Friday, May 31, 2013

FEE: Cities and Emergent Order

            by THE FREEMAN

            By definition, cities are places where a lot of people want to live. So we thought it would be interesting to explore and celebrate them.

            Cities are, after all, like coral reefs, or maybe rainforests. That is, not only are cities emergent orders of the sort we often admire here at The Freeman, but we want to communicate the idea that human beings aren't some sort of invasive species. We are a part of nature, of course, and cities are our version of termite mounds or anthills. They are complex. We also think they can be fascinating and beautiful.

Cities are more than just the residue of people pursuing their lives, though. They're more, in fact, than any one of us can really comprehend, whether we're looking at them from the outside or hustling around in the streets. Order emerges somehow, and within it, each of us has to negotiate the endless tradeoffs (public or private, social or individual, desires or resources) that life brings and that city life presents with more variables.

In his strange, dreamlike book Invisible Cities, Italo Calvino writes,

The people who move through the streets are all strangers. At each encounter, they imagine a thousand things about one another; meetings which could take place between them, conversations, surprises, caresses, bites. But no one greets anyone; eyes lock for a second, then dart away, seeking other eyes, never stopping . . . something runs among them, an exchange of glances like lines that connect one figure with another and draw arrows, stars, triangles, until all combinations are used up in a moment, and other characters come on to the scene. 

These lines that connect us are the real blueprints of cities.

In our more robust interactions, we may actually contribute to the erecting of skyscrapers once locked in dreams. The architects busy themselves with creating the spaces that will help us live together more closely and more comfortably, defying the scarcity of space on the surface. Then we fill and connect and reconfigure the spaces, defining ourselves and our cities in the process. It can elevate us metaphorically and physically.

And of course, none of this is possible without free exchange among consenting adults. Exchange of glances. Exchange of words. Exchange of ideas. Exchange of goods. Even the urban "planners" and municipal functionaries who feast like parasites on the extended order (while fancying they can design it) have to admit that Jane Jacobs is right when she writes, "There is a quality even meaner than outright ugliness or disorder, and this meaner quality is the dishonest mask of pretended order, achieved by ignoring or suppressing the real order that is struggling to exist and to be served."

Nothing this complex and ongoing can be simply beautiful, however, and the overall order that defines a city encompasses a lot of ugliness and disorder. These are parts of life; they're particularly visible in cities, where so many lives are concentrated. But ugliness and disorder are the frequent results of actions taken by what Adam Smith called "the Man of Systems," with all his grand visions, paternalistic instincts, and bureaucratic processes.

Sometimes, though, ugliness is something dreary or unseemly that is really just in the process of becoming. And the beauty of it all can be glimpsed for a moment on a fire escape, behind a clothesline on the 27th floor—at least until the cigarette is spent.


In this month's interview, we talk to Rod Lockwood, who's trying to build an independent city to rescue Detroit "and all of the United States"from government-induced decline.

The beauty of cities emerges from paradox, says Troy Camplin. Understanding this fact will make us as at home in them as we should be.

Austin only seems weird, says Max Borders, because it's so much more interesting "and tolerant" than most other places.

The unemployment rate is determined by political realities as much as economic ones. Wendy McElroy has the count.

Are intellectual property rights a government-created impediment to creativity, or is all property intellectual at root? In the debut of The Arena, our monthly debate feature, Adam Mossoff and Jeffrey Tucker duke it out.

People usually think they have Thomas Malthus figured out. Ross Emmett introduces "Bob" Malthus, a friend of liberty and markets.

Prohibition has driven the development of ever-stronger drugs, whereas a free market would see a proliferation of lighter options, says B. K. Marcus.

Our columnists have been bustling like cities. Sandy Ikeda says what really makes a city is the order that emerges from the lives lived within it, and it's too big for any one person to comprehend. Tom Bell says the key to keeping city streets safer is holding the government accountable in fair "that is, non-governmental" courts. Jeffrey Tucker says Atlanta's school-cheating scandal is only what should be expected from the distorted incentives created by top-down impositions. Doug Bandow says the taxpayers can't afford welfare for farmers, and farmers don't need it. Sarah Skwire says a story of life in prewar Lodz, Poland, illustrates how much more complex human lives are than any philosophy or religion. And Michael Nolan says New York is home for reasons as ultimately resistant to explanation as the city itself.

Dwight Lee reviews a book arguing that some things are too important to be dealt with via market mechanisms.

Milton Friedman teaches Monetary Policy


Menckenism: Once The Obama Narrative Implodes, Reality Breaks Through

            by BILL FREZZA

            Shock may best describe the Chicago Cabal's reaction to recent events as the narratives these political operatives spent a lifetime constructing lie in tatters, revealing an ugly reality long held at bay. While Barack Obama's presidency may yet recover "especially if the White House can win back the mainstream media's active support" the ability to frame, spin, distract, blame, deny, distort, demonize, and prevaricate on any issue unchallenged has been compromised. As the president continues to do everything but his job, more and more mainstream journalists are finally starting to do theirs.

            That it has taken a trifecta of scandals to awaken the minions of the press to their duty speaks volumes on how successfully prevailing narratives define what the public accepts as truth. Only the dogged pursuit of the Benghazi, IRS, and AP stories by alternative media forced the legacy press to stop averting its eyes. As the administration's incoherent responses continue to undermine its own credibility, now is a good time to step back and look at the big picture.

What is reality?

The idea that facts are just a social construct and that reality is malleable is a fundamental tenet of postmodern thought. While this obscurantist rejection of objective truth and the Enlightenment virtue of reason was originally confined to literature, architecture, and the arts, since reaching its apex in the middle of the last century it has crossed over into politics. The driving force for that shift was an influential 1966 treatise, The Social Construction of Reality by sociology professors Peter Berger andThomas Luckmann, which described the creation of "symbolic universes" used to manage a society's accepted perceptions of truth and knowledge.

In particular, Berger and Luckmann's theory of "Universe-maintenance" has served as a template for much of the modern progressive movement. It purports to describe how elites legitimize the institutional structures whereby they "construct" the reality they feed into the minds of non-elites. Contra John Adams's admonition, Berger and Luckmann maintained that facts have meaning only within the context of the prevailing narrative, which allows "truth" to be manipulated to serve a larger purpose. In the hands of progressive politicians, that purpose became the empowerment of a benevolent elite tasked with ushering in an age of peace, equality, prosperity, and social justice.

This all may sound like academic gobbledygook, but it is a mistake to believe that these ideas are powerless. All it took was for a generation surreptitiously indoctrinated into these notions to come of age for the masters of narrative creation to get their hands on the levers of power. The end result? Through a confluence of brilliant marketing, appeals to right past racial wrongs, a global financial catastrophe, and a political backlash against a prior failed presidency, we handed the most powerful office in the world to an inexperienced, untested, unvetted community organizer trained, mentored, and advised by a cabal of socialist agitators.

That is why we've got a president who runs his administration not by practicing chief executive skills he never acquired, but by doing the one thing he knows how to do best  ceaselessly campaign around the country while empowering his surrogates to craft a stream of narratives to paper over his failures.

The problem is, these surrogates have asked the American people to accept so many tall tales that we can't keep track of them anymore. To wit: that wealth is created by spending, that money is created by printing, that our inalienable rights include a long list of free stuff, that the Arab Spring will bring peace and democracy, that this is the most transparent administration in history, that government "investment" can usher in a new age of energy, that a reduction in the official unemployment rate is good news even though that's only so because more people have stopped looking for work, and that this is the worst economic recovery in American history because — well, it's Bush's fault!

To cap it all off, the cognitive dissonance created by clashing narratives that the president is simultaneously so wise and powerful he can and should rule by executive action, yet has no knowledge or control of his subordinate agencies, has made Universe-maintenance-as-usual an impossible task.

And hence, the narratives implode and objective reality breaks through. At least for a while. Will the White House be able to put the Humpty Dumpty press corps back together again? We'll find out soon if journalists who get thrills up their legs resume taking the president at his word, singing hosannas to hope and change. If the American people let them get away with it, we will deserve our fates.

Thursday, May 30, 2013

Henry Hazlitt on the Role of Government


Cafe Hayek: Slavery "Even Temporary" Is An Offense Against Humanity

            by DON BOUDREAUX

Here's a letter to the Wall Street Journal:

Gen. Stanley McChrystal joins the discordant chorus of anti-American voices calling for mandatory national service ("Lincoln's Call to Service - And Ours," May 30).

Of course, Gen. McChrystal is convinced that government coercion of young people to "serve" in programs designed by politicians and operated by bureaucrats is pro- rather than anti- American.  But he's mistaken.  What's more central to the American creed than the manifesto in the Declarartion of Independence that every individual possesses "unalienable Rights" which include "Life, Liberty and the pursuit of Happiness" "and that government's sole purpose is — to secure these rights?"

Not even the most twisted reading of the Declaration can make Jefferson's words consistent with a practice of robbing young people temporarily of their liberty.  That foundational declaration of American principles simply leaves no room for any policy of enslaving, even if only for a year, young people to serve Gen. McChrystal's (or anyone else's) notions — however high-minded in principle, if always arrogant in practice — of "citizenship" or "service" or "commitment" at the expense of these young-people's pursuit of their own happiness as they themselves judge it.

Slavery, even for a limited time, is an atrocity.  Gen. McChrystal's proposal deserves the same scorn that America's founders unleashed on their would-be masters in Britain in 1776.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

I've made it crystal clear to my son that if any government ever attempts to conscript him — no matter the purpose, no matter the circumstances, no matter the conditions, and no matter the promised duration — I will literally fight to the death, if necessary, to prevent his enslavement.  He is not "just as no one else is" born to serve any government.

Jim Bashline gives Gun Tutorial


Wednesday, May 29, 2013

FEE: The Man Who Outsourced the Government

            by THE FREEMAN

            Oliver Porter created and implemented the public-private partnership (PPP) model for Sandy Springs, Ga.�a city of 100,000 people near Atlanta. He has served as the principal advisor for many other new cities and for cities considering the conversion to the PPP model, both in the United States and Japan. He has authored three books on this subject and has agreed to sit down with The Freeman.

The Freeman: Can you describe in a nutshell what Sandy Springs, Georgia, has been able to do�that is, provide a sketch of your model?

Porter: The Sandy Springs model is a public-private partnership (PPP) in which the city contracts with private industry for all of its basic services other than public safety�that is, police, fire, and courts. The model has been an outstanding success, both financially and in response to citizens� service needs, over the seven years since the city�s incorporation. Financially: The city has not increased tax rates at all; has paid for a major capital improvement program from savings in the operating budget; has built a $35 million reserve fund despite a recession; and has no long-term liabilities�that is, no loans, no bonds, and of most importance, no unfunded liabilities for pensions and other benefits.

The Freeman: How much money has the model saved taxpayers there?

Porter: Initially about $20 million per year�40 percent of the budget for the �basket� of services being provided. These services include: administration; human resources; finance; accounting; purchasing; information technology; the backroom operations for the police, fire and courts; parks and recreation; transportation (road and sidewalk maintenance, traffic design and control); community development (planning, zoning, permitting, and enforcement); and management of the capital program. Over the life of the contracts, I am comfortable in saying that over $140 million of the taxpayers� dollars have been saved.

The Freeman: That is truly staggering. But what about the quality of the services?

Porter: Services have been substantially improved under the PPP model. Surveys, both internal and national, have generally rated Sandy Springs services as excellent.

The best indicator of citizen satisfaction may be that in the first election (four years) after the city was formed, the lowest vote total that any incumbent received was 84 percent. That certainly indicates a high level of voter satisfaction with the efficiency and responsiveness of the model.

The FreemanThe New York Times, not known for its affinity for anything private, wrote a pretty favorable story about your outsourcing work in Sandy Springs. There were certainly grudging admissions. But one worry the author expressed is that it only worked because Sandy Springs is an affluent area and that outsourced government services are not feasible in poorer areas. What do you think about this concern?

Porter: First, let me say that although Sandy Springs is relatively affluent, it is not a rich enclave. Unfortunately, there were areas of the city that were well below the average income of the metropolitan area. Sandy Springs is a melting pot with a population that includes 30 percent minorities�a growing segment�and over 55 percent apartment dwellers. Five other new cities with varying levels of affluence have been formed, each adopting the PPP model, and all have done well. In my opinion, the model is even more suited for less-affluent communities. These communities need the savings that the model offers, even more than richer areas.

By the way, everything that I am saying about city governments applies equally to counties. 

The Freeman: Detroit, Michigan, is insolvent. It�s a city that is essentially dying. If you could say anything to the new �emergency� manager there�Kevyn Orr�what would you say?

Porter: I hope to have the opportunity to meet him in the next month. I would say to him, �If you are in a deep hole, quit digging!� In a crisis, small, incremental steps are not sufficient. Bold initiatives are required. First, look for alternative service methods such as a PPP to produce operating savings; and second, consider the privatization of the city�s assets, to raise funds to be applied to the debt.

The Freeman: Some ideological purists who read this publication might not like the idea of public-private partnerships like those you�ve established. But among those purists, some will have reasonable concerns about corrupt relationships between business and government forming over time. Do you worry about the system in Sandy Springs being corrupted?

Porter: No. All governments have shown an Achilles heel that allows for corruption. 

The traditional model for cities is not immune. However, there is less opportunity under the PPP model than would normally be the case. The fact that the elected officials are prohibited from meddling in the day-to-day operations�including the bidding of contracts, hiring and firing of employees, and the granting of license and permits, etc.�is a deterrent to improper dealings. All contracts are granted through competitive bidding that is open to public scrutiny. The initial contract bids were thoroughly scrutinized by a citizens� committee, then by a volunteer group appointed by the governor, and finally by the elected council.

On a continuing basis, PPPs diminish the opportunity for such unacceptable behavior. Unlike traditional cities, the private contractors have a profit motive that serves as a natural incentive to reduce costs and operate efficiently. Therefore, behaviors such as preferential hiring of friends and relatives, or palm-greasing, that are sometimes prevalent in traditional governments, become a non-issue in the PPP model.

The Freeman: Has anyone copied your model?

Porter: Yes, At least five other cities. There are thousands of existing cities and counties that could benefit from the model. The only barrier to the adoption of the PPP model is politics. Officials, who have been elected under the traditional form of government, are scared to consider a new model even though it offers better service at lower costs. When I interact with such groups, I point out that their principal job is to serve the citizens�not to provide jobs�and that a part of their job description should be to constantly consider alternative methods for providing service.

The Freeman: We hope to publish this conversation in an issue on the subject of power. And as you know, the way political power works, in part, is that it protects entrenched interests, most of whom have a lot to lose from change in the status quo. It seems to us that the biggest obstacle for people adopting your model is that very power and those who benefit from its existence. What does it take to dislodge these special interests so that the people can see the benefits of privatization?

Porter: Unfortunately, it may take a financial crisis: bankruptcy or near ruin. A number of our cities are near that point. If unfunded liabilities are properly recognized, many more are approaching the crisis state.

For the cities not yet in crisis, there are several steps that should be taken to open the door to efficiency: First it takes a hero, an elected official, or prominent citizen, who is willing to take the heat that may come from those with vested interests. Such sponsorship should lead to a low-cost study that compares current operational costs, and this is very important, costs for pensions and other benefits, of the traditional city versus the PPP model. There is no risk to the city for such a study. And the cost is quite low compared to the potential payoff. If the study shows the potential for substantial savings, the city should issue RFPs [requests for proposals] for the PPP. Again, there is no risk. If the bids do not show substantial savings (and in most cases they will), the city has no obligation to proceed.

The Freeman: Can state governments do anything to help municipalities adopt your model?

Porter: To date, the states have done little; however, there is much that can be done. Obviously the most effective step would be a requirement that cities, at least, consider alternative models. Funding of comparative studies would be an even more helpful step. Removal of legal barriers to the PPP model that exist in some states is, of course, necessary and desirable.

May I add that not-for-profit organizations and media outlets should also take up the cause of municipal reform. The Freeman is to be commended for opening the subject.

The Freeman: Oliver Porter, it�s been a pleasure to speak with you.

Porter: Thank you. I hope that the conversation will not end with this interview. I welcome contacts from interested citizens across our nation.

Read more:

Tuesday, May 28, 2013

John Adams on the Cost of Freedom


FreedomBook #1: Ideas & Action by George P. Shultz

            by KEVIN CZARZASTY

            The following is the first of many micro-commentary on books that foster freedom.  The FTCN Blog's goal in covering "FreedomBooks" is to present the basic background and knowledge of liberty-minded books that could serve contemporary politicians and voters.  The range of books will vary, but all FreedomBook reviews will have the goal of understanding and defending the Constitutional principles of the United States.

            The 21st Century has presented many difficult
tasks to American diplomats.  It can be
said that, considering the unprecedented American involvement in international
affairs combined with the tradition of the USA as chief defender of life and liberty,
our diplomats are as challenged�and should be as apt�as ever.

            With the mess that is Syria, the embarrassment that is
Benghazi and the limitless war on terror, our stretched State Department could use a look at the principles that guided one of history�s finest statesman: George P. Shultz.

            George Shultz was a Marine in the South Pacific during
WWII, earned a Ph.D. in industrial economics from MIT, was dean of the
University of Chicago Graduate School of Business, president of Bechtel, and
held four cabinet posts including Secretary of State.  Among his wide-ranging accomplishments are
his agreement with the USSR to remove INF missiles, not to mention the ending
of the Cold War.

            Below are Shultz�s 10 Commandments of Negotiation, taken
from his Ideas & Action, which is available for purchase from FTCN here.

1) Be in Control of Your Constituency

2) Understand the Needs of the Other Side

3) Personal Factors (in other words, emphasize

4) An Educational Process (in other words, recognize role of
limited knowledge and curiosity)

5) An Ongoing Process

6) Credibility

7) Timing

8) Strength and Diplomacy Go Together

9) Trust is the Coin of the Realm

10) Realistic Goals

In Light of Memorial Day...


UKIP's Nigel Farage calls for Tax Fairness in EU

            Nigel Farage's party, UKIP, was considered a fringe party only a couple years ago, but following recent huge increases in power from local elections, the Liberty-minded party is becoming more influential at the national and international level.  Here, Farage calls out the EU for an unjust tax system, debt and monetary policy, and suggests that if the status quo of Statism was replaced with the free markets of the UK and US in the 1980's, we would all be a lot better off.


Saturday, May 25, 2013

FEE: Advice to Young, Unemployed Workers


We are now in the fifth year of very choppy hiring markets for young workers. The latest unemployment numbers once again leave them out from posted gains. Not even the boom in temporary employment included them. 

The United States has one of the highest rates of unemployment amongst 20-to-26-year-olds in the world. Nearly half of the U.S. army of unemployed is under the age of 34. As for those who are hired, there is a huge gap between wage expectations and paycheck realities, which is exactly what you would expect in post-boom world.

survey by Accenture finds that more than 41 percent of recent U.S. college graduates are disillusioned, underemployed, and not using their college degrees in their work. 

The young generation faces challenges unlike any that most people alive have seen. This situation requires new adaptive strategies. 

What follows, then, is my letter of advice to young workers.


Dear Young Workers:

Even if it weren�t for the economic stagnation, you would already be facing a tough market. That�s because you are showing up at the job marketplace nearly empty-handed. Our society long ago decided it was better for you to sit in desks for 16 years than to gain any real work experience in the marketplace that is likely to hire you later. 

Even if it were legal for you to work when you are capable of doing so�from the age of maybe 12 or 13�the government has imposed these wage-floor laws that price your services out of the market. Then you are told that if you stay in school, you will get a great, high-paying job right out of college. Then it turns out that employers aren't interested in you. You are beginning to sense that employers think you have few marketable skills and have no demonstrated predisposition to produce. 

Here�s the root of the problem: People have been lying to you all your life. 

As a young child you were repeatedly fed slogans about the equality of everyone. The urges to compete and win were suppressed in your childhood games, while sharing and caring for others were exalted above all other values. 

Then at some point�somewhere between the ages of 7 and 10�something changed. All that caring/sharing stuff ended and a world of dog-eat-dog began. You were expected to get perfect grades, to excel at math and science, to be perfectly obedient, to stay in school for as long as possible. You were told that if you did that, everything would work out for you. 

It does work out for some. But only a small minority of people are disposed to both compliance and rote learning. And even for those people, not everyone gets what they�ve been promised. As for the rest, there is no plan in place. Those who fall through the cracks are expected to make it on their own somehow.

How do you make it? It all comes down to remunerative work. And there�s the barrier you face right now. You have the desire and you are looking for some institution that values what you have to contribute. But you can�t find the match. 

Consider: Why does any business hire an employee? It happens based on the belief that the business will make more money with the employee than without it. The business pays you, you do work, and, as a result, there are greater returns coming in than there would otherwise be. 

But think through what this means. It means you have to add more value than you take out. For every dollar you earn, you have to make it possible for the business to earn a dollar plus something extra. This task is not easy. Businesses have costs to cover in addition to your salary. For example, government mandates that businesses be insured. You have to be trained. There could be healthcare costs, too. There are uncertainties to deal with. All of these add to the burden that you place on the business, which add to the costs of hiring you. 

What this means is you have to be more valuable than you think. Why are minimum wage jobs so hard? Because it�s difficult for an inexperienced worker to be worth paying that much. The employer has to extract as much value as possible from the relationship with you just to make that relationship happen at all. That can�t happen right away because odds are you are losing the company money in the first months of employment simply because you are untrained. You end up scrambling like crazy just to earn your keep.

If you already understand this rule�that you must add more value than you take out�you now know more than vast numbers of young workers. And this gives you an advantage. While everyone else is grumbling about the workload and low pay, you can know why you are having to hustle so much and be happier for it. You are producing more for the company than you take out. Doing that consistently is the way to get ahead. In fact, it�s the key to life. 

But in order to get ahead, you have to be a player in the first place. It does little good to sit around and wait for the right job at the right pay. Forget all your expectations. If something, anything, comes along, you should jump on it immediately. No job is too menial, despite what you have been told. The goal is just to get in the game. Yes, you have much higher salary expectations and those might be met someday. But not yet. 

The first step is to get into the game at some wage, just something, somewhere. The fear that such work, whatever it is, is somehow beneath you is a serious source of personal undoing. Those who are willing to perform the most �menial� of jobs are the people who can make a good life for themselves. Just because you perceive the job as �menial� does not mean it is not valuable to others and especially, ultimately, to you.

You learn from every job you have. You learn how to interact with others, how a business runs, how people think, how bosses think, and how those who succeed get ahead versus those who fail. Working is a time for learning, as much as or more than school. 

People�s number one fear is that their job will somehow define their lives. Hence, they conclude that a job stocking shelves at Wal-Mart will redefine or dumb down who they are. This notion is absolutely untrue. That job is a brick in your foundation. 

In order to get any job, you have to do more than drop off a resume or file one online. You have to emerge from the pack. That means that you have to sell yourself like a commodity. You have to market yourself (and marketing is the least-appreciated and yet most-crucial feature of all commercial acts). That is not degrading; it is an opportunity. Find out everything you can about the company and its products. After you apply, you need to go back and back, meet the managers, meet the owners, all with the goal of showing them how much value you will add to their enterprise. 

In this new job, success is not hard, but it requires discipline. Just follow a few simple rules. Never be late. Do first whatever your immediate supervisor tells you to do. Do it much more quickly and thoroughly than he or she expects. When that is done, do some unexpected things that add value to the environment. Never complain. Never gossip. Never partake in office politics. Be a model employee. That�s the path toward thriving.

It�s not just about adding value to the company. It�s about adding value to yourself. The digital age has given us all amazing tools for accumulating personal capital. Get a LinkedIn account and attach your job to your personal identity. Start putting together that essential network. This network is something that will grow throughout your life, starting now and lasting until the end. It could be the most valuable commodity you have outside your own character and skills. Take possession of your work experience and make it your own. 

While doing all this excellent work, you need to be thinking about two possible paths forward, each of them equally viable: advance within this one firm or move to another firm. You should go with whichever is to your best advantage. Never stop looking for your next job. This is true now and always throughout your life. 

A huge mistake people make is to embed themselves emotionally in one institution. The law encourages this attitude by tying all sorts of advantages to the status-quo job you currently hold. You get health benefits, time off, scheduled raises, and it is always easier to stick with what you know. To do so is a mistake. Progress comes through disruption, and sometimes you have to disrupt yourself to make that progress happen. 

To be willing to forgo the security of one job for the uncertainty of another gives you an edge. Average people around you will sacrifice every principle and every truth for the sake of security. People, with very few exceptions, fear the uncertainty of an unknown future more than the seeming security of a known status quo. They will give up every right and every bit of their souls for the promise of security (whether it be through a paycheck or an armed police officer), even to the point of personal misery or obeying a wicked despot (whether it be a boss or a dictator). You can break free of this tendency, but it takes courage, risk taking, and a conscious act of defying convention.

You should always think of yourself as a productive unit that is always on the job market. You can go from institution to institution, always upgrading your skills and hence your wages. Never be afraid to try something new or to plunge into a new work environment. 

Clever finance management here is crucial. Never live at the level that matches your income. Your standard of living, instead, should match your next-best employment opportunity, the one you have foregone or the one you might take next. If you stick with this practice�and it requires discipline�you will be free to choose where you work and to take greater risks. You will also develop a cushion should something go wrong. 

At the same time, there could be advantages to sticking around one place, even as everyone else around you is moving from here to there. Even if that happens, you should still think of yourself as being on the market. You are governing yourself. Don�t let yourself be beholden to anyone, but understand also that no one owes you a living. That�s the only way to make clear judgments about your career path. 

At every job, you are going to learn so much about human ethics, psychology, emotions, and behavior. Most of what you will learn will be enlightening and encouraging. Some of it, however, is not pretty and might come as a shock. 

First, you will discover that people in general are extremely reluctant to admit error. People will defend an opinion or an action until the end, even if every bit of logic and evidence runs contrary. Sincere apologies and genuine admissions of error and wrongdoing are the rarest things in this world. There is no point at all in demanding apologies or in becoming resentful when they fail to appear. Just move on. Neither should you expect to always be rewarded for being right. On the contrary, people will often resent you and try to take you down. 

How do you deal with this problem? Don�t get frustrated. Don�t seek justice. Accept the reality for what it is. If a job isn�t working out, move on. If you get fired, don�t seek vengeance. Anger and resentment accomplish absolutely nothing. Keep your eye on the goal of personal and professional advancement, and think of anything that interrupts your path as a diversion and a distraction. 

Second, we all want to believe that doing a great job and becoming excellent at something will lead to personal reward. This is not always or even often true. Excellence makes you a target of envy from those around you who have failed by comparison. Excellence can often harm your prospects for success. Meritocracy exists, and even prevails, but it is realized through your own initiative, and it is never just granted freely by some individual or institution. All personal and social progress comes about because you alone push through the attempts of everyone around you to stop it.

Third, people tend to possess a status-quo bias and prefer to follow orders and instructions; most people cannot imagine how the world around them might be different through initiative and change. If you can train yourself to imagine a world that doesn�t yet exist�to exercise the use of imagination and creativity in a commercial framework�you can become the most valuable person around. You might be among those who can be real entrepreneur/capitalists. You might even change the world. 

As you develop and use these talents, and as they become ever more valuable to those around you, remember that you are not infallible. The commercial marketplace punishes pride and arrogance and it rewards humility and the teachable spirit. Be happy for your successes, but never stop learning. There is always more to know because the world is ever changing, and none of us can know all things. The key to thriving in this life is to be prepared to not only change with it but to get in front of the change and drive it. 

From where you are now, unemployed with few seeming prospects, your future might look hopeless. This perception is not true. There are barriers, to be sure, but they are there to be overcome by you and you alone. The world does not work like you were told it works when you were a kid. Deal with it and start engaging the reality around you right now just as it is, using intelligence, cunning, and charm. You are the decision-maker, and whether you succeed or fail ultimately depends on the decisions you make.

In many ways, you are a victim of a system that has conspired against you. But you get nowhere by acting like a victim. You don�t need to be a victim. You have free will and the capacity for self-governance; indeed you possess the human right to choose. Today is the day to start exercising it.

Don't forget... watch our documentaries, free, at 

Friday, May 24, 2013

A Brilliant 30 Day Liberty Reading List

            This 30 day reading list from the Economic Policy Journal will help you beome a more knowledgeable Libertarian.

Friedman on Immigration


Cafe Hayek: The Curse of Aggregation Strikes Again

            by DON BOUDEAUX

Mr. Denis D___

Dear Mr. D___:

Thanks for your e-mail explaining your "black hole theory of the minimum wage."

A critical part of your theory, as I understand it (with help from the link you sent to a video of Sen. Elizabeth Warren talking about wages and worker productivity), is that the minimum wage hasn't risen by as much as has overall worker productivity.  Supply and demand, therefore, presumably aren't working for low-skilled workers.

Ms. Warren and you are correct that worker pay in the long run is determined by worker productivity.  The productivity that's relevant, however, is marginal productivity — namely, the value that "the last" worker added to a class of production projects adds to the market value of the outputs of those projects.  But not all workers and not all production projects are alike.  The level of aggregation at which Ms. Warren and you conduct this conversation is meaningless for the point you wish to make.  You confuse trends in overall worker productivity with that of the marginal productivity of low-skilled workers.

If, all other things unchanged, consumer demand for neurosurgeons rises relative to that for general practitioners, the wages of neurosurgeons will rise relative to that of GPs.  The reason is that the marginal productivity of neurosurgeons will rise relative to that of GPs.  The same result will occur if, all other things unchanged, the number of GPs increases relative to that of neurosurgeons.  If the average productivity of physicians as a group rises over time, nothing in economic theory says that the productivity or the wages of all physicians must rise by equal amounts — by amounts equal to the rise in average physician productivity and average physician wages.  Indeed, nothing says that the wages of some kinds of physicians cannot fall even when average physician productivity is rising.

What's true for physicians is true for workers generally.  There's absolutely no reason for Ms. Warren and you to conclude that the standard economic theory of wage determination is faulty, or fails to apply to low-skilled workers, simply because the wages of one kind of workers "the low-skilled" have not risen by as much as these wages would have risen had they been determined by the rise in average worker productivity.  What matters is marginal productivity of the particular kinds of workers in question.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

Several other flaws infect Mr. D___'s and Ms. Warren's economic analysis, but the letter above is quite long enough.

Wednesday, May 22, 2013

Milton Friedman on Welfare and Self-Interest


Fed Stimulus still Essential to Recovery, says Bernanke

            Today, Federal Reserve chairman Ben Bernanke told Congress he needs to maintain interest rates at record lows in order to continue to alleged economic recovery.  As he does at every Congress hearing, he further pressed Congress to get its act together, reminding our elected officials that he only has so many tools.  It should be asked, however, if Bernanke only has a select amount of tools, and as he is human only has a select amount of knowledge, should he be trusted to supply neverending cheap money to markets, thus creating bubbles in the face of an actionless Congress?

Tuesday, May 21, 2013

FTCN's Thoughts are with Oklahoma

            Following the tragic hurricane in Oklahoma, FTCN sends our thoughts and prayers.  Let this remind us of how precious life is.  Also, be sure to appreciate the good stories coming from the tragedy, such as this elderly woman being interviewed about losing her house and dog...and then finding her dog during the interview.

Friedman on Healthcare and the Poor


Menckenism: Move Over, Polar Bears: Palm Oil Orangutans Want Their $5 of Fame

            by BILL FREZZA

            What do polar bears, orangutans, the Walt Disney Company, Cheetos, recycled fundraising schemes and corporate shakedowns have in common? It's just another day on the social activism front.

            Skillful fundraisers have long used charismatic megafauna -- cool, cute, cuddly creatures whose pictures make you go squishy inside -- to collect money from donors concerned about the environment who want to feel like they are doing something. Nothing wrong with that -- voluntarism is a great American tradition and we all have our pet causes. But when the money is used to break the law in order to harass image-conscious corporations into making payoffs or driving their suppliers out of business, it stops being fun and games.

            The latest episode comes courtesy of the Rainforest Action Network (RAN), which recently reached into its archives of old publicity stunts to recycle plans to shake down snack food manufacturers for the "crime" of using palm oil in their products. Back in 2008, RAN's tactics consisted of asking a couple thousand volunteers to sneak into grocery stores across the country and attach stickers to bags of Cheetos and other snacks reading, 'Warning! May Contain Rainforest Destruction.' Another, similar attack targeted Walt Disney Studios for printing children's books with paper from suppliers deemed environmentally incorrect by RAN.

            The idea is to browbeat disfavored industrial vendors into endorsing RAN-favored policies by reaching up their supply chains to threaten the reputations of higher profile companies more vulnerable to negative publicity -- or, if they don't comply, bankrupt them.

Of course there is nothing wrong with urging consumers to use or not use any product for any reason. Witness attempts to get consumers to stop eating Chick-fil-A sandwiches because its CEO donated money to organizations that oppose same-sex marriage. Some consumers did stay away, but gay marriage opponents packed Chick-Fil-A to exercise their right to eat as many chicken sandwiches as they pleased. That's what freedom is all about.

            But freedom of choice is apparently not enough for RAN, which prides itself on practicing what it calls "environmentalism with teeth." In this case, "teeth" means vandalism, trespass and blackmail. And RAN isn't alone, as it is joined on the radical fringe by organizations like the Ruckus SocietyAnimal Liberation FrontPeople for the Ethical Treatment of Animalsand others, including some that cross the line into lawbreaking and even deadly arson.

            RAN's 2008 snack food sticker campaign fizzled out with hardly a whimper. But a new and improved version is back, this time to "save" orangutans, those cute, irascible Clint Eastwood co-stars whose antics can't help but make you smile. In a recent mailing asking supporters for $5.00, RAN announced its "most ambitious palm oil campaign yet, aimed at convincing the top 20 snack food companies to cut orangutan extinction out of their supply chains." Right now, hundreds of activists are stickering popular brand name snack foods in grocery stores around the U.S. with the message: 'Warning: This snack food may cause orangutan extinction.'

            There's just one small problem with this story, and that is demonizing an entire industry for the sins of some of the players. Malaysia is the largest exporter of palm oil in the world, while Indonesia is the largest producer. Palm oil is also produced in Nigeria and Colombia. Endangered orangutans live in only a few limited regions, mostly on the Indonesian islands of Borneo and Sumatra. According to a report published by the Adam Smith Institute, "Dispelling the myths: Palm oil and the environmental lobby," the only orangutans spotted on the Malaysian mainland in recent history are ancient fossils. Why, then, is orangutan preservation being used to falsely target Malaysian, Nigerian, and Colombian producers for extinction?

            As the industry develops, plantation operators, concerned about their image, are taking steps to ensure that their farming practices are sustainable. Almost 80 percent of Malaysia's natural forests have been given over to permanent reserves, national parks, and wildlife sanctuaries. In a country that is still almost three-quarters covered with trees, wouldn't that cover their fair share?

            For rich citizens of a country whose forebears chopped down every tree from the Atlantic Ocean to the Mississippi River to tell poor people living in an undeveloped country that they cannot develop their resources to pull themselves out of poverty is the worst form of imperialism.

            Yes, by all means we should teach and encourage sound environmental practices. No one wants to see mass forest burnings blackening the sky. But history shows that wealthy societies are the ones that protect the environment best. So if we want Malaysians to adopt our more enlightened values we need to help them develop their economy, not tell tall tales about endangered orangutans as justification for driving their industries out of business. 

            A major motivating force for social activism may well be the glorious sense of self-righteousness practitioners enjoy, but please get your narrative straight. There is no reason why the world cannot have orangutans and eat its Cheetos, too.

         Correction: Please note that paragraph 8 has been changed to reflect that fact that Malaysia is not the largest producer of palm oil (and hence does not contain the "vast majority of palm oil plantations"). Malaysia is the largest exporter of palm oil. Indonesia is the largest producer of palm oil, and has more total acreage under palm oil production than Malaysia.

Franklin on Virtue


Thursday, May 16, 2013

Milton Friedman on National Healthcare


FEE: Common Core: A Tocquevillean Education or Cartel Federalism?

         by LENORE EALY

            When administrators act, they constitute as well as manage. But what is being constituted—Leviathans or self-governing communities of relationships in compound republics?

            —Vincent Ostrom

            The development of the Common Core, the model school curriculum standards that have been adopted by 45 states, offers us a glimpse into the dark underbelly of the democratic drift toward soft despotism. Proponents tout Common Core as "state-led" and say states "voluntarily adopt" the standards. Philanthropic and corporate America have gotten involved voluntarily. Parents and students "those most intimately affected by the initiative" won't get to be a part of the voluntarism. But Common Core is so good, the argument goes, they'll want it anyway. 

            Bringing greater uniformity to the K-12 curricula across the country is supposed to rescue kids stuck in lousy schools and improve standards for everyone. But policy analysts across the spectrum from Brookings to Heritage are expressing skepticism about the promises accompanying the new standards. And it is quite likely that such bureaucratic uniformity from Washington to the state capitols and then to every public school district in the land will pose new risks to America's federalist experiment in self-government. What's more, the Common Core movement is pushing increased college matriculation just as students and parents are beginning to reassess the costs and benefits of college tuition.

            Apologists for the Common Core seek to allay fears of creeping nationalization with appeals that seem to invoke the blessing of Alexis de Tocqueville, who admired the energetic voluntary associations Americans once formed in almost every field of endeavor. Tocqueville's been making a comeback of late, so this defense of the Common Core isn't in itself surprising. But what happens, we must ask, when state leaders, private donors, and voluntary associations embark on initiatives that don't align with the principles of federalism necessary for sustaining America's constitutional order?

         All the Best Kinds of Experts

            In many ways, the Common Core coalition's rapid sweep of the country in four short years resembles nothing so much as the social movement for Prohibition a century ago, which led to the passage of the Eighteenth Amendment in 1919 (a police power fiasco that was repealed by the 21st Amendment in 1933). The best sorts of professional experts in education and government are on board, as are philanthropic and corporate America. The motives seem pure: Who doesn't want schools held to higher standards?

            The core fact of the Common Core, though, is that it's a relentless and coordinated push by philanthropic and bureaucratic experts to shift authority and responsibility from local citizens and independent school districts to the far-removed high cover of central authorities. The Obama administration quickly tied Race to the Top dollars to Common Core adoption by the states, not only tainting the appearance of the Common Core's voluntary roots but compromising their reality, too. State officials faced new external incentives: Rush to adopt the Common Core standards in order to submit applications for Race to the Top grants. Another carrot was added to the mix: States adopting the Common Core could receive administrative waivers from certain requirements imposed upon them by the much touted No Child Left Behind legislation passed by Congress in 2001.

            Indeed, the campaign for passage and implementation of the Common Corewhich now includes a concerted (and corporate-sponsored) advertising campaignepitomizes the trend toward cartel federalism described by Michael Greve in The Upside-Down Constitution (2012). In contrast to constitutional or competitive federalism, which works to discipline government at all levels, Greve describes cartel federalism as a form of bargaining among state governments and local elites that works to strengthen and centralize the national authority in return for attractive political and revenue returns. "A cartel federalism that empowers government at all levels is pathological, and quite probably worse than wholesale nationalization," writes Greve.

            The spring 2013 issue of Philanthropy magazine, published by the erstwhile-conservative Philanthropy Roundtable, recounts the "Common Core's Uncommon Rise" and depicts the now all-too-common ways cartel federalism and its helpmate, philanthro-policymaking, work to generate and promote policy bandwagons.

            In 2008 the American Diploma Project, heavily funded by the Gates Foundation, convened state officials and education reform groups, many of whom saw national standards as a key move to promote greater equity of educational processes and outcomes. [F]rom those meetings, Philanthropy reports, emerged the idea of leveraging the cross-state work that the governors and chiefs had been working on with the voluntary mechanism that the American Diploma Project had been using to help states benchmark standards to college and career readiness. 

            The new coalition began to make promises to donors, with apparently little attention to what voters in their respective states might have to say in the matter:

            "In the early stages of conversation with the foundations, there was a lot of skepticism about whether the states could do this and would do this, "explains Gene Wilhoit, who was until recently executive director of CCSSO. " We didn't have the entire support we needed when we started the process. So when we sat down with the philanthropic community we had to make some pretty specific promises to them "like having so many states agree to participate in the process, and that those states would sign on to the adoption." Cash-strapped states did not have the funds necessary to undertake the Common Core project on their own, and funding from the federal government wasn't desirable from the states "perspective" governors and education commissioners knew that if voters were to embrace national benchmarks, they would need to be convinced that states were in the driver's seat.

            Once the voluntary sector was co-opted, the rest was politics.

         To Educate for Liberty?

            The debate over the Common Core is exposing new fault lines in America's reigning political coalitions. Instrumental in the Obama presidential victories, teachers unions have been emerging as opponents of the Common Core. On the right, meanwhile, opposition to the Core is mounting from more libertarian- and Tea Party-oriented groups, while more neoconservative groups join in support for the new standards. In the National Review Online, Kathleen Porter-Magee (Thomas B. Fordham Institute) and Sol Stern (Manhattan Institute) recently tried to set conservatives straight, complaining:

            Common Core offers American students the opportunity for a far more rigorous, content-rich, cohesive K12 education than most of them have had. Conservatives used to be in favor of holding students to high standards and an academic curriculum based on great works of Western civilization and the American republic. Aren't they still?

            Such arguments miss the fundamental problem, however, which is that even if national standards could improve education for American students "and this is by no means certain" the rush to join in the national standards movement further alienates responsibility for education from the people whose lives are most intimately tied to what goes on in schools: teachers, students, and parents.

            Officials in my state, Indiana, have wisely decided to review the state's decision to adopt the Common Core, but as these things go, the odds are very long for a complete reversal. Nevertheless, the deliberations in this state and others may help us elevate the conversation beyond debates over the projected impact of these new standards. It opens the door to asking fundamental questions, such as whom is education really for?  Is education primarily a tool of social control? Is education merely a benchmark for assessing state-to-state and international competitiveness? Or is education more properly the cultivation, student by student, of the knowledge and personal capacity for self-governance? An auspicious moment is arising for political leadership in helping citizens re-examine both the principles of federalism and the role of education in promoting liberty.

         No Exit, No Discovery

            Regardless of the merit of the proposed standards, it still matters who decides and whether there are rights of exit from the influence of the interlocking directorates of educational "experts," government agencies, and companies standing to reap the rewards from selling new curriculum-aligned materials and tests to thousands of local school districts and families.

            This is exactly the sort of debate over the very possibility of freedom in America that should be enjoined by those who would renew the federal vision of the American founders. Returning to a federal system that promotes liberty does not mean returning to educational arrangements that fail to provide access and opportunity for all children. But it does require renewing one of the perennial questions of a self-governing people, articulated here by Robert B. Hawkins, Jr.: How can a society so constitute itself that its members will be free participants in a self-governing order and not merely the subjects of the state?

            In considering the role of education today, we must also take account of the ways in which the progress of both liberty and knowledge share dependence on trial-and-error discoveries. Schooling and public policy, therefore, need more of what we have learned about the mechanisms that best support the creation, diffusion, and validation of knowledge.

            We understand today through the work of social theorists such as Ludwig von Mises, F. A. Hayek, Michael Polanyi, Michael Oakeshott, and others that the methods of scientific rationality are not applicable to the management of social problems in which human persons are actors.

            Writing in The Freeman on behalf of a freer market in education in 1995, Sheldon Richman deftly brought to bear the contrast between a closed universe of knowledge and an open universe, in which discovery remains possible. Richman observed that in government school systems, neither contracting out nor even charter schools were likely to help us make education better, for "the ends of the educational system are still set by the same small group of officials, who are protected from competition."

            Common Core would build an "aligned" national infrastructure on the basis of what educators "know" at the present time with little apparent room for future competition as to the ends or the means or the methods of education. While educators may increasingly speak a standardized language, the children still may not learn. Worse, treated as educational subjects rather than as human persons, the rising generations may become even less capable of self-governance.

            In "Individualism, True and False," Hayek, invoking the insight of Lord Acton, offers us an antidote to the Common Core's we"re-all-in-this-together boosterism: —While individualism affirms that all governments should be democratic, it has no superstitious belief in the omnicompetence of majority decisions, and in particular it refuses to admit that "absolute power may, by the hypothesis of popular origin, be as legitimate as constitutional freedom."

            American debate over education should be, in the spirit of genuine American federalism, less concerned with global competitiveness and more attuned to the questions of what social arrangements most contribute to the capacity of a people for liberty.

            Vincent Ostrom points out the hollow victory of democracy if federalism is abandoned:

            Those who continue to assume that the national government, because of its "federal form," is competent to determine all matters that pertain to the governance of American society have fallen into two errors: that of neglecting the limited capabilities of those occupying positions of national authority; and that of considering citizens to be "more than kings and less than men" (Tocqueville [1835] 1945, 2:231), so that they are presumed to be competent to select their national rulers, but incompetent to govern their own local affairs. The federal form" of the national government is no substitute for a federal system of governance.

            But the principles of federalism can be left behind in other ways than outright nationalization of policy. Tocqueville wrote in admiration of America's voluntary associations, but he saw as well that these associations depended on certain habits of the heart, which he thought were cultivated across America by the prevalence of local institutions of self-governance. Such smaller political communities may indeed include schools of all sorts, where people are engaged in both instrumental and civic ends together. 

            A national curriculum shaping the educational institutions available to American children for the first two decades of their lives might be a wonder, if it could work. If it does not, shall we celebrate that at least we gave our habits of liberty away voluntarily, with great philanthropic ideals of equity and excellence in mind? Maybe we should consider hedging our bets.

            Read more:

Wednesday, May 15, 2013

Bastiat on Origins of Law


Tommy Vig on the Right to Arms


Cafe Hayek: Means Are Not Ends


Here's a letter to Salon:

In your interview of Jaron Lanier you quote a passage from his book Who Owns The Future — a book in which Mr. Lanier laments the modern economy's facility at making available at very low cost many goods and services whose production in the past required a great deal of human labor: "At the height of its power, the photography company Kodak employed more than 14,000 people and was worth $28 billion.  They even invented the first digital camera.  But today Kodak is bankrupt, and the new face of digital photography has become Instagram.  When Instagram was sold to Facebook for a billion dollars in 2012, it employed only 13 people.  Where did all those jobs disappear?  And what happened to the wealth that all those middle-class jobs created?"  ("The Internet destroyed the middle class," May 12).

Mr. Lanier sounds profound, I suppose, to people unfamiliar with history.  So let's re-write Mr. Lanier's prose just a bit in order to put his fears in historical context:

"At the height of its power, agriculture employed 90 percent of the population and produced output worth vastly more than half of U.S. GDP.  It even invented countless plant hybrids and animal breeds.  But today nearly all farms of the past have gone bankrupt (or, seeing the economic writing on the wall, were transformed to other uses).  Agriculture today employs only about one percent of the workforce.  Where did all those jobs disappear?  And what happened to the wealth that all those good agricultural jobs created?"

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

(For the pointer to the Salon piece on Lanier, I thank Steven McDuffie.)

By Mr. Lanier's logic — and, to be fair, he's hardly the only person who sees the world as he does — we'd all be made much wealthier if, suddenly, each gallon of water for human consumption had to be manufactured using many workers.

(For the pointer to the Salon piece on Lanier, I thank Steven McDuffie.)

By Mr. Lanier's logic " and, to be fair, he's hardly the only person who sees the world as he does —  we'd all be made much wealthier if, suddenly, each gallon of water for human consumption had to be manufactured using many workers.

Walter Williams on Race in Economics & his Life


Tuesday, May 14, 2013

Reflecting on The Socratic Imperative

            by KEVIN CZARZASTY

            Socrates pioneered the philosophy of questioning.  He explained that there are two ways of teaching.  On one hand, I can be told an answer, and then memorize it.  On the other hand, if I'm asked a question, I must then look inward to find an answer True to myself.  The more questions, the more full-proof a given premise.  While the memorization happens all too much, self-exploration is falsely labeled as useless.  We're too obsessed with thinking about what we do know; we're not concerned enough with wondering about what we don't

            The Athenian government persecuted Socrates for corrupting the youth with questions, and because he preached critical thought, he was given the choice between exile or death by poison.  In
hopes that his message would be heard, or maybe repeated by FTCN thousands of years later, Socrates drank the toxic Hemlock, and died a man of virtue.

            Tragically, Socrates seems to have failed.   Today, many know his name, but few hear his lesson, and even less live by the man's prophecy.  Why are we so afraid to question?  What's so Bad about curiosity?  The most curious people in the world are kids, and they're arguably the smartest. Consider how much knowledge kids retain in their first three years.  Indeed you have to feed and clothe, but through their own experimentation, they learn to move, interact, and survive independently.  Children are conditioned by their environment, but it is their curiosity that enables them to function within the environment.

            Perhaps we shouldstart analyzing governance in a curious manner. Similarly, maybe our government should not mimic the Athenians, but instead encourage and even practice critical thought.

Einstein on Teaching


Millennials are Bigger Savers than Babyboomers

            A USA Today article shows that unlike Babyboomers, Millennials are more geared towards savings.  What impacts might this trend have in the future?  As the Federal Reserve continues to manage markets and rely on stimulated spending, the future generations may not be as willing to spend.  Could this fundamental shift in behavior lead to a fundamental shift in banking?

Monday, May 13, 2013

What is an Idea?


FEE: After The Welfare State (Book Review)

            by LANCE LAMBERTON

            You�re at a cocktail party. You strike up a conversation with a stranger, and if you�re liberty-minded or concerned with economics, you might express skepticism about the viability of the current welfare state. Thanks to U.S. entitlement programs, unfunded liabilities threaten a fiscal tsunami. 

            Your conversation partner expresses dismay, however. Without such programs, she says, millions will be without food, shelter, and of course health care.

            Prior to reading After the Welfare State, I would meekly have argued for private charity to replace centralized entitlement programs. I would probably have outlined a boilerplate plan for entitlement reform that would make the welfare state at least sustainable. And while private charity can and should play a greater role, I would be hard pressed to make a convincing case that it could meet all of the needs of a modern industrial society, especially one that has become addicted to entitlement spending.

            Tom G. Palmer�s book showed me I needed only to look to history�a history nearly wiped clean by the welfare state. 

            Beginning in the late eighteenth century, friendly societies arose to address the needs of a growing population. As the Industrial Revolution created new markets and new wealth, it also saw the advent of organizations designed to solve myriad social problems and form the ties of true community. Self-governing �friendly societies,� both in Great Britain and America, developed spontaneously, providing mutual aid and welfare services without government support or involvement.

            It�s difficult to imagine today just how these aid societies flourished. By the late nineteenth century, membership had expanded to include millions, cutting across all racial and ethnic divisions. These voluntary, self-funded associations provided all manner of social welfare services, including death benefits, old-age homes, orphanages, healthcare, and savings for retirement and disability�just to name a few. Moreover, friendly societies were able to achieve their mission without the moral hazard endemic to the current welfare state (in which benefits are dispensed to recipients based on static income formulas rather than considerations about circumstances).

            With mutual-aid societies, membership was contingent on adhering to generally accepted codes of behavior, with aid provided to members who fell upon hard times through no fault of their own, such as an unavoidable job loss, injury, or prolonged illness. Wife-beaters and the chronically lazy were often expelled, or not admitted in the first place.

            Consequently, with friendly societies and their derivatives dominating the provision of social welfare services, the demand for welfare by public and private charities was miniscule compared to today. According to one of the book�s contributors, David Beito, in 1930 �less than 4 percent of New York�s aged depended on either public or private charity.�

            All this was to change rather dramatically with the rise of the welfare state, which was initiated in the modern era under Otto von Bismarck�s Germany in the late nineteenth century. As a blatant power grab by Chancellor Bismarck, the intent was to make the German people dependent upon, and thereby loyal to, the State. In pursuit of what he unabashedly called �State Socialism,� not to mention ambitions to dominate Europe, Bismark declared, �Whoever has a [state] pension for his old age is far more content and far easier to handle than one who has no such prospect.�

            Unfortunately, Bismarck�s welfare state concept soon found ready acceptance in Britain and the United States. They saw full American expression during FDR�s New Deal. In 1911 England passed the National Insurance Act, which came at a time when membership in friendly societies was growing at unprecedented rates. These were doomed to wither and die, however, as the state formed a tax-fueled charity monopoly.

            While the welfare state has succeeded in supplanting voluntary self-help associations, the net effect has been far more pervasive. It ensnares not just the poor and needy by trapping them in a life of hopeless dependency, but it also mires us in debt and deficit spending. The bulk of government spending is for so-called �entitlements,� which are meted out to current recipients across income quintiles. The tab is passed onto generations not yet born.  

            Palmer warns that we have about 10 years left to correct the current fiscal imbalance before the welfare state implodes. The government will have to repudiate these unfunded liabilities or accept rampant inflation, crippling taxes, and a lower quality of life. If and when that day comes, we will at least have this book to point to a way out�one that balances our fiscal solvency with concern for the least fortunate among us. History can be a guide for how we survive and prosper after the welfare state.

von Mises on Private Property


Friedman's columns for Newsweek via The Hoover Institute

            Want to learn liberty? The Hoover Institute's archive has all Newsweek columns by Milton Friedman here:

Saturday, May 11, 2013

FEE: Meet the Targets or Die the Death

            by JEFFREY A. TUCKER

            Sometimes a national story, reported in big venues in big ways for 48 hours, just goes away for no good reason. No lessons are learned. No insights are gained. No fundamental reforms are inspired. 


            That is the case with Atlanta public school scandal in which investigators identified 178 teachers and principals in 44 of the system�s 100 schools involved in cheating on student tests. The investigation has finally been completed and some people are going to the pen. 


            The response to the news was typical: down with these lying teachers. This response taps into a feeling we all have that tests should record actual student achievement. Falsifying exam results outright, solely to make the students and system look better than they are, is the height of fraud.


            But let�s look a bit deeper. 


            What�s the incentive structure behind the cheating scandal? No one at the top had ordered teachers and principals to change the tests. Bureaucrats put in place a system designed to make kids successful by fiat. Everyone knew the rules: Teachers and principals who failed to achieve these goals, however unreasonable, would be fired. And yet when the smoke cleared, everyone simply blamed the teachers.


            When she was hired as superintendent in 1999, Beverly L. Hall gave all principals three years to meet the state-mandated targets. They didn�t. She closed 20 percent of the schools and fired 90 percent of the principals. People cheered for the obvious reason: these schools were non-functioning. Someone had the pay the price. 


            Everyone who survived got the message and the new hires were on notice: Meet the goals or face professional death. 


            Then around 2004 the schools magically turned around. Scores on the exams mandated by the federal �No Child Left Behind� legislation started to rise. Dr. Hall became a national hero and fixture on the media and lecture circuits, explaining how inspiration and good management can make the difference. 


            Behind the scenes, the reality was very different. After collecting all the students� tests, a group of teachers nicknamed �the chosen� would meet behind closed doors. They sat in a big room and went over each test, erasers in hand, looking for incorrect answers to fix.


            It sounds crude and ridiculous. Initially, according to the main witness�elementary school teacher Jackie Parks��the chosen� were reluctant. But then the scheme started to show results. The scores showed that 86 percent of eighth graders passed math compared with 24 percent the year before. The same was true for reading: 78 percent passed versus 35 percent the year before. 


            The conspirators received nothing but praise for the results. The business community was thrilled because it drew new attention to the city and inspired investment and migration. The government was happy because everyone wants the public schools to work. 


            Most importantly for those doing the dirty work, they kept their jobs. Since the cheating didn�t seem to incur any penalties, but insufficient scores would have, it was an easy enough choice. 


            In 2010, investigators got involved. The jig was up. Now Dr. Hall may be facing 45 years in prison. 35 Atlanta-area teachers face similar charges. As she languishes in jail, we should ask what this does for the kids. Do they benefit? The answer is nothing changes for them. They didn�t actually become better educated in 2004 and they won�t be suddenly made less proficient now. It�s just the same old broken system. 


            The first response to this kind of story is: Lock �em up. But, again, what does that actually fix? I can�t help but be somewhat sympathetic to everyone involved, and that even goes for Dr. Hall. 


            Here�s why I say this: Every government plan gives rise to cheating and manipulation. This is true for the smallest cases or the biggest. This is easier to understand if you consider more famously epic cases. 


            Consider an example. It is 1935 Russia. Grain crops keep failing, despite the Five Year Plan Stalin imposed. He�s sick of it. It�s embarrassing. So this year, he decides to crack some skulls. Already tens of thousands have died, and everyone knows he means business. It�s the same in every industry actually, from steel to cars to railways. 


            What happens? The new farmer or plant manager faces either professional or real death or he fudges the records. He figures out a way to survive. And the difference between Soviet five-year plans and public school five-year plans seem to me to be mostly a difference of degree.


            Are people going to cheat? Absolutely. Is it wrong to cheat? Yes�but look at the bigger picture and the inherent problems with the system. The problem is not the cheaters per se; the problem is the ridiculous idea that you can reinvent reality by passing a law and enforcing it.


            �No Child Left Behind� was nothing but a soft version of Stalin�s Five Year Plan. It was an attempt to reform around the edges a system that is fundamentally wrong. It mandated that nationalized institutions, with students are who required to be there or face penalties, achieve a certain level of output or else everyone in charge gets replaced. This reform legislation was passed as a �back to basics� plan to replace the previous liberal plan that seemed to have no standards at all. 


            Now it stands as just another failed reform, another attempt to make reality different by passing laws and cracking skulls. It never works. So long as schools remain the province of politicians and are owned and run by the State, these reforms will continue as they have for a century. And in the same way, there will be incentives to cheat the system, no matter how strict the penalties. 


            The real way that education is being reinvented in our time is through myriad private efforts. Home schooling, privately managed charter schools, privately owned schools, unschooling, Internet-based learning, church schools�each of these solutions is something that the political and bureaucratic class doesn�t like. But they are marking out the only real path for reform that can work. 

Friday, May 10, 2013

Gregory Hicks (Benghazi Whistleblower) Embarrassed By Blame Placed On YouTube Video


Defense Distributed shutdown by Department of Defense

            FTCN has been extremely interested in the developments of Cody Wilson's DefDist, a company opensourcing data to print and distribute 3D printed guns.  After having success fired the first 3D printed handgun last weekend, and after the resultant 100,000+ downloads of the data, the Department of Defense has shut down the operation.  Below is the text now found on DefDist's website.

This file has been removed from public access at the request of the US Department of Defense Trade Controls. Until further notice, the United States government claims control of the information.

Jacob Mchangama on Free Speech