Mises Wire |
- A Brief History Of Secession Referenda in Europe
- With Reverse Repos, The Fed Is Now Trying to Clean up Its Own Mess
- Why "Wild Swings" In Crypto Prices are Not Really a Problem
- Why America's Oligarchs Are Moving Left
| A Brief History Of Secession Referenda in Europe Posted: 12 Jun 2021 12:00 PM PDT Scotland still hasn't given up on holding another independence referendum within the next several years. Although London opposes the measure, it is notable that the debate over Scottish secession is not over whether or not a secession vote is moral or legal. Rather, the question is over whether or not such a vote is prudent at this time. This is quite a departure from American politics in which any suggestion of independence for any region of the US—a country that is not even as old as the 300-year union between England and Scotland—is considered obviously illegal and beyond the pale of serious political discussion. Moreover, in spite of the US's (rather unwarranted) reputation for expansive local autonomy, we can find many cases in which European regimes were far more willing to compromise on local assertions of autonomy and independence, than is the case in the United States. Although fully or partially successful secession movements are not frequent occurrences in Europe, we can nonetheless look to a number of cases in which regions successfully carried forward independence movements at least to the point that a referenda was held. In some of these cases, independence won voter approval and was enacted. Let's look at some of these cases to learn more. Local Autonomy and Plebiscites as a Component of Classical LiberalismIn his 1919 book Nation, State, and Economy, Ludwig von Mises concludes that local independence is an assumed characteristic within a liberal (i.e., a "classically liberal" of "libertarian") polity. He writes:
Moreover, in his 1927 book Liberalism: In the Classical Tradition, Mises encourages the use of plebiscites in carrying this out. Mises writes:
To some readers, this might seem as a very radical position that Mises is taking. But, writing in the late teens and 1920s, Mises was working from what was becoming an established—albeit infrequently used—strategy for maintaining or increasing local autonomy within European states. European Independence Plebiscites: A Quick HistoryPerhaps the earliest uses of plebiscites to win local support for secession movements occurred in the late eighteenth century during the French Revolution. In an effort to enlarge the French state, plebiscites were used in the Papal States enclaves of Avignon and Comtat Venaissin in 1791, in Savoy in 1792, and in the Belgian Communes, Nice, and the Rhine Valley in 1793.1 In none of these cases was full independence contemplated, and these plebiscites only gave the voters a choice between the status quo and joining the French Republic. Nonetheless, pro-French sentiment was high in many of these areas and voters did indeed in many cases chose to secede from their status quo polities (i.e., the Papal States, Belgium, Sardinia) and join the French state. By the nineteenth century, plebiscites were being increasingly used as part of the political process of changing which regime controlled certaint districts and regions:
The Ionian Islands were transferred to Greece by Great Britain after the move was approved by voters in an 1863 plebiscite. Plebiscites were also used—beginning with the aftermath of the Treaty of Prague in 1866—in attempts to settle the so-called "Schleswig Question" over the borderlands between Denmark and the German Confederation. Secession in the Twentieth CenturyBy the beginning of the twentieth century, the idea of holding local elections to settle border disputes or the inclusion of a region within a certain polity was anything but novel. In a 1905 plebiscite, nearly 100 percent of Norwegian voters approved dissolving Norway's union with Sweden. Norway became a fully independent state three months later. In a 1918 plebiscite, Iceland's voters approved independence for the country in a personal union with Denmark under the Danish king. (The king would remain the head of state Iceland became a republic after another plebiscite in 1944). In 1919, the Austrian region of Vorarlberg held a plebiscite to determine if the region should secede from Austria and join Switzerland as a new canton. 81 percent of Vorarlberg voters approved the measure, but the movement failed due to opposition from the Swiss and Austrian governments, among others. A plebiscite was held in Carinthia in October 1920 to resolve an ongoing border dispute between Yugoslavia and the new Austrian Republic. 59% voted to attach Carinthia to Austria. In spite of opposition from Yugoslavian forces, the region ultimately became Austrian. After World War I, several plebiscites were held as a means of implementing the Treaty of Versailles. These plebiscites, unlike locally-driven plebiscites in, say, Voralberg and Iceland, were conducted under significant pressure from outside great powers—namely, the victorious Entente Powers. Where plebiscites were actually held in German territory—such as in East Prussia—the results favored the Germans, but the Entente Powers also simply transferred some areas of Germany to Poland and Czechoslovakia. (The Third Reich would later employ plebiscites in Austria and the Sudetenland as retribution for these territorial transfers.) In 1946, a plebiscite was held to determine if the Faroe Islands should secede from Denmark. It narrowly failed. In 1955, voters in the Saar, a French protectorate, voted to join Germany. In 1964, Maltese voters approved independence from the United Kingdom in a plebiscite. In 1990, Slovenia declared independence from Yugoslavia via plebiscite. The new Slovenia republic ultimately won independence after the nearly bloodless Ten-Day War. In the wake of the collapse of the Soviet Union, plebiscites were held in several Soviet republics including Ukraine and the Baltic states. (Outside Europe, of course, many more secession plebiscites were held throughout the twentieth century as part of the process of decolonization in Africa and Asia.) Plebiscites in PerspectiveAs we can see from these examples, Mises's position in favor of plebiscites in to implement self-determination plans through secession were not especially radical in the context of the late 1920s. After all, by the early twentieth century, they had come to be used a tool for settling border disputes and as a means of allowing for local vetoes on international agreements involving attempts at changing which state controlled certain regions. In many cases, plebiscites did not offer the option of total independence, but provided an option to attach the region in question to a different sovereign state. But in some cases, plebiscites were used to establish the creation of new sovereign states such as Slovenia, Estonia, Iceland, and Norway. In many cases, the results of plebiscites were not carried out or the results were short-lived even when implemented. For example, the Ionian Islands changed hands more than once after the 1863 vote. But in all cases, plebiscites were employed to determine a question of secession, whether or not the end goal was ultimately full independence. In this, they have worked relatively well. In many cases, these plebiscites have helped to peacefully settle disputes and to send a message to central regimes about the prudence of granting independence to separatist regions that vote overwhelmingly for independence. Given all this it would be odd to regard a vote on independence in Scotland—or anywhere else—as some sort of outlandish or radical political strategy.
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| With Reverse Repos, The Fed Is Now Trying to Clean up Its Own Mess Posted: 12 Jun 2021 09:00 AM PDT This spring Scott Pelley of 60 Minutes asked Fed chair Jerome Powell, "And you believe the system, because of the oversight of the Fed, has the wherewithal to stand a significant shock to the markets?" After pointing out that the markets survived a 25 percent drop in GDP and the loss of 30 million jobs last covid spring, Powell admitted that "some parts of the financial system had to be bailed out again. These were really, though, nonbank places like money market funds and things like that, where we had to step in again and provide liquidity." Money market funds (MMF) are what most investors consider cash. How could anything go wrong with cash? One wonders why the Fed would be forced to provide liquidity to shore up liquidity. Truth be known, it's not cash and not all that liquid. Money market funds, according to Investopia.com, are "a kind of mutual fund that invests in highly liquid, near-term instruments. These instruments include cash, cash equivalent securities, and high-credit-rating, debt-based securities with a short-term maturity (such as U.S. Treasuries)." For those who surf Twitter, there's been chatter aplenty about the surge in the amount of reverse repos. Ex–Dallas Fed staffer Danielle DiMartino Booth tweeted,
Another former Fed senior staffer, Roberto Perli, chimed in with,
Deploy where? If commercial bankers are set to go on a lending binge, they don't act like it. Jim Bianco, in a Real Vision Daily Briefing with Ed Harrison, also mentioned that reverse repos hit $485 billion and made Perli's point: "There's so many reserves in the banking system, and there's so many places you could put reserves[,] like you could put it in general collateral repo, you could put it in one month bills, just to use two examples. Those are negative, those rates are minus one basis point right now." Money market funds guard their $1 net asset values (NAV) with their lives. No one in America wants to break the buck, whereas in Europe, MMFs "never promised a fixed rate NAV … on their money funds," Bianco said. "Their money funds go out the four basis points and it does vacillate up and down, but in the United States, by offering fixed rate $1 NAVs, we think that's the safest investment that you could possibly—because it's $1 every day, it never changes. There's nothing safer than putting your money in a money market fund." MMFs are so safe the Fed has to step in and bail them out? This isn't new; those of us who lived through 2008 remember talk of "breaking the buck" back then. "We've got this mentality in the US that if we were to ever see a money fund break the buck, it's like opening the gates of hell," Bianco reminded Harrison. By now you want to know why there is a problem that must be bailed out by the Federal Reserve. The problems are the policies of the very same Federal Reserve. There are "[t]oo many reserves and it all comes back to too much QE (quantitative easing), and that the 40 billion a month in mortgages (being purchased by the Fed), the 80 billion a month in Treasurys (being purchased by the Fed), and the Treasury Department running down their cash balances, which injects money back into the banking system, because their cash balances are considered outside the banking system," explains Bianco. Mr. Bianco then speculates as to what may happen at the Fed's monthly powwow in June. He believes there will be "an announcement of some a technical adjustment, either to OER (interest paid banks on excess reserves) or maybe to the purchases, maybe they move away from mortgages, and move more into Treasurys but hold that 120 [basis] point, extend maturities or something, because this is not going away. It's continuing to get worse with this oversupply of reserves in the banking system. These negative rates on the front end [of the curve] are not going to go away, and we're going to wind up with the entire money market system basically, as the counterparty of the Federal Reserve, because everybody's going to pile into reserve reverse repo." If this all sounds complicated, it is. According to Bianco, the plumbers working at the Eccles Building don't understand their own plumbing. In September 2019, when the repo market blew up, Powell referred to it as a technical plumbing problem; in other words, too complicated for mere mortals and leave it to the monetary gods. "These plumbing problems," Bianco said, "the more the Fed has to deal with the plumbing issue and then dismisses it as a plumbing issue, the more I get worried, because the one thing I know about plumbing problems is they're so unbelievably complicated that the most qualified people at the Fed still don't understand this stuff." Finally, "You and me, we don't understand this stuff squared, and that's why you wind up with problems all the way down the line," Bianco told Harrison. "When I see a plumbing problem, I think no one's got their head around what this is, because you can't have your head around it. Because if you did, you'd never have the plumbing problem in the first place. You would have ended it off months ago, before it became an issue." Own any money market funds? Sleep well, the Fed has it handled.  This posting includes an audio/video/photo media file: Download Now |
| Why "Wild Swings" In Crypto Prices are Not Really a Problem Posted: 12 Jun 2021 08:00 AM PDT Price "stability" has never been a feature of a free marketplace. Stability is an obsession of central banks, and the day may come when central bankers intervene to "stabilize" crypto prices. That will be a bad thing. Original Article: "Why "Wild Swings" In Crypto Prices are Not Really a Problem" This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.  |
| Why America's Oligarchs Are Moving Left Posted: 12 Jun 2021 04:00 AM PDT These days it's not your typical latte-sipping millennials who are going woke. Taking a stroll around America's largest metro areas will have one believe social justice is the latest fad that's sweeping across corporate boardrooms. Much has been written about woke capital—businesses' recent pivot to signal their affinity for leftist movements—and what it means for society at large. Suffice it to say that since last year, this trend has accelerated at breakneck speeds. Scratching one's head in utter confusion should be a natural response to corporate America's virtue signaling. One has to wonder why big business, which has traditionally been perceived as a reactionary institution aligned with the political right, would make common cause with radicals on the cultural left. Counterintuitive as it may seem, corporations and prominent business moguls have many incentives to jump on the virtue-signaling bandwagon. For megacorporations, woke signaling is a matter of self-preservation in order to protect themselves from ravenous mobs in both the virtual and physical realms. What's more, in a time when hall monitors—state and nonstate—are lurking around every corner waiting for individuals to commit some kind of impropriety, many institutions will go out of their way to signal their compliance with the regime's standards. Not abiding by the regime's accepted behavior comes with major social and financial costs that the bulk of businesses are not willing to bear. For wealthy members of society who have leftist inclinations, there's a diminishing marginal utility of money, as Mises Institute president Jeff Deist spelled out in an interview with Jay Taylor two years back. Put simply, spending hundreds of millions on civilization-destroying campaigns is a casual expense for America's premier tycoons, who have plenty of money to spare after covering their expenses on basic necessities. When someone is rich, say an individual who has $10 billion, they have the luxury of throwing money at uneconomic ventures without losing any sleep about meeting their basic economic needs. The multibillionaire spearheading a woke project that is rejected by the public will not land in the poorhouse from the financial fallout. They can go back to their private affairs or pivot to another political cause that is not as divisive. By contrast, for a small business owner, such virtue signaling could mean bankruptcy if their customer base tends to be right wing or is at least hostile toward culturally radical virtue signaling. Indeed, one of the more perverse developments in Western societies is the rich's penchant to squander away the wealth they've accumulated by funding all sorts of bizarre social projects. Only in such a developed economy, characterized by hyperabundance and unprecedented luxuries, can people engage in bizarre activities that in previous eras would have been viewed as masochistic and self-destructive. The likes of George Soros and Michael Bloomberg offer stark counterexamples to the business elites of the past. The two financial titans have built a reputation of bankrolling a wide network of gun control groups which strive to pass legislation designed to infringe on millions of people's ability to defend themselves. By contrast, Bloomberg and his left-leaning oligarchical counterparts have the luxury of living in gated communities and relying on private security to defend themselves. In fairness, business magnates in previous eras were likely not fervent champions of wedge political issues like gun rights, but you would not see them enthusiastically throwing their weight behind the latest political fads the Left gravitates toward these days. Bolsheviks and BillionairesAlthough the Left has changed in its overall strategy, going from class-reductionist conflicts toward an identity politics focus over the course of the past century, there exist several commonalities between the contemporary left and its past iterations. Foremost of these is its elitist origins. In his polemical work, Wall Street and the Bolshevik Revolution, economic historian Antony Sutton uncovered the oligarchical backing of Bolshevism—the twentieth century's most destructive political movement in terms of the body count and economic mayhem it unleashed in countries that embraced its precepts. Contrary to the mythology that leftist historians have created, Bolshevism was no spontaneous uprising of workers, but rather a movement of elite aspirants. Lenin himself counted on a law degree and worked as a writer and political activist during his time in exile while living in Switzerland, Germany and the United Kingdom. Similar to Karl Marx, who relied on industrialist Friedrich Engels's lavish patronage to subsidize his daily activities, prominent financiers such as Swedish banker Olof Aschberg helped bankroll Lenin and his revolutionary compatriots, Sutton's work revealed. It's perhaps counterintuitive for financial heavyweights to throw their weight behind an individual and a movement advocating for the destruction of private property, but it makes sense when analyzing how rent-seeking economic actors behave in the context of state centralization. The inherently centralist nature of socialist systems, even when policymakers make deviations around the margins, as seen with Lenin's New Economic Policy, remains attractive to unscrupulous financial actors, who seek to exploit these features for the sake of easy profits while not facing any serious competition. Sutton observed how economic radicals and big financial interests can become strange bedfellows:
Likewise, Ludwig von Mises acknowledged in Omnipotent Government how the salt of the earth are not the ones responsible for making collectivist political movements mainstream:
"Wokeness" as a Public Relations StrategyFurthermore, woke signaling has an obfuscation function that businesses and individuals can use to divert attention away from their questionable behavior. In a world dominated by woke standards of conduct, these actors are banking on the assumption that being against the prevailing orthodoxy constitutes a larger social offense than providing shoddy services or participating in morally questionable behavior. Instead of competing with other companies on the basis of fulfilling consumer wants, companies try to one-up each other by trying to display their woke credentials. Those with skeletons in their closets would likely find use in this type of signaling as a way to avoid any unwanted attention. Going woke acts as a release from all social obligations. By viewing their nation's history as fundamentally bigoted, individuals and institutions no longer feel compelled to abide by basic rules of decency and serve their clients and community. With this in mind, one cannot underestimate the role of ideology in shaping the way corporate actors behave in contemporary times. Business magnates are often caricatured as homines oeconomici whose only concern is profit and who see human relations through an exclusively transactional lens. Such a perception understates the level of socialization that has permeated across class lines throughout America. There's nothing special about the upper-middle class and higher that exempts them from being infected by the cultural left's ideology. As a matter of fact, America's well-to-do grow up in milieus, from the educational institutions they're enrolled in to the social clubs they participate in, that expose them to the dominant political and social trends. Over the course of their development, many members of this class end up being conditioned to accept the established ruling doctrine. The current crop of business elites have little in common with Gilded Age corporate titans who still operated within the confines of bourgeois propriety. In fact, traditional values and resistance to cultural radicalism are more the province of the working classes and other Americans who have not placed themselves in the PC conveyer belt that is the contemporary education-to-corporation pipeline. One thing is certain, though: woke leftism is not about fighting for the interests of the common man. Grievance politics' ornamental displays of victimhood only obscure the oligarchical nature of this project.  This posting includes an audio/video/photo media file: Download Now |
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