Happy Birthday, Dr. Ron Paul!
Happy Birthday, Dr. Ron Paul!
Today is Dr. Ron Paul’s eighty-fifth birthday. He has always been a voice of wisdom, from the End the Fed campaign to his fight against the Iraq War to being a voice of sanity in the current covid-19 hysteria. He is a great American and one one of the foremost people ever to serve in Congress. Happy Birthday!
Mark Thornton on the Economics of Slavery
Dr. Mark Thornton joined the Ammo.com podcast to discuss the economics of slavery and its long-lasting negative effects on the economy.
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States Clamor for More Federal Aid as State Budgets Shrink
President Trump announced an executive order on August 8 that would extend unemployment benefits at a reduced rate and require states to front some of the cost. This generated almost immediate pushback from governors, who instead demanded more federal funds with no strings attached.
The executive order signed by the president was one of four aimed at bypassing congressional gridlock that has prevented another coronavirus relief bill from passing. The president’s extension reduces the amount of unemployment benefits offered to Americans from $600 to $400 per week but also requires that states take on 25 percent (or $100) of this weekly cost.
This requirement was met with disapproval from multiple governors across party lines. Democratic New York governor Andrew Cuomo and Republican Arkansas governor Asa Hutchinson released a statement through the National Governors Association (NGA) expressing their concern over the “significant administrative burdens and costs this latest action would place on the states.” California governor Gavin Newsom and Colorado governor Jared Polis also expressed concern over their states's ability to cover the cost.
The president’s executive order came just days after a request by the NGA for $500 billion in unrestricted additional federal funding for states. The existing funds have largely been restricted to coronavirus-related expenditures, and some states have only distributed small portions of their shares.
The federal aid already extended to states includes well over $150 billion from the Coronavirus Aid, Relief, and Economic Security (CARES) Act along with the Federal Reserve’s $500 billion loan program to support both state and local governments. The recently expired $600 per week unemployment benefits package from the CARES Act also offset significant costs for states. These measures have helped enable states to pursue lockdown measures in the face of declining economic activity and reduced tax revenue projections. They have thus been able to circumvent some of their budget constraints without having to make the kinds of spending cuts or reallocations that would otherwise be required in the face of an emergency.
Absent federal relief measures, states must face budget constraints because they do not have the vast tax base or the same ability to issue debt claims as the federal government, who have shown their near-limitless spending capabilities of late. Of course, another major contributing factor to these circumstances is that unlike the federal government, states do not have their own currencies or central banks to monetize their expenses. However, relief from Congress and the Federal Reserve has allowed states to utilize these spending mechanisms and disperse their costs in the form of a rapidly increasing national debt and money supply.
While the president’s executive order continues unemployment benefits, it will do so at a lower cost than the previous policy. Requiring states to pick up some of the tab is also a small step toward fiscal responsibility in a political environment where the only conflict in Congress has been how much they can add to the deficit.
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The Fed Says It Fears "an Excessively Rapid Expansion of the Balance Sheet."
The July 28–29 Fed committee meeting minutes were released Wednesday, giving us another glimpse into the careful deliberation of those working tirelessly at planning our daily lives.
The ten-person Board of Governors began with the financial conditions in the US, the performance of the stock market, and specific industries. Per the minutes:
Airline and hotel share prices declined sharply, and share prices of banks—which faced earnings pressures from large loan loss provisions and compressed net interest margins—continued to underperform.
No surprise; airline and hotels share prices declined under covid. Yet not one person inquired as to the importance of the stock market in relation to monetary policy. Considering the various market interventions by the Fed, it appears that it’s their job to ensure that the stock market always trends upward and crashes as seldom as possible; however nothing of the sort is mentioned in their mandate.
They continued with macro ideas and discussed GDP:
Total real government purchases appeared to have increased moderately, on balance, in the second quarter.
Whether this is a positive factor or not remains unclear due to the neutrality of the minutes. But GDP includes government expenditure. The more a government spends, the higher GDP goes. Since we are told increases to GDP are good, it stands to reason that government purchases are positive to the economy…according to the Fed. Of course, not one person in the room acknowledged that governments only have the ability to tax, borrow, or print, and perhaps it’s a good thing they didn’t make as many “purchases” using coercive or printing press technology.
As the minutes went on it was only a matter of time until we were given the usual:
in order to continue to support the flow of credit to households and businesses, it would be appropriate over the coming months for the Federal Reserve to increase its holdings of Treasury securities and agency residential mortgage-backed securities (RMBS) and CMBS at least at the current pace. These actions would be helpful in sustaining smooth market functioning…
How smoothly should the market function? It cannot be articulated with mere words. But we must trust that they will know it when they see it!
The highlight of the meeting occurred when yield curve targeting was mentioned and the participants noted the problem it would create, concluding that there is
the possibility of an excessively rapid expansion of the balance sheet and difficulties in the design and communication of the conditions under which such a policy would be terminated, especially in conjunction with forward guidance regarding the policy rate. In light of these concerns, many participants judged that yield caps and targets were not warranted in the current environment…
Yield curve control would create a commitment to an unlimited amount of money to be carried to its full extent. We can breath a sigh of relief that very little interest has been sparked in this arena, for now.
Ultimately, some of the most powerful bureaucrats in the world decided (with a unanimous vote) to release the final statement, carrying on with business as usual.
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The Covid Crisis Has Pushed Latin American Regimes back toward Authoritarianism
Since the beginning of the coronavirus pandemic, many governments around the world have taken advantage of the crisis, stretching the state's scope to levels that erode individual liberty and overstep civil rights.
Latin America has not been an exception. Administrations hungry for power have gratefully received emergency powers and have often used those to undermine protests, the press, and private property.
In an article for Reason, Joshua Collins highlights recent cases of power abuse across Latin America. For example, in Honduras, the government has temporarily suspended constitutional protections of free speech. In Bolivia, the interim government has put in place a decree allowing the incarceration for up to ten years of those who "misinform" or "promote noncompliance" with government measures. As usual, the Venezuelan regime has put down protests violently and detained journalists and politicians who dared to exercise their rights. In Brazil, President Jair Bolsonaro has prevented access to public health data. In Argentina, Alberto Fernández's administration has announced a protocol of "cyberpatrol" that was unwelcome by citizens and NGOs. The Argentine government has also threatened to expropriate a big agroindustrial company to achieve "food sovereignty." In Cuba, the regime has continued with its attacks on citizens’ rights and human rights activists have denounced the government's "increased arrests, harassment, and bans" on their movement, "even though they have not violated any health standards."
All this is taking place in the context of long and severe restrictions on movement that are enforced with "fines, arrests, and even deportations," says Collins. As he adds, "if civil unrest flares up again during the current state of emergency, protesters in many countries may find themselves facing down state forces with extralegal powers and a muzzled press."
The Economic Crisis
Long periods of severe government restrictions on movement and economic activity may prevent the overburdening of health systems but have damaging economic effects. In a recent United Nations Development Programme study, Constantino Hevia and Andrés Neumeyer explain that extensive shutdowns cause bankruptcies, mass layoffs, and a loss of efficiency in supply chains and production networks, among other effects.
What is more, in poor nations with messy public accounts (like several Latin American countries) these measures have deeper impacts on employment and investment. Besides, governments don't usually have the tools to deal with the crisis. Consequently, civil unrest may be more intense as desperation increases and poverty grows.
A Glimpse into the Past
The current combination of predatory governments and a deep recession adds to a long history of authoritarianism and economic disasters in the region.
Despite the progress of nations like Chile and Uruguay, corruption, authoritarianism, and poverty are still common in many people’s lives. From Castro to Videla, and from Pinochet to Maduro, tyranny has taken many forms and colors during the last decades. However, structural poverty, weak institutions, and state crime have never ceased to be on the lookout for a big part of Latin Americans.
Today, during a deep economic crisis, citizens of many Latin American countries will suffer the asphyxiation of a violent state that has used the emergency to increase its power. The story of power-hungry leaders taking advantage of unfortunate events is not new, and this ordeal will be added to a long list of attacks on liberty in the region.
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Abolition: An Acid Test
[From the October 1969 issue of Libertarian Forum.]
It has come to our attention increasingly of late that many self-proclaimed libertarians balk at the idea of abolishing slavery. It is almost incredible to contemplate, for one would think that at least the minimal definition of a libertarian is someone who favors the immediate abolition of slavery. Surely, slavery is the polar opposite of liberty?
But it appears that many libertarians argue as follows: the slave-masters bought their slaves on the market in good faith. They have the bill of sale. Therefore, respect for their property rights requires that slavery be left intact, or at the very least that the slave-master be compensated for any loss of his slave at the market value.
I used to believe, and have written articles to that effect, that the idea that right-wingers uphold "property rights over human rights" is only a left-wing smear. But evidently it is not a smear. For these libertarians indeed go to the grotesque length of upholding property rights at the expense of the human right of self-ownership of every person. Not only that: by taking this fetishistic position these pro-slavery libertarians negate the very concept, the very basis, of property right itself. For where does property right come from? It can only come from one basic and ultimate source—and that is not the pronouncement of the State that Mr. A belongs to Mr. B. That source is the property right of every man in his own body, his right of self-ownership. From this right of self-ownership is derived his right to whatever previously unowned and unused resources a man can find and transform by the use of his labor energy. But if every man has a property right in his own person, this immediately negates any grotesquely proclaimed "property right" in other people.
There are five possible positions on the abolition of slavery question. (1) That slavery must be protected as a part of the right of property and (2) that abolition may only be accompanied by full compensation to the masters seem to me to fall on the basis of our above discussion. But the third route—simple abolition—the one that was adopted, was also unsatisfactory, since it meant that the means of production, the plantations on which the slaves worked, remained in the hands, in the property, of their masters. On the libertarian homesteading principle, the plantations should have reverted to the ownership of the slaves, those who were forced to work them, and not have remained in the hands of their criminal masters. That is the fourth alternative. But there is a fifth alternative that is even more just: the punishment of the criminal masters for the benefit of their former slaves—in short, the imposition of reparations or damages upon the former criminal class, for the benefit of their victims. All this recalls the excellent statement of the Manchester Liberal, Benjamin Pearson, who, when he heard the argument that the masters should be compensated replied that "he had thought it was the slaves who should have been compensated."
It should be clear that this discussion is of far more than antiquarian interest. For there are a great many analogues to slavery today, an enormous number of cases where property has been acquired not through legitimate effort but through State theft, and where, therefore, similar alternatives will have to be faced once more.
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The Fed Is Going Digital
In a recent speech by Governor Lael Brainard called The Future of Retail Payments in the United States, she was able to combine the covid narrative with the payment system the Fed launched a year ago, noting:
The COVID-19 pandemic has heightened the urgency and importance of delivering a resilient instant payment system that is accessible to all Americans.
It’s called the FedNow Service, the “instant payment” service which promises to deliver money from the powers that be to whomever they choose instantaneously. She praised the success thus far, explaining:
The Federal Reserve, acting as Fiscal Agent for the U.S. Department of the Treasury, processed most of the CARES Act payments to households using direct deposit, prepaid debit cards, and checks, which can take several days between the time the funds are sent and the time recipients get access to their funds.
In addition to FedNow, there exists an ongoing dedication to developing central bank digital currencies (CBDC). As explained by Governor Lael Brainard in the speech An Update on Digital Currencies, saying:
Given the dollar's important role, it is essential that the Federal Reserve remain on the frontier of research and policy development regarding CBDCs. As part of this research, central banks are exploring the potential of innovative technologies to offer a digital equivalent of cash.
The speech is vague and offers no details as to what these “cash equivalents” refer to. She doesn’t mention what exactly they are working on, but does mention various stakeholders such as financial institutions and fintech firms. At this time, we are unsure whether they are simply using the latest technology to streamline the payment process or if they will eventually create an actual digital currency that will, in effect, increase the money supply.
Whatever it is, we can bet it will not be good, considering they are:
exploring the use of innovative technologies to enhance payments efficiency, expand financial inclusion, speed up settlement flows, and reduce end-user costs.
Given that we’ve seen a war on cash under covid, including cash being vilified due to health concerns or a shortage of coins, coupled with the nebulous ideas of the Fed, which promises to explore technology solutions for our benefit, it’s important that we say something not previously said: this will end in a cashless society. Naturally no one in the Fed will outright say that this is the end goal, but we can be confident that it is their intent. In a cashless society, the government and central planners get more control and surveillance over those they have sworn to protect, with the added bonus of never being able to reverse course once implemented.
The planners see little downside to going cashless, because they get the control they want. But the people have everything to lose, namely our liberty and freedom, which is something the Fed doesn't seem to care to research. Besides negative interest rates, bank depositor bail-ins, the ability to track payments, taxes, fines, penalties, and other levies imposed by the state, capital controls, power outages, or the ability to be hacked, what could possibly go wrong in a cashless society?
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The Trump Administration's Dangerous Plan to Deny American Citizens Entry into the US
Last week, the Trump administration announced it "is weighing a new rule that would temporarily block an American citizen or legal permanent resident from returning to the United States from abroad if authorities believe the person might be infected with the coronavirus."
The administration has already restricted entry of foreigners and some legal residents of the US, but this would be the first time it has sought to deny entry for US citizens, including the many thousands of US citizens who cross the US-Mexico border in both directions every day.
It is highly questionable whether this is constitutional, as the US Constitution has long been interpreted in a way that assumed US citizens cannot be denied entry into their own country.
Indeed, in recent decades, countries of the developed world have generally proven unwilling to deny entry to their own citizens, and have taken steps to avoid rendering any person stateless. Even in cases of new immigrants, some countries, such as Switzerland, have provisions in place to expedite legal residency for migrants who might be rendered stateless if denied entry.
The Trump administration's suggestion that it may now deny citizens entry represents a departure from this now well-established legal and political trend.
But one of the victories of the classical liberals in recent centuries has been their successful opposition to regimes' insistence that they can deny entry to their own citizens if those persons are deemed undesirable in some way.
This tactic has often been employed as a means of exiling political enemies and manipulating demographics for political gain.
During the late nineteenth and early twentieth centuries, for example, the Russian state, which generally discouraged emigration, sought to encourage Jews to leave Russia permanently. As noted by historian Tara Zahra: "It was possible to acquire an 'emigrant' passport for free, but this was a one-way ticket, since return was forbidden. That meant virtually cutting off family ties, and brought the risk of statelessness if a migrant was rejected or deported by American immigration authorities." (See Zahra's The Great Departure: Mass Migration from Eastern Europe and the Making of the Free World [New York: W.W. Norton, 2016])
In later decades, of course, those who defected under the Soviet communist regimes might find themselves denied reentry later on.
Other examples include the Manchu dynasty of China, which had at times "forbidden emigration and considered all outside China as having lost their nationality. Their return was forbidden."
Under the French revolutionaries, émigrés were at times denied reentry depending on the whims of those in power during the Directory and the Consulate.
During the days of the Spanish inquisition, Jews were encouraged to leave Spain during the 1490s but were denied reentry after 1499.
During the years of Hutu dominance in Rwanda, many Tutsi émigrés were later denied reentry. Only after Tutsi rebels finally subdued the Hutu militias following the genocide did many of these Tutsis finally return.
Now, I'm not saying the Trump administration is seeking to implement a crypto-ethnic-cleansing policy or some other nefarious scheme of that variety. However, the proposition that the US government ought to have the power to simply deny entry to US citizens who are neither criminals nor have received any sort of rigorous due process is dangerous and empowers regimes to deny citizens the most basic property rights. These rights include a citizen's right to access to his own property and to visit his family. The very idea ought to be rejected outright as a gross violation of an American's right to travel freely. There is a reason why, historically, denial of reentry for citizens is associated with authoritarians and despots, such as the French republicans and the czars of old.
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Kamala Harris Is Basically Obama-Clinton 2.0, but Worse
Listen to the Radio Rothbard version of this article.
Presidential candidate and former vice president Joseph Biden announced Kamala Harris as his running mate today. Harris is currently a US senator from California and the former attorney general for the state. Biden's choice brings her back to the fore of the 2020 race after having dropped out as a presidential candidate in early December.
In many ways, Harris dropped out because she had trouble setting herself apart from other candidates such as Biden, representing the mainstream of the Democratic Party. While Elizabeth Warren and Bernie Sanders represented in many respects the far left of the Democratic coalition, Harris was just one of several establishment Democrats in the race, and competed for many of the same fundraising dollars as Biden and Amy Klobuchar.
By picking Harris, Biden—or whoever is making these decisions for Biden—will likely placate the Obama-Clinton power brokers in the party who privately oppose lawmakers like Warren and Alexandria Ocasio-Cortez, who are viewed by establishment Democrats as candidates who often alienate middle-class Middle American voters. At the same time, Harris is likely to satisfy—or at least silence—critics on the party's left wing, who have long called for a black woman on the presidential ticket.
In 2020, the choice of a vice-presidential candidate is especially high-stakes, because many believe Biden will be either unwilling or unable to run for president in 2024. This sets Harris up as the heir-apparent leader of the party. Because Biden will be the oldest man to ever enter the presidency, and because he is clearly not in excellent health, it is known that Harris has a good chance of succeeding him directly in case he dies or becomes seriously ill.
But although Harris is "demographically correct" for the party's left wing, she remains basically a social climber who is very well ensconced in the mainstream of the party—although the party's mainstream has itself moved considerably to the left in recent years.
On foreign policy, for instance, Harris is not significantly different from Hillary Clinton, Barack Obama, Susan Rice, Joseph Biden, or other high-ranking US officials who have been happy to perpetuate endless wars across the globe in recent decades. According to her official campaign site, no region of the globe is off-limits to US intervention so long as the US intervenes multilaterally. It's just the Clinton-Obama doctrine yet again. In usual Washington doublespeak fashion, she says she is in favor of ending the war in Afghanistan but insists that the US must maintain a presence there to prop up the Afghani regime. She has advocated continued military intervention in Syria.
Harris is very much an advocate of the conspiracy theory that Russians "hacked" the 2016 election and remain a major threat to US security.
On the environment, she supports a "Green New Deal," which we would today expect from any Democrat running for the White House. This means immense amounts of new subsidies for "green energy," paid for with new taxes and a host of new regulations on private businesses. It means global management of carbon emissions in line with international agreements like the Paris accords.
On economic policy, it's the usual interventionist slate of policies. She wants to "empower" labor unions, more heavily regulate employers, and aggressively prosecute businesses for a variety of "crimes" that run afoul of the intricate labyrinth of federal laws managing the financial sector. Fiscal policy is sure to be what we've come to expect from both Republicans and Democrats: endless deficit spending.
Harris has lauded federally imposed mandates like "forced busing," in which federal courts dictate public schools' enrollment policies in the name of racially desegregating schools.
In all of this, we don't find very much at all that differs from the eight years of the Obama administration. It's the usual center-left policy agenda we've seen since at least the 2008 election.
What is especially dangerous now, however, is that the political context has changed considerably. Both major US parties have adopted far more interventionist stances in terms of fiscal policy, monetary policy, and in terms of domestic police power. What's more, the presidency has slowly been moving toward a rule-by-decree model for decades, in which the president essentially rules through executive orders and Congress only intervenes on occasion. The Trump administration has only accelerated this trend.
This is likely music to Kamala Harris's ears. Harris, after all, as a former prosecutor and as a presidential candidate has never shied away from aggressive use of executive power.
As Tyler Curtis has noted:
Over the course of her campaign, she has repeatedly promised to bypass Congress and take unilateral action on a whole host of intensely divisive issues. On immigration, she has vowed to issue an executive order granting citizenship to “Dreamers” (migrants brought to America illegally by their parents). On the environment, she says she will declare a “state of water emergency” and force the country to re-join the Paris Climate agreement. She also wants to ban the use of fracking.
Many observers have noted how dictatorial these statements sound, and rightly so. To follow through on any one of these proposals would be deeply suspect, but the sheer number of them, coupled with Harris’ brazenly peremptory attitude, must leave no doubt as to her authoritarian ambitions.
For Harris, Congress is at best merely an advisory body. As a kindly gesture, the President may ask Congress for permission to do something, but he or she does not really require their assent.
Harris has even said she would do an end run around Congress on gun control:
upon being elected, I will give the United States Congress 100 days to get their act together and have the courage to pass gun safety laws. And if they fail to do it, then I will take executive action. And specifically what I’ll do is put in place a requirement that for anyone who sells more than five guns a year, they are required to do background checks when they sell those guns.
These are the words of a politician who views the role of the president as an elected dictator. Many presidents, of course—including Donald Trump—have likely viewed things this way, but it's now easier than ever for a president to carry out these "promises" in which presidents don't wait for Congress to pass duly enacted laws. That's the old way of doing things. The new way is to follow Barack Obama's strategy of using "a pen and a phone" to issue diktats without the inconvenience of involving an elected legislature.
No doubt, many of Harris's detractors will call her radical or a tool of the far left. The reality is actually far more alarming. Radicals have a tendency to lose political battles, because they often stand on principle. Harris is unlikely to have that problem. She is very much a savvy player who fits in well within the party's mainstream and who will carry on the center-left political program as we've come to expect it from the likes of Hillary Clinton or Barack Obama. There's not much here that's new. What has changed, however, is that we live in a country where presidents are ever more rapidly becoming unrestrained in taking unilateral action to do what they want. In ages past it might have been reasonable to assume the Congress might effectively intervene to restrain a president's less popular and more radical proposals. That vision of the US regime is looking more unrealistic than ever.
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Mises on MMT, Seventy Years Ago
Modern monetary theory, with origins both in chartalism and the "functional finance" doctrine of the 1940s, is the freshest left-progressive gambit to justify radically increased federal spending. It is functional finance, promoted by post-Keynesian economist Abba Lerner, to which Mises refers in this 1950s passage from the new edition of The Theory of Money and Credit. Mises also quotes Beardsley Ruml, the New York Fed chair who in 1945 delivered a talk before the American Bar Association titled "Taxes for Revenue Are Obsolete." This talk, later published in American Affairs, makes the protoargument for MMT: sovereign national governments, with full control over their treasuries and central banks, can issue money at will to fund government expenditures. Absent any need for taxes, the justification for their continued imposition becomes social and economic, not fiscal.
Everything old is new again. Mises could be describing the thoughts of an MMTer today:
For the naive mind there is something miraculous in the issuance of fiat money. A magic word spoken by the government creates out of nothing a thing which can be exchanged against any merchandise a man would like to get. How pale is the art of sorcerers, witches, and conjurors when compared with that of the government's Treasury Department! The government, professors tell us, "can raise all the money it needs by printing it." Taxes for revenue, announced a chairman of the Federal Reserve Bank of New York, are "obsolete." How wonderful! And how malicious and misanthropic are those stubborn supporters of outdated economic orthodoxy who ask governments to balance their budgets by covering all expenditures out of tax revenue!
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Hunter Hastings on How Entrepreneurs Beat the State
Jeff Deist recently argued the case for economics over politics in his talk "Markets vs. Mobs." I believe markets will prevail, and here's why.
Our resource is not "science" but knowledge. It accumulates, perhaps at an exponential rate. Mises.org is one of the great consolidators of knowledge, attracting many more people than ever before (620,000 unique visitors per month, 1.5 million page views per month). If we can multiply those numbers by ten times we might start to make a dent in the universe.
Austrian or classical liberal knowledge has been associated with great advances in economics, higher average standards of living, and civilization, including enlightened government (Gladstone). But we don’t need to look backward; rather we need to market our ideas in a better fashion for the future. Jeff Deist talks about successful "2 percent movements." With 6 million mises.org visitors per month, we’d be in 2 percent territory. We don’t need great men, just a great knowledge repository with great communication and sharing.
Mises and Huerta de Soto say that socialism is an intellectual error. That means it is correctable, via superior ideas and the right knowledge. So far, we have spent most of our efforts fighting in the wrong channels—academia and politics—where we have already lost. Business is a new channel to try. Technology may be another—blockchain is one area of technology associated with liberty and individual sovereignty, and complex systems theory is a modern update of spontaneous order. Gaming could be another (so-called agent-based simulations rely on individual freedom of action for their "agents"). All of these fields have quite well-developed libertarian groups embedded in them.
And I will continue to believe that Austrian entrepreneurship can be one of our best vehicles. Professor Per Bylund and others have established the idea of the ethic of entrepreneurship. Contemporary researchers indicate that a belief in free markets and entrepreneurship is associated with meaning in life. De Soto calls entrepreneurship the most intimate and essential characteristic of man: his ability to act creatively. Society thrives when individuals pursue entrepreneurial creativity. Entrepreneurs resolve social maladjustment.
The changes required in institutions can be created entrepreneurially. Connor Boyack provides examples in the institution of education, and Robert Luddy pursues the same goal with his private academies. Kartik Gada of ATOM sees a future where technology rather than people is the source of tax revenues, which will change the relationship between people and government.
Government (or what we call the state) is the great problem. But perhaps even that is vulnerable. In Eastern philosophy there is the concept of the eternal cycle, in which, when systems become overly bureaucratic or otherwise sclerotic, any crisis that comes along can result in a creative renewal that overturns the bureaucratic managers responsible for the sclerosis. Fund manager Mark Spitznagel refers to this in The Dao of Capital, using the analogy of the forest. When the forest floor becomes overgrown, and the wrong species have become dominant in the wrong parts of the forest, strangling new and creative growth, a crisis like a fire comes along, destroying the maladjusted species and the dead undergrowth, and releases the creativity of new growth among agile and adaptive species. In his analogy, the conifers wait patiently in the acid, rocky soils to which they have been pushed by the aggressive angiosperms, waiting patiently and adaptively for the fires that are sure to come:
For the conifers, their roundabout strategy allows them to withdraw to inhospitable places, all the while producing innumerable pine cones loaded with seeds that can be expediently dispersed by the wind to other remote areas, giving rise to a phalanx of patient, long-living warriors awaiting the next rout in the ongoing battle between conifers and angiosperms. While conifers growing on the rocks may appear to be nature’s outcasts, theirs is truly the false humility of the Daoist manipulator-sage. They withdraw to where others cannot go and then act when conditions suddenly shift and an opportune moment arises, such as after a wildfire….fire is friend, not foe, to the patient conifer.
Spitznagel's analogy should give us confidence in the economic future of the West, despite the depredations of the state.
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