:15 -0400 Johan Norberg Open the Postal Service to Competition David Boaz <p>At the Guardian <a href="">David Ferguson criticizes</a> calls by Cato’s Chris Edwards and others to <a href="">privatize the U.S. Postal Service</a>. The headline of the article tugs at the heartstrings:</p> <blockquote><p>The US Postal Service lifted my family out of poverty. We can’t let it die</p> </blockquote> <p>And Ferguson writes:</p> <blockquote><p>The postal service hired my grandfather when he returned from fighting in Europe during the second world war. He was the son of a&nbsp;farmer with little education beyond the ninth grade. He grew up in grinding poverty during the Great Depression, but his job carrying the mail allowed him to ascend into the US’s then‐​burgeoning middle class, to save money for my mother’s college education, and to escape the legacy of poverty that had dogged his family for generations.</p> </blockquote> <p>That’s great for the Ferguson family, but there are two obvious problems with Ferguson’s argument.</p> <p>First, privatizing the Postal Service doesn’t mean Americans would cease to communicate with one another. If there’s still a&nbsp;demand to send letters, catalogs, bills, and packages to homes, then companies will seek to satisfy that demand. Already, with minimal competition allowed, companies such as FedEx and UPS have recently been joined by Amazon, Peapod, and other delivery services. Private companies could also deliver first‐​class mail if they were allowed to, <a href="">as happens now</a> in Great Britain and Germany. Of course, consumer demand changes. First‐​class mail volume <a href="">has fallen 47 percent</a> since 2001. With greater use of email, the volume is like to fall further. So especially in a&nbsp;competitive market, there might well&nbsp;be fewer jobs for mail deliverers. But delivery services are thriving; during the pandemic, delivery jobs have been <a href="">growing faster</a> than any other job category.</p> <p>Second, “the Postal Service lifted my family out of poverty” could be said about any company, as well as any church, school, nonprofit, or other employer. <a href="">Companies such as</a> Woolworth’s, PanAm, and Enron provided jobs to millions of people over the years, as do companies from bodegas to Walmart and IBM today. It would not have been a&nbsp;good idea to keep Woolworth’s in business to save the jobs. Other companies proved they could serve consumers better, and competition is a&nbsp;key part of the economic growth that keeps jobs and incomes rising.</p> <p>Economic growth involves change. Some call it “creative destruction.” Plenty of companies go out of business, which is a&nbsp;hardship for their employees. But new businesses are created, with more jobs and higher incomes on net. And more goods and services for consumers.</p> <p>We can mourn for the old‐​fashioned small‐​town post office, as we may lament the demise of our favorite department stores or restaurants. But it does no good to protect any business from change and competition.</p> </p> Thu, 25 Jun 2020 17:02:06 -0400 David Boaz RSC’s FTO AUMF: LOL! Gene Healy <p>In these increasingly grim Days of Rage and COVID, you have to take your laughs where you can find them, sometimes from unusual sources. It has come to my attention that the Republican Study Committee—the nearly 150‐​strong caucus of House conservatives—<a href="">recently released</a> a comprehensive national security strategy entitled, <a href="">“Strengthening America &amp; Countering Global Threats.”</a> The “product of over 1.5 years of policy development,” this 120‐​page manifesto is “a conservative, solutions‐​oriented plan” that “advances the interests of the American people at home and abroad,” <a href="">according to</a> RSC Chairman Rep. Mike Johnson (R.-LA) and Rep. Joe Wilson (R.-SC). </p> <figure role="group" class="align-right filter-caption"><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="bbdf83d8-532f-43c5-88cc-f808b2e64643" data-langcode="en" class="embedded-entity"> <img srcset="/sites/ 1x, /sites/ 1.5x" width="700" height="394" src="/sites/" alt="Emphasis on “Global”" typeof="Image" class="component-image" /></div> <br /><figcaption><div class="figure-caption text-sans-alternate">Have they got a solution for you! </div> </figcaption></figure><p>One of those purported solutions involves constitutional war powers. The RSC report acknowledges that the congressional resolutions the president currently relies upon to wage war—the 2001 and 2002 authorizations for the use of military force (AUMFs)—are “outdated,” have been “stretched,” and therefore “some conservatives may be concerned with increasingly degraded congressional war powers.” What’s needed, the RSC says, is a new AUMF “giving the President sufficient authority to go after terrorist organizations for a definitive length of time without granting vague and indefinite war powers.” But what the House GOP brain trust has come up with would empower the president to wage war in, among other places, Peru, Sri Lanka, Japan, Spain, and—why not?—Northern Ireland. In (God help me) <a href="">nearly two decades</a> of following the war powers issue, it’s the most ridiculous proposal I’ve ever seen.</p> <p>Here’s the RSC’s bright idea: replacing the 2001 and 2002 resolutions with “an AUMF that authorizes the President to engage in operations against any currently designated Foreign Terrorist Organization (FTO) that is on the Department of State’s list at the time of enactment.” Granted, it would be nice to have a fixed, public list of terrorist organizations Congress has empowered the president to target. What we’ve got instead is <a href="">runaway mission creep</a>, as successive presidents have expanded the war on terror to new theaters and new jihadist groups under the rubric of “[Al Qaeda‐] associated forces.” Along the way, they’ve been <a href="">extraordinarily cagey</a> about which groups we’re at war with and which ones we might target next. As a result, nearly two decades after 9/11, the U.S. is engaged in combat operations in <a href="">some 14 countries</a>, bombing half a dozen of them on a semi‐​regular basis.</p> <p>And, true enough, the State Department has a list of Foreign Terrorist Organizations that it’s maintained since the late ‘90s, following criteria outlined in the Antiterrorism and Effective Death Penalty Act of 1996. You can take a look at the FTO list <a href="">here</a>. It includes <em>some 67 groups in 30 countries</em>.</p> <p>Did anybody at the RSC look at the list? Somebody involved in drafting this batty proposal visited the State Department’s FTO site at least once: the URL’s right there in footnote #369. But apparently, no one bothered to, er, <em>study</em> the page long enough to wonder: does the president really need standing authority to launch airstrikes and kill‐​or‐​capture missions against, say, the <a href="">Liberation Tigers of Tamil Elam</a> (Sri Lanka), the <a href="">Revolutionary Armed Forces of Colombia</a>, the <a href="">Real Irish Republican Army</a>, the <a href="">Continuity IRA</a> (<a href="">splitters</a>!), the ragtag band of Greek Marxists who go by the name <a href="">“Revolutionary Struggle”</a>—and umpteen other groups that pose no significant threat to the United States?</p> <p>A bunch of these sects are yesterday’s news: the Japanese terror‐​cult Aum Shinrikyo “has not conducted a terrorist attack since 1995,” per State’s <a href="">last available report</a>, and Japan executed seven of its leaders two years ago. The Basque separatist group Fatherland and Liberty, responsible for killing over 800 people in Spain and France over its 50‐​year history, ceased active operations in 2011 and <a href="">formally disbanded in 2018</a>. There’s a delisting process through which inactive groups can be removed, but it clearly hasn’t kept pace with current events in the terror community.</p> <p>That’s probably because the FTO roster wasn’t compiled with military targeting in mind. It’s mainly used to restrict terrorist financing, prevent admission of FTO members to the U.S. and to show diplomatic solidarity with allies facing their own extremist threats. It was never supposed to be a kill list.</p> <p>No doubt, your average RSC member is more hawkish than the <a href="">small cadre</a> of antiwar Republicans in the House. But surely none of the members who <a href="">signed onto this document</a> loves war so much that they’re completely indifferent to where, why, and with whom it’s waged. Instead, it seems nobody involved in crafting this proposal gave much thought to how it would work and what it would do. Clearly, the intellectually lazy, dog‐​ate‐​my‐​homework approach to public policy didn’t start with Donald J. Trump and it won’t end with him.</p> Thu, 25 Jun 2020 14:30:25 -0400 Gene Healy Why Tyrie’s Attempt to Make the Competition Authority More Like Which? Magazine Was Wrong Ryan Bourne <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Shelves lay barren, yet the price stickers read “Buy 1&nbsp;Get 1&nbsp;50% Off.” Hand sanitiser was like gold dust here in Washington DC in March. Demand surged after the Covid‐​19 hand hygiene advice. Unsurprisingly, stores rapidly emptied of existing stock.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>More surprising was the shortages’ duration. Prices usually rise with prolonged elevated demand, encouraging new supply and making consumers rethink “unnecessary” purchases or hoarding. Markets ultimately clear — providing more at higher prices.</p> <p>But no adjustment came. Big chains worried about reputational risks of raising prices in a&nbsp;pandemic. DC’s emergency “anti‐​price gouging law,” meanwhile, meant small outlets opted not to bother selling at higher prices, lest they be punished for charging “more than normal.” So prices remained notionally low, but sanitiser was unavailable.</p> <p>Economists&nbsp;<a href="" target="_blank">oppose anti‐​price gouging laws</a>&nbsp;for this reason. Price controls denying market realities harm economic welfare. It might seem in consumers’ interests to keep prices low by government decree to prevent “rip‐​offs.” But if consumers are unable to get products they’re willing to pay more for, they can be worse off collectively than with market pricing.</p> <p>I remember thinking at the time that I’d never heard of such bad pricing laws in the U.K. Just two days’ later, Andrew Tyrie’s Competition and Markets Authority&nbsp;<a href="" target="_blank">warned</a>&nbsp;it would use existing powers to “consider any evidence that companies may have broken competition or consumer protection law, for example by charging&nbsp;<em>excessive</em>&nbsp;prices” during the pandemic [my emphasis].</p> <p>Last week, the CMA confirmed&nbsp;<a href="" target="_blank">it is investigating</a>&nbsp;four pharmacies and local convenience stores for “suspected charging of excessive and unfair prices for hand sanitiser.” Under current law, the CMA must prove these retailers have abused a&nbsp;dominant market position.</p> <p>Given none of these businesses seem likely to much affect market realities, this is really an attempt to stop price gouging by spooking retailers. The CMA wants to make an example of them to show it is “pro‐​consumer,” focusing on local outlets in all likelihood because consumers had fewer options to shop elsewhere, especially those without internet accdess, giving some semblance of credibility to the idea of dominance.</p> <p>This absurd use of resources is befitting of Tyrie’s legacy as CMA chairman. The former Treasury Select Committee chair&nbsp;<a href="" target="_blank">resigned last week</a>, frustrated that his demand for ever‐​more expansive CMA powers from government went unanswered.</p> <p>But, importantly, Tyrie aimed to shift the emphasis of the CMA’s role away from its bread‐​and‐​butter role of helping to regulate economic competition (such as breaking up BAA for airport competition, or blocking the merger of Asda and Sainsbury), towards beefing up its consumer protection role as well.&nbsp;He synthesised by pledging that the CMA should champion the “consumer interest.”</p> <p><a href="" target="_blank">A Social Market Foundation</a>&nbsp;speech last May outlined his vision. An address on the limits of competition law quickly descended into an analysis of public perceptions about capitalism, with a&nbsp;sort of call to arms that the CMA should bend the knee to&nbsp;<a href="" target="_blank">“what most concerns ordinary consumers,”</a>&nbsp;lest it be swept away by populism.</p> <p>Tyrie acknowledged he was potentially exiting his lane, but didn’t care. Competition experts — who see the most important CMA role as protecting consumer welfare through effective competition law — bemoaned his “grandstanding,” in private.</p> <p>Despite his denial, Tyrie’s vision was clearly strongly influenced by a&nbsp;new U.S. anti‐​monopoly movement that says big is bad, more competitors in a&nbsp;market is good, and consumers face constant&nbsp;threats of exploitation. Economists challenge all such claims empirically. But Tyrie puts huge weight on sentiment. Consumers “feel” they are being ripped off. Even where they pay nothing, for social media, they feel terrified about data harvesting. “We are all vulnerable now,” he concluded.</p> <p>Such generalisations bode ill as a&nbsp;guide even to the CMA’s primary role. Amazon is regarded as&nbsp;<a href="" target="_blank">one of the most reputable brands</a>&nbsp;in the country, as is Google. Digital advertising has lowered advertising costs for social media’s true customers, so advertising spending has&nbsp;<a href="" target="_blank">plunged as a&nbsp;share of GDP</a>.</p> <p>Platform users meanwhile have the option of free services that&nbsp;<a href="" target="_blank">economic studies</a>&nbsp;find generate big benefits to them. Even on the supposed “big is bad”&nbsp;<a href=";segmentId=7c8f09b9-9b61-4fbb-9430-9208a9e233c8#myft:notification:daily-email:content" target="_blank">opposition to tech acquisitions</a>&nbsp;such as Whatsapp by Facebook and YouTube by Google, opponents ignore the many more acquisitions that don’t work or consumer welfare gains from better products when they do.</p> <p>But that’s the point: Tyrie wasn’t primarily animated by the idea the competitive process protected consumers’ welfare. No, what he envisaged in championing the “consumer interest” was a&nbsp;more populist body with huge discretionary powers marauding around stamping out practices unfavorable to&nbsp;<em>some</em>&nbsp;consumers, or which consumers disliked in other more subjective ways than conventional consumer welfare analysis considers.</p> <p>This distinction between “consumer welfare” and “consumer interest” is crucial. Consumer welfare can be assessed and debated using facts about the structure of the market, pricing, and evidence on innovation. Consumer interests are defined by slipperier concepts of “fairness.” Someone caring about consumer welfare might consider higher prices an unfortunate reality in a&nbsp;pandemic market when demand rises; someone animated by the “consumer interest” might see it as unfair to&nbsp;<em>some</em>&nbsp;vulnerable consumers.]</p> <p>A “consumer interest” champion looks at higher prices some loyal customers pay for utilities, and sees an unfair penalty. Those interested in overall consumer welfare muse that teaser rates for new customers encourage switching, pressuring companies to remain efficient to the benefit of consumer welfare. A&nbsp;competitive market allows companies to compete on pricing strategies too.</p> <p>A consumer interest lens, then, could sometimes actually harm competition, by eliminating businesses’ opportunities to profit where reputational constraints bind on large firms or where consumer welfare‐​enhancing pricing strategies exist. The CMA’s ham‐​fisted intervention on Covid‐​19 prices almost certainly prolonged shortages of numerous household products, and encouraged supermarkets to remove pro‐​poor discount deals instead.</p> <p>Now whether Tyrie is a&nbsp;symptom of a&nbsp;within‐​CMA attitude shift or its cause, I’m not sure. But his tenure overall accelerated a&nbsp;worrying push towards such discretion. On the audit market, the CMA bypassed the standard market investigations reference process designed to investigate new anti‐​competitive practices.</p> <p>His proposals for new CMA powers, meanwhile, would have stripped protections from companies and heightened the risk of wrongful punishments. In short, he wanted the CMA to be an aggressive consumer champion&nbsp;<em>and</em>&nbsp;decision‐​maker simultaneously — “too much prosecution, judge, and jury” according to some experts.</p> <p>Tyrie now promises to push his agenda strongly in the Lords. But with so much important competition activity coming the CMA’s way post‐​Brexit, this “consumer interest” shift couldn’t come at a&nbsp;worse time.</p> <p>Thankfully, the Government has resisted Tyrie’s demand for power — hence his resignation. It should now select a&nbsp;new chair intent on returning the competition regulator to its primary role, rather than becoming the governmental arm of&nbsp;<em>Which?</em>&nbsp;magazine.</p> </div> Wed, 24 Jun 2020 15:19:09 -0400 Ryan Bourne Cato Institute’s amicus program is cited by Judge Robert L. Wilkins during the Michael Flynn perjury dismissal trial on C-SPAN 3 Wed, 24 Jun 2020 11:16:55 -0400 Cato Institute Johan Norberg discusses the end of his series on Free to Choose Media’s Dead Wrong Wed, 24 Jun 2020 11:12:43 -0400 Johan Norberg Lenin Rises in Germany: Time for the Good Guys to Take Down a Few Statues Doug Bandow <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Tearing down statues has become the latest nihilistic pleasure in America. Never mind legal process, property ownership, and democratic decision. Unthinking mobs with little knowledge and less judgment wander America’s streets claiming the mandate of heaven to violently impose wokedom upon the rest of us.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>The assault on Confederate figures goes without saying, even though most Northerners were equally racist and Abraham Lincoln originally intended to preserve slavery, calling out the troops only to invade the southern states and maintain the union, irrespective of the human cost. The idea that people, like Robert E. Lee,&nbsp;<a href="" target="_blank">could genuinely feel loyalty to their states that trumped nationalism, and abhor the willingness of Washington to use military force to subjugate people</a>&nbsp;seeking to change their political system, is well beyond the thought processes of the typical statue Stalinist.</p> <p>Of course, the Founders were next. Thomas Jefferson and George Washington have suffered humiliating falls. They were slaveowners, like so many others at the time. Never mind their accomplishments, however. Which included forming a&nbsp;nation and writing a&nbsp;Constitution that set the stage for eliminating slavery, something they understood to be necessary but also viewed as politically unattainable at the time.&nbsp;<a href="" target="_blank">Even Ulysses S. Grant became a&nbsp;target.</a>&nbsp;One suspects that many of the happy destroyers thought he was a&nbsp;Confederate. After all, another uniform, another horse, another Civil War figure. What’s the difference? Why should it matter that he was&nbsp;<em>the North’s</em>&nbsp;commanding general, who did more than anyone else to end Southern military resistance? And, anyway, he was not perfect, as are today’s many social justice mobsters and poseurs.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>New statue follows the old communist script: tear down history to rebuild it in your own image. </p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Perfection is demanded by the Left’s roving gangs. This leaves a&nbsp;target‐​rich environment. Let me suggest some new targets. Without question, anything commemorating the sanctimonious, racist, anti‐​civil libertarian and warmonger Woodrow Wilson should be destroyed. (<a href="" target="_blank">I would be happy to assist in this endeavor, with great pleasure!</a>)</p> <p>So should the woke army destroy any statues of Franklin Delano Roosevelt, who did little to combat segregation, imprisoned Japanese‐​Americans, turned away Jewish refugees before World War II, did nothing to interfere with Nazi Germany’s death camps, and enjoyed a&nbsp;political romance with Joseph Stalin, one of history’s greatest mass murderers. Then there is Lyndon Johnson, corrupt and power‐​mad, who sent tens of thousands of Americans to their deaths in Vietnam. Almost any southern Democratic politician elected before, oh, 1970. And even Barack Obama. He didn’t believe in gay marriage until the popular majority shifted. No profile in courage was he!</p> <p>But the German city of Gelsenkirchen is in even more desperate need of someone to tear down a&nbsp;statue. Last Saturday the Marxist‐​Leninist Party of Germany, or MLPD,&nbsp;<a href="" target="_blank">erected</a>&nbsp;a&nbsp;monument to Vladimir Ilyich Ulyanov Lenin, the man most responsible for the Bolshevik Revolution, Soviet Union, and ensuing parade of horrors. “The time for monuments to racists, anti‐​Semites fascists, anti‐​communists, and other relics of the past has clearly passed,” declared Gabi Fechtner, the slightly deranged “chair” of the MLPD. (No word on what the party’s “table” and “lamp” think about Lenin!) Lenin, she explained, “was an ahead‐​of‐​his‐​time thinker of world‐​historical importance, an early fighter for freedom and democracy.”</p> <p>Gelsenkirchen is located in what was West Germany, so Fechtner can’t blame East German indoctrination for her hilarious views. (Lenin fought for freedom and democracy? On what planet? In which solar system?) And, at age 43, she was old enough to view the joyful response of her brethren in the east to the fall of the Berlin Wall, allowing them to escape their national prison. (Maybe she was angry that a&nbsp;bunch of them later moved west and crowded her town.) Or perhaps Germany’s educational system is simply overrated. Or Fechtner is a&nbsp;slow learner. Very slow.</p> <p>The MLPD defends not just Marx and Lenin but also Mao and Stalin. While the party insists that it doesn’t endorse everything about them — mass murder involving tens of millions of people is a&nbsp;bit much even for a&nbsp;committed commie ideologue today to stomach! — the MLPD still relies on their teachings. Maybe the party’s identification with mass killers is why it has been less than wildly successful. It averages 0.1 percent of the vote in national Bundestag elections. In the last European Parliament contest, the MLPD got 0.05 percent. It has elected a&nbsp;few members to city councils. Its biggest victory: taking three of 38 seats in Neukirchen‐​Vluyn with an impressive 7.5 percent of ballots cast.</p> <p>But perhaps the Lenin statue will trigger a&nbsp;new revolution. It is the first one to Lenin to be erected in western Germany, which was the front line facing the Red Army throughout the Cold War. Next up will be a&nbsp;statue of Marx, said Fechtner. At least he was simply a&nbsp;nitwit intellectual without the slightest idea how his ridiculous ideas would play out. (You didn’t know how much of a&nbsp;nitwit?&nbsp;<a href="" target="_blank">Read Paul Johnson’s&nbsp;<em>The Intellectuals: From Marx and Tolstoy to Sartre and Chomsky</em></a>.)</p> <p>If the MLPD is serious, how about a&nbsp;statue of Stalin? Museums and parks throughout Eastern Europe have more than a&nbsp;few available, presumably for sale. And the Chinese Communist Party is still producing Mao idols, before which the Chinese people are expected to genuflect. No doubt, Beijing could spare a&nbsp;couple for the MLPD, perhaps gratis as long as accompanied by a&nbsp;plaque praising the genius and greatness of&nbsp;<a href="" target="_blank">Chinese President and CCP General Secretary Xi Jinping</a>.</p> <p>Alas, not everyone was happy with the MLPD’s loving gesture for the Bolshevik paragon. The district council in Gelsenkirchen‐​West passed a&nbsp;resolution in March stating the obvious: “Lenin stands for violence, repression, terrorism and horrific human suffering.” Germany, however, apparently in contrast with America, is a&nbsp;country in which law prevails, property is respected, and mobs are not tolerated.&nbsp;<a href="" target="_blank">Explained</a>&nbsp;the city council’s spokesman, Martin Schulmann, “only a&nbsp;very few people around the Marxist Party want [the statue], no one else.” But “we have no choice but to accept the court’s rulings, since the piece of land where the statue is due to be installed is privately owned.”</p> <p>None of this is surprising.&nbsp;<a href="" target="_blank">Reported</a>&nbsp;Euronews: “In decades of experience addressing the country’s Nazi and communist pasts, ‘things have always been done properly, it all seems very German’ with official applications to local authorities and orderly dismantling of monuments, said Urte Evert, head of Berlin’s Spandau Citadel museum where many old statues are on display.”</p> <p>So the Lenin statue, produced more than six decades ago in Czechoslovakia, which had been communized courtesy of occupying Soviet troops after World War II, was erected. It was even purchased in the most capitalistic fashion — with a&nbsp;bid of $18,000 on eBay.&nbsp;<em>Deutsche‐​Welle</em>&nbsp;reported that the celebration of Lenin, whom it politely described as the “controversial Soviet leader,” was accompanied by music, flag‐​waving, and, of course, speeches. Appropriately enough, Lenin was covered with a&nbsp;red cloth before the unveiling.</p> <p>Apparently Fechtner noticed the spate of statue‐​hate elsewhere and said the faithful commies had reinforced Lenin: “I won’t say exactly how but it has been very firmly fastened in place.” But there presumably is nothing that a&nbsp;couple of blowtorches and a&nbsp;bulldozer could not handle.</p> <p>It is worth remembering the real Lenin —&nbsp;<a href="" target="_blank">still at rest in his celebrated Moscow tomb</a>, with&nbsp;<a href="" target="_blank">many other unworthies, including Stalin</a>, buried nearby at the Kremlin. After the USSR collapsed, there was serious discussion about burying Lenin and closing his tomb. Boris Yeltsin, Russia’s first democratically elected president, dropped the honor guard from the mausoleum but with fading health and political capital was unwilling to face down the mythologists who opposed dismantling communism’s most holy site.</p> <p>Lenin is one of history’s most important and consequential individuals. Without him there probably would have been no Bolshevik Revolution. There were other talented, intelligent, and determined revolutionaries. But he was unique. He had drive, charisma, and appeal, which is why Wilhelmine Germany recognized that he was an early weapon of mass destruction, worth transporting in a&nbsp;sealed train to Russia to spread the virus of radical revolution. And he did, with devastating effect.</p> <p>He also ruthlessly acquired and manipulated power. When leading Bolsheviks opposed Germany’s harsh peace terms in the Treaty of Brest‐​Litovsk, he was almost alone in forcing the revolutionary regime’s acceptance. He understood that the people desperately wanted peace and would oust the Bolsheviks if the latter failed to deliver. And all that mattered was holding on to power. He also drove the communists to victory in the brutal civil war that ensued. Others, including Stalin and especially Leon Trotsky, played important roles. But it was Lenin who would allow nothing to divert the communist party from its essential task in consolidating its control.</p> <p>He died at only 53&nbsp;in 1924. But what a&nbsp;legacy! The Bolshevik Revolution. Slaughter of the Czarist royal family. Brutal triumph over the Whites in the civil war. Bloody suppression of the Kronstadt rebellion against communist repression. Empowering Joseph Stalin, leading to pervasive party purges, mass starvation of Ukraine, the Hitler–Stalin pact, and conquest of Central and Eastern Europe. And an intense Cold War, filled with hot conflicts, Third World dictatorships and revolutionary movements, and superpower confrontations. Creation of murderous communist regimes in China, North Korea, Vietnam, Cuba, and elsewhere. The Berlin Wall. And the Evil Empire, as Ronald Reagan called the Soviet system at its zenith.</p> <p>Some modern communists, who, unlike Fechtner’s MLPD, have airbrushed Stalin from their ranks of communist heroes, claim that Lenin was a&nbsp;poor, misunderstood humanitarian whose utopian promise was perverted by his unprincipled successors. Yet Lenin drove the Bolshevik revolution by ousting, arresting, and suppressing all opposition, even liberal and elected. He wasted no time on “freedom and democracy,” contra Fechtner’s claim, enforcing Bolshevik rule, crushing dissent even within the party, establishing the Cheka secret police, which later morphed into the monstrously murderous NKVD and only slightly more discrete and polite KGB, and leading the victorious side in one of the world’s most horrific civil wars. He likely ordered the murder of the deposed Czar and royal family, including children and servants.</p> <p>Other than that, Lenin was a&nbsp;real sweetie, loved his family, and adored pets.</p> <p>It is worth emphasizing that Lenin was responsible for Stalin’s rise, choosing the latter to run the party. Before strokes disabled and ultimately killed him, Lenin dictated a&nbsp;testament suggesting Stalin’s removal, but mostly for being coarse and rude, including to Lenin’s wife, not for abusing power, or demonstrating murderous ambition, or threatening “freedom and democracy.” Even amid his criticism Lenin praised Stalin as an “outstanding leader” alongside Trotsky. In practice, Lenin was not bothered by terror as a&nbsp;revolutionary weapon. And he shed no tears for the victims.</p> <p>What did Lenin’s Soviet Union ultimately become? The late social scientist R. J. Rummel described how the communist leader’s beloved Cheka, since renamed, operated: “murder and arrest quotas did not work well. Where to find the ‘enemies of the people’ they were to shoot was a&nbsp;particularly acute problem for the local NKVD, which had been diligent in uncovering ‘plots.’ They had to resort to shooting those arrested for the most minor civil crimes, those previously arrested and released, and even mothers and wives who appeared at NKVD headquarters for information about their arrested loved ones.” A&nbsp;believer in freedom and democracy, indeed!</p> <p>Fechtner and her handful of fellow party members are free to enjoy their delusions. There was a&nbsp;time when many others were taken in by communism’s false promise. “I have seen the future and it works,” declared journalist Lincoln Steffens in 1919. After seven decades of brutal, bloody, oppressive experience, the band of true believers dwindled. By the time the Berlin Wall fell, the few real communists left were in academia — and working in Burlington Mayor Bernie Sanders’ office. They certainly weren’t in the Soviet Union or the desolate provinces of its far‐​flung empire. And, thankfully, there aren’t many in Germany today, as evidenced by the MLPD’s dismal vote totals.</p> <p>Nevertheless, Lenin’s statue now stands in Gelsenkirchen, Germany. It is calling out to the world to be disrespected, painted, vandalized, and torn down. Who is with me? A&nbsp;field trip to Gelsenkirchen? A&nbsp;weekend of sight‐​seeing highlighted by a&nbsp;bulldozer joy ride and fireworks finale featuring a&nbsp;couple of blowtorches? It’s time for the rest of us to do something to really promote “freedom and democracy,” which Lenin did so much to destroy.</p> </div> Wed, 24 Jun 2020 08:27:57 -0400 Doug Bandow Jeffrey A. Miron discusses his co‐​written blog post, “The Value of Living,” on KHOW’s The Ross Kaminsky Show Tue, 23 Jun 2020 12:42:33 -0400 Jeffrey Miron, Peter Van Doren, Ryan Bourne Roberto Salinas‐​Leon participates in the webinar, “Voces de libertad: La creación de riqueza,” hosted by Caminos de la Libertad Tue, 23 Jun 2020 10:52:15 -0400 Roberto Salinas-León Human Freedom Index is cited on the China Unscripted podcast Mon, 22 Jun 2020 12:40:40 -0400 Ian Vásquez, Tanja Porčnik The Witch Hunts of the Left Revive Soviet Ghosts Cathy Young <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Forty years ago next month, I&nbsp;came to the United States from what was then the Soviet Union. Less than four years ago, I&nbsp;<a href="" target="_blank">wrote</a>&nbsp;about my worry that certain elements of both the old USSR and Vladimir Putin’s new authoritarian Russia were on the rise in the country I&nbsp;now call home: on the right, Putin‐​style aggrieved populism and love for strongman rule; on the left, Soviet‐​style ideological zealotry and thought policing.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>In 2020, these trends seem to have become America’s new normal.</p> <p>Some of the police actions we have witnessed during the protests in response to the killing of George Floyd have been disturbingly reminiscent of the treatment of&nbsp;<a href="" target="_blank">protesters in Putin’s Russia</a>: peaceful demonstrators clubbed, pepper‐​sprayed, roughed up, and arrested for dubious reasons. The degree to which the authoritarian mindset has taken hold in Donald Trump’s Republican Party was evident in the infamous <em>New York Times</em>&nbsp;<a href="" target="_blank">OpEd by Sen. Tom Cotton</a>&nbsp;urging a&nbsp;show of military force to stop unrest in American cities, even without request for help from city or state governments.</p> <p>But at least so far, this Putinesque/​Trumpian authoritarianism has been largely a&nbsp;bust. The protests only&nbsp;<a href="" target="_blank">grew stronger</a>, and arguably prevailed insofar as we’re seeing real&nbsp;<a href="" target="_blank">progress on police reform</a>. Military leaders including former Trump administration officials have&nbsp;<a href="" target="_blank">pushed back</a>&nbsp;strongly against the use of troops to disperse non‐​violent protesters.</p> <p>Trumpism is dangerous. But at the moment, I’m more worried about Soviet‐​style zealotry and witch‐​hunting on the left.</p> <p>Izabella Tabarovsky, a&nbsp;fellow ex‐​Soviet Jew, has published a&nbsp;trenchant&nbsp;<a href="" target="_blank">piece</a>&nbsp;in Tablet about the “Soviet mentality in America,” drawing parallels between Soviet collective “hounding” of heretics like Boris Pasternak after the publication of his novel “Doctor Zhivago” in the West in 1958, and modern Twitter mobs, such as the one that&nbsp;<a href="" target="_blank">went after</a>&nbsp;<em>New York Times</em> op‐​ed writer/​editor Bari Weiss after the <em>Times</em> published Cotton’s column.</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="557" height="368" alt="young-twitter-1.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Today’s mobs, Tabarkovsky concedes, “do not follow orders from above” — but they still have power: “Those of us who came out of the collectivist Soviet culture understand these dynamics instinctively.”</p> <p>Another Russian‐​born Jewish American journalist, Julia Ioffe, strongly disagreed. On Twitter, Ioffe called Tabarkovsky’s article “<a href="" target="_blank">dumb</a>,” pointing out that “criticism is not censorship” and “is not analogous to being arrested, shot or sent to the Gulag.”</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="566" height="674" alt="young-twitter-2.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Of course not. But there is a&nbsp;big difference between criticism and denunciation.</p> <p>Ioffe noted that “Bari Weiss still has her job.” However, <em>New York Times</em> op‐​ed page editor&nbsp;<a href="" target="_blank">James Bennett does not</a>. Neither does former Philadelphia Inquirer editor&nbsp;<a href="" target="_blank">Stan Wischnowski</a>, forced out over a “Buildings Matter Too” headline on an article exploring the damage to the community from property destruction. (Not the smartest headline, but was it a&nbsp;firing offense?)</p> <p>Neither does data scientist&nbsp;<a href="" target="_blank">David Shor</a>, sacked after accusations of “anti‐​blackness” for tweeting out a&nbsp;paper — by a&nbsp;biracial scholar, Omar Wasow — showing that violent protests tend to backfire against progressives. Neither does sports broadcaster Grant Napear,&nbsp;<a href="" target="_blank">fired</a>&nbsp;for tweeting “ALL LIVES MATTER… EVERY SINGLE ONE!” in response to a&nbsp;question about his view of the Black Lives Matter movement. (Napear says he didn’t realize the phrase was perceived as a&nbsp;disparagement of BLM.)</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="565" height="314" alt="young-twitter-3.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Neither does Sue Schafer, an obscure government contractor fired after the pointless&nbsp;<a href="" target="_blank">exposure</a>&nbsp;of a&nbsp;two‐​year‐​old incident in which she wore blackface to a&nbsp;Halloween party to mock television host Megyn Kelly’s defense of blackface costumes.</p> <p>University of California‐​Los Angeles accounting professor Gordon Klein still has his job despite being denounced for a&nbsp;caustic email refusing a&nbsp;request to alter final exams or give grading accommodations to black students because of current events, but he has been&nbsp;<a href="" target="_blank">placed</a>&nbsp;on leave because of the backlash. Lee Fang, a&nbsp;reporter for The Intercept&nbsp;<a href="" target="_blank">assailed</a>&nbsp;as&nbsp;<a href="" target="_blank">racist</a>&nbsp;for his&nbsp;<a href="" target="_blank">interview</a>&nbsp;with an African‐​American BLM supporter who felt that the movement should pay more attention to lives lost to violence within the black community, has likely kept his job only because he&nbsp;<a href="" target="_blank">posted</a>&nbsp;an apology for being insensitive and causing “harm” to his colleagues and others.</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="566" height="618" alt="young-twitter-4.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>And often, the accusers are explicit about their intent to get their target fired: Shor’s main “critic,” Democratic activist Ari Trujillo Wesler,&nbsp;<a href="" target="_blank">tagged</a>&nbsp;his employer with the comment, “Come get your boy.”</p> <p>It’s true that getting fired is not the same as getting shot or imprisoned. But that didn’t happen to Pasternak, either, who was never arrested or sent to the Gulag. He was “only” denounced in angry articles and pages of letters expressing righteous outrage at his supposed anti‐​Soviet “libel” and calling him a&nbsp;traitor, an enemy, and a “White Guard” counterrevolutionary. He was then expelled from the Soviet Writers’ Union and lost all his publishing contracts. As another Soviet Jewish poet,&nbsp;<a href="" target="_blank">Alexander Galich</a>, put it in his 1968 ballad in memory of Pasternak, in a&nbsp;blistering reference to writers who shrugged off his persecution as no big deal: “Well, it’s not prison or the camps, or execution.”</p> <p>In fact, after the end of the Stalin era, relatively few dissenters in the Soviet Union&nbsp;<a href="" target="_blank">went to prison</a>, except for chronic troublemakers and those involved in organized activism. Mostly, the punishment for “thoughtcrime” was social ostracism and loss of access to respectable work or education — in other words, a&nbsp;pattern very similar to our current “cancel culture.” More common than being shipped off to a&nbsp;Gulag was the fate of a&nbsp;former journalist my parents knew in the late 1970s, who was hauling heavy loads for a&nbsp;living because he spoke against the 1968 Soviet invasion of Czechoslovakia at an office meeting. In the milder, post‐​Stalin phases of the Soviet regime, you had to be an actual dissenter to be punished by either prison or ostracism — in contrast to the Stalin era, when you could end up in the Gulag for unintentional missteps (like the father of one of my mother’s co‐​workers, arrested because he was overheard saying that Stalin sounded tired in a&nbsp;radio address).</p> <p>It’s also true that Soviet “cancellations” were always instigated by the regime and backed by the threat of state‐​sponsored violence: You could get kicked out of college or lose your job today, go to prison tomorrow. And yes, that makes a&nbsp;huge difference. Yet the similarities in mindset remain, from the Soviet‐​style calls for&nbsp;<a href="" target="_blank">shunning</a>&nbsp;ideologically deviant family members to the&nbsp;<a href="" target="_blank">abject apologies</a>&nbsp;for wrongthink to the repercussions for insufficiently vocal or genuine support for the cause, for instance, when the leadership of the Poetry Foundation is forced to&nbsp;<a href="" target="_blank">resign</a>&nbsp;after their statement expressing “solidarity with the Black community” and condemning “injustice and systemic racism” is&nbsp;<a href="" target="_blank">blasted</a>&nbsp;as inadequate and met with threats of boycott; or when a&nbsp;widely circulated Google&nbsp;<a href="" target="_blank">document</a>&nbsp;slams theaters for not speaking out on racial injustice, and then for posting messages of solidarity that feel “slapped together and hollow.”</p> <p>The current anti‐​racist moment demands that we politicize all personal life, and all art. The ubiquitous corporate messages of solidarity with Black Lives Matter — from Netflix to my bank’s website to Whole Foods — makes me think of the way slogans like “Forward to the victory of Communism!” and “The Party and the people are one” were woven into Soviet life at every step. It feels like a&nbsp;fake, forced demonstration of conformity — no matter how much I&nbsp;agree that we must do more to ensure that the inalienable rights to life and liberty are equally accessible to black Americans.</p> <p>I know all too well that anti‐​racist rhetoric can be weaponized in the most cynical ways: I&nbsp;grew up under a&nbsp;regime that weaponized such rhetoric as a&nbsp;propaganda tool while condoning actual rampant bigotry (including toward African students at Soviet universities). My own repugnance for racism certainly didn’t come from this propaganda; it it came from my parents, from my awareness of anti‐​Semitism, and from reading American literature (“The Adventures of Huckleberry Finn” and “To Kill a&nbsp;Mockingbird” were among my favorites).</p> <p>Many of today’s anti‐​racists are motivated by genuine and commendable concern about bigotry and inequity. But animating this anti‐​racist moment and the cadre of activists seeking to build a&nbsp;utopia of absolute equality, cleansed of all broadly defined oppression or “harm” to any member of a&nbsp;traditionally disadvantaged group, I&nbsp;see the same passion that drove communism, whose anthem, “<a href="" target="_blank">The Internationale</a>,” famously promised “A brand‐​new world we will create;/We who are nothing shall be all.” It has the same conviction that — to quote yet another Soviet slogan — “whoever is not with us is against us.” In today’s version, you are either actively anti‐​racist as defined by the activists, or racist, with nothing in between.</p> <p>These activists do not control a&nbsp;totalitarian regime, but they have a&nbsp;totalitarian mentality — and plenty of cultural power.</p> <p>This story does not end well.</p> </div> Mon, 22 Jun 2020 12:17:25 -0400 Cathy Young About That Trump Economy … Thomas A. Firey <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Before COVID-19, President Trump intended to make his stewardship of the American economy the centerpiece of his reelection campaign. Even with the pandemic, he will likely do so, claiming that he made the economy great before and will do so again.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But did Trump boost the U.S. economy before COVID-19?</p> <p>The answer to this question isn’t as obvious as the president’s boosters would have you believe.</p> </div> , <aside class="aside--right aside--large aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>When you look at the data, it’s less impressive than it seemed. </p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>At the start of 2020 unemployment was nearing historically low levels, gross domestic product was at an all‐​time high, and equities markets were surging. But does Trump deserve credit for any of that?</p> <p>In the latest issue of the Cato Institute’s policy journal&nbsp;<em>Regulation</em>, economist Pierre Lemieux&nbsp;<a href="" target="_blank">tries to answer that question</a>&nbsp;by analyzing U.S. economic data under Trump and his predecessor, Barack Obama. Here are some of his findings</p> <p>Consider the unemployment rate over the last decade.</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="679" height="504" alt="usc1.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>As noted, it was nearing historic lows in 2019, a&nbsp;remarkable change from the 10 percent it reached in October 2009, four months after the end of the Great Recession. From that point in October 2009, the unemployment rate declined steadily, first under the final seven years of the Obama administration—falling to 4.7 percent in December 2016—and then falling to 3.5 percent under Trump in late 2019.</p> <p>This decline continued under Trump, but did not accelerate after Trump became president in January 2017. If anything, the rate of improvement slowed down. Now that’s to be expected for the simple reason that&nbsp;<em>there wasn’t much further for it to fall</em>&nbsp;as it neared frictional levels.</p> <p>This was all great news for American workers, but it doesn’t suggest that President Trump performed any better on the economy than his predecessor.</p> <p>Equity prices show a&nbsp;similar pattern. The stock market reached new highs in 2019:</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="670" height="476" alt="usc2.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Those highs came after a&nbsp;decade of fairly steady growth under both Trump and Obama. But notice, again: There’s no obvious change in the trend following Trump’s 2017 inauguration. The average daily increase in the index was 0.0500 percent under Obama and 0.0502 percent under Trump (until 2020). Once more, the economy seemed to be doing the same under Trump as it did under his predecessor.</p> <p>The GDP offers somewhat better news for Trump. When measured by real (inflation‐​adjusted) GDP per capita, the nation did better under Trump (again, until 2020). Under Obama, the average annual growth in this measure (starting in 2010) was 1.4 percent. Under Trump it averaged 2.0 percent. But growth slowed slightly in 2019, falling to 1.8 percent.</p> <p>And moreover, 2&nbsp;percent is no great shakes. If anything, these data show a&nbsp;slow recovery from the Great Recession under both presidents.</p> <p>Wage data presents a&nbsp;similar picture. According to the 2020 Annual Report of the President’s Council of Economic Advisers, real wages of workers at the bottom of the income distribution improved during the Trump presidency:</p> </div> , <blockquote class="blockquote"> <div> <p>The real wages of private sector production and nonsupervisory workers increased by 1.9 percent during the year ended in November 2019.</p> </div> </blockquote> <cite> </cite> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>You can see that here:</p> </div> , <figure class="figure overflow-hidden figure--default figure--no-caption responsive-embed-no-margin-wrapper"> <div class="figure__media"> <img width="669" height="501" alt="usc3.jpg" class="lozad component-image" loading="lazy" data-srcset="/sites/ 1x, /sites/ 1.5x" data-src="/sites/" typeof="Image" /> </div> </figure> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But notice that the significant increases only started in mid‐​2018, and all gains in 2019 were cancelled out by the last two months of the year. Overall, the average annualized monthly rate of increase under Trump was 1.2 percent (before 2020), only slightly better than Obama’s 1.0 percent.</p> <p>What about the federal government’s fiscal health, which could be an important factor in how the United States weathers the economic shock from COVID-19?</p> <p>The country was burdened with heavy debt at the end of the Obama administration, as then‐​candidate Trump stressed to&nbsp;<em>Washington Post</em>&nbsp;reporters Bob Woodward and Robert Costa in the spring of 2016.</p> <p>“We’ve got to get rid of the $19 trillion in debt,” he said, referring to the gross federal debt (which actually was $18.1 trillion at the end of 2015). “How long would that take?” the interviewers asked. “I would say over a&nbsp;period of eight years,” he responded.</p> <p>Over the first three years of his administration, Trump went in the opposite direction, increasing the annual budget deficit from $585 billion (in Obama’s last year) to $984 billion in the fourth quarter of fiscal year 2019.</p> <p>This increase was due mainly to higher government spending. By December 31, 2019, the gross federal debt had increased 14 percent since 2016 and reached $22.7 trillion—and all of that&nbsp;<em>before</em>&nbsp;COVID-19 hit.</p> <p>President Trump’s attitude on debt and deficit seems to have changed somewhat since his interview with Woodward and Costa. At a&nbsp;January 17, 2020 Republican fundraiser, Trump declared “Who the hell cares about the budget? We’re going to have a&nbsp;country.”</p> <p>What do these and other data from Lemieux’s article tell us about President Trump’s economic policies?</p> <p>First, the data show that the economy more‐​or‐​less followed the same course in the first three years of Trump’s administration that it did over the last seven years of the Obama administration.</p> <p>Second, Trump’s administration rang up trillions of dollars in new government debt even before it began spending to fight the effects of COVID-19.</p> <p><em>That’s</em>&nbsp;his actual record. He should own it.</p> </div> Mon, 22 Jun 2020 09:17:01 -0400 Thomas A. Firey The New Deal and Recovery, Part 2: Inventing the New Deal George Selgin <p>"It is difficult to think of an important aspect of the New Deal to which Roosevelt had not plainly pledged himself before taking office. …Roosevelt had campaigned on a clear and specific New Deal Program." (Eric Rauchway, <em>Winter War</em>, pp. 15-17.) </p> <p>To understand the New Deal's shortcomings as a grand scheme for achieving economic recovery, it helps to realize that the New Deal wasn't a grand scheme at all, but an assemblage of steps and programs, many of which were decided upon or concocted only after Roosevelt took office. </p> <p>But if I'm to expect you to see the New Deal that way, I must first convince you that Eric Rauchway's opposite claim isn't true. Hence this post, which (unlike most others to come) is about history, but not so much about economics. If you're only here for the econ., you might skip it without fear of not being able to follow others in this series. </p> <h4>Rauchway's Revisionism<br /> </h4> <p>According to Rauchway, most of the New Deal's important components had been planned and pledged to well before FDR took office. Rauchway's view goes hand-in-hand with his portrayal of the New Deal as a well-oiled, supercharged recovery machine. In contrast my own view of the New Deal, as a set of make-shift remedies, makes it seem more likely to have had the U.S. economy bucking and stalling like an ill-tuned jalopy. </p> <p>Of the two views, mine is (for once) the more orthodox. Although journalist Robert Wright took poetic license when he wrote, <a href="" rel="nofollow external noopener noreferrer" target="_blank">back in 2001</a>, that "FDR threw a bunch of policies against the wall, and the ones that stuck became the New Deal," his opinion isn't all that far removed from what most New Deal historians believe. Roger Daniels, in his 2015 book <a href="" rel="nofollow external noopener noreferrer" target="_blank"><em>Road to the New Deal</em></a>, even goes so far as to say that "The notion that when Franklin Roosevelt became president he had a plan in his head called the New Deal is a myth no serious scholar has ever believed." </p> <p>Rauchway is certainly a serious scholar. So, how has he come to his unorthodox view? In brief, he argues (1) that the New Deal must have been a coherent and well-advertised program, as well as a radical one, for otherwise Hoover couldn't have made opposition to it the cornerstone of his own presidential campaign; (2) that the memories and motives of FDR's own colleagues and advisors who insist there was no plan can't be trusted; (3) that other historians haven't examined the right documents; and (4) that the orthodox view can't possibly be right because it implies that Roosevelt misled voters, depriving his program of "democratic legitimacy," whereas it's clear that democratic legitimacy "was the New Deal's ultimate goal." </p> <p>Most of these arguments seem easily answered. Concerning "democratic legitimacy": that Roosevelt didn't tell voters just "what he was going to do" needn't mean that he hoodwinked them. It could (and did in fact) mean that he himself had no precise idea what he would do once in office. Concerning Hoover: although <a href="" rel="nofollow external noopener noreferrer" target="_blank">he did say things</a> like "they [i.e., the Democrats] are proposing changes and so-called new deals which would destroy the very foundations of our American system," it is of course common for candidates to accuse their opponents of harboring sinister plans. If Hoover's frightening portrayal of FDR's plans was unusual, it was not because it accurately represented the avowed designs of FDR or his party, but because Hoover appears to have sincerely believed it. Concerning other historians missing key sources: if so, then Rauchway ought to supply direct proof of his own thesis from these. But he never does. </p> <p>What Rauchway <em>does</em> do is either ignore or dismiss key documents informing the orthodox view, including the testimonies of <a href="" rel="nofollow external noopener noreferrer" target="_blank">Raymond Moley</a> and <a href="" rel="nofollow external noopener noreferrer" target="_blank">Frances Perkins</a>, two of FDR's closest associates. According to Moley, the first member of FDR's "brain trust," believing that New Deal policies were "the result of a unified plan" is like believing "that the accumulation of stuffed snakes, baseball pictures, school flags, old tennis shoes, carpenter's tools, and chemistry sets in a boys bedroom could have been put there by an interior decorator." Although he cites Moley extensively, Rauchway doesn't mention this statement. </p> <h4>Dissing Frances Perkins<br /> </h4> <p>Moley eventually parted company with FDR, so perhaps his testimony is jaundiced. The same certainly can't be said of the testimony of Frances Perkins, who first served with FDR in Albany and was secretary of labor for all four of his terms in Washington. In <em>The Roosevelt I knew</em>, her 1946 memoir, Perkins writes: </p> <blockquote><p>The notion that the New Deal had a preconceived theoretical position is ridiculous. The pattern it was to assume was not clear or specific in Roosevelt's mind, in the mind of the Democratic party, or in the mind of anyone else taking part in the 1932 campaign. </p> </blockquote> <p>"<em>Not</em> clear or specific." Although Rauchway does refer to this passage, he avoids quoting these words flatly contradicting his own. Instead he opines, condescendingly, that while "Perkins may have been a great secretary of labor… she was a poor historian: not a word of her remarks is true." </p> <p>Why would Perkins not tell the truth? "In reminiscing," Rauchway says, "she may merely have forgotten how things stood thirteen years before." But thirteen years isn't so long, after all; and "ridiculous" isn't the sort of adjective one uses to describe something one isn't certain about. Nor, for that matter, is it likely that Perkins' foggy memory inspired not only the passage in question, but several others to the very same effect that Rauchway doesn't quote. Passages like </p> <blockquote><p>When Franklin Roosevelt and his administration began their work in Washington in March 1933, the New Deal was not a plan with form and content. It was a happy phrase he had coined during the campaign, and its value was psychological. It made people feel better, and in that terrible period of depression they needed to feel better, </p> </blockquote> <p>and </p> <blockquote><p>It is important to repeat, the New Deal was not a plan, not even an agreement, and it was certainly not a plot, as was later charged. </p> </blockquote> <p>This last statement reads almost as if Perkins wanted to make sure no one would attribute her other statements to mere heedlessness. </p> <p>There are also other passages referring to specific New Deal programs. For example, Perkins observes that as late as April 1933 FDR's "mind was as innocent as a child's of any such program as the NRA." In fact, far from being confined to scattered <em>obiter dicta</em>, Perkins' claim that the New Deal wasn't planned in advance forms one of her memoir's central themes. </p> <p>But Rauchway has an answer to this as well. "In reminiscing," he says, "Perkins may have wanted to minimize Roosevelt's own role in the New Deal so she could maximize her own." To call this charge against Perkins, who <a href="" rel="nofollow external noopener noreferrer" target="_blank">has been described</a> as "a modest woman" who "didn't care if other people took credit," and who by all accounts was fiercely loyal to FDR, "far-fetched," is being charitable. "Shabby" is more like it. </p> <h4>The New Deal and the FDR's Campaign<br /> </h4> <p>Let's now consider the facts of the case. They are, in brief, that while a few elements of what the "New Deal" came to mean in practice were spelled-out clearly enough beforehand, many others, including most of the New Deal's "recovery" components, weren't. Nor is it likely they could have been anticipated, or that Roosevelt would have divulged them if they had been. </p> <p>As for what Roosevelt did make explicit, until his nomination his most revealing remarks came during his May 22, 1932 speech at <a href="" rel="nofollow external noopener noreferrer" target="_blank">Oglethorpe University</a>. Here he spoke of "the vital necessity of planning for definite objectives." But if Roosevelt already had a plan in mind he revealed nothing of its content. Instead he declared that "the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something." This was indeed an accurate indication of what was to come. But what it described was more like a plan to throw policies against a wall to see which ones stuck than a "clear and specific New Deal program." The closest Roosevelt came in his speech to announcing even part of such a program was in declaring it "self-evident that we must… restore commodities to a level approximating their dollar value of several years ago or else see more defaults or loan write-downs." Even so, he didn't say <em>how</em> he planned to get "commodities" up again. </p> <p>From the opening of the Democratic National Convention on June 27th, 1932, <a href="" rel="nofollow external noopener noreferrer" target="_blank">the Democratic platform</a> became the official statement of FDR's intentions, to which he solemnly agreed to adhere. "We believe," it declared, </p> <blockquote><p>that a party platform is a covenant with the people to have [sic] faithfully kept by the party when entrusted with power, and that the people are entitled to know in plain words the terms of the contract to which they are asked to subscribe. </p> </blockquote> <p>If there was ever an opportunity for the Democrats to reveal a "clear and specific" New Deal program, this was surely it. But while the platform listed some measures that would indeed be part of the actual New Deal, as far as the New Deal's recovery initiatives are concerned, it was more misleading than prescient. The platform promised: </p> <ul> <li>"an immediate and drastic reduction of governmental expenditures…to accomplish a saving of not less than twenty-five per cent in the cost of the Federal Government";</li> <li>"a federal budget annually balanced on the basis of accurate executive estimates within revenues, raised by a system of taxation levied on the principle of ability to pay";</li> <li>"a sound currency to be preserved at all hazards and an international monetary conference called on the invitation of our government";</li> <li>"strengthening and impartial enforcement of the anti-trust laws, to prevent monopoly and unfair trade practices, and revision thereof for the better protection of labor and the small producer and distributor."</li> </ul> <p>The platform also "condemn[ed] the extravagance of the [Hoover administration's] Farm Board," including its "unsound policy of restricting agricultural products to the demands of domestic markets." </p> <p>As we'll see, Roosevelt did in fact try to cut spending and balance the federal budget. But he was unsuccessful on both scores; and today it is the <em>growth </em>in spending, and especially in deficit spending, during the New Deal that is said to have contributed to the recovery as an early application of supposedly "Keynesian" thinking. (I'll address Keynes's <em>actual</em> influence on Roosevelt's policies in a later post.) As for "strengthening and impartial enforcement of the anti-trust laws," the National Recovery Administration, one of the <em>actual </em>New Deal's centerpieces, would do just the opposite. A second New Deal centerpiece, the Agricultural Adjustment Association, would, through its "domestic allotment" plan, implement the very "policy of restricting agricultural products to the demands of domestic markets" that the platform expressly condemned.<a href="#_ftn1" name="_ftnref1" id="_ftnref1">{1]</a> </p> <p>Turning to monetary policy, that the "bank holiday" and Emergency Banking Act were adventitious measures rather than ones FDR had been planning all along should go without saying. The promised "international monetary conference" was actually scuttled by Roosevelt. As for the other monetary measures that were to be chiefly responsible for aggregate demand growth during the New Deal era—suspending gold payments, and devaluing the dollar—the platform never so much as hints at them. On the contrary: it assures voters that a "sound currency is to be preserved at all hazards." </p> <p>Some commentators claim that the phrase "sound currency" was vague enough to avoid committing Roosevelt to maintaining the gold standard; and in his 1936 book <em>Half Way with Roosevelt </em>Ernest Lindley explains that the word "gold" wasn't mentioned because "the silverites and other advocates of price-lifting by monetary action were strong enough to keep it out." The fact remains, however, that "sound currency" is just a variant of "sound money," which itself comes from the French "monnaie sonnante et trébuchante." This literally means "money that rings and stumbles"; but it stands for full-weight or standard, as opposed to debased, precious metal coins, which actually <em>sound</em> different than their debased counterparts when tossed onto and allowed to "stumble" on a hard surface. In other words, to practically everyone who heard it in 1932, including <a href="" rel="nofollow external noopener noreferrer" target="_blank">banker James Warburg</a>, who was to be one of Roosevelt's more savvy financial advisors, and who felt bitterly betrayed by his decision to go off gold, the Democrats' promise to preserve "sound currency" could mean nothing other than that FDR did <em>not</em> plan to toy with the gold standard. </p> <p>Once again: none of this is meant to deny that the platform did point clearly enough to some actual New Deal measures, including its extensive public works program, the Glass-Steagall Act's separation of investment from commercial banking, the TVA, unemployment insurance, and social security. But the anticipated bits almost all had to do with relief and reform, rather than recovery. So far as the voting public was concerned, the New Deal's recovery plan, to the extent that it was a plan at all, was a black box. </p> <p>Nor is it the case that Roosevelt clarified matters by explicitly departing from any part of the platform. Instead, in his <a href="" rel="nofollow external noopener noreferrer" target="_blank">nomination acceptance speech</a> FDR said, "I have many things on which I want to make my position clear at the earliest possible moment in this campaign. That admirable document, the platform which you have adopted, is clear. I accept it 100 percent. …And you can accept my pledge that I will leave no doubt or ambiguity on where I stand on any question of moment in this campaign." While it certainly can't be said that FDR led a campaign free of "doubt and ambiguity," he gave the public no reason to doubt that he meant to keep his word. </p> <h4>A Secret New Deal?<br /> </h4> <p>Nor, to judge from press reports, did the public doubt him. That is, they believed that the New Deal would be just as the Democratic platform described it, and not a far more ambitious program that would radically depart from that platform in many respects. Reporting just after the election, <em>The Economist </em>expressed a common opinion in saying that it didn't </p> <blockquote><p>anticipate that any very radical experiments will be made. We doubt whether Mr Roosevelt, in any attempt which he may make to lift America from the depression "by her own boot-jacks," will succeed in evolving measures very different from those formulated and applied during the past two years by Mr Hoover. ("The New President," November 12, 1932). </p> </blockquote> <p>Although it might have been expected to help the public to form a more accurate picture of the coming New Deal, the interregnum—that is, the weeks separating FDR's election from his inauguration—was marked by increasing rather than diminishing doubts as to just what the president-elect had in mind. With just three weeks to go before FDR took the oath of office, <em>The</em><em> Economist </em> (February 11, 1933) observed that "The market has tacitly suspended action and judgment until the new Roosevelt administration has assumed office and <em>declared its policy on major questions</em>" (my emphasis). It would, of course, have been perfectly unnecessary for the incoming administration to "declare its policy on major questions" had FDR "campaigned on a clear and specific New Deal Program" all along. </p> <p>That he didn't, and that the specifics of the actual New Deal would often run counter to FDR's less-vague campaign pledges, raises two possibilities. One is that there really was no well-worked-out New Deal plan, as Raymond Moley and Frances Perkins insisted. The other, which we must also consider, is that there <em>was </em>such a plan, blueprinting more-or-less what took place, but that FDR kept it under his hat. This last possibility appears especially plausible with respect to FDR's plans for the dollar. After all, if FDR did in fact intend all along to suspend the gold standard and eventually devalue the dollar, he could hardly have revealed these parts of his plan in advance! During the campaign Hoover repeatedly accused FDR of harboring plans to abandon the gold standard in favor of "fiat money"; and by the closing weeks of Hoover's presidency many had begun to suspect that Hoover might be right. Were they just falling for Hoover's FDR-bogeyman, or had Hoover been onto something after all? </p> <p>The answer is a little of both. FDR wanted to keep his options open. ''I do not want to commit to the gold standard," he told Brains Trust member Adolf Berle a few days before the election. "I haven't the faintest idea whether we will be on the gold standard on March 4th or not; nobody can foresee where we shall be.' "This was an astute position; but it spoke not of a definite plan for gold but of the folly of trying to formulate any such plan. </p> <p>And that seems to have been FDR's position all along. Having carefully looked into the matter, <a href="" rel="nofollow external noopener noreferrer" target="_blank">Sebastian Edwards concludes</a> </p> <blockquote><p>that during the primary and presidential campaigns, neither Roosevelt nor his inner circle had a strong view on gold or the dollar. …Tinkering with the value of the currency was a possible area for experimentation; but it was an option with a relatively low priority. …Until inauguration day FDR's views on the gold standard were ambivalent and noncommittal; he was neither a diehard fan of the system, nor was he a severe critic. </p> </blockquote> <p>Nor, Edwards adds, had the Roosevelt team undertaken or commissioned any "studies that examined in detail what would be the possible consequences of abandoning the gold standard." In short, while FDR may have contemplated abandoning the gold standard, he certainly hadn't <em>planned</em> on it. What's more, nothing changed during the interregnum: "To put it simply," Edwards says, "on March 4th, the day Franklin Delano Roosevelt was to take over as President, there was no concrete or definitive plan for taking the U.S. off gold and devaluing the dollar." </p> <p>What was true of FDR's secret plans for the dollar was almost certainly true of his other secret New Deal plans, namely, that he didn't have any. That is, there is no reason to disbelieve what Francis Perkins, Raymond Moley, and most historians have had to say on the subject. </p> <h4>***<br /> </h4> <p>To conclude: "New Deal" rhetoric and revisionist histories notwithstanding, FDR didn't come to Washington equipped with any well worked-out plan for ending the Great Depression. Instead, his recovery plan was mostly rushed together during his famous first 100 days in office. That some components of this hastily-assembled program should have failed to contribute to the recovery, and that some may even have hindered it, should not seem all that surprising. But this is merely speaking of probabilities. I still have to prove that certain New Deal programs did in fact impede recovery, and did so enough to justify the claim that, taken as a whole, the New Deal, considered as a program for economic recovery, was a flop. </p> <p><strong>Continue Reading<em> The New Deal and Recovery:</em></strong> </p> <ul> <li><a href="" rel="nofollow noopener noreferrer">Intro</a></li> <li><a href="">Part 1: The Record</a></li> <li>Part 2: Inventing the New Deal</li> </ul> <p>___________________ </p> <p><a href="#_ftnref1" name="_ftn1" id="_ftn1">[1]</a> Rauchway (<em>Winter War,</em> p. 97) ignores Roosevelt's pledge when he writes that "he indicated his support for a "domestic allotment or something similar to it" by "ruling out other production-controlling policies." Because the domestic allotment was itself the one agricultural production-control policy expressly ruled-out by the Democratic platform, the fact that Roosevelt may also have ruled out others can hardly be reckoned an instance of his having offered voters a "clear and specific" indication of what he would do once in office. What happened in fact is that <a href="" rel="nofollow external noopener noreferrer" target="_blank">Henry Wallace</a>, upon becoming Roosevelt's first secretary of agriculture, disregarded the Democratic platform's condemnation of the domestic allotment idea—which had been put in it by then Tennessee Senator (and future secretary of state) <a href="" rel="nofollow external noopener noreferrer" target="_blank">Cordell Hull</a>—and instead based the AAA on <a href="" rel="nofollow external noopener noreferrer" target="_blank">the <em>Republican</em> platform,</a> which among other things had called for "control of [agricultural] production to such volume as will balance supply with demand," where "demand" was understood to mean domestic demand alone. (See former Iowa Senator Smith Brookhart's May 22, 1938 letter to Cordell Hull, <a href="" rel="nofollow external noopener noreferrer" target="_blank">here</a> at pp. 292ff.) The story is complicated by the fact that while many Republican Senators and Congressmen, as well as some Farm Board officials, favored a domestic allotment plan, Hoover himself vehemently opposed it while favoring a voluntary alternative. The Republican platform left room for either option. </p> <p> [<a href="">Cross-posted from</a>] </p> <p></p> Mon, 22 Jun 2020 08:31:09 -0400 George Selgin