Friday, February 24, 2012

Jim Rogers has a Better Pick for President than Ron Paul

Asked who he would pick for President, of any person dead or alive, Jim Rogers said, Adam Smith. Boooo.

Which means Rogers likely hasn't read Murray Rothbard's take on Smith :

Adam Smith (1723–90) is a mystery in a puzzle wrapped in an enigma. The mystery is the enormous and unprecedented gap between Smith's exalted reputation and the reality of his dubious contribution to economic thought.

Smith's reputation almost blinds the sun. From shortly after his own day until very recently, he was thought to have created the science of economics virtually de novo. He was universally hailed as the Founding Father. Books on the history of economic thought, after a few well-deserved sneers at the mercantilists and a nod to the physiocrats, would invariably start with Smith as the creator of the discipline of economics. Any errors he made were understandably excused as the inevitable flaws of any great pioneer... 
'Adam Smith ties' were worn as a badge of honour in the upper echelons of the Reagan Administration.

On the other hand, Marxists, with somewhat more justice, hail Smith as the ultimate inspiration of their own Founding Father, Karl Marx. Indeed, if the average person were asked to name two economists in history whom he has heard of, Smith and Marx would probably be the runaway winners of the poll.

As we have already seen, Smith was scarcely the founder of economic science, a science which existed since the medieval scholastics and, in its modern form, since Richard Cantillon. But what the German economists used to call, in a narrower connection, Das AdamSmithProblem, is much more severe than that. For the problem is not simply that Smith was not the founder of economics.

The problem is that he originated nothing that was true, and that whatever he originated was wrong; that, even in an age that had fewer citations or footnotes than our own, Adam Smith was a shameless plagiarist, acknowledging little or nothing and stealing large chunks, for example, from Cantillon. Far worse was Smith's complete failure to cite or acknowledge his beloved mentor Francis Hutcheson, from whom he derived most of his ideas as well as the organization of his economic and moral philosophy lectures. Smith indeed wrote in a private letter to the University of Glasgow of the 'never-to-be-forgotten Dr. Hutcheson,' but apparently amnesia conveniently struck Adam Smith when it came time to writing the Wealth of Nations for the general public.

Even though an inveterate plagiarist, Smith had a Columbus complex, accusing close friends incorrectly of plagiarizing him. And even though a plagiarist, he plagiarized badly, adding new fallacies to the truths he lifted. In castigating Adam Smith for errors, therefore, we are not being anachronistic, absurdly punishing past thinkers for not being as wise as we who come later. For Smith not only contributed nothing of value to economic thought; his economics was a grave deterioration from his predecessors: from Cantillon, from Turgot, from his teacher Hutcheson, from the Spanish scholastics, even oddly enough from his own previous works, such as the Lectures on Jurisprudence (unpublished, 1762–63, 1766) and the Theory of Moral Sentiments (1759).... 
Into this complacent miasma of Smith-worship, Joseph A. Schumpeter's History of Economic Analysis (1954) came as a veritable blockbuster. Coming from the continental Walrasian and Austrian traditions rather than from British classicism, Schumpeter was able, for virtually the first time, to cast a cold and realistic eye upon the celebrated Scot. Writing with thinly veiled contempt, Schumpeter generally denigrated Smith's contribution, and essentially held that Smith had shunted economics off on a wrong road, a road unfortunately different from that of his continental forbears

Is Smith a guy we really want for president?

As for my choice for president from the universe of those dead and alive, it would be Ron Paul, but I do not make this choice lightly. I have a second choice.

I once asked Lew Rockwell what people didn't know about Ron Paul. He thought for a minute and then confidently said that they don't know how good a politician Dr. Paul is. Since then I have watched Dr. Paul from a "political view" and I have to say from the way he has been accumulating delegates to other moves he has made, he is indeed one very shrewd politician. I think he has moves thought out for the future that no one in the Republican political establishment has thought out, and that's what probably really scares the establishment.

Anyone who would want to be president and put the United States back on the track of liberty would have to have a very strong personality, the pressure on such a man to do otherwise would be enormous, and such a person would have to be politically shrewd person to know just how to advance liberty and take apart the state. Ron Paul has those traits. The only competition I think he would have from all political leaders, dead or alive, would be from Ludwig Erhard.

Erhard was a German politician and Chancellor of West Germany from 1963 until 1966. He is notable for his leading role in German postwar economic reform and "Wirtschaftswunder" (German for "economic miracle").

Richard Ebeling explains what happened while Earhard was economics minister of the American zone of the then divided postwar Germany:
A small band of German free-market advocates had survived the war. A leading figure in this group was Walter Eucken, who was a professor at the University of Freiberg. While restricted in what they could say publicly under the Nazi regime, Eucken and his colleagues had maintained a network among themselves with the goal of sharing ideas for establishing a market-oriented economy in the post-Hitler era that they all impatiently awaited. While intellectually isolated from other free-market economists outside Germany, they remained inspired in their thinking by classical liberals like Ludwig von Mises and Wilhelm Röpke, whose writings they read and clandestinely shared.

One of Eucken’s protégés was an economist named Ludwig Erhard. He was appointed economics minister in the American zone in Bavaria in 1946. For two years he used this position as a platform to advocate market reforms. In radio broadcasts he frequently exhorted the German people to accept that they had brought their current tragic circumstances on themselves and only hard work, savings, and self-responsibility could restore their prosperity and gain them a new place among the civilized nations of the world.

In 1948 the British and American zones were combined into one administrative unit, with Erhard as director of economics. In June he instituted a major currency reform to restore monetary stability and to end the inflationary after-effects from the Nazi period. Not only was a new currency put in place, but it was done through a process of reducing the money supply. In June 1948 Germans in the Western zone could exchange ten of the old marks for one new mark.

Shortly after this, Erhard introduced the other essential element of any successful economic-reform project: abolition of the price and production controls. On a Sunday, while all the Allied occupation authorities were out of their offices, Erhard announced on the radio that the next morning virtually all price controls would be abolished. General Lucius Clay, commander of American forces in Germany, called Erhard into his office and said, “Herr Erhard, my advisers tell me you’re making a terrible mistake.” Erhard replied, “Don’t listen to them, General. My advisers tell me the same thing.”

Hoarded goods in short supply suddenly came out of their hiding places now that they could be sold at market-based prices. In the second half of 1948 industrial production increased 46 percent from its June level. And a year later, at the end of 1949, that production was 81 percent above what it had been when the reforms had been implemented in the middle of 1948. After an initial spike in prices when the controls were abolished, by the end of 1950 the greater industrial and agricultural output that was offered on a more open market significantly reduced the cost of living. Germany’s economic-recovery path assured that well into the 1960s its rate of growth in output and productivity would place it far ahead of virtually all the other countries of western Europe, including those, like Great Britain, that had been victors in the war.
As Ebeling goes on to say, Erhard was not a full free market advocate. He believed in a "social market economy," which Ebeling correctly notes planted "the seeds of new forms of government control and corruption", but Erhard's first move of disbanding the price controls was a very important free market step. It's one of the very few real world examples of rolling back parts of the state.

Ron Paul understands free markets better than Erhard and is as good a teacher, if not better than Erhard. Dr. Paul certainly has the backbone to stick to his principles against pressure, just as Erhard had the ability to stand up to General Clay. With Erhard being able to create a German economic miracle, with a limited acceptance of free markets, one wonders what would have happened in Germany, if Erhard held the full free market views of Ron Paul, and one wonders what type of United States economic miracle would occur if after the decades of shackles put on the economy, the shackles would be removed one by one by a Ron Paul administration.

No need for a confused Adam Smith to run the country, we have the opportunity for the real thing right in front of us in a candidate running right now, Ron Paul. I can't think of a better qualified person in history


  1. I can think of no one in history I would rather have as president. If Fox News wanted Paul to be president, he would have run away with it. You have to control the media to win elections.

  2. While I would prefer that people stop kicking the can down the road in their continuing to have blind faith in a system of central planning that is inherently doomed to fail, I must admit that, amongst any of the U.S. presidential candidates in the entire history of this country, no one would do his damnedest to repeal all the governmental encroachments and intrusions into our lives, persons, property, homes and businesses more than Ron Paul. No one more sincerely actually wants us to have our freedom.

  3. This was an very thoughtful and enlightening article. Thank you.

  4. Give me a break.

    If I had to choose between economists, Smith vs Rothbard, I'd choose Rothbard. That said, Rothbard or anyone else raking Smith over hot coals is idiotic.

    He correctly states Smith's ideas inspired the laughably stupid Marxian labor theory of value that came after, but is that really Smith's fault? If Smith was alive to see what they espoused he would have condemned it. If some ideological crazies take some of Rothbard's ideas and inject them into some framework that would obviously lead to doom, does that automatically mean ALL of Rothbard is garbage? No, it does not.

    I don't deny that Smith screwed up in a number of areas, but in the history of economic thought, he was one of the good guys. No economist living or dead is free from errors, and like Smith, Rothbard barked up the wrong tree.

  5. love these sorts of posts. Keep 'em coming!

  6. Thomas Jefferson would be a close second, but Ron Paul would indeed be first of all americans, past or present.

  7. "In 1948 the British and American zones were combined into one administrative unit, with Erhard as director of economics [...] Shortly after this, Erhard introduced the other essential element of any successful economic-reform project: abolition of the price and production controls."

    It's enough to make you weep. Such controls didn't end in the UK until Margaret Thatcher's government came to power in 1979. Guess which country fared better in those decades? It's because of price and production controls that food rationing continued until 1954 (nine years after the war ended!)

  8. Damn. I knew something was not quite right about JR.

  9. I really dont want Dr Paul to be president. Anybody who is that principled is going to get killed by the MIC and/or the FED.I'd rather have him stay alive and keep the freedom movement alive

    the only two presidents in history who went against a central bank and actually printed currency in competition against it were JFK and Abraham Lincoln......

    1. Abraham Lincoln didn't go against the central bank. The national banking system was established under his watch, in 1963, to fund the war between the states.
      He got assassinated because he was a tyrant.

  10. "But what the German economists used to call, in a narrower connection, 'Das AdamSmithProblem,' is much more severe than that."

    Holy crap, he must have had Hoppe on the floor with that one at UNLV!

  11. Lincoln was worse than Obama and Bush combined, so he was hardly killed for taking on the central bankers. He was a tool for them just as Obama or Romney is today.

  12. If I were to pick a person for president, I'd definitely pick a dead guy as well.

  13. Jacques Rueff wrote of Erhard's currency reform:

    "Shop windows were full of goods; factory chimneys were smoking and the streets swarmed with lorries. Everywhere the noise of new buildings going up replaced the deathly silence of the ruins. If the state of recovery was a surprise, its swiftness was even more so. In all sectors of economic life it began as the clocks struck on the day of currency reform. Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display. Shops filled with goods from one day to the next; the factories began to work. On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later they thought of nothing but producing them. One day apathy was mirrored in their faces while on the next a whole nation looked hopefully into the future."

    I always find that quote inspirational. It helps me to imagine what might happen to countries wise enough to adopt a hard currency.

    The quote was pulled from this article:

  14. "..The only competition I think he would have from all political leaders, dead or alive, would be from Ludwig Erhard."

    Great pick!

  15. Actually Ludwig Erhard was also being shrewd in coining the phrase "social market economy". What he meant was that a free market economy is in itself and without regulation social. Unfortunately that phrase has since been and is continually misused by about every political party here in Germany.

  16. MMT Princeling L. Randall Wray cites Adam Smith as the ultimate in free market thinking. MMT for Austrians? Really?

    He still doesn't get catallactics, human action, human exchange, economic calculation, the pricing process or Cantillon Effects. We can thank the MMTers for emphasizing how effortlessly the state can create money out of nothing without the obsfuscation of the present Rube Goldberg Fed system. It's important that average people understand the real source of inflation ASAP and the MMTers do, in fact, make that clear, as horrific as the truth is.