Cafe Hayek

The Founders Would Be Appalled

Cato's David Boaz defends the memory and principles of America's founding generation from the grotesque misrepresentations of modern politicians.

My wife and I celebrate our 20th wedding anniversary today

I am happy to report that I am not in Argentina. (Neither is my wife.)

A Dent in Our Pessimism

My friend Fred Dent, of Dent Asset Management, is optimistic about the future.  His case is strong, and his presentation is fascinating.  Here's the short version.  Here's the longer one.  If you have time to watch the longer one, I recommend it highly.

Listen to Mencken

Here's a link to a 1948 audio interview with the great H.L. Mencken -- perhaps the most insightful American ever to put ink to paper.

(HT Fred Dent)

A Tale of Two Tycoons

This history lesson will get you steamed.

Foolishness on Film (Or, Wiping the Sheen Off of Silliness)

Tyler Cowen hits a home run with his review of Phillipe Diaz's movie The End of Poverty.  Here's one especially nice selection:

I can only report that The End of Poverty, narrated throughout by Martin Sheen, puts Ayn Rand back on the map as an accurate and indeed insightful cultural commentator. If you were to take the most overdone and most caricatured cocktail-party scenes from Atlas Shrugged, if you were to put the content of Rand’s “whiners” on the screen, mixed in with at least halfway competent production values, you would get something resembling The End of Poverty. If you ever thought that Rand’s nemeses were pure caricature, this film will show you that they are not (if the stalking presence of Naomi Klein has not already done so). If you are looking to benchmark this judgment, consider this: I would not say anything similar even about the movies of Michael Moore.

In this movie, the causes of poverty are oppression and oppression alone. There is no recognition that poverty is the natural or default state of mankind and that a special set of conditions must come together for wealth to be produced. There is no discussion of what this formula for wealth might be. There is no recognition that the wealth of the West lies upon any foundations other than those of theft, exploitation and the oppression of literal or virtual colonies.

Or as I recall Peter Bauer's way of putting the matter: "poverty has no causes; wealth has causes."

A Man Apart

This book, co-edited by my friend G.M. Curtis, looks like a great read!

Higgs on the Economy, Economics, and Economists

The great economic historian Robert Higgs was interviewed recently on C-SPAN2's "Book tv."  The interview is three-hours long; every minute is worth watching.

As regular readers of this blog know, I greatly admire Bob's work (and Bob personally).  His 2006 book Depression, War, and Cold War is just out in paperback; this book -- data-rich and well-argued -- effectively challenges the claim that the New Deal helped to improve the American economy during the 1930s, and the claim that war and military spending promote prosperity.

Oh, and his 1987 book Crisis and Leviathan is, justifiably, a classic.

Trade and Wages

This item is from the Carlisle Journal, 12 November 1846:

FREE TRADE AND WAGES. - The Protectionists used to be fond of asserting that the manufacturers were anxious to repeal the corn laws in order that they might reduce the wages of their workmen. Events have falsified the assertion. In Carlisle the wages of the hand-loom weavers, since the passing of Sir Robert PEEL's measures, have been considerably increased upon certain fabrics, and we understand there is the prospect of a further rise very shortly. The manufacturing population of Carlisle are, we feel happy in adding, in full employment, and we are not aware of any intention among the millowners to resort to the short-time system, now so extensively adopted in Lancashire.

(HT: T. Alan Russell)

Hazlett and Bittlingmayer on Obama and Roosevelt

My GMU colleague Tom Hazlett and his frequent co-author George Bittlingmayer, in yesterday's Wall Street Journal, compare Obama to FDR.

Jim Crow Was a Product of Government

Here's an important history -- and economics -- lesson from the Boston Globe's Jeff Jacoby.  His conclusion is this:

Many Americans know that it took strong government action in the 1950s and 1960s to end Southern segregation. Far too few realize that it was government action that established segregation in the first place. Today, when the power of the state is being aggrandized as never before, the history of Jim Crow offers a cautionary reminder: When the political class overrides the private sector, what ensues can be a national disgrace.

Do Best By Doing Nothing

Bob Higgs has forgotten more economic history than anyone who writes on, or reads, this blog will ever know.  And what knowledge of economics and economic history Bob retains shames the corresponding "knowledge" of nearly anyone you can find or even name.

Here's Bob's take, published in the Christian Science Monitor, on the merits of doing nothing in the face of the current economic turmoil.

Mencken Understood the New Deal

No more raw deals.

Today's Economy in Perspective

Steve Chapman helps put the state of today's economy in historical perspective.  Summary: it ain't great, but it's hardly the once-in-a-lifetime catastrophe that conventional wisdom has already declared it to be.  (Of course, it could become such a catastrophe if Uncle Sam continues his frenzied interventions.)

Easterly on Hayek

Today's Dean of development economists, William Easterly, won the inaugural Hayek Prize, offered by the Manhattan Institute, for his splendid book The White Man's Burden.  Congratulations Bill!

Here's the Hayek Lecture that Bill delivered this past October when he was awarded the prize formally.  Like all of Bill's work, it is written in a lively, engaging, fast-flowing style, filled with humor and important facts and insights.  I whet your appetite with the opening paragraph:

Tonight we find ourselves in a moment similar to that in which Hayek wrote The Road to Serfdom in 1943. Then, as now, a great financial crash was seen as a failure of freedom. Actually, things were even worse then for Hayek’s point of view. In the aftermath of the Depression, many pointed out the apparent success of centrally planned industrialization in the Soviet Union in outperforming markets. As Hayek wrote in 1943, democracy barely existed outside of a few English-speaking societies. Even in the U.S., people noted the apparent success of government top-down planning for wartime production of arms. Under these circumstances, Hayek knew he would be caricatured as a right-wing ideologue, even though his ideas did not fit into the stale partisan debate about markets versus government. He argued that the best system in the long run relied upon the creativity of individuals at the bottom who had both political and economic freedom. In a way I will describe below, Hayek saw both government and markets as functioning better the more they were the outcome of spontaneous development from the bottom up, with nobody in charge. It took courage to criticize top-down control after the scary calamities of the Depression, yet Hayek’s vision would be vindicated by subsequent events. How many of us will show similar intellectual courage in the midst of today’s financial crash?

Invisible Hook

My GMU colleague Pete Leeson's new book -- The Invisible Hook: The Hidden Economics of Pirates -- is now available at Amazon.com for pre-order.  (Sorry; no pirated page proofs are available.  So buy the book!)

I'll Drink to That!

Today is the 75th anniversary of the end of national prohibition on alcohol in these United States.  Bottoms up!

No New New Deal

Here's George Will, in today's Washington Post, speaking great good sense about the alleged need for a new New Deal.  (Will quotes Russ, and mentions Amity Shlaes's important book The Forgotten Man; unfortunately, although he hints at Bob Higgs's work, he doesn't mention Bob by name or Bob's great book Depression, War, and Cold War.)

Cowen on the Great Depression and New Deal

Here's Tyler Cowen, writing in the New York Times, helping to set the record straight about the Great Depression and the New Deal.

Keynesian Stimulus, the 1930s, and WWII

The acclaimed economic historian Price Fishback has this very useful discussion, at Freakonomics, on the extent to which Keynesian stimulus played a role in helping the economy during the 1930s and during World War II.

(HT Bob Higgs)

Libido for Power

Challenging the myth that society would be improved if governed by "intellectuals," Thomas Sowell -- writing in today's Washington Times -- says that "It would be no feat to fill a big book with all the things on which intellectuals were grossly mistaken, just in the 20th century."

Such a book has already been filled.  Paul Hollander's "Political Pilgrims" documents the gullibility, the boundless capacity for self-delusion, and the ecstatic fetish for Great Leaders displayed throughout the 20th century by large numbers of American and European intellectuals.  These Smart People cheered the Soviet Union, applauded Mao, drooled over Castro, celebrated the Sandinistas - all the while dismissing those persons suspicious of centralized power as "anti-intellectual."

Of course, consistently these "anti-intellectuals" were proven right as the heroes of the "intellectuals" were revealed to be blood-thirsty bastards.  Is there reason to suppose that the "intellectuals'" still-raging libido for Great Leaders and Big Plans is today any more rational than it was during the tragic episodes documented by Hollander?

Bryan and Herbert

Bryan Caplan lists the 21 things Herbert Hoover mentioned in a 1932 speech just before the election that Hoover claimed help save the economy. Bryan is making the point that Hoover wasn't a free market guy in the least. What I found chilling was the analogy to what the Bush administration has done so far. When Bush leaves office he'll surely mention all that he has done to save the banks, the financial system, employment, and so on. A lot of the measures are awfully similar at least on paper. Nothing good came of them in 1932. I fear nothing good will come of them in 2008.

Cowen on the End of the Great Depression

Here's Tyler Cowen over at Marginal Revolution on the end of the Great Depression.

Henry Morgenthau on the Success of the New Deal

Even Franklin Roosevelt's own Treasury Secretary, Henry Morgenthau, admitted in 1939 that New Deal policies had not ended the Great Depression.

Obama and F.D.R.

Here's a letter that I sent recently to the New York Times.  (By the way, I should have written that F.D.R.'s policies "prolonged" the Great Depression - rather than "deepened and prolonged" it.  A strong case can be made that these policies did both, but that case is more esoteric than the much more straightforward case that the policies prolonged the Depression.)

Franklin Delano Bush

Here's a letter I sent on October 20th to the Washington Times:

Dear Editor:

Your equating George W. Bush with FDR is spot-on ("Franklin Delano Bush," October 20).  Both presidents recklessly increased government's role in the economy - a move that proved (in FDR's case) and will prove (in Bush's case) to do nothing but saturate the economy with such uncertainty as to frighten away entrepreneurs and investors.

But popular history will almost surely remember Bush, not as a second FDR, but as a second Herbert Hoover.  The myth will be made that Bush was a staunch free-marketeer who was succeeded in the Oval Office by a charismatic saint whose hyperactive interventions saved the economy (even though precious little evidence of economic salvation will appear in the data).  History will forget Bush's interventions just as it has forgotten Hoover's - as it has forgotten that Hoover signed the largest tariff hike in U.S. history; as it has forgotten that Hoover tried to create jobs by deporting hundreds of thousands of Mexicans; as it has forgotten that Hoover signed the Emergency Relief and Construction Act, the Federal Home Loan Bank Act, and created the Reconstruction Finance Corporation; as it has forgotten that, with the Revenue Act of 1932, Hoover raised the top marginal tax rate on personal incomes from 25 percent to 63 percent (in addition to raising the corporate-tax rate).

History will repeat itself, blaming capitalism for a problem caused and intensified by government interventions.

Sincerely,
Donald J. Boudreaux

By the way, even the Washington Post -- no catacomb of free-market sympathies -- understands that blaming capitalism for today's financial turmoil is absurdly simplistic.

O'Driscoll on Central Banking

Gerald O'Driscoll has a fine piece on the failed promise of central banking.

The Great Escape

Here's Bob Higgs's compelling explanation of the 'great escape' from the Great Depression.

Changing Times

I reflect here on the much-predicted coming of much more government regulation.

World War II Cured the Great Depression? Unlikely

Here's a letter that I sent today to the Wall Street Journal:

To the Editor:

In his otherwise superb letter, Rolf Goehler repeats the dubious, if common, claim that World War II got America's economy "going again" (Letters, October 22).

The official unemployment rate did fall (from 14.6 percent in 1940 to 1.2 percent in 1944), but it did so overwhelmingly because of military mobilization rather than because of improvement in the economy's performance.  As economist Robert Higgs wrote about the war years, "Official unemployment was virtually nonexistent, but four-tenths of the total labor force was not being used to produce consumer goods or capital capable of yielding consumer goods in the future."  So it's not surprising that, according to Higgs's estimates, personal consumption per capita in 1945 was only a paltry 2.5 percent higher than it was in the still-deeply-depressed year of 1940.

Regardless of WWII's merits on other fronts, almost surely it was no great economic boon.

Sincerely,
Donald J. Boudreaux

See Robert Higgs's indispensable book Depression, War, and Cold War (New York: Oxford University Press, 2006).  The quotation in the letter is found on pages 63-64; the data on consumption are found on page 71.

Also note that personal consumption per capita in 1944, the last full year of WWII, was about two percent less than it was in 1940.

Contributing to Regime Uncertainty

Here's the always-excellent George Selgin on central banking and the bailout.

Excellent Arrggguments

My colleague Pete Leeson has a new book on pirates -- the economic, social, and legal organization of pirate institutions, to be more precise.  Pete is an incredibly creative young scholar.  You can pre-order the book here from Princeton University Press (and you should do so; because it's not yet released, pirated editions are few!).  Here's the publisher's blurb:

Pack your cutlass and blunderbuss--it's time to go a-pirating! The Invisible Hook takes readers inside the wily world of late seventeenth- and early eighteenth-century pirates. With swashbuckling irreverence and devilish wit, Peter Leeson uncovers the hidden economics behind pirates' notorious, entertaining, and sometimes downright shocking behavior. Why did pirates fly flags of Skull & Bones? Why did they create a "pirate code"? Were pirates really ferocious madmen? And what made them so successful? The Invisible Hook uses economics to examine these and other infamous aspects of piracy. Leeson argues that the pirate customs we know and love resulted from pirates responding rationally to prevailing economic conditions in the pursuit of profits.

The Invisible Hook looks at legendary pirate captains like Blackbeard, Black Bart Roberts, and Calico Jack Rackam, and shows how pirates' search for plunder led them to pioneer remarkable and forward-thinking practices. Pirates understood the advantages of constitutional democracy--a model they adopted more than fifty years before the United States did so. Pirates also initiated an early system of workers' compensation, regulated drinking and smoking, and in some cases practiced racial tolerance and equality. Leeson contends that pirates exemplified the virtues of vice--their self-seeking interests generated socially desirable effects and their greedy criminality secured social order. Pirates proved that anarchy could be organized. Revealing the democratic and economic forces propelling history's most colorful criminals, The Invisible Hook establishes pirates' trailblazing relevance to the contemporary world.

Banking on Selgin

Here's a letter of mine that appears in today's Wall Street Journal:

By portraying central banks as necessary to prevent banking crises, John Steele Gordon misreads banking history ("A Short Banking History of the United States," op-ed, Oct. 10). It's true that between 1836 and 1914 (when the Federal Reserve was created) the U.S. had no central bank. It's also true that during those years Americans suffered several banking crises. But the reason had nothing to do with the absence of a central bank and much to do with ill-considered regulations -- such as state prohibitions on branch banking, and Uncle Sam's requirement that national banks hold federal-government securities as reserves.

Canada's history is instructive. That country allowed branch banking; Canadian banks could issue currency free of regulations common in the U.S.; and, significantly, that country had no central bank until 1935. A happy result of this system of free banking is described by one of the world's pre-eminent banking historians, George Selgin: "It allowed Canada to avoid the bewildering assortment of bank notes, recurring currency shortages, and waves of bank failures that beset the United States."

Donald J. Boudreaux
George Mason University
Fairfax, Va.

The quotation from George Selgin can be found by going to this page and downloading Selgin's article.

The "Mysterious" Great Depression?

This insightful op-ed by West Virginia University banking theorist and historian George Selgin (dispensing the myth of the alleged 'mysteries' of the Great Depression), although written more than a year ago, is especially relevant today.  Here's a key paragraph:

Paradoxically, perhaps, the fact that orthodox economics has a good deal to say about how the Great Depression happened itself suggests that there is after all something puzzling about the Great Depression. What's puzzling is not that the depression happened, given policies that were resorted to, but that such destructive policies secured wide support despite their often readily-predictable, adverse consequences. But to call even such perversity a "mystery" is to be guilty of hyperbole. After all, politicians are rewarded for appearing to "do something," and not for their command of "abstract" theories.

Regime Uncertainty

What I find most scary about the current market turmoil are the shenanigans it fuels on Capitol Hill and its immediate environs.

Uncle Sam is, I worry, on the verge of creating the same kind of "regime uncertainty" that Bob HIggs effectively argues deepened and prolonged the Great Depression.

Lazy Fare

Here's a letter that I sent this morning to the Wall Street Journal:

Calling for "new New Deal" ("America Needs a New New Deal," Sept. 27) Katrina Vanden Heuvel and Eric Schlosser offer a potted history of the old one and the problems that it allegedly solved.  For example, the bank failures that prompted the 1933 Emergency Banking Act were emphatically not the result of laissez faire policies.  Rather, they were caused by the Fed's disastrous contraction of the money supply and by government restrictions on branch banking - restrictions that prevented banks from sufficiently diversifying their portfolios.

Ms. Vanden Heuvel and Mr. Schlosser contradict not only history, but also themselves.  After asserting that the Great Depression was "preceded by years of laissez-faire economic policies," they write, a mere two paragraphs later, that "direct government intervention has played a central role throughout American economic history."

Such poor history and lousy logic ought not be taken seriously.

Sincerely,
Donald J. Boudreaux

Hopeless

Here's a letter that I sent on Wednesday to the Wall Street Journal:

You introduce several letters on Amity Shlaes's interpretation of the New Deal with this headline: "New Deal Brought Hope, but Not End of Depression" (Sept. 24).

Some "hope."  The New Deal - as convincingly argued by Ms. Shlaes, by professional economic historians such as Robert Higgs, and by most of your letter-writers - deepened and prolonged the Depression.  Any "hope" that ordinary Americans found in the New Deal was as justified as the hope that the Trojans found in the apparent retreat of the Greek army and its gift of a large wooden horse.

Sincerely,
Donald J. Boudreaux

Joseph Ellis on American Creation

The latest EconTalk is a conversation with Joseph Ellis talking about his latest book, American Creation. I learned a lot from both the conversation and the book. Probably the most interesting discussion was about Madison's sense of failure after the Constitutional Convention and what might have happened had that Convention not occurred at all. There is also some fascination stories about Washington's attempts to carve out a safe harbor for Native Americans.

Shell-lacked

Here's a letter that I sent on Monday to the Washington Post:

Amity Shlaes rightly points out that in the 1930s "An irate Canada and many other nations retaliated" against the Smoot-Hawley tariff ("Five Ways to Wreck a Recovery," August 18).  Take, for example, the case of eggs.  Smoot-Hawley increased the tariff on eggs by 25 percent, resulting in a 40 percent fall in egg imports from Canada.  Canada responded by raising its tariff on U.S.-produced eggs by 233 percent - causing U.S. egg exports to Canada to fall from 11 million annually to a paltry 200,000.*

Such retaliation isn't the only reason protectionism harms an economy, but it's a predictable and important one.

Sincerely,
Donald J. Boudreaux

* See Jeffry A. Frieden, Global Capitalism (New York: W.W. Norton, 2006), p. 255.

Palmer on Liberty's Roots

My favorite public speaker is Tom Palmer, of the Cato Institute.  Listen to this speech of Tom's and you'll know why.

Americans' Standard of Living

Mike Cox and Richard Alm continue their compelling and straightforward use of data to show that ordinary Americans' standard of living continues to improve.

Infrastructure and the State

This letter of mine appears in today's edition of the Washington Times:

Upset that Virginians' taxes were not recently raised to construct more roads, State Delegate Brian J. Moran, Alexandria and Fairfax Democrat, declares that "Government has an important role to play in strengthening our infrastructure, developing our economy and creating new jobs" ("Virginia's transportation conundrum," Op-Ed, Tuesday). Not so fast.

Infrastructure that we today naively suppose must be supplied by government has in the past often been supplied by the private sector - supplied so well, indeed, that these private-infrastructure projects helped to spark the Industrial Revolution in 18th-century Britain. Harvard University historian David S. Landes explains:

"At the same time, the British were making major gains in land and water transport. New turnpike roads and canals, intended primarily to serve industry and mining, opened the way to valuable resources, linked production to markets, facilitated the division of labor. Other European countries were trying to do the same, but nowhere were these improvements so widespread and effective as in Britain. For a simple reason: nowhere else were roads and canals typically the work of private enterprise, hence responsive to need (rather than to prestige and military concerns) and profitable to users.... These roads (and canals) hastened growth and specialization."

Donald J. Boudreaux

The quotation in my letter comes from David Landes's splendid book The Wealth and Poverty of Nations (1998), pp. 214-215.

The 2002 book The Voluntary City -- co-edited by my colleague (and Marginal Revolution's) Alex Tabarrok (along with David Beito and Peter Gordon) -- offers further historical insight into how markets supply many collective goods.

Sherman's Motives

I sent this letter today to the Wall Street Journal:

Donald Libert speculates that Sen. John Sherman sponsored the 1890 antitrust act that bears his name out of "a desire to 'pay back' the New York industrialist-dominated delegation who he blamed for denying him the Republican nomination for president at the 1888 convention" (Letters, July 19).  Revenge might well have been part of the Senator's agenda. But another part of that agenda likely was his desire for political cover.

Sherman, a staunch protectionist, was a senate champion of the McKinley Tariff.  This tariff, enacted a mere three months after passage of the antitrust act, set import duties at (what at the time were) record high levels.  (So much for Sen. Sherman's credentials as friend of consumers!)  Free-trade Democrats rightly accused protectionists as being architects of monopoly power - an accusation that Sen. Sherman no doubt sought to conveniently deflect by putting his name on an antitrust statute.

Sincerely,
Donald J. Boudreaux

Once again, the relevant research here was done by Tom DiLorenzo.  See: Thomas J. DiLorenzo, "The Origins of Antitrust: An Interest-Group Perspective," International Review of Law and Economics (June 1985).

Times Aren't '70s-Bad

Here's a letter of mine sent recently to the Atlanta Journal-Constitution:

We can debate just how closely the economy of 2008 parallels that of the 1970s ("Today's crunch feels like '70s," July 13).  But one big difference unquestionably - and happily - distinguishes today from the dismal days of disco: no wage and price controls.  This fact alone goes far toward making our prospects today brighter than they were during the presidencies of Nixon, Ford, and Carter.  No inflation camouflaged by government fiat, and no long lines at gasoline stations or anxiety about finding fuel.

Plus, we're much wealthier today.  Those who doubt this truth can get any Sears catalog from the 1970s, study it, and ask if they'd prefer to use their 2008 incomes to buy 1970s-era products at 1970s prices, or buy today's products at today's prices. Even though nominal prices in the 1970s were much lower than prices today, very few persons would choose the 1970s option.

Sincerely,
Donald J. Boudreaux

Ellis on the American Creation

I recently saw Joseph Ellis speak on the founding. I assume his talk drew on his book, American Creation which I plan to read.

He said the founding had two tragedies and five triumphs. The tragedies were slavery and the plight of the native Americans. The first he called a Shakespearean tragedy, meaning it could have been avoided by human agency. The second he called a Greek tragedy, meaning it couldn't.

His best insights into slavery were that none of the founders tried to justify slavery as being consistent with the ideals of the founding and that everyone expected the slavery phenomenon to die a natural death to be followed by the expulsion of the Negro. No one foresaw a multiracial coexistence. Ellis argued that the the unforeseen invention of the cotton gin ignited the Southern economy and increased the demand for slaves.

The triumphs were winning the revolutionary war (a miracle really, given the quality of quantity of America troops), the concept of a Republic that transcended a large geographical space (rather than say, just a city-state), the formalisation of dissent (rather than killing the losers), the idea of multiple sovereignties (no one is really in charge of say, domestic policy--there is separation of powers and state vs. federal overlap) and the creation of a state without a state religion.

He closed his talk with a paean to George Washington's refusal to accept a monarchical role. It gave me goose bumps. He told it very well. I'd like to know how widespread popular support there was for such a move. He was beloved undoubtedly.

Ellis opened his talk with the observation that the population of Virginia in colonial times was roughly that of Wilkes-Barre , Pennsylvania today. Virginia gave us Jefferson, Washington, Madison, Henry, and Mason, among others. Remarkable. He implied if I remember correctly that surely the population of Wilkes-Barre hides some remarkable lights under its bushel if the times were right. I don't think so. I think the group of people who made their way to the New World between 1620 and 1775 were quite exceptional.

Domestic Protectionism

This letter of mine appears in today's edition of the Wall Street Journal:

Edwin Rockefeller accurately describes antitrust proceedings as "the debris of past political demagoguery" (Letters, July 10). Research shows that the 1890 Sherman Antitrust Act was not sparked by fears of high, monopoly prices: Real prices charged by the so-called trusts fell steadily during the decade leading up to the passage of that statute. Instead, that first national antitrust statute was the result of hostility to the low prices charged by the innovative entrepreneurs who pioneered the use of new technologies that, for the first time, enabled individual firms to serve a transcontinental market.

Populist hostility to the efficiency of firms such as Standard Oil filled congressional debate over the act. Congressman William Mason (R., Ill.), for example, thundered on June 20, 1890, that "Trusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to the people of this country by the 'trusts' which have destroyed legitimate competition and driven honest men from legitimate business enterprises."

Donald J. Boudreaux

The pioneering piece of research to consult here is Thomas J. DiLorenzo, "The Origins of Antitrust: An Interest-Group Perspective," International Review of Law and Economics (June 1985).

Nuts

Jesse Jackson is now being scolded - justifiably - for expressly wishing to cut off Barack Obama's balls.  But come on: no one is surprised that the rhyming reverend envies persons whose political skills are more potent than his own.  More importantly, Rev. Jackson's testy swipe at Sen. Obama is hardly his most objectionable verbal emission.  That distinction goes, I suggest, to Rev. Jackson's 1988 protest jingle at Stanford University - to wit: "Hey Hey, Ho Ho, Western Culture's Got to Go."

With that little jewel, Rev. Jackson expressed his wish to castrate the human mind from much of the finest and most seminal learning available to it.

Politicians Make My Eyes Tear Up

From today's Wall Street Journal:

As it happens, though, there's a useful case-study in the relationship between futures markets and commodity prices: onions. Congress might want to brush up on the results of its prior antispeculation mania before it causes more trouble.

In 1958, Congress officially banned all futures trading in the fresh onion market. Growers blamed "moneyed interests" at the Chicago Mercantile Exchange for major price movements, which could sink so low that the sack would be worth more than the onions inside, then drive back up during other seasons or even month to month. Championed by a rookie Republican Congressman named Gerald Ford, the Onion Futures Act was the first (and only) time that futures trading in a specific commodity was prohibited, and the law is still on the books.

But even after the nefarious middlemen had been curbed, cash onion prices remained highly volatile. In a classic 1963 paper, Stanford economics professor Roger Gray examined the historical behavior of onion prices before and after the ban and showed how the futures market had actually served to stabilize prices.

The fresh onion market is highly seasonal. This leads to natural and sometimes large adjustments in prices as the harvest draws near and existing inventories are updated. Speculators became the fall guys for these market forces. But in reality, the Chicago futures exchange made it possible to mitigate the effects of the harvest surplus and other shifts in supply and demand.

To this day, fresh onion prices still cycle through extreme peaks and troughs. According to the USDA, the hundredweight price stood at $10.40 in October 2006 and climbed to $55.20 by April, as bad weather reduced crop yields. Then it crashed due to overproduction, falling to $4.22 by October 2007. In April of this year, it rebounded to $13.30.

Futures trading can't drive up spot prices because the value of futures contracts agreed to by sellers expecting prices to fall must equal the value of contracts agreed to by buyers expecting prices to rise. Again, it merely offers commodity producers and consumers the opportunity to lock in the future price of goods, helping to protect against the risks of future price movements.

Why Take these Clowns Seriously?

Below is a link to an MP3 file that features part of President Jimmy Carter's July 1979 speech on energy policy.  Carter made all sorts of grand promises and commitments about reducing America's dependence on foreign oil, blah, blah, blah.  Big words, government diktats, and collective 'solutions' to problems real and imaginary sounded no less silly back in the disco days than they do today.

Download National_Energy_Crisis_Address.mp3

(HT my friend Terry Brock)

I have no doubt that 30 years from now people will revisit the speeches, blog-posts, and writings of the likes of Barack Obama and John McCain and find them to be just as fancifully idiotic as is this speech by Jimmy Carter.

The Real Life of Low Carbon-Footprint Locovores

The late William Manchester's 1992 book A World Lit Only By Fire provides a well-paced and vivid look at life in late-medieval and renaissance Europe.  For example, consider his description of the homes and some common experiences of peasants (pp. 52-54):

Lying at the end of a narrow, muddy lane, his rambling edifice of thatch, wattles, mud, and dirty brown wood was almost obscured by a towering dung heap in what, without it, would have been the front yard.  The building was large, for it was more than a dwelling.  Beneath its sagging roof were a pigpen, a henhouse, cattle sheds, corncribs, straw and hay, and, last and least, the family's apartment, actually a single room whose walls and timbers were coated with soot.  According to Erasmus, who examined such huts, "almost all the floors are of clay and rushes from the marshes, so carelessly renewed that the foundation sometimes remains for twenty years, harboring, there below, spittle and vomit and wine of dogs and men, beer...remnants of fishes, and other filth unnameable.  Hence, with the change of weather, a vapor exhales which in my judgment is far from wholesome."

The centerpiece of the room was a gigantic bedstead, piled high with straw pallets, all seething with vermin.  Everyone slept there, regardless of age or gender -- grandparents, parents, children, grandchildren, and hens and pigs -- and if a couple chose to enjoy intimacy, the others were aware of every movement.  In summer they could even watch.....

If this familial situation seems primitive, it should be borne in mind that these were prosperous peasants.  Not all of their neighbors were so lucky.  Some lived in tiny cabins of crossed laths, stuffed with grass or straw, inadequately shielded from rain, snow, and wind.  They lacked even a chimney; smoke from the cabin's fire left through a small hole in the thatched roof -- where, unsurprisingly, fires frequently broke out.  These homes were without glass windows or shutters; in a storm, or in frigid weather, openings in the walls could only be stuffed with straw, rags -- whatever was handy....

Typically, three years of harvests could be expected for one year of famine.  The years of hunger were terrible.  The peasants might be forced to sell all they owned, including their pitifully inadequate clothing, and be reduced to nudity in all seasons.  In the hardest times they devoured bark, roots, grass; even white clay.  Cannibalism was not unknown.  Strangers and travelers were waylaid and killed to be eaten, and there are tales of gallows being torn down -- as many as twenty bodies would hang from a single scaffold -- by men frantic to eat the warm flesh raw [original emphasis].