Mises Wire |
- How the "Respectable" Media Serves the Political Elite
- Join Us in the Battle of Ideas by Doubling Your Gift Today!
- Defaulting on the Debt Is the Moral Thing to Do
- "The Great Reset" Is the Road to Socialism Mises Warned Us About
- Should War Be Made "Humane"?
- It's Not Good Enough to "Look at the Data"
How the "Respectable" Media Serves the Political Elite Posted: 30 Sep 2021 12:00 PM PDT [Editor's note: Two interviews from August 1992 given by Murray Rothbard to the Swedish student publication Svensk Linje (continuously published since 1942) were recently discovered in the Rothbard Archives and translated by Sven Thommesen for the first time. In this interview, Rothbard offers his thoughts on the 1992 election and the role of the "respectable" media in promoting the campaign of Bill Clinton.] The Presidential Election: Clinton and the Media In January 1993, Bill Clinton will be inaugurated as President of the United States. On August 7 [1992], while it was still unknown whether this would be the outcome of the election, Anton Wahlman interviewed the libertarian economist Murray Rothbard. Rothbard is S.J. Hall Distinguished Professor of Economics at the University of Nevada at Las Vegas, and he has among other things written books on the topics of monetary theory, business cycle theory, and the philosophy of economics. Anton Wahlman: Anyone who has been interviewed by the media knows that in principle they always present reality from a particular point of view. News from the United States is usually particularly distressing in this sense. Even the largest newspaper in Sweden, the Expressen, publishes editorials in favor of the Democratic Party presidential candidate, Bill Clinton. Give us your take, Murray Rothbard! Murray Rothbard: I am particularly pleased to have the opportunity to address a Swedish audience. During the last half century, the social democrats [liberals] in the United States, though a tad embarrassed by the excesses of communism, have promoted the supposed success of the Swedish "third way." I am therefore greatly pleased that Sweden seems to be on its way to emerging from the darkness of the "third way" and starting along the path to a free society. Your question is about the prospects for an eventual victory by Bill Clinton in November. I believe that the most important lesson I have for my Swedish readers is that they should not believe any reporting or any articles from American media. American media are divided into "respectable" and "non-respectable" media. Respectable media, which are the only ones that are read by the American political elite, and presumably are all that filters down to European readers, are completely biased in favor of social democracy. The non-respectable media, which are read by the masses but have no influence at all in the circles of power, do not care about ideology but are mostly interested in selling as many copies as possible, and in racking up the largest numbers of viewers and listeners they can. For this reason, truth occasionally manages to find its way into the non-respectable media. The "respectable" media aren't just in favor of Clinton because they are social democrats, but also because they like his style: that is to say, he is young (people in the media are generally of an age with Clinton and Gore, and they share the outlook of that generation), and he is a "social democratic reformer" (read: neo-liberal), which is to say that he hides his socialist ideology in technocratic "value free" rhetoric, rather than the old 1930s-style slogans of class struggle. The great media lie in the 1992 electoral campaign is that Clinton, unlike earlier Democratic presidential candidates, has moved from the "left" to the "middle" of the political spectrum, and also that unlike earlier presidential candidates he is not beholden to left-wing special interests. The fact is that they tried the same nonsense in the Dukakis campaign in 1988, and they were not successful in fooling too many people. Clinton's "moderation" and "business friendly" views consist of his promotion of "investments." But these "investments" have mysteriously been redefined to consist of government spending! The current media narrative claims that the US economy is losing productivity, and that what is needed to improve productivity is higher taxes (!) and increased government spending on "infrastructure"—that is to say, more money wasted on government roads and more money for schools which serve mostly as indoctrination camps. To sum up my view on this presidential campaign: The Bush administration has been a quasi-catastrophe, stumbling along the road to ever more government power: higher government spending, higher taxes, more regulations. A Clinton administration would constitute a complete disaster: Bush's stumbling would be replaced by a deliberate and intentional desire to drag the United States down into the socialist maelstrom. This is obviously not an optimistic perspective, at least not in the short run. In the long run, on the other hand, I am enormously pleased that ever more Americans hate the state, realize the evil of the two-party system, and demand a radical change in our political system. If Ross Perot had stayed in the campaign there would have been some hope that we could have seen a system change that would have shaken up the corrupt and monopolistic two-party system, which is worshipped and glorified by those who benefit from their monopoly privileges. When Perot backed out of the campaign it became clear that we will have to wait a while longer before we see fundamental institutional changes in American politics. This posting includes an audio/video/photo media file: Download Now |
Join Us in the Battle of Ideas by Doubling Your Gift Today! Posted: 30 Sep 2021 10:00 AM PDT Today, the ideas of Ludwig von Mises are as important as ever. During his career, he discredited the ideas of socialism, identified the role central banks play in creating financial booms and busts, and established himself as the most powerful defender of capitalism. But perhaps his most important analysis came in a speech he delivered in 1950, The Middle of the Road Leads to Socialism. You can get a copy for yourself today with a $5 donation to the Mises Institute. In this speech, delivered to the New York University Club, Mises identified the dangers of the ideology that captured the world in the twentieth century: interventionism. As he notes, interventionism is often packaged as a practical "third way," beyond the "extremes" of socialism or laissez-faire. Instead, however, the result is a volatile economic system that inevitably leads to more and more government control—unless it is rejected entirely. Now, in 2021, this work is as important as ever. As we have seen over the past two years, would-be central planners in national governments and globalist institutions are seeking to use the veil of crisis to consolidate their power on an international scale. The goal isn't to explicitly seize the means of production. Instead, it is to gradually consolidate economic power within nominally private companies which can be more easily controlled to serve their political agenda. "Covid," "global warming," "overpopulation," "domestic extremism"—the crisis may change, but the playbook remains the same. Reject consumer-driven markets in favor of a government-driven agenda and utilize the resulting chaos to expand the control of state institutions. Mises understood it doesn't have to be this way. "[T]his outcome is not inevitable. The trend can be reversed as was the case with many other trends in history." How? By people, like yourself, arming each other with the intellectual tools necessary to identify and respond to this creeping authoritarianism. The challenges we face will not be solved with shallow bumper stickers and the façade of democratic elections, but by inspiring new generations of courageous individuals prepared to resist. This is the mission of the Mises Institute. Join us in this battle with a donation today and receive a free copy of The Middle of the Road Leads to Socialism. Even better, with your donation, you will receive special access to a Private Seminar on this important work with Dr. Robert Murphy and Jeff Deist. This posting includes an audio/video/photo media file: Download Now |
Defaulting on the Debt Is the Moral Thing to Do Posted: 30 Sep 2021 08:00 AM PDT The US is in the midst of yet another "debate" over the debt ceiling. In the twenty-first century, this is a ritual that Washington politicos and journalists go through every few years when the prospect of default and government shutdown is used as a way to hold Americans hostage until they cave to a debt-ceiling hike. I won't bore you with the details of which politicians are voting against a higher debt ceiling this time around. Outside a tiny handful of principled eccentrics of the Ron Paul variety, virtually everyone in Washington favors more deficit spending. The fact that the leadership from one of the parties currently pretends to oppose higher debt levels tells us nothing about what the regime really wants. What it wants, of course, is sky-high spending, forever, and it wants to borrow huge amounts—at rock-bottom interest rates—to do it. A default—brought about by a stable debt ceiling—would complicate that goal. A failure to hike the debt would also limit the power of the regime, so we can expect most everyone inside the Beltway to be deeply opposed. So, it was not exactly a surprise when Janet Yellen took to the pages of the Wall Street Journal earlier this month to call for an immediate increase to the debt ceiling. She doesn't hold back when it comes to predicting sure and immediate doom if the debt ceiling is not increased. "Our current economic recovery would reverse into recession, with billions of dollars of growth and millions of jobs lost," Yellen insists, and she predicts that
And if a financial crisis weren't enough, Yellen claims the US "would emerge a permanently weaker nation" (emphasis added), supposedly because the US government would no longer be able to borrow more cheaply than its unnamed and ominous "economic competitors." Needless to say, this is quite the laundry list of ills all stemming from the fact the US government would have to live with spending only the $3.4 trillion or so that it collects in taxes. Not piling on an extra $1 to 3 trillion in debt on top of that every year? Why, that would just be madness! Raising the debt ceiling is presented as a moral choice. Do it, or you favor poverty and "calamity." But here's the problem with Yellen's position—and the prodeficit position in general: she's not actually offering a choice between pain now or pain never. It's only a choice between pain now or even more pain in the future. The moral policy here is to hold fast on keeping the debt ceiling stable. Raising the debt ceiling only perpetuates the status quo and paves the way for future fiscal chaos. By kicking the can down the road yet again, those who favor raising the debt ceiling merely encourage another decade of historically weak growth and employment, while bringing higher borrowing costs, instability, and cuts to social programs. By doubling down on all this, Yellen is courting the very outcomes she claims to oppose. Meanwhile, approving yet another increase to the debt ceiling only rewards the regime for its profligacy. Rising Interest Levels Will Force Cuts to Government ProgramsHuge debt loads are already cutting into social programs and military spending. For example, American taxpayers are now being fleeced annually for around $350 billion just to pay interest on the debt. And that's with ten-year Treasurys at a measly 1.5 percent. That's $350 billion that can't go to families or seniors or soldiers. It's certainly money the taxpayers will never see again. And what if interest rates double to a still low but historically more normal 3 percent? This isn't exactly an outlandish prospect. We're then looking at interest payments of many hundreds of billions more, which would mean substantial cuts to those programs Yellen claims she's saving. Moreover, a continuation of the current debt-to-infinity "strategy" will also lead to increasing borrowing costs—although Yellen implies an increase in the debt ceiling will somehow avert that fate. In reality, as even the Congressional Budget Office admits:
So all that stuff about a stable debt ceiling making America "a weaker nation"? That's exactly what the current deficit-spending tactic is already doing. It drives up borrowing costs, and endangers the dollar's status as the global reserve currency. Yes, the Fed has made it seem for now that borrowing costs are stable by buying up trillions in US bonds. But the Fed can't keep buying up huge amounts of government debt forever. With asset price inflation already sky-high and with goods price inflation mounting, the Fed is facing the limits of its monetization of the US's federal debt. There is no end game here that avoids the fate Yellen seems to think can be magically made to disappear with more debt. She's only offering a short-term placebo. Rewarding the RegimeAn additional problem is the fact that constantly raising debt limits rewards the regime for its profligacy, and also impoverishes the private sector by giving the government an advantage over the private sector in terms of borrowing. States have long benefited from the fact that it is presumed states can always just tax more to pay off their creditors. Or, failing that, states can just inflate the currency. Every time the taxpayers buckle to yet another demand to increase the debt limit, another new pile of government debt continues to suck the air out of private sector debt markets. But states keep getting away with doing it because of the misplaced belief that regimes must never be allowed to default. This only perpetuates the exalted position of the regime's debt and borrowing privileges above the people who actually create the wealth and pay the bills. If anything, the voters and taxpayers have a moral obligation to threaten to force default at regular intervals. It's an obligation to future generations and to all those who are squeezed of tax dollars every year to pay a few hundred billion more in debt service on old loans piled up to pay for the regime's wars and other boondoggles. That is, with this more realistic view of government debt, the regime would be forced to live within its means far more often. There would be a far more real and immediate chance of default. As Lew Rockwell has noted, government debt would be priced more realistically, and the power of the regime would be curbed:
Don't We Have a Moral Obligation to Pay Our Debts?And as a final note, let's not be fooled by the mistaken claims that the US government has some sort of moral obligation to its creditors. It doesn't. Public debt is paid off with tax dollars from taxpayers who had no choice in the matter and were not parties to the contracts between the creditors and the borrowers. Or, as David Henderson put it in the form of a question: "It's worse to default on creditors who took a risk than to forcibly take money from taxpayers who have no choice?" The implied answer, of course, is "no, it's not worse." Rothbard sums it up:
The moral policy? Default. [Read More: "Repudiating the National Debt" by Murray Rothbard] This posting includes an audio/video/photo media file: Download Now |
"The Great Reset" Is the Road to Socialism Mises Warned Us About Posted: 30 Sep 2021 06:15 AM PDT Through the sheer power of his intellectual output, Ludwig von Mises established himself as one of the most important intellectuals of the twentieth century. His work Human Action remains a foundational text of the Austrian school. His critique outlining the impracticality of socialism was vindicated with the fall of the Soviet Union and remains without a serious intellectual challenge today. Just as important, but often overlooked, is his work on the economic system that continues to infect the world today: interventionism. Like contemporaries such as James Burnham, Mises discerned that the true threat to free markets in the West was not a true socialist revolution, but rather a "middle of the road" approach that so attracted an intellectually shallow political class. In 1950, during one of his most important speeches, Mises identified the most dangerous ideology on the global stage:
This ideology succeeded where communism failed, successfully toppling governments around the world that never had true respect for property rights. But as Mises understood, however, this "managerial revolution" could not last as a sustainable form of government. Interventionism may be politically convenient, but ultimately it is grounded in volatile inconsistencies. It must be rejected completely, or it will inevitably lead to more and more power shifting to the state. This is precisely what we have seen. The twentieth century witnessed governments hostile to communism abroad become increasingly accepting of growing statism within. The regulatory state grew. The welfare state grew. The warfare state grew. The spending at home and domestically was so great that it forced the American government to break the dollar's tie with gold, giving the American technocracy new ways to extract the wealth of the people and reward loyal institutions. The only remaining checks to the state come from what the public will put up with, and from competition between governments seeking to attract financial and human capital. In 2021, would-be central planners in national governments and globalist institutions have identified the opportunity to transcend these remaining limits. Under the guise of "public health," proud "liberal democracies" have imprisoned their own citizens without due process. They have shut down economies and destroyed countless small businesses. They have mandated medical procedures. With the help of regulated corporations, they have silenced political dissidents. In response to the economic consequences of these actions, they are seeking to eliminate tax competition among states, harmonize medical mandates, control the prices of select industries, and debank those who resist. With this new playbook and global ambitions, institutions like the International Monetary Fund and the World Bank are seeking to use similar tools in the future, in the name of whatever crisis they deem worthy. Climate change. Overpopulation. Domestic extremism. Misinformation. The cause of the day may change, but the playbook remains. We will own nothing, we will have no privacy, we will do what we are told, and we will like it—or else. As Mises understood, it doesn't have to be this way. "[T]his outcome is not inevitable. The trend can be reversed as was the case with many other trends in history." How? By people like yourself arming each other with the intellectual tools necessary to identify and respond to this creeping authoritarianism. The challenges we face will not be solved with shallow bumper stickers and the façade of democratic elections, but by inspiring new generations of courageous individuals prepared to resist. This is the mission of the Mises Institute, to inform and educate individuals around the world in the ideas necessary for rejecting the intellectual sins of the twentieth century and the authoritarian horrors of our existing neoliberal order, and restoring a civilization grounded in a respect for individual liberty, property rights, and peaceful coexistence. In the words of Ludwig von Mises,
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Posted: 30 Sep 2021 06:00 AM PDT Moyn fears that "humane warfare" along with programs of global surveillance, would subject the world to hegemonic control by one or a few dominant superpowers. Original Article: "Should War Be Made 'Humane'?" This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack. |
It's Not Good Enough to "Look at the Data" Posted: 30 Sep 2021 04:00 AM PDT According to popular thinking, it is held that by means of statistical and mathematical methods one can organize historical data into a useful body of information. This in turn can serve as the basis for the assessments of the state of the economy. It is also held that the reality is elusive. Hence, it is not possible to know its true nature. Some scholars, such as Milton Friedman, hold that since it is not possible to establish how things really work, then it does not really matter what the underlying assumptions of a theory employed to ascertain the facts of reality are. In fact anything goes, as long as the theory can yield good predictions.1 Other theorists, such as Ludwig von Mises, hold that various pieces of data utilized by economists in their analysis are an historical display, which by itself cannot provide the economists with the facts regarding the real world. According to Mises, "Experience of economic history is always the experience of complex phenomena. It can never convey knowledge of the kind the experimenter abstracts from a laboratory experiment."2 Economists do not just randomly arrange the data before starting an analysis. On this Mises wrote, "The arrangement of various price data in groups and the computation of averages are guided by theoretical deliberations, which are logically and temporally antecedent."3 Moreover, "[i]t is vain to search for coefficients of correlation if one does not start from a theoretical insight acquired beforehand."4 It seems that to make sense of the data economists must have a theory which stands on its own feet and did not originate from the data as such. The purpose of a theory is to establish the essence of the subject of investigation. In his "Philosophical Origins of Austrian Economics" (Mises Daily, June 17, 2006), David Gordon writes that Eugen von Böhm-Bawerk maintained that concepts employed in economics must originate from the facts of reality—they need to be traced to their ultimate source. A theory that rests upon the idea that human beings are acting consciously and purposefully fulfils this criteria. That human beings are acting consciously and purposefully cannot be refuted, for anyone that tries to do this does it consciously and purposefully, i.e., he contradicts himself. Mises, the initiator of this approach, labelled it praxeology. According to Murray N. Rothbard, "[W]hile most things have no consciousness and therefore pursue no goals, it is an essential attribute of man's nature that he has consciousness, and therefore that his actions are self-determined by the choices his mind makes."5 The knowledge that human actions are conscious and purposeful allows one to make sense of historical data. According to Rothbard,
Why Methods of Natural Science Are Not Applicable in EconomicsMost economists are of the view that the introduction of the methods of natural sciences, such as laboratory experiments, could lead to a major breakthrough in our understanding of the world of economics. According to Rothbard,
While laboratory experiments are valid in the natural sciences, they are not in economics.
Again, a laboratory is necessary in physics, for there a scientist can isolate various particles relating to the object of inquiry. While the scientist can isolate various particles, he does not know the laws that govern these particles. All that he can do is hypothesize regarding the "true law" that governs the behavior of the various particles identified. He can never be certain regarding the "true" laws of nature. According to Mises, "The physicist does not know what electricity 'is.' He knows only phenomena attributed to something called electricity. But the economist knows what actuates the market process. It is only thanks to this knowledge that he is in a position to distinguish market phenomena from other phenomena and to describe the market process."9 To appear scientific, mainstream economists employ various quantitative methods. Thinkers such as Rothbard had serious misgivings about the usage of quantitative methods in economics. On this Rothbard wrote,
Again, contrary to the natural sciences, the factors pertaining to human action cannot be isolated and broken into their simple elements. However, in economics we know that human beings are acting consciously and purposefully. This knowledge in turn could help us to understand the world of economics. For instance, a key role of money is to fulfil the role of the medium of exchange. An individual exchanges goods for money and then exchanges money for the goods of another individual. What we have here is an exchange of something for something. In the modern world of the fiat money standard, we know that an increase in money supply results in an exchange of nothing for something. It leads to a diversion of wealth from wealth generators to non-wealth-generating activities. This is certain knowledge and does not require empirical verification by scientific analysis. We also know that for a given amount of goods an increase in money supply, all other things being equal, must lead to more money paid for a unit of a good—an increase in the prices of goods. (Note a price is the amount of money per unit of a good.) The complexity of the interaction of various factors means that there is no way for us to know the importance of each factor at any given point in time. Nonetheless, certain things such as changes in money supply, because they influence the prices of various goods with a time lag, could provide us with useful information regarding events such as the boom-bust cycles and changes in the price indexes in the months ahead. The fact that a man is pursuing purposeful actions implies that causes in the world of economics emanate from human beings and not from outside factors. This means that mathematical methods are not going to be of much help here. For instance, contrary to popular thinking, individuals' outlays on goods are not caused by real income as such. In his own unique context, every individual decides how much of a given income will be used for consumption and how much for investments. While it is true that people will respond to changes in their incomes, the response is not automatic. Every individual assesses the increase in income against the particular set of goals he wants to achieve. He might decide that it is more beneficial to him to raise his investment in financial assets than to raise his consumption. ConclusionReliance on historical data as a foundation for the formation of a view about the state of the economy could be problematic. For the data cannot produce much information about the facts of reality without a theory that stands on its own feet and is not derived from the data. Once the theory passes the test of logic, it becomes a tool for the establishment of the facts of reality through the assessment of the historical data. Various mathematical and statistical methods cannot assist an analyst in establishing causes in the world of economics. All that these methods can do is to describe things. To ascertain the underlying causes one requires a logically worked-out theory. After logical scrutiny, once it is established that the theory faithfully describes the essence of the world of economics, the theory can be employed in extracting the facts of reality from the historical data. Because the theory was not derived from the historical data as such, it can be utilized also to ascertain reasons for the discrepancy between the data and the theory. For instance, according to economic theory, individuals assign a greater importance to the consumption of goods at present versus consumption in the future. This preference emanates from the fact that in order to maintain their lives and well-being people have to consume at present rather than in the future. By this way of thinking, the interest rate cannot be negative. If, however, we do observe negative interest rates, this discrepancy in relation to the theory suggests that a possible reason for this is central bank monetary policies.
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