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.
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.Where was the government? Where were the public school administrators? He was protected by the private sector.
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.
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.
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.
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.
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.
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.LIMITED LIABILITYIn 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.
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.
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.
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.
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.
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; http://mises.org/journals/jls/20_1/20_1_3.pdf Block, Walter. 2006. “Kevin Carson as Dr. Jekyll and Mr. Hyde” The Journal of Libertarian Studies; Vol. 20 Num. 1;http://mises.org/journals/jls/20_1/20_1_4.pdf 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; http://mises.org/journals/jls/20_1/20_1_5.pdf 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;http://www.jhhuebert.com/articles/corporations.html Huebert, J. H. and Walter E. Block . 2008. “Response to Long on Corporations, Unions, and Wal-Mart.” December 12;http://jhhuebert.com/articles/response-to-long-on- corporations-unions-and-wal- mart/; http://www.jhhuebert.com/ articles/corporations2.html; http://www.lewrockwell.com/ blog/lewrw/archives/024387. html Klein, Peter G. 2008. “Long on the corporation.” November 10;
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.”
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.
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.
