Monday, September 30, 2013

Rand Paul Wants to Wreck the Government Shutdown

It's not much of a shutdown, especially with trained government killers still receiving checks, but Rand wants to ruin the small shutdown that appears very likely.

National Review reports:
Rand Paul Suggests Short-Term CR

Senator Rand Paul (R., Ky.) suggested that a path to a compromise between Senate and House might involve a short-term continuing resolution.

“The way to get a compromise would be maybe we do a clean CR for a week or two and we negotiate but we keep government open,” Paul told reporters tonight.

Some small government libertarian that Rand.

Obama Signs Bill Ensuring Government Trained Killers Will Get Paid During a Shutdown

The White House said Obama signed the “Pay Our Military Act” late Monday. The bill, approved unanimously in the last day by the House and Senate, ensures that active-duty military service members, plus civilians and contractors with the departments of Defense and Homeland Security, will still be paid during the temporary cessation of most government activities.

(Via WaPo)

BREAKING Explosion on UC Berkeley Campus


Return to this post for updates.


Explosion on central campus is confirmed, and people are being directed to evacuate.


UCBerkeley officials declare emergency following explosion around California Hall


The Daily Califronian reports:

An explosion on campus around California Hall has injured an unconfirmed number of people, prompting officials to declare a campus emergency and order an evacuation of the campus around 6:40 p.m. Monday evening.

Berkeley Fire Department Chief Gil Dong said that he thought an underground electrical vault exploded at about 6:40 p.m. Emergency responders included four ambulances, fire trucks and multiple police units.

The explosion follows a campuswide power outage earlier Monday evening, which forced the evacuation of several campus buildings and left some people stuck in elevators.[...]The campus is currently looking into an attempted theft of copper from the campus high-voltage system, which may have led to the outage


Injuries reported.

Clueless Robert Reich Doesn't Realize He Was Protected by the Private Sector

Robert Reich, who has never seen a government intervention he doesn't like, tells this story on his blog:
As a child I was bullied by bigger boys who threatened to beat me up if I didn’t give them what they wanted. But every time I gave in to their demands their subsequent demands grew larger. First they wanted the change in my pocket. Next it was the dessert in my lunchbox. Then my new Davy Crockett cap. Then the softball and bat I got for my birthday.

Finally I stopped giving in. When the bullies began roughing me up on the playground some older boys came to my rescue and threatened my tormenters with black eyes if they ever touched me again. That ended their extortion racket.
Where was the government? Where were the public school administrators?  He was protected by the private sector.

"In short, if you want it in two words, it's this: I'm done'

Karl Denninger is shutting down most of his income producing streams and mentally relocating to his version of Galt's Gulch.

Boys vs. Girls on the Math SAT Test

The 2013 SAT results have just been released showing another +30 point advantage for boys on the math SAT.

(Video created by Mark J. Perry)

The Remarkable Milton Friedman

Some start for a positivist. In 1977, Hayek reminded us that Milton Friedman was "an arch-positivist who believes nothing must enter scientific argument except what is empirically proven."  Yet, Friedman couldn't even get physical empirical correlations correct, when only around a half dozen variables were involved.

During an interview conducted by John Taylor he said:
There was a big project during the war of trying to determine the alloy that would have the greatest strength under high temperatures. We were called in as statistical consultants to the various groups working on the problem. I had a lot of data from all their experiments. I computed a multiple regression using these data--data that had been derived from hanging a weight on an experimental turbine blade to see how long it took for the blade to rupture at a given temperature. I regressed the length of time to rupture on the chemical composition and various other variables based on metallurgical theory I could find. I got an excellent correlation. So I used my regression to predict what new alloys would have a longer time before rupture, I got wonderful results even though I insisted on restricting  every variable separately to the range of values that had been used in the experiment. My equation predicted something like 200 hours until rupture for my constructed alloy, That would have been an enormous success compared to existing alloys.

Unlike in economics, we could put the prediction to a test. I called some people up at MIT and they constructed this alloy and tested it. It was an utter failure! That taught me that you could not depend on a narrow range of evidence using a lot of variables. I think I had a half-dozen or more variables.

The Only Way to Stop Government Spying

By Justin Raimondo

Thanks to Edward SnowdenGlenn Greenwald, and Laura Poitras, we know the National Security Agency (NSA) is collecting a huge amount of information about American citizens. But what are they doing with it?
Government officials have been quick to deny any "misuse" of this huge data bank – beyond the to-be-expected eavesdropping on spouses, and other anomalous pranks by errant ex-employees – and critics have so far focused on potential misuse. Well, now we know it’s much more than just potential: it’s real, it’s happening, and it’s downright scary.
The rationale for the Surveillance State has always been "the foreign connection." There are these Bad Guys outside the US, you see, who are trying to infiltrate our society and cause violent havoc, so we have to create this huge "haystack" of data and sift through it with a fine-toothed comb – but Americans, we’re told, aren’t the primary targets. It’s them furriners we have to worry about.
This turned out to be a lie. We always knew it was a lie, but now James Risen and Laura Poitras have confirmed it in a recent New York Times article that blows the lid off this rationalization:
"Since 2010, the National Security Agency has been exploiting its huge collections of data to create sophisticated graphs of some Americans’ social connections that can identify their associates, their locations at certain times, their traveling companions and other personal information, according to newly disclosed documents and interviews with officials."
The "foreign connection" was only ever a fig leaf, utilized to get around existing lawsforbidding mass surveillance of Americans: this had to be true because, after all, Al Qaeda and its affiliates were and are a foreign group trying to gain entry to our shores and implant its operatives on our soil. Ipso facto, it was deemed necessary to gain access to the entire "haystack" in order to map their success in doing so. The focus isn’t on overseas operatives but on their allies inside the United States who might conceivably be utilized in terrorist attacks. Pushing the legal limits of this mass surveillance, US government officials finally breached the walls of the Constitution in November 2010, when, as Risen and Poitras report, they began to "examine American’s networks of associations."

Movie Mogul Raises $1 Million for Mitch McConnell's Democratic Foe

Movie mogul Jeffrey Katzenberg raised more than $1 million for Alison Lundergan Grimes,the Democratic challenger to Senate Minority Leader Mitch McConnell, at a recent fundraiser at the Spago restaurant in Beverly Hills, according to the Hollywood Reporter.

In an email to potential donors sent earlier this month, Katzenberg said of the Kentucky Senate race, "There is no more important election being held next year in this country." Katzenberg wrote that he sees McConnell as an obstructionist who has crippled the US Senate and hurt the democratic process in Congress. "Alison is the antidote to McConnell and all he represents," Katzenberg wrote. "She can win, and she will win if she gets the support she needs."

This is not good news for McConnell campaign director Jesse Benton, who already holds his nose while working for McConnell.

Most Popular Question at "How do I get an exemption."

As of Monday morning, here is how the website listed its "Most Popular" items:

How Does the Debt Ceiling Standoff End?

I think Paul Krugman actually has created a pretty decent verbal flow chart:
So how does this end? The votes to fund the government and raise the debt ceiling are there, and always have been: every Democrat in the House would vote for the necessary measures, and so would enough Republicans. The problem is that G.O.P. leaders, fearing the wrath of the radicals, haven’t been willing to allow such votes. What would change their minds?

Ironically, considering who got us into our economic mess, the most plausible answer is that Wall Street will come to the rescue — that the big money will tell Republican leaders that they have to put an end to the nonsense.

But what if even the plutocrats lack the power to rein in the radicals? In that case, Mr. Obama will either let default happen or find some way of defying the blackmailers, trading a financial crisis for a constitutional crisis.

Rand Paul: "I’ve said all along it's not a good idea to shut down government."

Rand Paul said on CBS’ Face the Nation with Bob Schieffer :
I’ve said all along it's not a good idea to shut down government. I’ve been saying that for months, but I also think that it's not a good idea to give the president 100 percent of what he wants on Obamacare without compromise.
Rand seems not only weak here on big government (Why not shut the monster down?), but also indicates he is willing to "compromise" on Obama's socialist healthcare plan, that is, it seems he doesn't even want to kill Obamacare. He went on to say on FTN:
Why won’t the President negotiate and come to a compromise on trying to make Obamacare less bad?
Rand may be even worse than Ronald Reagan in misdirecting libertarians. I doubt Reagan would call for compromise on Obamacare.

Women Quits Job Via Dance Video

Ron Paul: Where's the Grand Bargain For Liberty?

By Ron Paul

As I write this, it appears that the federal government is about to shut down because the House and Senate cannot agree on whether to add language defunding or delaying Obamacare to the “Continuing Resolution.” Despite all the hand-wringing heard in D.C., a short-term government shut down (which doesn’t actually shut down the government) will not cause the country to collapse.

And the American people would benefit if Obamacare was defeated or even delayed.

Obamacare saddles the American health care system with new spending and mandates which will raise the price and lower the quality of health care. Denying funds to this program may give Congress time to replace this bill with free-market reforms that put patients and physicians back in charge of health care. Defunding the bill before it becomes implemented can spare the American people from falling under the worst effects of this law.

As heartened as we should be by the fight against Obamacare, we should be equally disheartened by the fact that so few in D.C. are talking about making real cuts in federal spending. Even fewer are talking about reductions in the most logical place to reduce spending: the military-industrial complex. The U.S. military budget constitutes almost 50 percent of the total worldwide military spending. Yet to listen to some in Congress, one would think that America was one canceled multi-million dollar helicopter contract away from being left totally defenseless.

Read the rest here.

Rand Paul Calls for Conference Committee

WaPo reports:
Sen. Rand Paul (R-Ky.) on Sunday called for the formation of a conference committee to work out the differences between clashing House and Senate stopgap bills to keep the government funded.
"Why don't we have the conference committee on this? You could appoint one today, they could meet tomorrow and hash out the differences," Paul said on CBS' "Face The Nation. "That's the way it's supposed to work."
What exactly is libertarian or even small government about Rand's point?  The idea is to hope the government is jammed and gummed up for as long as possible. The real danger is that a shutdown will last only days.

Rand's call for a conference committee solution puts him in the let's make government operational rather than the lets shrink government camp.

The Vanishing Entrepreneur

Law professor Donna Matias, director of a legal clinic at the University of San Diego School of Law, discusses the absurd regulations that low- and moderate-income entrepreneurs must deal with. She tells the story of one client who wanted to operate a simple transportation service, but was faced with an incredible mountain of  regulations as a result. The video is here.

In a situation similar to the one Matias details, I'm familiar with a Puerto Rican-American, who wanted to launch a gourmet hot dog cart in Los Angeles. He was a dish washer at the Standard Hotel in Los Angeles and whenever I went there to the roof top bar, it was a pleasure to see his enthusiasm for his venture. He saved up money while studying the different carts, but when he was ready  to buy, he learned he needed one type of license, the next week he learned of another and yet another. The license process sapped the energy out of him and made the venture much more risky given the costs of the licenses and the fact that one of the licenses required him to hire a lawyer because it was so complex. He finally gave up.

This is how entrepreneurship is being suffocated in the country. Regulations are making the rags to riches success stories near impossible. The regulations prevent the little guy from getting a footing and protects large corporations.

Mark Cuban vs. The SEC

The SEC is continuing to harass Mark Cuban and now it is court time. A federal trial starts today in Dallas. Ben Protess has a play-by-play on the absurd charges against Cuban.

Sunday, September 29, 2013

Gary North and Murray Rothbard on Corporations

In Rothbard's Defense of Contractual Limited Liability, Gary North writes:
Rothbard affirmed “the absolute right to exchange or give away the ownership to such titles to whoever is willing to exchange or receive them.” This is the foundation of the right of contract in his system.
He placed no limits on these rights, just so long as the exchange does not involve aggression against anyone else. He then makes this observation:
While opposing any and all private or group aggression against the rights of person and property, the libertarian sees that throughout history and into the present day, there has been one central, dominant, and overriding aggressor upon all of these rights: the State.
He saw nothing good coming out of the State. I mean nothing. If any policy or practice had its origin in the State, Rothbard opposed it, both axiomatically and operationally. This is what is unique about his social and ethical thought. For him, this is an axiom: State = bad, both morally and operationally.
For Rothbard, the right of contract means immunity from the State. It also means immunity from violent action by others. If two people decide to make an exchange in terms of a set of non-violent principles, no third party has the authority to interfere. The terms of exchangeare established by the contracting parties, not by a third party. This is fundamental in Rothbard’s defense of contract. In The Ethics of Liberty, he writes:
In contemplating the law of a free society, therefore, the libertarian must look at people as acting within a general framework of absolute property rights and of the conditions of the world around them at any given time. In any exchange, any contract, that they make, theybelieve that they will be better off from making the exchange. Hence all of these contracts are “productive” in making them, at least prospectively, better off. And, of course, all of these voluntary contracts are legitimate and licit in the free society.
There is no legal appeal beyond these contracting parties. What the doctrine of the divine right of kings attributed uniquely to kings, and what the divine right of the British Parliament in 1688—89 substituted for the divine right of kings, Rothbard assigns to the non-coerciveindividual, and by implication, to voluntary contracts made by autonomous individuals.
In Rothbard’s system, individuals possess the legal privilege of specifying their mutual obligations. There is no higher appeal beyond them. His discussion of limited-liability laws rests on this moral and judicial foundation.
Rothbard denied that limited liability is a grant of privilege by the State. He wrote the following in Power and Market (1970), which had originally been in the original manuscript of Man, Economy, and State.
Finally, the question may be raised: Are corporations themselves mere grants of monopoly privilege? Some advocates of the free market were persuaded to accept this view by Walter Lippmann’s The Good Society. It should be clear from previous discussion, however, that corporations are not at all monopolistic privileges; they are free associations of individuals pooling their capital. On the purely free market, such men would simply announce to theircreditors that their liability is limited to the capital specifically invested in the corporation, and that beyond this their personal funds are not liable for debts, as they would be under a partnership arrangement. It then rests with the sellers and lenders to this corporation to decide whether or not they will transact business with it. If they do, then they proceed at their own risk. Thus, the government does not grant corporations a privilege of limited liability; anything announced and freely contracted for in advance is a right of a free individual, not a special privilege. It is not necessary that governments grant charters to corporations.
The State possesses no original ownership in Rothbard’s system. It does not even possessdelegated ownership.
Any argument that challenges the legal right of contract between autonomous individualsmust of necessity invoke a higher law than the right of self-ownership and a higher court than the mutually contracting parties. For Rothbard, there is no higher law or higher court.
If limited liability contracts are prohibited by law, then there is a major limitation on the right of voluntary contract.

In  Limited Liability and the Right of Contract, North writes:
Limited liability is a means of risk-sharing. By placing “Inc.” or “Ltd.” — which stands for limited liability — in the organization’s name, investors are telling the public that this entity is not a partnership. In a partnership, the investors’ entire net worth is at risk. If your partner goes bankrupt for any reason and still owes money, the creditors or plaintiffs can take your assets in settlement of the claim.

Partnerships are exceedingly risky. They are also small. Nobody wants to pool his assets in a partnership that includes poor people or strangers whose net worth statements are not shared with everyone in the partnership. A partnership is the economic equivalent of a co-signed debt: if the borrower defaults, the co-signer must pick up the tab. This arrangement used to be called “surety.” About 3,000 years ago, the author of the Book of Proverbs warned:

He that is surety for a stranger shall smart for it: and he that hateth suretiship is sure (Prov. 11:15).

A man void of understanding striketh hands, and becometh surety in the presence of his friend (Prov. 17:18).

A corporation has the potential to become large through the addition of new capital, not just through retained earnings. If a company requires more capital for expansion, it can invite investors to purchase a portion of ownership. Nobody hesitates to invest because of a threat of being jointly involved with people of limited means.

That’s what it boils down to: limited liability or unlimited means. A corporation reduces the risk of associating with “the likes of them.” For those of us who are “them,” this opens up investment doors that would otherwise be closed to us. Lloyds of London, a series of high-return partnerships, does not want us around. We’re just too risky. But the New York Stock Exchange thinks we’re great. (Frankly, I’m not sure I want to associate with the New York Stock Exchange.)

A general principle of life is this: responsibility accompanies power. With greater wealth or benefits comes greater responsibility. But it is possible to transfer some of this responsibility to others by means of a contract. A risk-aversive individual may be able to persuade another person to accept some of his responsibility for a price. A person who is willing to accept more risk — at the margin, of course — can enter into an agreement with someone who is trying to avoid risk — again, at the margin. They exchange assets/risk at a price. The risk-aversive person sells some of his risk — risk that offers a possibility of future gain — to the risk-buyer.

[Let's say] I agree to sell you a ticket to a Broadway show. You agree to pay me in advance. The performance we agree to is a month away.

Let’s talk about risk. The star may sprain her ankle. You will see an understudy. The understudy may turn out to be something less impressive than the understudy in 42nd Street. Do I owe you a partial refund? I can spell out the details in a long contract, which you will sign and perhaps have notarized at your expense, or we can go by court decisions in the past as to who owes whom what, if anything, or we can go by tradition, which is appropriate if the show is a revival of Fiddler on the Roof.

What if the electrical system goes kaput in the middle of Act 2? Do I owe you anything? By tradition, I owe you a replacement ticket. We have a name for this: a raincheck. But you will have come back to New York City to see the show. To return to the show in a month will cost you a bundle. Do I owe you the cost of another round-trip plane fare plus hotel and food?

And so it goes. Case by case, contract by contract, there is an exchange of risk. Buyers bear some of it; sellers bear some of it. We have a phrase for this: “Let the buyer beware.” In short, don’t count on limited liability if you’re a buyer.

To speed up transactions, societies rely on tradition, which in turn rests on court decisions and possibly legislation. The lengthier the contract, the fewer the transactions. The more the paperwork, the higher the cost per transaction. The more the details must be spelled out to buyers, the higher the cost per transaction. The more lawyers involved, the more likely that the deal will fall through.

So, instead of going through reams of paperwork that spell out the details of risk-allocation, modern society has an alternative: incorporation papers. The rules are known in advance in much the same way that the rules of New York Broadway show ticket sales are known. The rules boil down to these: (1) “Let the buyer [from the corporation] beware.” (2) “Let the seller [to the corporation] beware.”

Corporation law is all about the allocation of risk. It is about making deals possible where fewer deals or no deals at all are likely. It is all about “let’s make a deal.” It is therefore quintessentially American.

Instead of reams of paper to read and sign in triplicate, we have corporation law. Whatever a corporation achieves in terms of risk-allocation, a contract could achieve. But it is cheaper for everyone concerned to file incorporation papers and put “Inc.” on the company’s letterhead stationery than it is to fill out all those forms every time there is a transaction.

Critics of incorporation usually invoke a higher morality — undefined and undefended — to challenge the corporation’s right to exist. But every criticism boils down to this one: “The right of contract has limits when it comes to risk-allocation.” Every criticism of the corporation is inherently and necessarily a criticism of the right of contract.

This is why it is so strange to read critiques of the corporation written by people who affirm their commitment to libertarianism. They say, sometimes openly, that the corporation is immoral and therefore should not be allowed to exist because people who invest in the corporation do not bear all of the risks associated with doing business. The critics never admit, let alone praise, the economic fact that such a legal prohibition is discriminatory against outsiders who want to make a deal and who are willing to bear some of the risk associated with the deal.

Critics of the corporation are necessarily critics of contracts. They are promoters of legalized restraints on trade. They are saying, not simply that limited liability for corporations is wrong, but that limited liability is itself wrong. “The seller cannot legally transfer responsibility to the buyer.” Why not? “It’s just not right!”[...]

Risks are a fact of life. Someone must bear them. Contracts are capitalism’s way to enable buyers and sellers to come to terms regarding the allocation of risks. The free market principle of the right of voluntary contract is the principle governing liability.

There is no way to legislate risk out of transactions. It is possible to reduce the transaction costs of allocating risks. The most cost-effective way is by contract. Incorporation is a shorthand form of contract.

(ht The Libertarian Zamboni) 

Corporations in a Private Property Society

I am seeing a lot of comments with regard to corporations under the On Left Libertarianism post. Most go something like this:
 Corporations are creatures of government. Free association is a product of society. Since governments are coercive by definition, anything that comes from government will be coercive, including corporate law.
The flaw in this thinking is to assume that corporations wouldn't develop on their own in a free market society.

Consider, most roads are now built and controlled by the government but does this mean that we shouldn't have roads in a free market society? Of course, not. Just because the government is involved in a sector of the economy now doesn't mean that such a sector wouldn't evolve in a libertarian society.

A corporation is nothing but a an entity that limits liability and defines ownership. In a free society, there is nothing wrong with my going to a lender and saying, "Hey, I would like to borrow some money for my business (i.e. corporation), but if it fails I want to limit my liability to the liquidation value of the assets of the business." Similarly, a corporation with many stockholders can approach a lender and offer pretty much the same terms. It is then up to the lender to decide whether he wants to lend under those terms. But there would be no necessity for such a corporation to be backed up by government law. In a free market society, it is individuals interacting and deciding when they want to make an agreement and when they don't.

There is nothing wrong with the corporate form. Indeed, I would expect that under a free market society, corporations very similar to the ones we have today would emerge and that hybrids of current day corporations would emerge.

One should keep in mind the answer Ludwig von Mises gave Murray Rothbard when Rothbard asked him when a country should be identified as socialist:
One time I asked Professor von Mises, the great expert on the economics of socialism, at what point on this spectrum of statism would he designate a country as "socialist" or not. At that time, I wasn't sure that any definite criterion existed to make that sort of clear-cut judgment. 
And so I was pleasantly surprised at the clarity and decisiveness of Mises's answer. "A stock market," he answered promptly. "A stock market is crucial to the existence of capitalism and private property. For it means that there is a functioning market in the exchange of private titles to the means of production. There can be no genuine private ownership of capital without a stock market: there can be no true socialism if such a market is allowed to exist."
Given that only shares of corporations trade on stock exchanges, it is clear how important Mises viewed corporations and, indeed, Rothbard supported this thinking. Following the report on Mises answer, Rothbard wrote this:
And so it is particularly thrilling to see that in the headlong flight from central planning and socialism, several of the Communist countries are actually introducing, or preparing to introduce, a stock market. A prospect that would have been unthinkable only a few years ago! The process is already in its early stages in Communist China. And the Soviet Union is beginning to talk about introducing a stock market.

Jerry Wolfgang on the 1920-1921 Recession

EPJ's most regular troll gets one half right. Jerry Wolfgang writes:
The claim that there was massive money printing during the 1920s contradicts a claim made by Ron Paul on Charlie Rose that the recovery from the 1921 recession was strong because govt cut spending and got out of the way. Funny how Austrian economists make both arguments that 1921 recession fixed itself and 1928 meltdown was due to money printing.
Wolfgang is partially correct here. There is no reason to single out the 1920-21 recession as different from other Federal Reserve money manipulations.

According to A Monetary History of the US by Friedman and Schwartz (Table 10) money growth was at 15% between May 1919 and May 1920. This according to Austrian theory would have fueled the boom. Eyeballing Chart 1 in Friedman-Schwartz one can see that money supply growth peaked in 1921 but then bottomed in 1922. Thus, money supply would have started to slow in 1920, but would have started to climb in 1922. Indeed, money growth according to Murray Rothbard (America's Great Depression Table 1) for the period June 1921 to June 1922 was at  4.1%. but for the period June 1922 to June 1923 money growth was at 9.8%. This growth would  have thus started in 1922, when the economy was coming out of the recession. Thus, as far as I am concerned, the boom, bust and new boom were all the result of Federal Reserve money manipulations.

I have no idea how the urban myth started that the 1921 recession was different from other Federal Reserve manipulations, that said, after this period for the remainder of the 1920s, money supply growth until 1928 was pretty much between 5% and 10% (See Rothbard, Table 1), which justifies, contra to Wolfgang's statement, Austrian claims that it was money printing in the 1920s that caused the 1929 stock market crash and start to the Great Depression.

Ron Paul's claim that government stayed out of the way in the early 1920s, applies more to the propping up of wages and businesses, that didn't occur, so there was no suffocation of the overall economy as occurred in the 1930s and at present, but the Fed was, indeed, up to its dirty tricks in the early 1920s.

A Comment from Walter Block on Left Libertarianism

Prof. Block emails:
Dear  Bob:

Re your piece on “left libertarians,” as per usual I agree with you 100%.

This biblio might be of interest:

Anti Carson:

Murphy, Robert P. 2006. “The Labor Theory of Value: A Critique of Carson's Studies in Mutualist Political Economy” The Journal of Libertarian Studies; Vol. 20 Num. 1; 

Block, Walter. 2006.  “Kevin Carson as Dr. Jekyll and Mr. Hyde” The Journal of Libertarian Studies; Vol. 20 Num. 1;

Reisman, George. 2006.  “Freedom is Slavery: Laissez-Faire Capitalism is Government Intervention: A Critique of Kevin Carson's Studies in Mutualist Political Economy.”  The Journal of Libertarian Studies, Vol. 20 Num. 1; 

Pro corporation:

Hessen, Robert. 1979. In Defense of the Corporation Stanford, CA: Hoover Institution Press,

Huebert, J. H. and Walter E. Block . 2008. “In Defense of Corporations, Tax Breaks, and Wal-Mart” November 24;

Klein, Peter G. 2008.  “Long on the corporation.” November 10;

Is the Senate About to Pass a Bill Legalizing NSA Logging of Every American's Phone Calls?

This is what I feared would be the ultimate outcome of the Snowden revelations.

Early on, I wrote about the Edward Snowden NSA leaks that were reported by Glenn Greenwald:
Are we being set up for a more open aggressive tracking by the government? I have no reason to question the sincerity of Glenn Greenwald and his desire to break open the secretive tracking of Americans by the United States government. However, I am very suspicious of the manner in which MSM jumped on the story and pushed it so hard.
A bit later I wrote:
Greenwald has reported that there are more Snowden leaks to come. Let's see what the nature of those leaks are. Will they truly provide shocking revelations or just more unimpressive repackaged news? This may provide the best clue as to whether Snowden is a new generation anti-state cyber-warrior hero  or a cleverly crafted state operative in play to advance a very dangerous new totalitarian grab of control over the people.
And now we have this news from NYT  (my bold):
The Senate Intelligence Committee appears to be moving toward swift passage of a bill that would “change but preserve” the once-secret National Security Agency program that is keeping logs of every American’s phone calls, Senator Dianne Feinstein, the California Democrat who leads the panel, said Thursday.
Ms. Feinstein, speaking at a rare public hearing of the committee, said she and the top Republican on the panel, Senator Saxby Chambliss of Georgia, are drafting a bill that would be marked up — meaning that lawmakers could propose amendments to it before voting it out of committee — as early as next week.

After the existence of the program became public by leaks from the former N.S.A. contractor Edward J. Snowden, critics called for it to be dismantled. Ms. Feinstein said her bill would be aimed at increasing public confidence in the program, which she said she believed was lawful.[...]

Ms. Feinstein contended that “a majority of the committee” believed that the call log program was “necessary for our nation’s security.

Bottom line: At this point, the only clear result of the Snowden leaks is that the Senate is about to pass a bill legalizing the logging of the phone calls of all Americans. Further, who knows what amendments will be added in the mark up stage.  Don't for a minute think the mark ups are going to advance privacy. It will be all about complex paragraphs that will allow even greater surveillance.

The Fed Cannot Cureth...It Only Maketh Ill

By, Chris Rossini

Bloomberg's Justin Wolfers writes:
So, the Fed got it right. The so-called taper is off. That is, the Federal Open Market Committee decided to follow its stated policy of continuing to increase monetary stimulus while the labor market remains sick.
What a loaded comment. First with the diagnosis that the labor market is "sick," the choice of a central planning Fed as the physician, and finally the counterfeiting of money as the prescription.

This is what a bizarro world without sound money and free markets looks like. We don't get to read about it in history books (as future generations surely will). We, on the other hand, actually get to live it!

Let's bring some sanity to the situation and show how government and its octopus central bank only maketh ill.

Let's start with the fact that markets, when left alone, clear. That applies to the sale of Doritos, sneakers, iPads, and yes, even labor!

What can be preventing the labor market from clearing? Let's take a look:
  • First of all, the minimum wage right away sends the low-skilled, poor, and teenagers into unemployment if their productivity does not add up mandated minimum. This is nothing more than forced unemployment courtesy of the loving hands of government.
  • You then have countless regulations, and licensing that raise the costs of starting a business.
  • There are the goofy "equality of pay" pressures that businesses must think of before making a hire.
  • There are the "healthcare" considerations which distort decision making.
  • There are the regulations dictating who you can hire based on the person's "race," "sex," "age," and whether or not the person is capable to hopping on one leg.
  • There are regulations dictating when, or who, you can fire. Will the person come back with some obscure legal precedent and sue you into oblivion?
  • Add in zoning, and the armed EPA agents. Will they bust down the doors?
  • Let's not forget the unions, who are backed up with the State's violent arms.
Is there any doubt as to what hinders entrepreneurship and job-creation?

This creates several responses, which further make the situation tougher for the average American. First, businesses will seek greener pastures overseas, and setup shop there. Unfortunately, the "land of the free" is too much of headache. 

Second, for those that do stick it out in the U.S., many will do their best to cozy up to the State. If the State is such a meddler in even the smallest minutia, best to influence it in your direction. Lobbying and protection from competition replace customer service and entrepreneurial alertness. Crony Corporatism takes hold.

The steaming pile is not complete. We're just getting to the good part.

On top of all this, a central planning price fixer, called The Federal Reserve, is supposed to cure this "sickness" by counterfeiting money!!

I kid you not.

It should not come as a surprise that the Fed just adds to the misery.

The poor and low-skilled, thrown out of work by government regulations, now get to have what little purchasing power they have, stolen by the great counterfeiter.

Malinvestments get piled one on top of another. And liquidations are prohibited, since the Fed bails out the connected big businesses that should go bankrupt.

Ridiculous booms are created that distort the rational allocation of resources. These are followed by excruciating busts that drive so many to divorces and even suicide. If they only knew the source of their financial woes.

The combination of Fed & State keeps taking a sledgehammer to the American public. And the best that a Bloomberg columnist can come up with is: "The Fed got it right" and will continue insidious ways.

The truth is that the "system" is failing. Let's hope that when it finally does take its last breath, the ideas of sound money and free markets are ready to fill the void.

"All the forces in the world are not so powerful as an idea whose time has come." - Victor Hugo

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Eating Dinner Out at 103 Years Old

By Corey Kilgannon

It never fails, Harry Rosen said on Wednesday evening as he enjoyed another fine meal by himself in another top-rated Manhattan restaurant.

“Maybe because I’m eating alone at my age, people at other tables start conversations,” he said.

Yes, he tells them, he lives alone, in a modest studio apartment on West 57th Street in Manhattan, and he always eats dinner out, always orders the fish.

“They always ask my age, and I often lie and tell them I’m 90,” he said. “If I tell them my real age, it becomes the whole subject of conversation and makes it look like I’m looking for attention, which I’m not.”

Read the rest here.

On the Robert Reich Film: 'Inequality For All"

Economist Robert Reich is out with a film, Inequality for All. By the end of the film, it will be clear that Reich is quite comfortable with his shortness. In fact, before the end of the film, you will want him to stop with his short jokes.

If you are at all familiar with economics, you will want the entire film to stop, probably by the 15 minute mark. I have heard more sophisticated lefty arguments in San Francisco bars then the ones made in this film.

Reich does nothing but throw up a bunch of charts on the screen without full context, beyond that he promotes through out the film the Keynesian notion that it is consumption that drives the economy and states that higher taxes on the rich will help the economy grow (because the rich save instead of consume).

His favorite chart shows wealth inequality peaking in 1928 and 2007, but he never mentions the connection between those years and peak Federal Reserve money pumping. In fact, in a movie about the economy, he doesn't mention the Fed at all, not once. He does point out that the most recent explosion in CEO salaries started in the 1990s, but fails to mention that this was when government stepped in to protect establishment CEOs against upstarts that were trying to end the establishment gravy train.

Michael Milken was indicted for racketeering and securities fraud in 1989 by US Attorney Rudy Giuliani, who had big time political ambitions and took marching orders from the establishment. Milken was funding takeovers by raiders of establishment firms, The raiders were putting an end to the super high CEO salaries and over the top perks. Once Milken was in jail and it was clear to Wall Street that anyone who attempted to mess with establishment CEO perks faced ending up in the slammer, the era of the hostile takeovers stopped cold. There was not a word about this in the film. Instead, Reich mentions the absurd leftist claim that it was the lifting of regulations that caused the expanding difference in wages of the 1% and the middle class. In fact, it was the stretching of regulations by Giuliani that put fear into raiders that allowed CEO salary abuses to skyrocket.

On Left Libertarianism

Mike Hoffman emails:
 I've been loving the material on the website lately Robert. A friend of mine is an anarcho capitalist like me, but has been reading the works of Roderick Long and Kevin Carson as have I. I seem to think the Left libertarians make a few good points on some things but don't see too much difference between them and Ancaps. Whats your postion on Left Libertarians as another "off shoot" of Libertarianism when compared to yours and others associated with the Mises Institute?
While they are good on many points, I see them as holding some very odd views relative to pure libertarianism. They are anti-corporatist and pro-labor, which to me seems to be in contradiction with the libertarianism. If a group of people want to form a corporation, and others want to trade with them, what's the problem? It is only if a corporation joins with government to use coercion in some manner that I see a problem, but not in corporations, themselves.

The pro-labor view is also an odd one from my perspective. If you just allow free transactions between individuals, there is no need for a "pro-labor" stand, just allow markets to determine the nature of transactions and group formations. However, Sheldon Richman writes, "left-libertarians favor worker solidarity vis-à-vis bosses." What if someone just wants a job and doesn't care about "worker solidarity"? Free markets are about promoting free exchange and free organizations, it is odd to promote one type of organization, especially one that would seem to have limited possibilities of forming in a free market.

Richman also writes, "left-libertarians tend to harbor a bias against wage employment." What is the problem with wage employment? Many people seemingly want to put in a good day's work and leave the headaches of dealing with marketing, overall production and matching up different laborers for projects, to others. I know lots of people like this.What is wrong with this?

Richman writes, "In a freed market left-libertarians expect to see less wage employment and more worker-owned enterprises, co-ops, partnerships, and single proprietorships." Naturally, any type of worker organization should be allowed in a libertarian society, but nothing stops worker-owned organisations and co-ops  from operating now, that they don't, in general, suggests they are not very efficient. And, again, if you are a laborer with a certain skill, why would you want to spend your time in co-op meetings, where every nut job in the room gets to advance his nutty theory? Why not leave business running to businessmen, where you don't have to worry about anything but doing your job?

Bottom line: I see left libertarians as those who  would like you to join into different organizations that don't appear to be very efficient. I would take them over a coercive government , but I wonder what side of the line they would fall on if they got to see their non-coercive world develop in a way that resulted in many larges corporations (in addition to small ones)  forming and mostly non-labor union work forces. Would they remain anti-government intervention? If so, they are simply libertarians, with I believe, impractical views on how a libertarian society would develop. If not, well then they are simply interventionists, with a helluva a cover story. .

Greenwald Revelations on "U.S. Assassination Program" Coming

Glenn Greenwald and Jeremy Scahill said Saturday they've teamed up to report on the National Security Agency's role in what one called a "U.S. assassination program," according to AP.

"The connections between war and surveillance are clear. I don't want to give too much away but Glenn and I are working on a project right now that has at its center how the National Security Agency plays a significant, central role in the U.S. assassination program," said Scahill.

The EPJ Calendar

By, Chris Rossini

Each Sunday EPJ publishes a calendar of upcoming political & economic events. The appearance of an event does not necessarily mean an endorsement by EPJ. If you believe that your event, speech, meetup, etc. should be on our weekly calendar, please email me at


'Traces of Reality Radio' Interviews Robert Wenzel

Robert Wenzel discusses Kenya, blowback, drones, the economy, and the Fed on this interview with Traces of Reality Radio.


Saturday, September 28, 2013

Behavioral Economics in Action (Men's Suits Edition)

Behavioral economics is a different science than economics, but it does exist.

Business Insider doesn't get it, but they are really writing about behavioral economics when they are discussing the promotional success of the retailer Jos. A Banks over Men's Wearhouse, here.

Ted Cruz, Leninist

I am not a big fan, overall, of Ted Cruz, though he does lean libertarian on some issues. He's just a politician, as far as I am concerned, but Jack Balkin has a fascinating theory at to what Cruz may be up to. This is a must read, here.

The Crazy Ones

Travis Holte emails:

Have you ever seen the unaired Steve Jobs' version of "Here's to the crazy ones"? It twice as long and much better than the Richard Dreyfuss version.

On side note, here is a fascinating talk he gave in 1980.

The Key to Success

A veryimportant factor.

Peter Klein on What Happened to Blackberry?

The Warmongers: Not Looking Out For Us

By Ilana Mercer

To listen to U.S. government officials there is only an upside to the punitive sanctions imposed on Iran by the United States and a reluctant European Union. Consequently, the emphasis is forever on how to toughen the punishment; never on whether to lift economic sanctions on the long-suffering people of Iran.

But what about the effects of trade boycotts on American businesses?

Chris Harmer of The Institute for the Study of War estimates that the Boeing Company alone forfeits a minimum of $25 billion in business every year because of U.S.-imposed sanctions on Iran, a niche market that is filled by the Russians. Overall, Harmer puts the value to U.S. business of trade lost due to the economic embargo on Iran at approximately $50 billion per annum.

For example, Iran imports $1.5 billion worth of cars a year, the beneficiaries of which are companies like Nissan, Toyota and Peugeot (when they might have been General Motors and Chrysler). Peugeot does an added half a billion dollars’ worth of commerce with Iran just in car parts.

The Iranian economy, moreover, has diversified and is adapting to life without the U.S. The rest of the world—pockets in Europe and most of Asia—has not isolated Iran, with the result that the country has many trading partners other than the U.S. And while Iran has lost petroleum revenue due to sanctions, the trend will not endure. China, Japan and South Korea are hungry for the country's crude.

Not to be overlooked are the costs to Americans of sanction enforcement, avers Harmer. In addition to the opportunity costs—the missed business aforementioned—there are "direct costs." The Office of Foreign Asset Control in the U.S. Treasury Department squanders around $1 billion a year in developing lists of "financial institutions that are subject to sanctions," and then infringing on the rights of individuals and companies to freely exchange privately owned property.

"Indirect costs" are incurred in the course of cultivating a massive U.S. intelligent infrastructure—a veritable alphabet soup of agencies—upon which the Treasury draws in enforcing a regimen of sanctions.

So, too, are the "deterrent costs" borne by the American taxpayer who pays for patrolling the Persian Gulf, the Northern Arabian Sea and the Strait of Hormuz.

Ultimately, trade, not democracy, is the best antidote to war with Iran. The more economically intertwined countries become, the less likely they are to go to war. More than boycotts, barter with Iran is bound to promote good will and reduce belligerence on both sides.

As a general rule, state-enforced boycotts harm honest, hard-working Americans who use the economic means to earn their keep. They benefit servants of Uncle Sam—the political class and its media and think-tank hangers-on. For they deploy the political means to advance their ends and grow their sphere of influence. As libertarian economist Murray Rothbard once observed, these "are two mutually exclusive ways of acquiring wealth"—the economic means is honest and productive, the political means is dishonest and predatory.

As always, it's us against them: the state versus the people who labor outside it and in spite of it.

For now, Obama's eager response to Iranian overtures has sidelined Syria. Before Syria recedes in memory—to be replaced by demands for action against Iran—it's worth considering one constant quantity: the media guttersnipes and their motivation.

The bobbingheads of TV have been complaining in the most unctuous terms that Russia and Syria have pulled one over us. The U.S., they lament, has been weakened, evidently, because someone halted the momentum of war.

You see, the chattering and political classes cannot conceive of greatness outside the state because they are part of the state apparatus and depend on it for status and income.

Conversely, individual Americans—who have nothing to gain and only losses to sustain from war—should never conflate their interests with those of the government and its emissaries, who have everything to gain from the great theatre that is war.

More than anyone, who benefits when America goes to war? Those who “function within the nimbus of great power” in D.C. and around it—the media-military-congressional-industrial complex.

Thus did Charles Krauthammer ridiculously equate the failure to go to war against Syria with “Russia supplanting America as regional hegemon.”

Krauthammer was joined by others, not least of them Bill O’Reilly and his sidekick Dennis the Menace. How diminished will the bluster of both media mouths be if the U.S. is no longer dictating the terms of war (lots of it) and peace (too little of it) in the world? Their immense egos will suffer. Maybe even their incomes, eventually.

But not you, the everyday American.

Putin stopped a war in Syria. This is not the same as "supplanting" American power. Rather, the Russians replaced bully power with a balance of power, and this is good for ordinary Americans.

He who saves you from war is better than he who sends you to war. The proof is in the Putin.

ILANA Mercer is a classical liberal writer, based in the United States. She pens WND's longest-standing paleolibertarian column.  ILANA is a fellow at the Jerusalem Institute for Market Studies. She is the author of "Into the Cannibal's Pot: Lessons For America From Post-Apartheid South Africa."  ILANA's website is . She blogs at

Copyright 2013 Ilana Mercer

Big Brother Grows Big: Boeing Converts F-16 Fighter Jet Into an Unmanned Drone

Boeing has announced that it has retrofitted a number of retired Lockheed Martin F-16 fighter jets with equipment enabling them to be flown remotely without a pilot. In conjunction with the US Air Force, the company recently flew one of these unmanned jets, performing combat maneuvers and a perfect center line landing, reports

Rothbard's Wiki Vandalized!

An EPJ reader emails:

Please take some time to read Rothbard's wikipedia entry:

Vandals have attempted to smear Rothbard by associating him with white supremacists and overemphasizing otherwise insignificant political musings.  They've attempted to associate him with David Duke, the KKK, and opposition to Martin Luther King.  For example, his "political activism" section is incredibly selective in its information.  The Wikipedia term for this is "undue weight", meaning the bulk of his work is deliberately omitted to skew the reader's impressions.

Of all the people Rothbard opposed, they put Martin Luther King?  How about Milton Friedman?  Of all the people Rothbard was influenced by, they list David Duke?  How about Hayek?  This is clearly a malicious attack.

I believe your readers can help clear Rothbard's name.  Check the Wayback Machine for an idea of what this page should look like:

McCain Hires Syrian Analyst Who Lied About Her PhD

Sen. John McCain has hired Elizabeth O'Bagy, the Syria analyst in Washington who was fired for padding her credentials, according to The Cable. She begins work Monday as a legislative assistant in McCain's office.

"Elizabeth is a talented researcher, and I have been very impressed by her knowledge and analysis in multiple briefings over the last year," McCain told The Cable in a statement. "I look forward to her joining my office."

O'Bagy, who is 26, was fired after it was confirmed that she had padded her resume with a Ph.D. from Georgetown University. She also failed to disclose in for a pro-Syrian rebels op-ed in WSJ that she was part of a pro-Syrian rebel political group, the Syrian Emergency Task Force.

“Send Us Your Freaks”

Amazing Person, RIP

By Karen DeCoster

If I titled this blog “Joy Covey, RIP” it is likely that no one would look at it because they probably don’t know Joy Covey by name.

Last week, Joy Covey died at 50 years old in a cycling accident – a collision with a car – in San Mateo County, California. Joy Covey was an amazing person who should be of interest to entrepreneurs, libertarians, autodidacts, and generally, those who reject the status quo.

Joy’s short story is that she dropped out of high school in her freshman year because she was bored. She chose to work at a grocery store in Fresno while she obtained her high school equivalency exam so she could attend Cal State – Fresno. She graduated with her BBA at the age of nineteen and obtained her certification as a Certified Public Accountant. Her score on the CPA exam was the second highest in the United States for that sitting of the exam. She later received a JD and MBA from Harvard, and she described her years at Harvard as “not fitting in.” It’s great to note why she was bored and chose a different, more accelerated path away from the conventional wisdom: her IQ was 173.

Read the rest here.

As The World Turns

By, Chris Rossini

Below you'll find snapshots of how major markets around the world ended the week.

U.S. - Dow Jones Industrial Average -1.25%

China - Shanghai Composite Index -1.45%

EPJ Week In Review - Week Ending 9/27/13

By, Chris Rossini

Below you'll find everything that has been published on EPJ for the week ended Friday September 27th, 2013. The hottest posts for each day are highlighted in red.

Friday 9/27/13
Thursday 9/26/13
Wednesday 9/25/13
Tuesday 9/24/13
Monday 9/23/13
Sunday 9/22/13
Saturday 9/21/13