Gregory on “Why Capitalism Is Worth Defending”

(Austrian) Economics, Anti-Statism, Corporatism, The Left, The Right
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The prolific Anthony Gregory has a great article up today at LewRockwell.com, “Why Capitalism Is Worth Defending.” His view is that capitalism is “the greatest engine of material prosperity in human history, the fount of civilization, peace, and modernity.” As part of his argument he rejects the calls of some fellow travelers to drop the word capitalism because of its origins (it was coined by its enemies) and because it is used by some corporate capitalist types to refer to their preferred system. As Gregory writes:

even insofar as the word has negative connotations in popular culture, we might still want to adopt it. The anti-Federalists were initially opposed to the label affixed to them by the Hamiltonian statists. But now I would uphold that descriptor with pride. This is an area where we can take a cue from the gay rights activists who were smeared as “queer,” only to proudly appropriate the term for their own uses. … regardless of how we define it, in terms of feeding the masses and sustaining society, I will take flawed capitalism over flawed socialism any day. I will take state capitalism, crony capitalism, or corporate capitalism over state socialism, democratic socialism, or national socialism.

Another interesting insight Gregory makes is the parallel between capitalism itself and the use of the word: “Maybe it takes longer to explain ourselves when we adopt the battle cry of capitalism – it also takes longer to be a capitalist than only a consumer.”

Great piece.

 

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The Truth About the Debt Ceiling

(Austrian) Economics, Taxation, Vulgar Politics
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[I just posted this on Google+, but I figured it was worth posting here as well.]

The debt ceiling is just for show; it hasn’t stopped the federal debt from increasing and politicians just keep raising the ceiling when it’s reached.

Failing to raise the debt ceiling will not necessarily result in default. The federal government has plenty of revenue to cover interest payments, even if it must shift that money out of other parts of the budget. Any claims of immediate default and imminent financial collapse are disingenuous fearmongering designed to fool a gullible and economically ignorant public and force an increase of the debt ceiling and an increase in taxes.

Tax cuts are not the reason for the debt crisis — spending is. Spending in excess of revenue is the cause of any debt, public or private. The federal government has been increasing spending with and without tax cuts for a very long time, under both parties.

The CBO’s inclusion of tax cuts as a major source of current and future federal debt is disingenuous. Why?

  1. Tax cuts are not spending anymore than tax breaks are subsidies (sorry Rachel Maddow).
  2. All of that estimated debt increase can be eliminated by cutting spending without eliminating tax cuts or raising taxes!

The solution is not to eliminate tax cuts and loopholes, let tax cuts expire, or raise taxes. Increasing taxes, however you do it, will inevitably lead to more spending because governments will find something to spend that increased revenue on and then some.

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Forecasts vs. Policies

Business Cycles, Finance
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Arnold Kling, at EconLog, relates Scott Sumner’s simple query as to why the 2008 financial crisis has caused such low or negative growth down even unto the present day, and offers four possible answers. I will comment only on one of them:

Because the Fed made forecasting errors. Right-wingers are fond of brandishing charts showing that the unemployment rate with the stimulus is on a worse trajectory than what was forecast without the stimulus. That may or may not be evidence that the stimulus failed, but it is evidence that standard forecasts were not sufficiently pessimistic about the economy. Assuming the Fed used standard forecasts, that would explain the inadequate monetary expansion back then. It doesn’t explain their reluctance to expand now, though.

There are several places where this answer (which Kling does not favor) goes wrong. Most noticeable, to me, regards the possibility that the forecasts “were not sufficiently pessimistic about the economy.” This is not the only possibility. It is not even the most likely possibility.

The problem was that the forecasts were too negative …

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Mises on the Beach

(Austrian) Economics, The Left, Vulgar Politics
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When Michelle Bachmann confessed to taking the writings of Ludwig von Mises with her on vacation, I assumed she used the august Austrian economist as a soporific — not because Mises isn’t worth reading, or not exciting to read (I can’t tell you how my heart pounded when I first unleashed myself onto The Ultimate Foundation of Economic Science), but because Bachmann has never said anything to suggest a scholarly or subtle mind, the kind of mind best suited for pleasure in reading Mises.

But a Salon writer, Andrew Leonard, has proven himself less dismissive of Bachmann than I. He, knowing nothing of Mises, set out to read Human Action. His conclusion? Well, he didn’t get very far into the book. But he did get far enough to tell us what he found. After reading a few chapters, he was struck by
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Jennifer Burns on Ayn Rand and the Classical Liberal Tradition

(Austrian) Economics, Anti-Statism, Business, Pop Culture, Statism, The Right
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With the recent release of the first part of the film adaptation of Atlas Shrugged (see Matthew Alexander’s review on Prometheus Unbound), the Institute for Humane Studies (IHS) — via LearnLiberty.org — brings us this interview with Professor Jennifer Burns, author of Goddess of the Market: Ayn Rand and the American Right, on how Ayn Rand fits into the classical liberal tradition.

In this video, Prof. Burns explains three classical liberal themes in Ayn Rand’s masterpiece Atlas Shrugged: individualism, suspicion of centralized power, and free markets. These themes come to life through the novel’s plot and characters and give the reader an opportunity to imagine a world where entrepreneurship has been stifled by regulations and where liberty has been traded for security. Burns ends by reviving Rand’s critical question: do you want to live in this kind of world?

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