Wednesday, April 28, 2010

What On Earth Is Walter Block Talking About?

Libertarian anarchist heavyweight Walter Block has recently penned a series of articles at attempting something of a debrief of Ron Paul's recent appearance on Chris Matthews show (article 1, article 2). In the clip, which I will reproduce below, Ron Paul is essentially savaged by Matthews. Of course, this is how Matthews treats all his anti-statist guests so it's not as if Ron Paul was treated to a special dose of inconsiderate ignorance and naivety.

Block sees the clip as an opportunity for libertarians to study Ron Paul's method for responding to and dealing with stubborn, offensive non-libertarian debating partners while perhaps looking for ways to improve upon Ron Paul's technique.

I know Block, via Rockwell, has a long and storied past with Ron Paul and as a result is particularly enamored with the man. What I find puzzling, however, is Block's choice of language in describing Ron Paul. It's a bit confusing to watch a hardcore anarchist describe a politician, even a liberty-minded one, as if he is nearly divine. Consider the following examples:
Ron, after all, is by far our best spokesman. He has probably brought more ordinary people to libertarianism than any other person in the entire history of the known universe, with the possible exception of Ayn Rand.
Ayn Rand isn't a possible exception, she's a definite one. She has sold many times more books than Ron Paul has. She is essentially a household name. Many people who haven't read her works and haven't taken the time to study her thought nonetheless condemn her and their conception of her ideas by name. To your average leftist (an ordinary person, not even an "intellectual" one), Rand is practically a curse word.

If "best" spokespeople are those who are alive and have a lot of exposure for their views, sure, Ron Paul might be considered best. But if the "best" spokespeople are those who are the most intelligent, eloquent and consistent in intellectual and personal practice, Ron Paul would probably be lucky to be in the top ten.

And if you're a believer in Ludwig von Mises theory of the transmission of ideas throughout society (I am), then you'd wonder whose advocacy of liberty has been more important over time-- Mises and Rothbard, who have converted members of the intellectual leadership of society to libertarianism, as Block notes, or Ron Paul, who has (temporarily) captured the imagination and the zeitgeist of the unreliable common man.
On the other hand, we learn methodological individualism from our study of Austrian economics. In this vein, it is possible that what works best for Ron will not be the ideal response for all of the rest of us who are trying to promote liberty and rational economics, in support of Ron.
I don't understand the sentence fragment tacked on at the end, "in support of Ron." At best, Ron Paul is a representative of certain people and in such capacity he is promoting liberty and rational economics for them, not vice versa. The idea of promoting the opposite of political power being of benefit to or in support of a politician is, on its face, self-contradictory. But even going beyond that, nobody in the libertarian movement (if that's what you want to call it) is there for Ron Paul's benefit above all others, including themselves.

This kind of singling out and insistence of "Ron Paul uber alles" is appalling coming from an individualist anarchist. Unfortunately, it only gets more bizarre in Block's follow-up post:
I wrote this column, in an attempt to explore techniques the NEXT PRESIDENT OF THE U.S. could have employed, and, also, I assessed how well he did in this one instance (very well indeed, in my humble opinion).
Why the sudden caps? It comes across to me like, "HIS MAJESTY, THE KING...", as if there is something eminently glorious and honorable about having the title of POTUS. At least Block is being consistent, as he has previously opined that almost anything government related is more tolerable, sometimes even libertarian, if done by a libertarian instead of a statist.
In what follows I offer some of the very best of these letters, with commentaries from yours truly. I do this not because Ron Paul needs any advice from the likes of us. It is not for nothing that he is now libertarianism’s best spokesman. If we could all be one hundredth as good as him in this sort of thing, our attempts to promote liberty would be far better than they are now. No, I offer these comments since many readers of are called upon, in our relatively more modest ways, to do public speaking, radio and television interviews, and these thoughts might well help all of us to a better job in transmitting our philosophy.
This one really got me. "The likes of us"? What are "we", now, commoners? Mere peasants in the presence of this great and noble man?

If we could even be a fraction as worthy as Ron Paul at this sort of thing? I find that insulting! Everytime I watch Ron Paul interrogate one of the central scammers on Capitol Hill I nearly leap out of my seat in frustration at yet another wasted opportunity to quickly, simply and easily hammer these fraudsters into submission! Ron Paul often spends so much time yammering away in some esoteric, tangentially-related rant that by the time he finally gets to asking the liar on deck a question (which is itself of so many different parts that it's almost not worth asking when he finally stops to breath), there's just enough time left for the shyster to reply, "I don't recall" before smirking into the camera in a smug manner.

If the rest of "us" wee little libertarian folk live such relatively modest lives, then I suppose that means Ron Paul is the great altruist for setting down his personal life in order to fight for liberty on our behalf? Sorry, but I don't buy the "Selfless Ron Paul" story and neither should you. Many libertarians could put up with the fat paycheck, primo health benefits and retirement package (which Ron Paul, great master of liberty that he is, rejects the use of-- even though it'd be totally libertarian for him to do the opposite if he wanted), taxpayer-funded staff, postal frank privilege and made-in-the-shade work schedule, amongst numerous other perks and benefits of the job that they'd enjoy while sacrificing their life and personal ambition in the name of serving the people. Not that you'd necessarily need to sacrifice your personal ambition though, because you could always run for higher office, like Ron Paul.

Am I the only one who finds the anarchist Block's near-worship of politician Ron Paul to be a bit over the top?

Anyway, here is that video clip, as promised:

Look, Ron Paul is cool in a lot of ways. But you watch that clip and tell me you couldn't have done better with a total buffoon like Matthews. These are basic, socialist fallacies he trots out one by one and any principled libertarian should've been able to quickly and easily blast them out of the water and make Matthews look like the plutocratic maniac he is in short order, even in spite of how rude of a host he happened to be.


Lest I come across as too critical of the whole affair, I would draw your attention to the 6m mark in the clip. That was probably the most coherent, consistent and powerful libertarian point Ron Paul made in the entire interview (especially after a number of tragic pragmatic errors like saying he wasn't in favor of getting rid of Social Security). Matthews genuine, sputtering shock was evidence that it hit home and the only opportunity Ron Paul missed was following it up with an intellectual hammer blow to Matthews pea-brain by advising Matthews that many other libertarians might be inconsistent in their application of libertarian principles but that is a fault of their own, not the libertarian ideology and logic itself.

BAM! Matthews would've been out and down for the count after that one.

The Macro-Managed Economic Recovery

Mish has written a follow-up post to his previous discussion of the existence of "crowd-sourcing" as evidence of deflationary tendencies within the US economy. One of Mish's readers writes:
I’m currently working at Intel and was responsible for outsourcing my test team over the past decade. I’m personally being let go next Monday after 13 years and have experienced what you mentioned about crowd sourcing. I’m currently trying to get an interview with an international company that has a job offering exactly what I’ve done, but as a contractor with no benefits. You would never find this level of experience and knowledge about a job being offered as a contractor ten years ago. This is very clearly deflationary as you mention and will only increase at least for the larger companies involved with manufacturing.

I believe the jobs that can be outsourced either have or will be which means almost everything including all levels of skill and technical acumen. The only reason for keeping someone, a group or a type of job such as accounting locally in the US is because these employees have information that is not easily electronically stored or have information that is needed immediately and can’t wait for one day to receive it from Asia. I don’t believe that the reason for keeping accountants is due to fear that data will fall into the wrong hands as this information can easily be kept away of from any group of employees as necessary.
Your typical perma-bull jingoist Amerifan stock investor is probably going to react to this news in the following manner-- "America is a dynamic country with a robust economy built on a highly educated and innovative workforce. We will create new industries and new wealth faster than older technologies can be outsourced to cheaper countries in the emerging markets."

And that very well could be true. But what happens when the dynamism is crowded out by stultifying new government regulations?

Like the Great Depression before it, so far the early stages of this Greater Depression have been exemplified mostly by a massive collapse and nearly equally massive rebound in the price of various financial instruments. Fortunes have been lost and gained in the process of this financial readjustment as illusion-wealth has first disappeared and now reappeared following the bailout and stimulus efforts. Unemployment has steadily risen but has not yet exploded (at least according to official statistics) into the range of the Great Depression itself.

I think that's because, so far, the federal government's attempts to micro-manage the economy and working conditions have been minimal to non-existent. What we've witnessed is macro-managing of key capital and financial markets and businesses. Your average business owner may be having a harder time paying his bills right now, but so far he hasn't had to deal with anyone telling him how to run his business anymore than he had to deal with such things before the crisis.

When FDR expanded upon the precedent set by Hoover with his micro-managing of the economy by launching the New Deal, and specifically the industrial coordination bureau of the National Recovery Administration, the Great Depression went from bad to truly "great" in scope.

My prediction is that as this recovery is increasingly exposed as a fraud and the depression continues to drag on for another year, especially past November of this year when a crowd of newly-elected politicians will be fresh off the high of their "mandate to govern", there will be renewed political pressure for a New New Deal (let's call it the Big Deal) and a neo-NRA.

As BHO is quite fond of fascism as I outlined in my recent post, and as these kinds of industrial cooperation legislation always have been about restricting competition, centralizing power and propping up profits for the connected insider businessmen, look for the PEU outfits like Carlyle to offer their expertise in helping BHO's administration to set-up and manage this neo-NRA. If you've been following the headlines around the globe, you'll know that public-private partnerships are back in fashion and all the rage within the global private equity and public policy circles, with Carlyle and the Obama administration teaming up with the likes of Egypt, China, Saudi Arabia and more as of late.

The point is, when the micro-managing begins, so too will the next phase of this Greater Depression and that's when you're really going to see unemployment take off to the upside. Standards of living will noticeably deteriorate for the average American at the same time as economic calculation becomes increasingly haphazard within each sector of the economy that ends up being exposed to the arbitrary decision-making of fascist central planners.

As Robert Wenzel might say, buckle up-- it's going to be a bumpy ride!

Senator Claire McCaskill Is A Criminal Gambler

Bess Levin at Dealbreaker, in all her glory, picked up on an embarrassing admission made by Senator Claire McCaskill of Missouri in yesterday's Goldman Sachs hearing:
What is she sorry for? Is it for ‘causing horrible flashbacks for those on the panel and watching at home to being sent to the principal’s office? Her bizarre and at times troubling line of questioning? Use of the term “smart alecks”? Comparing “the legal activity of market making to the illegal activity of sports bookmaking,” the latter of which is a serious hobby of hers? Not using her indoor voice? Just generally projecting her gambling problem on Goldman Sachs? Giving Maxine Waters a run for her money? All of the above? None of the above?
Gambling, except in special circumstances such as on licensed river boat casinos and other venues, is illegal in the state of Missouri. One would have to assume that this general ban on gambling would include sports betting and specifically college sports betting.

Yet, in making her crazy and nearly impossible to follow metaphor for what Senator McCaskill imagines Goldman Sachs' market-making business to be, she inadvertently advised the interogees and the audience that she regularly bets on college sports games. In essence, Senator McCaskill just admitted to habitually committing gambling crime.

Where and how does Senator McCaskill place her sports bets? She can't place them in-state with a live bookie and, according to Missouri state law, she can't place them with electronic gambling organizations on the internet, either:
Don't be fooled by assurances from Internet gambling operators that it is legal to play online in Missouri. It is illegal for out-of-state gambling operations to offer Internet gambling to Missouri residents.

Does Senator McCaskill place her bets in Washington? Well, she can't because it's illegal there, too.

Maybe the good senator goes to nearby Maryland or Virgina to do a little, good ol'fashioned wagerin'. Wherever she gambles, as a representative of Missourians, she's at the very least a hypocrite and a disgrace.

Does Bethany McLean Know Who Are The Real Financial Villains?

Bethany McLean is out with a new op-ed at The New York Times where she introduces readers to "the real financial villain." Is it Goldman Sachs? Is it the rating agencies? Is it the big banks that were duped by the first two actors?
Goldman Sachs, ACA Capital, IKB Deutsche Industriebank and even the rating agencies never had any duty to protect us from their greed. There was one entity that did — our government.
Bethany's conclusion of who is to blame is sound. Unfortunately, her reasoning for why the government is to blame, is not. Let's look at the claims she makes point-by-point. Bethany again:
But it was the purported regulators, including the Office of the Comptroller of the Currency and the Office of Thrift Supervision, that used their power not to protect, but rather to prevent predatory lending laws. The Federal Reserve, which could have cracked down on lending practices at any time, did next to nothing, thereby putting us at risk as both consumers and taxpayers. All of these regulators, along with the S.E.C., failed to look at the bad loans that were moving through the nation’s banking system, even though there were plentiful warnings about them.
Bethany's complaint here is arbitrary. "Predatory lending" is a scare-term with no scientific basis or absolute definition.

You think offering someone a $500,000 home mortgage loan with a 10% interest rate when they only make $20,000 a year is "predatory." I think the bank that would make such a loan is stupid because banks make money on credit spreads between deposited money and loaned money, not on foreclosing on homes and having to pay maintenance teams, real estate brokers and auction fees, ultimately to write down the sold property as a loss.

But either way, who is the United States Congress or any other federal or state regulator to tell somebody that they can't afford something and therefore they won't be allowed to take out a loan? And who are these regulators to tell a bank that they're only going to lose money on such a silly transaction and therefore they can't make such a loan?

They're nobody, that's who. I don't believe governments have any proper role but so far as people have agreed over the years that they do, the justification for government is that it is supposed to protect individuals and their property from theft, assault and murder.

Notice that "financial loss accrued through careless borrowing/lending practices" is not on that list.

Bethany then claims that this disinterest by regulators in policing these practices put "us" as consumers and taxpayers at risk.

That isn't correct, either. I as a consumer am not at risk of careless borrowing/lending practices if I don't participate in them. And I as a taxpayer am not at risk if the government doesn't bail out a bunch of slimeball bankers and then pass me the bill. Which, ultimately, it did-- but I pay the price not because some bad loans were made, but because the government decided to make me responsible for those decisions!
More important, it was Congress that sat by idly as consumer advocates warned that people were getting loans they’d never be able to pay back. It was Congress that refused to regulate derivatives, despite ample evidence dating back to 1994 of the dangers they posed. It was Congress that repealed the Glass-Steagall Act, which separated investment and commercial banking, yet failed to update the fraying regulatory system.
Again, the question is, "What danger do risky loans/the use of derivatives pose to anybody but those who use them, so long as the government doesn't subsequently bail these actors out and stick unrelated parties with the bill?"

Bethany seems to take government intervention as inevitable. But that appears to be a problem with the political system, not the financial system.

I feel like I am repeating myself here but, in regards to Glass-Steagall, "What need is there to separate investment and commercial banking within an institution, if no one but the institution and those that voluntarily exchange with it are the ones to pay the penalty of risky or unethical business practices?"
It was Congress that spread the politically convenient gospel of home ownership, despite data and testimony showing that much of what was going on had little to do with putting people in homes. And it’s Congress that has been either unwilling or unable to put in place rules that have a shot at making things better. The financial crisis began almost three years ago and it’s still not clear if we’ll have meaningful new legislation. In fact, Senate Republicans on Monday voted to block floor debate on the latest attempt at a reform bill.
Rules that "have a shot at making things better" are not the same as "rules that will make things better." One involves probability, the other certainty. Bethany's take seems to be that any gamble is "worth" taking at this point which is apparently why she criticizes Republicans at the end of the paragraph for stalling the latest regulation bill. (It's a regulation bill, not a "reform" bill, another scare-word that is in this case used to make opponents of the bill look like regressive, overly conservative monkeys.)

Missing from Bethany's discussion entirely is WHY banks were making increasingly risky loans at the point in time they were making them. Look at the timeline-- Glass-Steagall repealed with Gramm-Leach-Bliley Act of 1999, housing bubble 2003-2007. Why did it take the banks a full four years after they were able to recombine their investment and commercial banking arms to start a housing bonanza? If the derivative danger was known in 1994, why did it not blow up until 2007? And how significant to this whole story is the fact that Alan Greenspan reduced the Federal Funds target to 1% in 2003?

Bethany McLean is a great writer and an outstanding journalist. Her work on uncovering the extent of the Enron fraud and her depiction of the deranged personalities of the participants was thorough and insightful. Unfortunately, she doesn't understand business cycle theory and fails to see the role federal government and Federal Reserve stimulus policies play in creating the boom-- and the bust. As a result, she misses the cause of all the financial chicanery she writes about, just as she was confused about the ultimate cause of the rise and fall of Enron.

The reality is that the Boom is the Bust and no amount of bailouts or stimulus can change that reality. People were going to lose money because they had to-- the wealth was an illusion in the first place. Now, thanks to the near-ZIRP of the Fed and the bailouts and stimulus efforts of the federal government, when the next crisis comes, people will be out their share of the cost of the bailout PLUS all the wealth they would've lost the first time around (plus more, because the extent of their wealth which is illusory will have grown).

Contrary to Bethany's narrative of the depression, the greatest damage that was done to American taxpayers in the aftermath of the first wave of this global economic depression was the massive, government-engineered bailouts and stimulus efforts. These were financial burdens foisted on taxpayers and dollar-holders without their consent. Ultimately, these burdens will prove to be much more financially destructive to individual Americans and individual holders of US dollars than the collapse of the major commercial and investment banks would have been at the time. And the worst part is that these are burdens that will largely be shouldered by parties that were not responsible for the mess while the real villains of the financial crisis -- the Federal Government, the Federal Reserve and the starry-eyed shoulda-been-failures of the Wall Street world -- will walk away largely unscathed, again.

Oh, and they'll all be chuckling as they walk down the street counting your money.

Thursday, April 15, 2010

Herr Obama's Fascism... IN SPACE!

Obama's recent speech outlining his views on a national United States space program really had it all as far as the bumbling incoherency of a belligerent calculating socialist is concerned. Courtesy of the in Obama Vows Renewed Space Program, let's listen in:
“The bottom line is, nobody is more committed to manned spaceflight, to human exploration of space than I am,” he said in a speech to about 200 attendees of a White House-sponsored space conference here.
Arrogance. I wonder how Obama can be so sure that nobody is more committed to manned spaceflight than he is? By what calculation does he arrive at this conclusion?

Obama is not a full-time space entrepreneur. He is not a part-time space enthusiast. He has not donated any of his private wealth to realizing new frontiers in space. He does not make "space jokes" in his other policy speeches and he has never been caught, in a moment of recreation at the White House, running around the place with a toy Space Shuttle in his hands making a loud "WHOOOOOOOOOSH!"-ing sound.

So, by what calculation, by what reasoning, does Obama arrive at his belief that he is the most committed to spaceflight?

It seems this claim is based solely off of the extent to which he is willing to direct Other People's (Tax) Money to national space research.
But he was unwavering in insisting that NASA must change in sending people into space. “We’ve got to do it in a smart way,” Mr. Obama said, “and we can’t just keep on doing the same old things we’ve been doing and thinking that’s going to get us where we want to go.”
Omniscience. Obama seems to be a change-fetishist. So enamored with his campaign brand-image is he that he makes these meaningless paeans to even more meaningless change everywhere he goes.

Let's be clear-- I am not defending the current space program here. The best publicly-funded space program I can conceive of is the one that simply does not exist. Given that there is a space program, however, and given that it has been nominally "successful" in getting things and people into parts of space (you can't really say anything more than that as far as the space program's success goes), what is it according to Obama that is so unintelligent and unworkable?

And where is it that "we want to go"? And is that different from where "we" need to go, or must go?

Again, I ask, what calculations is Obama using to make all these grand judgments and abrupt pronouncements about how unspecific goals are most efficiently achieved?
Instead of earlier vague assurances by Charles F. Bolden Jr., the NASA administrator, and other administration officials that NASA would eventually venture beyond Earth orbit, Mr. Obama gave dates and destinations for astronauts. But the goals would be achieved long after he leaves office: a visit to an asteroid after 2025, reaching Mars by the mid-2030s.

Sure, a capital-intensive project like space exploration requires a lot of time and planning. In that sense, Obama has no other option but to lay a plan now that won't hatch until he's long-since gone.

Does that make this announcement any less of a publicity-garnering fraud?

Ask yourself this-- what are the chances the US Federal Government will still be solvent and able to fund an asteroid visit in 2025, or a Mars expedition in the mid-2030s?

Doesn't matter. It's someone else's political problem now. Obama can take the credit for being the unmatched space-lover now and it'll be up to some future politician to face the wrath of his constituency later for possibly nuking said program in a vain attempt to balance the by-then 400-lb-5-ft-tall-one-legged fat person of a federal budget.
“Step by step, we will push the boundaries not only of where we can go but what we can do,” Mr. Obama said. “In short, 50 years after the creation of NASA, our goal is no longer just a destination to reach. Our goal is the capacity for people to work and learn, operate and live safely beyond the Earth for extended periods of time.”
Inexplicability. Why is the goal for humans to be able to "work [on what?] and learn [about what?], operate [what?] and live [how? in what manner, with what level of comfort and safety?] beyond the Earth [how far beyond?] for extended periods of time [how long, specifically?]"?

Why is this a better goal than landing a dog on Uranus?

Who is coming up with this stuff?
Mr. Obama noted that President John F. Kennedy challenged Americans to land on the Moon in 1961 — the year the current president was born. But the plan Mr. Obama laid out for now through the 2030s was unlike the Kennedy vision: It was a call for private industry to innovate its way to Mars, rather than a call for a national effort to demonstrate American predominance.
Fascism. And not just any old kind of fascism... SPACE FASCISM! It's the kind of fascism that is out of this world, man!

Seriously, the only thing sillier than federal weapons platforms in space (Reagan's Star Wars) has got to be the spreading of fascism beyond the earth's exosphere.

People, this is progress-- when loopy comic book-caliber sci-fi ideas become reality. Check it out!

On a more serious note, though, it seems odd to begin a private effort to put someone on Mars by starting with a call to do so from a national figure-head. It seems like such an effort will be anything but private and national in all-but name when this will be a program whose private contractors are funded by the national government. It will likely be run along the lines of military weapons systems contracting, that is to say, it'll be expensive, inefficient, massively corrupt, ethically suspect and at the end of the day, arbitrary. Arbitrary as all political decision-making must be.

Or does Obama have a secret calculation model for this, too?
Strikingly, Mr. Obama used the speech to blame his predecessors for lacking leadership on space policy and the critics of his own plan for failing to recognize that times have changed. NASA’s budgets, he noted, have “risen and fallen with the political winds.” That appeared to be a shot at President George W. Bush, who announced a new plan for NASA after the Columbia disaster and barely mentioned space policy again for the rest of his presidency. And he argued that turning to private entrepreneurs would result in more space flights and more astronauts in orbit than the space plan he inherited.
Confusingly hypocritical and predictably non-striking.

Let's think about this for a second: on the one hand, Bush is being criticized for allowing NASA's budget to rise and fall with the political winds; on the other hand, Obama, the new political wind in town, is stirring up the leaves of the NASA budget to his own liking.

Try another: one the one hand, Obama is claiming the private sector is more efficient at putting spacecraft and astronauts into orbit than the public sector; on the other hand, Obama IS the public sector, and relishes his role as such.

And one more, for the future: on the one hand, Bush didn't care about the space program during his presidency outside of a token policy-speech following a space shuttle calamity; on the other hand, Obama will likely not revisit this topic himself during the remainder of his presidency, and will be lucky if he doesn't get his very own space shuttle disaster.

At this point, we ought to just face the facts-- under Obama, yet another previously entrepreneurial, free-spirited hobbyist-driven industry (private space exploration) is going to be co-opted into the over-stimulated Bubbleville economy of Planet USSA. It'll be done in the name of progress, children and Mother Necessity and it will ensure that freedom-loving individuals looking for some place where they can take a gasp of fresh air will have literally nowhere to run, not even outer space.

It will, in short, mean an existence that is increasingly arbitrary, insane and nepotistic in a world of "calculated" dictatorial privilege and favor. It will be much like Space Balls, though not even a sixteenth as funny.