Does Walter Block Understand Econ 101?

Thanks to the internet, Paul Krugman can bitch, from Japan, about the lack of public spending in the U.S., ignore ideas from such economists as Walter Block, and we can all read about it with amazement, from around the globe. Krugman writes, in a blog post titled, Infrastructure:

...the other party is standing in the way of much needed repair to our roads, ports, sewers, and more– not to mention creating jobs...

Beyond all that, the new initiative is a chance for me to air one of my pet peeves: the stupidity of the claim, which you hear all the time — and you’ll hear again now — that it’s always better to provide stimulus in the form of tax cuts, because individuals know better than the government what to do with their money.


Why is this claim stupid? Because Econ 101 tells us that there are some things the government must provide, namely public goods whose benefits can’t be internalized by the market.

So suppose we’re going to put $50 billion of resources that would otherwise be idle to work. Is it better to use them to produce public goods like improved roads, or private goods like more consumer durables? ...

....anyone who tells you that basic economics settles the question, that is says that devoting more resources to production of private goods is better, doesn’t understand Econ 101.


And there’s a pretty good argument to be made that we are, in fact, starved for public goods in this country, so that it would actually be a good idea to shift some resources to public goods production even if we were at full employment...

First, as far as, public spending creating jobs. Krugman simply fails to get the very basic, first chart introduced to any ERcon 101 student. That is the "guns and butter" chart, where guns represent government spending and butter private sector spending. If the government is spending money to "create jobs", there is that much less available for the private sector. Thus, the Krugman implication that there is a net gain in job creation by government spending is false. It is a trade off, between government spending and private sector trading. This is not only Econ 101, but it is Chapter 1 of Econ 101. That Krugman doesn't get this is astounding.

From there the Nobel Prize winning Krugman goes on to show his lack of understanding of, admittedly, an advanced concept.

That concept is the belief that it is inaccurate to say only government can provide a road system.

Krugman writes as though he has never read any literature that has argued such. This, of course, could be an understandable error if written by a non-economist, but it is surely embarrassing for the pontificator Krugman to not be familiar with the work in his own profession.

Does this means that advocates of a private road system are not familiar with Econ 101, surely not. What it does mean is that there are advances made in public versus private sector theory made by such economists as Walter Block that Krugman chooses to ignore or is simply unfamiliar with. In either case, it is Krugman who is failing to provide a full picture.

One hopes that Block takes pen to paper to inform Krugman about his failure to recognize the growing work surrounding private road theory..

Walter Block on Radio Free Markets

 Andy Katherman emails:

Walter Block will be interviewed tomorrow on Radio Free Markets.


The Topic: Why BP Should Stand for Beyond Public: How the BP Spill is NOT a failure of Free Markets

Dr. Walter Block is a Senior Fellow at the Ludwig von Mises Institute, a Professor of Economics at Loyola University in New Orleans, and the author of Defending the Undefendable.

Dr. Block removes the confusion surrounding the BP fiasco and clearly explains the important differences between Private and Public Property.

He will illustrate how Privatization of the Oceans --- Yes, EVEN THE OCEANS -- creates stronger regulations, accountability and transparency of the oil industry, more so than ALL of the government agencies currently tasked with the job.

What would happen if water, land, minerals, and others natural resources were NOT shared in common - but instead ALL PRIVATELY OWNED?

Can Privatization lead to LESS pollution and greater productivity as well?

Radio Free Market's, Zoe Russell, will host this powerful interview show with Dr. Walter Block.

Please plan on CALLING IN (800-313-9443) and listening to this very important show Tomorrow, July 17th, at 1PM CT on www.RepublicBroadcasting.org

Thank you for listening!

Tiger Pays Out 10 Million Cool Ones to Mistress #1

The big question here is,  "Has attorney Gloria Allred ever read Walter Block's booking Defending the Undefendable?" In his book, Block puts together the theoretical case in defense of blackmailers. Allred has gone the more practical route and has "just done it."

The word from TMZ is that Allred negotiated a $10 million dollar "settlement" for Tiger Wood's mistress, Rachel Uchitel:

TMZ has learned Rachel Uchitel -- the pilgrim of alleged mistresses -- settled up with Tiger Woods for waaaaaaay more than you think ... as in $10 MILLION!!

There were numerous reports Rachel settled on the brink of holding a Gloria Allred-style news conference for anywhere between $2 - 5 million.

But our sources -- and they are good -- tell TMZ Tiger was so concerned with the depth and detail of information from Alleged Mistress #1 that they folded like a cheap suit, and offered the huge $10 million sum in return for an ironclad confidentiality agreement.

TMZ has learned the actual settlement could fluctuate $1 million either way, depending on future circumstances. But the baseline is $10 mil.

I'm guessing the settlement details were leaked by Allred. It's great advertsing for her.  Oh yeah, Block also defends advertisers in his book.

Block Party

By Michael Labeit

No one has ever mistaken Columbia University as an institution devoted to free market economics, and for good reason. So when I had the privilege to meet acclaimed economist and iconoclast Dr. Walter Block at the Mathematics Building on the Columbia campus, I knew the occasion would be a rare one. I happily managed to be one of the first students to approach him in what was an almost completely vacant lecture room. "This is no surprise" I thought." Columbia doesn't exactly attract the type of students that would be interested in this sort of lecture, nor does it tend to provoke that kind of interest while students attend." Fortunately, enough people came, students and non-students alike, to fill most of the seats. They would not be disappointed.


If you've ever seen one of Dr. Block's lectures on Youtube you would know that he is (admittedly) soft-spoken but not shy, jovial but nevertheless willing to "betray" your hospitality by telling you that you're wrong if he believes so. He does not let the sorry state of current affairs encourage him to address others cynically but he also does not speak with levity, as if we're not burdened by the growing coercive authority of government. The lecture was studded with two somber moments when Dr. Block asked for a moment of silence at the beginning and at the conclusion for the remembrance of John David Fernandez, a Columbia sophomore and the former vice president of the Columbia University Libertarians who passed away from pneumonia. It was he who invited Dr. Block to speak at Columbia to begin with, so it was a fitting tribute.

Personal Experiences

Dr. Block divided his lecture into two parts: his personal and academic experiences and economics and political philosophy. He began with his time as a student in 1972 pursing a Ph.D at Columbia. Block noted that his dissertation was on the effects of rent control and that the distinguished economist Gary Becker was his dissertation advisor at the time. Block had used statistical analysis to demonstrate that rent control laws had led to shortages of housing units, where the quantity of housing units demanded exceeded the quantity supplied. His work produced significant t-values in his favor but also yielded significant t-values that contradicted his thesis.

When Block informed Becker of this oddity, Becker, in a very non-positivist manner, admonished him to repeat the procedure until he "got it right." How unusual, Block claimed, that Becker would ask this of him, since the purpose of his empirical work, and of empirical work in general, was to test the soundness of theories, not be tested by them. Theories are supposed to conform to empirical data, not vice versa. If the two are discrepant, then it's the theory that should be abandoned, not the data. From this experience, Block concluded that "if you scratch a Chicagoan, chances are you'll find an Austrian." He explained this reasoning later within the lecture.

Block continued to reminisce about his economics professors. Predictably, most were either oblivious or insouciant to Austrian economics. His macroeconomics professor Arthur Burns chose to use his time during class to discuss his dinners with Nixon. Professor Albert Hart was dubbed "marblemouth" by Block and his fellow students because he was, as Block described, "incoherent." The now well-known pro-globalization economist, Jagdish Bhagwati, was a leftist and an advocate of increasing foreign aid outlays to India (surprise, surprise) when he was a professor to Dr. Block. Another of Block's instructors, professor William Vickrey, believed foreign aid should in part come in the form of bicycles and roller skates. No doubt, the cast and crew of Block's academic career were unusual.

Block particularly emphasized the obstructions he faced when pursing his doctorate, possibly his greatest intellectual crucible. "Pack your dissertation committee" was his advice to the Ph.D candidates in the lecture room, a humourous allusion to FDR's plot to fraudulently "pack" the Supreme Court in the 1930s. Block's committee was composed of five scrutinizers: three economists, one other professor from Columbia, and a yet-to-be-chosen fifth guest from elsewhere. Given his intellectual prowess, one would guess that Block's anti-rent control dissertation presentation would have perhaps impressed even the most intransigent detractor. This may have been true for your average academic, but, unfortunately for Block, a rent control commissioner was chosen as the fifth individual. According to Block, the commissioner was the most recalcitrant member of the committee and that after five hours of effort (two for the presentation and three for what can best be described as an interrogation) he was unwilling to grant Block the evaluation he required in order to receive his doctorate. Only after being beseeched by his committee associates did the commissioner relent. Of course, "packing one's committee" would be a corrupt endeavor but one can certainly appreciate Block's wit when one understands how disadvantaged he was ab initio.

Not all of Block's academic experiences were as despondent however. He recalled how he defended Professor Peter Bauer in school who he considered a true free market advocate. One of Block's most crucially developmental experiences was his encounter with Ayn Rand, Nathaniel Brandon, and Leonard Peikoff when Rand came to deliver a speech at Columbia. Block was a philosophy-majoring left-liberal at the time and took the opportunity to heckle Rand with his grievances. He situated himself right between Rand and Brandon to prepare for further harrassment but instead engaged in a conversation which ended with Brandon recommending two books to him, Rand's Atlas Shrugged and Henry Hazlitt's Economics in One Lesson, the former becoming his most favorite novel and the latter being a text he now regularly issues to his students. Block did voice a common complaint about Rand however, namely that she and her group of intellectuals nurtured a form of cultishness and dogmatism, behavior that made him a bit disillusioned with Rand and her litigious assembly of Objectivists.

Block went on to give credit to Robert Nozick, the famous Harvard libertarian philosopher. It was Dr. Nozick, Block argued, who introduced libertarianism to mainstream political philosophy in academia. Block did mention Ludwig von Mises when he discussed his personal academic experiences but only briefly since Mises did not produce a significant effect on Block personally. He attended Mises’s final NYU seminar when the venerable economist was well into his 80s. Mises’s tenacity is a well-known fact in free-market circles, but even with his vigor Block recalled how Percy Greaves had to shout questions in Mises’s ear so that they could be made audible. Mises of course was the author of Human Action, the most influential text in the entire corpus of the Austrian School.

Finally, Block allotted much of his time to discussing perhaps his most instrumental acquaintance, Murray Rothbard. From reading Rothbard’s pioneering work, Block figured he was an intrepid, physically overawing, man’s man. Instead, when he first made contact, Block described Rothbard as a “short, fat, little Jew” with an almost unstoppable diligence. Rothbard could author eight relatively unblemished pages in one hour and his influence on the Austrian School, and on Block in particular, are unmistakable. His Man, Economy, and State is a treatise par excellence and a must-read for any serious economist.

However, Block did not want to give anyone in the audience the impression that he and Rothbard were automatons who worked and thought perfectly in sync, since it may have seemed, prima facie, that this was the case, giving the adulation Block thought Rothbard was worthy of and the fact that Block worked with Rothbard as an associate editor of the Review of Austrian Economics. Block revealed a number of instances in which their opinions were incongruent. The issue of immigration unearthed an intellectual divide between the two. Both Block and Rothbard were of one mind when it came to the idea that all property should be private. However, Rothbard believed that, given the existence of the welfare state, the government should restrict the flow of immigrants into the country (postponement libertarian position) in order to decrease the number of tax consumers and therefore reduce the redistributionist burden upon the taxpayers. By contrast, Block argued that the government should not restrict immigration (free-immigration libertarian position) and that the free flow of immigrants should be allowed to overwhelm the welfare state, hopefully leading to its demise. Block likened Rothbard’s position to a prohibition on “excessive” pro-creation (his “Storkovia” analogy). The two occurrences, immigration and pro-creation, amount to the same thing politico-economically: both processes increase the human population within a given territory. Babies and immigrants are both capable of becoming dependent upon the government. Why should the latter be obstructed and not the former? Logical consistency, Block argued, would commit a postponement libertarian to restrain both.

The two also clashed when it came to the far less urgent issue of voluntary slavery. Rothbard argued that contractual slavery was an aberration while Block argued it was justifiable. Block devoted only a few minutes to this debate since it is less penetrable than the immigration dispute.

Block’s did take the time to stress what he felt was Rothbard’s type of intellectual tolerance. When introduced to Hans Hermann-Hoppe’s defense of private property via argument from argumentation ethics Rothbard, instead of casting aspersions, welcomed Hoppe and his argument as what he thought was a superior justification of private property than his own. There are now Austrians who reject Hoppe’s argument and those who endorse it.

Philosophy and Economics

Block devoted the remainder of his lecture to a juxtaposition of Austrian School economics with libertarianism, Chicago School economics, and antitrust economics. He began with the common confusion between Austrianism and libertarianism. Austrian economics, he argued, is a theory of economics, of autistic and interpersonal human action, which does not include any normative claims, or “ought” propositions such as “One ought to oppose taxation.” Libertarianism is, by contrast, a theory of political philosophy, of the proper forms of social interaction, which includes a number of normative propositions such as “The initiation of physical force against person or property is wrong.” Libertarianism tells people which values to pursue while Austrian economics does not counsel anyone on what values to seek. Austrian economics is thus a value-free theory in Block’s eyes, while libertarianism is not. Furthermore, while most Austrians are libertarians, the two are not necessarily linked, according to Block. There are many libertarians such as Bryan Caplan, Robert Nozick, and others from the Cato Institute who are not Austrians. George Reisman from the Mises institute is a self-described Objectivist and Austrio-classical. The proposition “All Austrians are libertarians” and its converse are both false, as a matter of fact and logic.

Speaking of logic, perhaps the best part of Block’s lecture was his comparison between Austrian economics and Chicago economics. What makes Austrian economics unique is the fact that it is not treated as a “branch of science but as a branch of logic,” not the fact that its adherents are committed to the free-market. Austrian economics is a theory of human action that proceeds deductively and hypothetically, like mathematics, ultimately from a set of axioms or logically undeniable propositions. Austrian economics is deductive, meaning that it’s composed of such arguments where it is impossible that the conclusion is false if the premises are true. In a valid deductive argument, if the premises are true, then the conclusion will be true as a matter of logical necessity. Austrian economics is also hypothetical, meaning its deductive arguments are mediate arguments (syllogistic) where one premise is a hypothetical proposition (If A are B), the other premise is an affirmed, categorical form of the antecedent within the hypothetical proposition (A), and the conclusion is the categorical form of the consequent (B). The argument runs like this: (If A, then B), (A), (Therefore, B). Furthermore, (B) can become a premise for a subsequent syllogism, say (If B, then C), (B), Therefore (C), und so weiter. One can embellish this whole procedure by formalizing it using the propositional calculus, though this is not strictly necessary for proof purposes. See Carveth Read and P.D. Magnus for more on informal and formal logic, respectively.

Chicago economics, conversely, is not deductive but positivistic . Rothbard offered the following as a simple example of the positivist method:

Step 1. The scientist observes empirical regularities, or “laws,” between variables.

Step 2. Hypothetical explanatory generalizations are constructed, from which the

empirically observed laws can be deduced and thus “explained.”

Step 3. Since competing hypotheses can be framed, each explaining the body of empirical laws, such “coherence” or consistent explanation is not enough; to validate the hypotheses, other deductions must be made from them, which must be “testable” by empirical observation.

Step 4. From the construction and testing of hypotheses, a wider and wider body of
generalizations is developed; these can be discarded if empirical tests invalidate them, or be replaced by new explanations covering a still wider range of phenomena.

As can be seen, the positivist method is a form of scientific induction. In scientific inductive arguments the conclusion may be false even if the premises are true, unlike deductive arguments. So while the Austrian school proceeds deductively from premises that are observable such as “Humans act” and “Leisure is a consumer good,” the Chicago school does not. Furthermore, whereas Austrians do not rely upon economic statistics to test their theories (since their conclusions indubitably follow), the Chicagoans use economic data to determine whether their theories are valid. Thus, while the Austrians argue that the law of demand - that as the price of a good falls, the quantity of that good demanded will either increase or remain the same – that this law follows logically from the axiom of human action and cannot be contradicted within a theoretical, unhampered free market, the Chicagoans would be hard-pressed to make such an assertion. By contrast, the Chicago-neoclassical method would involve testing the law of demand by determining if empirical data corresponded with its claims about the quantity demanded. It is a data-driven method that’s deeply concerned with experimental duplicatibility.
This brings us back to Becker’s insistence that Block get his figures “correct” on his rent control dissertation. Block insinuated that Becker knew well that as the rent of housing units fell, the quantity of housing units demanded would either remain the same or rise. He suggested that Becker’s persistence came from at least an intuitive understanding that the law of demand is always true in a free market. So if there is a discrepancy between a theory and empirical data, it’s not axiomatic that the theory should be discarded. If the theory in question proceeds deductively from true propositions, then it’s the contradictory empirical data that should be ditched, not the theory.

Other points of contention mentioned by Block between both schools include the use of mathematics, economic forecasting, and value. While the Austrians refrain from using much math, at most employing algebra when they feel it’s absolutely essential, the Chicago-neoclassical approach involves calculus, complex statistics, and econometrics, epistemic instruments that have made it necessary for majors in economics to become part-time mathematicians. According to Block, the Austrians focus on making qualitative propositions descriptive of human action whereas Chicagoans and neoclassicals use econometric tools to make quantitative claims about human action in addition to qualitative assertions. And whereas Austrians make qualitative predictions, particularly regarding the mal-effects of government intervention, Chicagoans and neoclassicals tend to make quantitative as well as qualitative predictions regarding future events. Finally, Austrians subscribe to the subjective theory of value and ordinal utility theory while Chicagoans and neoclassicals tend to subscribe to the objective theory of value (not to be confused with the Objectivist theory of value which is an ethical theory, not an economic one) and cardinal utility theory. For a much more comprehensive comparision between the methods of the Austrian school and of the Chicago-neoclassical school, see Jesus Huerta de Soto , Murray Rothbard , and Edward W. Younkins.

These differences are not merely academic however. According to Block, they can lead the Austrians and the Chicagoans in very different public policy directions. For instance, the Chicagoans have favored the existence of a welfare state, believing that it can, at an optimal size, “maximize social utility,” on the idea that the utility of goods can be measured. If the utility of a specific quantity of money possessed by Y is higher for X than it is for Y, than that money should be taken from Y and given to X. The problem with this reasoning, according to Block, was multifaceted. It first assumed that utility can be measured (cardinal utility theory). Rothbard has answered this charge by arguing that measurement requires a unit of measurement. Since there is no unit of measurement for utility, the utility of a given good cannot be mathematically assessed. Furthermore, if the utility of a good cannot be measured, period, it can’t be measured for anyone and therefore compared between people, especially between providers of and candidates for welfare. As Lew Rockwell has stated

Conventional welfare theory argues that if the law of diminishing marginal utility is true, then total utility can be easily increased. If you take a dollar from a rich man, his welfare is slightly diminished, but that dollar is worth less to him than to a poor man. Thus redistributing a dollar from a rich man to a poor man increases the total utility between the two. The implication is that welfare can be maximized through perfect income equality. The problem with this, say Austrians, is that utilities cannot be added and subtracted, since they are subjective.

Again, Rothbard has proven to be masterful when it comes to critiquing mainstream, Chicagoan/neoclassical methodology. Block further warned the audience of the Chicagoan/neoclassical propensity to embroider arguments with useless mathematics. Pseudo-units like “utils” can be constructed to measure utility, but as long as they do not represent anything in the realm of existence, they are uselessly arbitrary.

Lastly, Block addressed anti-trust economics. He conceded that if an ambitious economics or law major wanted to put his or her degree to work, he or she should choose anti-trust. Right or wrong, that’s where the money was, especially in consulting. However, anti-trust law was grounded in bad economics, he argued. Block paid particular attention to the unpredictability of anti-trust law, joking about how a producer could be submitted an anti-trust subpoena for charging prices higher than the competition (restraint of trade), for charging prices lower than the competition (intent to monopolize), and for charging prices equivalent to the competition (collusion or conspiracy). He also attracted attention to the fact that anti-trust authorities may define industries very broadly or very narrowly, whichever serves their purpose best. And again, he drew on the fact that anti-trust economics take for granted the idea that opportunity costs can be measured and graphed as a curve. If anti-trust laws were to be taken seriously, Block argued, it would commit trust-busters to take on “producers” like Roger Federer, who, in accordance with anti-trust doctrine, could be labeled as a supply-cutting monopolist. Anti-trust law, taken sincerely, would encourage the Justice Department to nationalize Roger Federer, or morph him into a utility via municipalization, to mitigate against his anti-competitiveness. The third option, disintegration, would be impossible for obvious reasons. But all humour aside, Block argued that anti-trust law, taken to its logical extent, would literally involve such nonsensical decision making.

Block was kind enough to take a number of questions after his lecture. Through these he revealed a number of interesting convictions, facts, etc. Block rejected left-right specific differentia to libertarianism, preferring what he calls “plumbline” libertarianism , a form of libertarianism grounded purely on an uncompromising opposition to physical aggression against person and property. Block commented for a moment on a recent series of Mises Institute critiques of mutualist Kevin Carson. When asked how Kevin Carson was mistaken, Block answered simply with “…he’s a Marxist.” Block also took Roderick Long to task for his claim that sexism played a part in manufacturing the income gap between men and women. As Block explained, the gap was explained in part by the marital asymmetry hypothesis, the premise that married women expend more labour at home than married men do. Well, as women expend more labour at home, they have less labour to expend in the workplace, and therefore what labour they do expend in the workplace will garner less income. The truth of this hypothesis is suggested by the fact that the income gap that provokes so much vitriol from the Left exists between married men and married women. The gap is non-existent between single men and single women.

Block gave a lengthy response to one question about the incredulity people exhibit against the demonstrated fact that economic freedom is a necessary condition for economic prosperity. His explanation behind such disbelief was twofold. First, he argued it was in the interests of the ruling class (governments and their cooperatives) that people fail to understand the causal link between freedom and wealth, after all, freedom and government authority share an inverse relationship. Therefore, it’s no surprise that the ruling class may take steps to discredit the link between liberty and affluence. Secondly, Block took a refreshing diversion into sociobiology, which, according to Block, held that “we are the way we are because of what it took to survive years ago.” Physiological inclinations encourage people to act in ways that are detrimental to their self-interest. We are hardwired to engage in explicit cooperation, the personal, sometimes familial form of social collaboration but not hardwired whatsoever to engage in implicit cooperation, e.g., market activity. Block alluded to an incident in New Orleans after the Hurricane Katrina catastrophe where a water supplier charged $20/gallon for his freshwater. Natural disasters tend to reduce supply and therefore tend to increase prices, so $20/gallon was almost certainly a logical consequence of the lack of scarce freshwater. However, someone waiting on the water queue summoned the authorities on the “price gouger” and while he was being arrested and read his rights the people on line applauded! Block held that trust in the free market, while rational, was very much counterintuitive.

I took the opportunity to ask Block to express his opinion on intellectual property, as I was aware of the positions of many Austrians on this issue but not his. He responded with “Intellectual property is illegitimate” and went on to argue that he thought intellectual property committed believers to performative contradictions. Finally, Block responded to a question on banking, announcing that he was opposed to fractional reserve banking. Fractional reserve banking, he argued, created conflicting claims to private property, was fraudulent, and that central banks and government deposit insurance were created to manage the intrinsic dilemmas posed by fractional reserves.

I don’t agree with all of Block’s convictions, but then again he doesn’t necessarily look for or revel in consensus, as is evident in his work. Regardless of one’s disagreements, libertarians, Objectivists, economists, and political philosophers alike have much to learn from Dr. Block. I certainly hope more people take the time to meet him and/or his fellow Austrians when the opportunity presents itself, as I have.

Michael Labeit is an economics major, a disgruntled army reservist, an aspiring freelance writer, and an amateur logician. He currently resides in the People's Republic of New York City and can be reached at logician179@yahoo.com.


-Rockwell, Jr., Llewellyn H. "Why Austrian Economics Matters." Mises Institute. Web. 10 Feb. 2010.

-Rothbard, Murray N. "Praxeology as the Method of the Social Sciences." Mises Institute. Web. 10 Feb. 2010.

Walter Block Does the Impossible

An attendee at economist Walter Block's speech at Columbia University writes to say that Block did something that any Econ 101 student will find hard to believe:

i had a fantastic time...he was so entertaining...he's got something very woody allen about him. the audience was interested for the entire 2 hours and there were times where he drew econ graphs on the board which typically puts people to sleep.

I understand that Professor Block's speech was videotaped, so hopefully we will all have an opportunity to view it.

Walter Block at Columbia

Here's a pic from last night's speaking engagement by economist Walter Block, at Columbia University. EPJ contributore Michael Labeit is putting a piece together on the event, with tons of details. Keep an eye out for it here at EPJ.



(Photo courtesy of Michael Labeit)

Update on Walter Block Columbia University Speech

Walter Block writes:

John David Fernandez, Columbia College and Vice President, Columbia University Libertarians, invited me to give a speech at his university on 2/2/10. He was to be the contact person for those who wanted to attend this lecture, but were not Columbia students (and thus could not be admitted). With his untimely passing, other arrangements have had to be made, see below. I shall be dedicating this talk to the memory of John David Fernandez, who I had the privilege to meet at the 2009 Mises University.

Feb 2. New York City, Columbia University, Alfred Lerner Hall, 8-10pm; topic: Austrian Economics and Libertarian Political Philosophy, plus, my life as a student at Columbia in the late 1960s, reminiscing about the people I met then: my teachers at Columbia: Gary Becker, Jacob Mincer, Phillip Cagan, Arthur Burns, Albert Hart, Jagdish Bhagwhati, William Vickrey, William Landes, Roger Alcaly; from NYC: Murray N. Rothbard, Milton Friedman, Ayn Rand, Nathaniel Branden, Robert Nozick, and Ludwig von Mises; if you do not have access to Columbia; University ID, contact: contact: Jamie Maarten, President, Columbia University Libertarians, who says: tell any non-Columbia students who want to attend this lecture that they can email me (jjm2182@columbia.edu) and I will make sure they can get access to Lerner Hall for the night.

I shall also be giving other lectures in New York City on February 1 and 2, and in St. Louis on February 15 and 16. If you are interested in attending any of these talks, email me for further information.

Who's the Greatest?

From a post at LRC:

Dom Armentano writes to Walter Block:

Walter…strongly support your positions on MR. He was the most influential intellectual in my life. I found him smart, tough, funny, and incredibly helpful in matters economic and strategic. One of a kind and I miss him dearly.

BTW, for me, Rothbard is far more impressive an overall economist than Mises. Mises could never have written Rothbard’s history of economic thought material, for example. And no one understood the dark underbelly of political economy—or wrote more brilliantly about it—than Murray. Certainly Murray stands on Mises’s shoulders but in doing so, in my view, his understanding of political economy (theory and history) and his unique ability to write clearly and cleverly, pushes him well past the great Mises. We can agree to disagree.

Responds Walter:

Dom, this is the sort of debate I’d like: Resolved, Mises and Rothbard were the best two economists, ever. Now, which one has precedence? Believe me, I’m very receptive to your argument that I was wrong, and Murray was really number 1, and Lu, merely, number 2.

Walter Block World Tour Q1 2010

Walter Block writes:

“Economists like Carl Menger, F.A. Hayek, and Ludwig von Mises were devoted to getting their ideas out. They accepted as many travel invitations as possible in the hope of reaching new audiences. Mises himself was particularly aware of the need to teach outside the academy. Rothbard’s own desire to reach the multitudes — by writing for every possible venue — left us with an immense literary legacy.” (Source: http://mises.org/daily/4027)

Well, I don’t like to brag, but (whenever you see a sentence like that, just ignore everything that comes before the “but”) when it comes to traveling around the world by airplane to give speeches on Austrian economics and libertarianism, I kick Menger’s butt. Here are a few of my upcoming talks. If you are in these cities during that times, please, c’mon by.

Feb 1. Central Islip, New York 11722; Touro Law School, noon – 2:00pm; 225 Eastview Drive, topic: Legalizing Drugs; room number: tba, contact Yan Katsnelson 917 495 7002, yan-katsnelson@tourolaw.edu; 917 495 7002

Feb 1. New York City, NY. New York Law School, 185 W. Broadway (between Worth and Franklin Streets, 5:00-7:00pm; street address; room number; topic: Legalization of Consenting Adult Behavior contact: William Daks; william.daks@law.nyls.edu; Ian Kaplan or William Daks (347-531-7452)

Feb 2. New York City, NY. Fordham University Law School, 12:30-2:00 pm, 140 West 62nd Street, between Columbus and Amsterdam. Room 302, debate with Fordham Law Professor Richard Squire, http://flslive.lawnet.fordham.edu/faculty/1144.htm; topic: “When Should Government Intervene in the Financial Markets?” Walter Block: “never”; Richard Squire: “never say never”; contact: Reuvain Borchardt, fordhamfedsoc@gmail.com; The moderator will be Fordham Law Professor John Pfaff; http://law.fordham.edu/faculty/1130.htm; Profs. Squire and Block will each deliver a 12-minute presentation, followed by a 5 minute rebuttal from each, followed by Q&A.

Feb 2. New York City, NY 10012 New York University Law School, 40 Washington Square South; accessible to the ACEBDFV subways, which are one block west at Sixth Avenue and Third Street; 4:00-6:00pm, room number, tba; topic: rent control; contact: Andrew Kloster, arkloster@gmail.com, 847-544-8651

Feb 2. New York City, Columbia University, Alfred Lerner Hall, 8-10pm; topic: Austrian Economics and Libertarian Political Philosophy, plus, my life as a student at Columbia in the late 1960s, reminiscing about the people I met then: my teachers at Columbia: Gary Becker, Jacob Mincer, Phillip Cagan, Arthur Burns, Albert Hart, Jagdish Bhagwhati, William Vickrey, William Landes, Roger Alcaly; from NYC: Murray N. Rothbard, Milton Friedman, Ayn Rand, Nathaniel Branden, Robert Nozick, and Ludwig von Mises; if you do not have access to Columbia University ID, contact: John David Fernandez, Columbia College, Vice President, Columbia University Libertarians; djf2125@columbia.edu; 718 300 8149

Feb 15. St. Louis, MO 63130. Washington University Law School. Corner of Throop Drive and Snow Way, Noon – 2p.m. topic: “The Male/Female Wage Gap”; room number, tba; Contact: Stephen C Cassarino sccassarino@wulaw.wustl.edu, 860-384-9374.

Feb 16. St. Louis, MO 63108. St. Louis University. 3701 Lindell Blvd. (intersection of Lindell and Spring); noon – 2pm, room number, tba; Topic: “The Cause and Cures of the Current Economic Crisis”; contact: Luis Hess, hesslf@gmail.com, 281-954-4377; Joseph Blewitt, jblewitt@gmail.com

Mar 11–13. Auburn, AL. Austrian Scholars’ Conference; http://mises.org/events/114

Mar 16. State College University Park, PA. Penn State University. 7:00pm. Topic, The Libertarian Philosophy and Drug Legalization; room number, tba. Alex Weller [mailto:aweller@psu.edu] 267-566-2440, ‘Nicole Lee Ritschel’; ‘Nate Emmons’; ‘Bob Eckhardt’ Robert B. Eckhardt [mailto:eyl@psu.edu]

Mar 16. State College University Park, PA. Penn State University Radio Free Penn State on the LION 90.7 FM, WKPS State College at 5 pm

Steven Levitt on Hookers and Pimps

I have been highly critical of most of the writing of Steven Levitt.

However, I have come across a chapter in the new Steven Levitt/Stephen Dubner book, Superfreakonomics, where I am pleased to report that they actually provide some insightful data. It's obvious they have done some significant research on hookers and pimps.

In the book, they report that their investigations, mostly on the south side of Chicago, indicate that pimps provide a valuable service to hookers. It should be pointed out that Walter Block in his book, Defending the Undefendable, made the theoretical case for pimps providing valuable services to hookers. It's always fascinating though when a free market is viewed in action versus what a theoretical view of such action might be like. Inevitably, the real free market ends up delivering more services than can be envisioned from a simply theoretical understanding that a free market will provide important services.

Levitt and Dubner tell us that when hookers use pimps they earn more money per hour, than when they don't use them, and that they work fewer hours. Pimps are able to go in to clubs and solicit clientele where a hooker might not be allowed.

Further, Levitt and Dubner point out that the pimps stop gang members from forcing the hookers to provide the members "freebies".

Another fascinating Levitt and Dubner point informs on the different price information strategies hookers use for black men versus whit men. Levitt and Dubner report that with black men, hookers will state the price for their services, with white men, hookers demand that the white men tell them how much they want to pay.

Levitt and Dubner theorize that because the south side of Chicago is black (This is where Michelle Obama is from) that the black customers are local and already know the price structure so there is no point in haggling, while white men are not from the area and are not familiar with the price structure, thus they ask them how much they are willing to pay in the hope of getting a higher pay.

Walter Block on Blackmailing David Letterman

The New Yorker contacted the uberexpert on blackmail, the Harold E. Wirth Eminent Scholar Chair in Economics and Professor of Economics at Loyola University New Orleans, Walter Block.

Here's what Block told The New Yorker:

A final call went out to Walter Block, the libertarian economist. Block believes that blackmail, like smoking, is “yucky” but should be legal. “He only threatened to be a gossip—maybe a screenwriter,” he said of Halderman. “Screenwriting and gossiping are legal. If it’s legal to do it, it should be legal to threaten to do it.” Of Halderman’s defense team, he said, “If the purpose is to promote justice, they should argue that it’s an unjust law, and he should get off free.” Of his fellow ethics experts, he said, “They wouldn’t know just law if it bit them in the rear end.”

So has Block done any work on the topic? Has he explored different views?

Glad you asked.

Here's a list of his writings on blackmail:

Block, Walter. 2009. “Reply to Matt Mortellaro on “Block’s Paradox”: causation, responsibility, libertarian law, entrapment, threats and blackmail,” Libertarian Papers; Here.

Block, Walter, Stephan Kinsella and Roy Whitehead. 2006. “The duty to defend advertising injuries caused by junk faxes: an analysis of privacy, spam, detection and blackmail.” Whittier Law Review, Vol., 27, No. 4, pp. 925-949

Block, Walter. 2005. “Liberdade de Experssao, Discurso, Libelo, Difamacao, Chantagem, Incitamento.” Cultura Do Trabalho, vol. 9; ed., Lars Knorr. Porto Alegre, Brasil: Instituto de Estudos Empresariais

Block, Walter. 2002-2003. “Berman on Blackmail: Taking Motives Fervently,” Florida State University Business Review, Vol. 3, No. 1, pp. 57-114; Here.

Block, Walter. 2002. “Blackmail,” in Levenson, David, ed., Encyclopedia of Crime and Punishment, Thousand Oaks, CA: Sage Publishers, 2002, pp. 118-120.

Block, Walter. 2001. “The Logic of the Argument in Behalf of Legalizing Blackmail,” Bracton Law Journal, Vol. 33, pp. 56-80; http://www.walterblock.com/publications/legalizing_blackmail.pdf

Block, Walter and Gary Anderson. 2001. “Blackmail, Extortion and Exchange,” New York Law School Law Review, Vol. 44, No. 3-4, pp. 541-561; http://www.walterblock.com/publications/blackmail_extortion_exchange.pdf

Block, Walter. 2001. “Toward a Libertarian Theory of Blackmail,” Journal of Libertarian Studies, Vol. 15, No. 2, Winter, pp. 55-88; http://www.mises.org/journals/jls/15_2/15_2_2.pdf

Block, Walter. 2000. “Blackmail is Private Justice,” University of British Columbia Law Review, Vol. 34, No. 1, pp. 11-37

Block, Walter. 2000. “Reply to Wexler: Libertarianism, Blackmail and Decency,” University of British Columbia Law Review, Vol. 34, No. 1, pp. 49-53; http://www.walterblock.com/publications/reply_to_wexler.pdf

Block, Walter. 2000. “Threats, Blackmail, Extortion and Robbery And Other Bad Things,” University of Tulsa Law Journal, Vol. 35, No. 2, Winter, pp. 333-351;
Here.

Block, Walter. Stephan Kinsella and Hans-Hermann Hoppe. 2000. “The Second Paradox of Blackmail,” Business Ethics Quarterly, Vol. 10, No. 3, July, pp. 593-622; http://www.walterblock.com/publications/second_paradox.pdf; Here.

Block, Walter. 2000. “The Legalization of Blackmail: A Reply to Professor Gordon,” Seton Hall Law Review, Vol. 30, No. 4, pp. 1182 1223; Here.

Block, Walter. 1999. “Blackmailing for Mutual Good: A Reply to Russell Hardin,” Vermont Law Review, Vol. 24, No. 1, Fall, pp. 121-141; Here.

Block, Walter. 1999. “The Crime of Blackmail: A Libertarian Critique,” Criminal Justice Ethics, Vol. 18, No. 2, Summer/Fall, pp. 3-10;

Block, Walter. 1999. “Replies to Levin and Kipnis on Blackmail,” Criminal Justice Ethics, Vol. 18, No. 2, Summer/Fall, pp. 23-28; http://www.walterblock.com/publications/levin_kipnis.pdf;

Block, Walter. 1999. “Blackmail and Economic Analysis: Reply to Ginsburg and Shechtman,” Thomas Jefferson Law Review, Vol. 21, No. 2, October, pp. 165-192

Block, Walter and Robert W. McGee. 1999. “Blackmail as a Victimless Crime,” Bracton Law Journal, Vol. 31, pp. 24-48; Here.

Block, Walter and Robert W. McGee. 1999. “Blackmail from A to Z: A Reply to Joseph Isenbergh’s ‘Blackmail from A to C,’” Mercer Law Review, Vol. 50, No. 2, winter, pp. 569-601;

Block, Walter and Christopher E. Kent. 1999. “Blackmail,” Magill’s Legal Guide, Pasadena, CA: Salem Press, p. 109.

Block, Walter. 1998. “A Libertarian Theory of Blackmail: Reply to Leo Katz’s ‘Blackmail and Other Forms of Arm-Twisting,’” Irish Jurist, Vol. XXXIII, pp. 280-310; http://www.walterblock.com/publications/libertarian_theory.pdf

Block, Walter. 1997. “The Case for De-Criminalizing Blackmail: A Reply to Lindgren and Campbell,” Western State University Law Review, Vol. 24, No. 2, spring, pp. 225-246;

Block, Walter. 1986. “Trading Money for Silence,” University of Hawaii Law Review, Vol. 8, No. 1, Spring, pp. 57-73; reprinted as Block, Walter. 1987. “Trading Money for Silence?” Economic Imperialism: The Economic Approach Applied Outside the Traditional Areas of Economics, Peter Bernholz and Gerard Radnitzky, eds., New York: Paragon House, pp. 157-218; Here.

Block, Walter and David Gordon. 1985. “Blackmail, Extortion and Free Speech: A Reply to Posner, Epstein, Nozick and Lindgren,” Loyola of Los Angeles Law Review, Vol. 19, No. 1, November, pp. 37-54; Here.

Block, Walter. 1973. “The Blackmailer as Hero: A Reply.” The Libertarian Forum. March, Vol. 5, No. 2, pp. 3-4;

Block, Walter. 1972. “The Blackmailer as Hero.” The Libertarian Forum. December, Vol. 4, No. 10, pp. 3-4; http://www.blogger.com/%3Ca%20href=">Here.

I'm sure Prof. Block has touched upon it somewhere, but blackmail acts as a brake on bad behavior. If blackmail is legal, the person who is considering conducting activity that would subject him to blackmail, would have to consider the possibility that he could be blackmailed. Thus, blackmail tends to promote a more proper society--of course, there will be others that will choose to fight a particular norm of society, blackmail be damned--but this is, say, more likely to be some closet gay person versus, say, a child molester. Blackmail has its strongest influence in the deep bowels of behavior outside the norm. If Letterman was banging eleven year olds, he would have paid up.

(ViaLRC)

Walter Block World Tour 2009-10 (Updated)

Oct 15: Baton Rouge, LA. Louisiana State University, Paul M. Hebert Law Center, near the intersection of Highland & Dalrymple, room 110, from 12:40 to 1:40pm; topic: “Legalizing drugs, all drugs; save lives, empty prisons and hospitals, promote justice,” contact: Andre Collins Gaudin Jr, 504-669-2125 504-669-2125, andre.gaudin.jr@gmail.com

Oct 21–24: Salamanca, Spain. Mises Supporters Conference

Oct 31: Grove City College, Grove City, PA. Mises Lecture Austrian Student Scholars’ Conference “My 41 years as an Austrian economist;” contact: Jeff Herbener: jmherbener@gcc.edu;

Nov 4: Williamsburg VA 23188; William & Mary Law School, 613 South Henry Street, 1–3pm; room #[tba]; contact: Amanda DeVuono, abdevuono@wm.edu, 571-970-7725 571-970-7725, topic: “Is the market racist? Sexist? No.”

Nov 4: Richmond, VA 23173; University of Richmond School of Law, Moot Court Room, 28 Westhampton Way, Contact: Margaret Harker, margaret.harker@richmond.edu, 240-481-1872 240-481-1872, 4pm; Topic: welfare state? Topic: Medical socialism, commentator: Dr. Karen Swisher Professor of Health Law with the Department of Health Administration at VCU/MCV where she teaches in the MHA (Masters in Health Administration) Program.

Nov 5: Charlottesville, VA 22903; UVA School of Law, 580 Massie Rd, room #[tba]. Contact: Alex Cox, cox.alexander@gmail.com, 517-614-0473 517-614-0473; noon; Topic: drug legalization

Nov 5: Lexington, Virginia 24450; Washington and Lee University Law School, 5:15pm, Sydney Lewis Hall. AKA “The Law School,” room A or B; Topic: The Market is NOT Sexist nor Racist: the Black-White, the Male-Female Wage Gap, and the Glass Ceiling. Contact: Robert Merting, Email and phone number for Merting have been removed at his request.

Feb 1: Touro Law School, noon–2:00pm; 225 Eastview Drive, Central Islip, New York 11722, topic: [tba], contact Yan Katsnelson 917-495-7002 917-495-7002, yan-katsnelson@tourolaw.edu; 917 495 7002 917 495 7002

Feb 1: New York City, NY. New York Law School, 5:00–7:00pm; street address; room number; topic: [tba], contact: William Daks; william.daks@law.nyls.edu;

Feb 2: New York City, NY. Fordham University Law School, 12:30–2:00 pm, 140 West 62nd Street, between Columbus and Amsterdam. Room 302, topic: [tba]; contact: Reuvain Borchardt, fordhamfedsoc@gmail.com, 718-406-4029 718-406-4029

Feb 2: New York City, NY 10012 New York University Law School, 40 Washington Square South; accessible to the ACEBDFV subways, which are one block west at Sixth Avenue and Third Street; 4:00-6:00pm, room number; topic: [tba], topic: rent control, tentatively; contact: Andrew Kloster, arkloster@gmail.com, 847-544-8651 847-544-8651

Feb 2: New York City, Columbia University, 8–10pm; topic: Austrian Economics and Libertarian Political Philosophy; contact: John David Fernandez, Columbia College, Vice President, Columbia University Libertarians; djf2125@columbia.edu; manooch44@gmail.com

For those of you who are new to EPJ and don't know who Walter Block is, here is his web site.

Walter Block World Tour 2009 (Updated)

There ought to be T-shirts. Walter Block’s World Tour 2009 speeches:

Sept 12 Bellevue, WA, Mises Institute, Mises Circle, “Ticka, ticka, ticka, you need good timin’” http://mises.org/events/121

Sept 22 Baton Rouge, LA. Louisiana State University, Paul M. Hebert Law Center, near the intersection of Highland & Dalrymple, room 110, from 12:40 to 1:40pm; topic: free market environmentalism, contact: Andre Collins Gaudin Jr, 504 669-2125, andre.gaudin.jr@gmail.com,

Oct 1 Newark, N.J., Rutgers Newark Law School, 123 Washington Street, room 125, Baker Trial Courtroom; 8-10pm, topic: socialized medicine; contact: Steve Link, sjlink@pegasus.rutgers.edu, 201-788-5108

Oct 2 Newark, N.J., Seton Hall University, 1109 Raymond Blvd; small moot court room on the first floor, 1pm– 3pm; topic: socialized medicine; contact: Alessandro Di Stefano – alessandrorinaldodistefano@gmail.com, 617-894-5436

Oct 5 New York, N.Y., Cardozo Law School, noon-1:30pm; 55 Fifth Avenue (corner of 5th Ave & 12th St), room 206; topic: socialized medicine; contact: John Safarli, jsafarli@gmail.com; 206-909-9963

Oct 6 Baton Rouge, LA., Southern University, Room 129 in AA Lenoir Hall at noon – 2pm. Contact: Cindy Manuel, Barry Manuel, barrymanuel@bellsouth.net, Ross LeBlanc, leblarm@yahoo.com, 504-236-2451; topic: medical socialism

Oct 21-24. Salamanca, Spain. Mises Supporters Conference. http://mises.org/events/118

Oct 31. Grove City College, Grove City, PA. Mises Lecture Austrian Student Scholars’ Conference “My 41 years as an Austrian economist;” http://www2.gcc.edu/dept/econ/ASSC/

Nov 4. Williamsburg VA 23188; William & Mary Law School, 613 South Henry Street, 1-3pm; room, tba; contact: Amanda DeVuono, abdevuono@wm.edu, 571 970-7725, topic: “Is the market racist? Sexist? No.”

Nov 4. Richmond, VA 23173; University of Richmond School of Law, Moot Court Room, 28 Westhampton Way, Contact: Margaret Harker, margaret.harker@richmond.edu, 240 481-1872,
4pm; Topic: welfare state? Topic: Medical socialism? Commentator: Dr. Karen Swisher Professor of Health Law with the Department of Health Administration at VCU/MCV where she teaches in the MHA (Masters in Health Administration) Program.

Nov 5 Charlottesville, VA 22903; UVA School of Law, 580 Massie Rd, room #: tba;. Contact: Alex Cox, cox.alexander@gmail.com, 517 614 0473; noon; Topic: drug legalization

Nov 5. Lexington, Virginia 24450; Washington and Lee University Law School, 5:15pm, Sydney Lewis Hall. AKA “The Law School,” room A or B; Topic: The Market is NOT Sexist nor Racist: the Black-White, the Male-Female Wage Gap and the Glass Ceiling. Contact: Robert Merting, Email and phone number for Merting have been removed at his request

(Thanks to Alessandro Di Stefano)

The Walter Block 2009 World Tour

There should be tee shirts. Walter Block’s upcoming speeches:

Sept 12 Bellevue, WA, Mises Institute, Mises Circle, “Ticka, ticka, ticka, you need good timin’” http://mises.org/events/121

Sept 22 Baton Rouge, LA. Louisiana State University, Paul M. Hebert Law Center, near the intersection of Highland & Dalrymple, room 110, from 12:40 to 1:40pm; topic: free market environmentalism, contact: Andre Collins Gaudin Jr, 504 669-2125, andre.gaudin.jr@gmail.com,

Oct 1 Newark, N.J., Rutgers Newark Law School, 123 Washington Street, room 125, Baker Trial Courtroom; 8-10pm, topic: socialized medicine; contact: Steve Link, sjlink@pegasus.rutgers.edu, 201-788-5108

Oct 2 Newark, N.J., Seton Hall University, 1109 Raymond Blvd, 1 Newark Center; probably 5th Floor Faculty Library, noon – 2pm; topic: socialized medicine; contact: Alessandro DiStefano – alessandrorinaldodistefano@gmail.com, 617-894-5436.

Oct 5 New York, N.Y., Cardozo Law School, noon-1:30pm; 55 Fifth Avenue (corner of 5th Ave & 12th St), room 206; topic: socialized medicine; contact: John Safarli, jsafarli@gmail.com; 206-909-9963

Oct 6 Baton Rouge, LA., Southern University, Room 129 in AA Lenoir Hall at noon – 2pm. Contact: Cindy Manuel, Barry Manuel, barrymanuel@bellsouth.net, Ross LeBlanc, leblarm@yahoo.com, 504-236-2451; topic: medical socialism

Oct 21-24. Salamanca, Spain. Mises Supporters Conference. http://mises.org/events/118

Oct 31. Grove City College, Grove City, PA. Mises Lecture Austrian Student Scholars’ Conference “My 41 years as an Austrian economist;” http://www2.gcc.edu/dept/econ/ASSC/

Nov 4. Williamsburg VA 23188; William & Mary Law School, 613 South Henry Street, 1-3pm; room, tba; contact: Amanda DeVuono, abdevuono@wm.edu, 571 970-7725, topic: “Is the market racist? Sexist? No.”

Nov 4. Richmond, VA 23173; University of Richmond School of Law, Moot Court Room, 28 Westhampton Way, Contact: Margaret Harker, margaret.harker@richmond.edu, 240 481-1872, 4pm; Topic: welfare state? Topic: Medical socialism? Commentator: Dr. Karen Swisher Professor of Health Law with the Department of Health Administration at VCU/MCV where she teaches in the MHA (Masters in Health Administration) Program.

Nov 5 Charlottesville, VA 22903; UVA School of Law, 580 Massie Rd, room #: tba;. Contact: Alex Cox, cox.alexander@gmail.com, 517 614 0473; noon; Topic: drug legalization

Nov 5. Lexington, Virginia 24450; Washington and Lee University Law School, 5:15pm, Sydney Lewis Hall. AKA “The Law School,” room A or B; Topic: The Market is NOT Sexist nor Racist: the Black-White, the Male-Female Wage Gap and the Glass Ceiling. Contact: Robert Merting, Email and phone number for Merting have been removed at his request.

The Mises Traveling Circle Is Headed to Seattle

If you are in the area, I recommend that you attend.

Lew Rockwell, Doug French, Walter Block, Peter Klein and Bob Murphy will be speaking. I attended the San Francisco meeting, which is now online here.

By attending in person, it will give you the rare opportunity to meet some of the leading supporters of liberty. These are truly modern day sons of liberty. Rockwell, for example, is one of the greatest organizers and marketers for the cause of liberty, ever. Paul Revere rode a horse one night for the cause of liberty, and he is in the history books. Rockwell has been spreading the message of liberty, and sounding the alarm about those who want to take it away, for his entire adult life. It's a courageous act, and I don't say this lightly. Lew has a powerful web site. I'm sure he's on a few statist lists, and you really don't know what plans the statists have for the future, but you can still count on Rockwell to have the courage Monday through Saturday to confront them on his web site.

A good part of the reason for attending in person is to mingle with the crowd, for perhaps the first time in your life you will be amongst fellow travelers who get it.

For those of you that are in other parts of the country, I guess you will have to "go to the videotape". There was not a weak link in the presentations in San Francisco. Doug French is a former banker and he pulled no punches laying out the current situation, with all the accompanying facts and figures. Block and DiLorenzo were, well, Block and DiLorenzo. They dissected the current situation with the tight analysis that we have all come to expect from these two.

A Bob Murphy economic speech is like none other you will ever hear. It's a stand up routine which I'm sure will eventually get him at the Improv on Sunset Boulevard in Hollywood. You really laugh so much that you almost forget that he is providing solid economic analysis with his one liners.

My favorite part of the presentation was the panel discussion which was open for audience questions. You got to see French, Block, DiLorenzo and Murphy ad lib.

The Mises Circle is headed to other cities, so keep an eye out.

Walter Block On Black Productivity

Walter Block has created a major brouhaha at Loyloa College in Maryland as a result of his speech there and comments he made during the Q & A. See his report on the controversy here.

Part of the controversy surrounds Block's comments on the productivity of blacks. I'll let Block take it from here:

...one young man asked about the pay gap between blacks and whites, which I had said in my lecture was of about the same magnitude as that between females and males, about 25–30%. My answer, of course, was in terms of lower productivity. After all, if black people had the same productivity as white people on average, but were paid less, then there would be profit opportunities available to all those who hired blacks and fired whites, and such a situation could never last.

But why was this so: Why, that is, would this minority group have lower productivity than the majority? Surely, it couldn’t be attributed to marriage asymmetry? No, I replied. And here I was very careful to say that the cause was a matter of dispute, and that I, as an economist, was not in a position to say which was correct. Instead, I would merely offer both options, and call for the audience to make up its own mind on this issue. The politically correct answer is that lower black productivity is due to slavery, Jim Crow legislation, poor treatment of African-Americans in terms of schooling, etc. The politically incorrect explanation was supplied by Richard Herrnstein and Charles Murray in their book The Bell Curve: lower black IQs.

I have never been impressed with the reasoning in Murray's book. However, I believe that there may be another reason behind lower black productivity that Block may have missed in his explanation. I call it the "Black Crutch". It's a crutch that Jews, Italians, Irish etc. just don't have.

The crutch is that when something goes wrong in business or at work, a black can say it is racism, and it stops his mind from thinking further on the topic. I hasten to add that this does not apply to all blacks. I have dated enough black women to know there are plenty of blacks that don't use such a crutch.

However, I have observed many situations where the Crutch has been used. I will provide an example.

Once I was called by a client to help a friend of the client who had started a business that was going under. The friend had borrowed money for the business from a Jew, an Italian and two blacks. To say this was not the brightest investment was to put it politely. As part of my role in helping out, I called the four investors to explain there would be a very long delay in their getting their money back, if they were to get it back at all.

The Jew and the Italian were not very happy to say the least. But, the interesting comments came from the two blacks, one was a man the other was a woman. They both said pretty much the same thing. It went something like this: "If he thinks he can put something over on me because I am black, he has another thing coming."

Now, think about this for a minute. It was a bad investment. Could the Jew say, "If he thinks he can pull one over on me in business because I am a Jew"? Of course not, since Jews are supposed to be wizened in business. Likewise, with the Italian, where some have a reputation for breaking bones when investments don't go well.

So after they calm down, the Jew and Italian will perhaps learn from the experience and think about what mistakes they made to get into such a poor investment. But, I wonder about the two blacks, they have the Crutch. It wasn't that they made a bad investment it was because they were black that they were taken advantage of. If they stop their thinking there and use the Crutch, they are simply not going to think about and develop beyond where they are now.

I think the Black Crutch is of the most dangerous excuses for failure that circulates in much of black society. Blacks have used the crutch to tell me why they have been turned down for credit or lost a job, when I could see from the facts that the case suggested otherwise. Blacks who rely on the crutch stop growing in important ways and it is very easy to see how such reliance could lower productivity.

Note: I am not saying there isn't racism or discrimination, in fact, I marvel at how often I can detect subtle racism going on when I am with black friends and they don't detect it. But any person who uses the Black Crutch is setting himself up for a life of mediocrity. The best way to deal in business is to walk as though there are no crutches and you have to overcome the situation anyway. There are lots of people who don't like Jews or Chinese, yet they succeed in business without out being liked. For anyone who needs proof that you can succeed even when being discriminated against, I recommend the Thomas Sowell books on race and discrimination.

In Defense Of 'Rumor' Mongering, Short Sellers

By Robert Wenzel

Investment banking stocks are crashing and regulators are all in a huff. They are aggressively harassing short-sellers.

SEC Chairman Chris Cox previously announced a ban on naked short selling, even though regulations already existed that banned that specific type of short sale. On Thursday, Cox proposed requiring hedge funds to post daily the short positions they have in stocks.

New York State Attorney General Andrew Cuomo, tried to one-up Cox, and has started a "wide-ranging investigation" of his own into short selling and has called for the SEC to put a " freeze on short selling of financial stocks on a temporary basis."

Republican presidential candidate John McCain, who apparently isn't satisfied with calling for war against Iran, Russia and China, wants to see battle also joined against short sellers. In fact on Thursday, he called for the firing of the wonderfully incompetent and ineffective SEC chairman Christopher Cox.

So what gives? Are short-sellers the evil monsters of Wall Street?

No there are not and, as Walter Block might say, they are, in fact, heroes.

To understand what is going on, one must realize that the structure of the now collapsing financial industry was built upon the money pumping ways of Alan Greenspan and the early Ben Bernanke. It was easy for the macho, testosterone fueled big swinging dick investment bankers of Wall Street to borrow the money that Greenspan and Bernake printed at the below normal market rates.

Since the Fed operates on the short term end of the interest rate spectrum, that's where investment bankers borrowed their billions. Borrow at the low short-term rates and lend long on mortgages and the like at higher rates, and earn the spread. That was the Fed enabled game. The more billions you borrowed, the more you earned. And the Fed certainly accommodated the Wall Street players. Even early this year, three month annualized M2 money growth was moving along at double digit rates. Indeed, in March, three month annualized money growth was 12.5% Then something peculiar happened a few months ago. Either Ben Bernanke became a closet Austrian economist (The only ones who really understand business cycle theory, and who would call for a complete end to money supply manipulation) or he really didn't understand mainstream economic monetary theory well enough to realize he was dramatically slowing the money supply. (Note: I'm not betting he is a closet Austrian. My bet is he is incompetent and bumbled his way into slowing money growth.) As of last Thursday, three month annualized M2 money growth was only 1.5%.

Now Wall Street investment bankers need fresh new money all the time, to keep the long term assets they bought with short term money, financed. With less new money being created, it was a case of musical monetary chairs. There were more investment bankers needing "financing chairs", then actual financing out there. Lehman was the first to find itself short of funds.With hedge funds being run by very aggressive, very savvy traders, it did not take them long to realize that there was a shortage of money to finance the current financial structure. Always seeking profit from whatever the financial situation, the hedgies poured over financial statements to see who was the most vulnerable investment bank. Who leveraged the most? and Who would never be able to find the money to support the previous financial structure? were the questions they asked. The name Bear Stearns popped up. And thus the hedgies shorted whatever Bear Stearns stock they could find. Once loaded up, they, of course, told the world what a financial wreck Bear Stearns was--and thus became labeled rumor mongers, In fact, they were speaking truth to Wall Street, not rumors.

Once Bear Stearns was wiped out, they moved on to identify and load up short positions in others who played in the Federal Reserve induced high leverage game. Next came Freddie Mac and Fannie Mae, then Lehman Brothers and then AIG. So what was the role of the short-selling hedge funds?

They scoured the balance sheets to discover who was overly leveraged--so we wouldn't have to. They leaked to the financial press who was in trouble--so we could get the news with our morning paper and they speeded up the financial crisis so that it occurred in just weeks instead of months or years. As a result of their aggressive due diligence, they pointed out a mis-match and shortage of funds that would otherwise have taken months, if not years to become clear and unwound. The economic mess would have dragged on and on. They are, indeed, heroes. And as if in an Ayn Rand novel, they will be harassed and investigated by the evil keepers of the ugly, manipulative, inflation created, status quo.

Christopher Cox, Andrew Cuomo and John McCain will pander to the unthinking masses, satisfy their status quo sponsors on Wall Street, and harass, interrogate, regulate and attempt to destroy the true heroes of this financial drama.

But the drama doesn't end here. There may be a kind of Benedict Arnold in cahoots with the hedge funds.

Very little on Wall Street is exactly as it seems. It is so even with our hedge fund heroes, since I suspect that Treasury Secretary Paulson may have played some type of role in the early short-selling escapades. While our hedge fund/short selling operators may have been involved in a noble cause, the role of Treasury Secretary Paulson may have been to use these short-sellers as his tool to wipe-out competitors, so that the Fed money printing game will be the exclusive domain of Paulson's old firm Goldman Sachs. It is noteworthy than Paulson's lapdog, Ben Bernanke, may have accelerated the money printing presses again at this time, just when it appears that Goldman Sachs may be the only major independent investment bank left standing--and just before the hedgies started to take a good hard look to see why Goldman shouldn't end up in the same trash bin as its competitors.

It is very important to keep in mind what Robert Novak reported about, one, Hank Paulson: "Hank is for Hank." And it is also important to keep in mind, as the inevitable hearings and mud slinging begins, that hedge fund short sellers are as much heroes warning of  dangerous balance sheets as was Paul Revere in his midnight ride and warnings.

Robert Wenzel is an economic consultant and Editor & Publisher of EconomicPolicyJournal.com. He can be reached at rw@economicpolicyjournal.com.