Campaign for Liberty

This Week in Congress: Part Three
Posted on Thursday January 18, 2018

Today the House will vote on a stop-gap funding bill keeping the government open until February 16. As mentioned yesterday, the CR contains a two year suspension of Obamacare’s medical device and “Cadillac” tax, and a one year suspension of [...]

This Week in Congress: FISA and Spending
Posted on Wednesday January 17, 2018

Here is the roll-call vote on the motion to proceed with Section 702 of the FISA Act. The vote means that Senator Rand Paul will be forced to end his filibuster and will not be able to offer the USA Rights Act as an amendment to the [...]

This Week in Congress
Posted on Tuesday January 16, 2018

The big event of the week is the Senate vote on S.140, the legation extending Section 702 of the FISA Act. Senator Rand Paul is filibustering the act and Campaign for Liberty urges all members to call their Senators and tell them to Stand with [...]

Oppose the con in Pennsylvania
Posted on Thursday January 11, 2018

I am writing to you today about an issue of grave concern to me . . . an issue that could set the liberty movement and our country back decades or worse. Campaign for Liberty emailed you recently about dangerous bills applying for an Article V [...]

Oppose the con in New Hampshire
Posted on Thursday January 11, 2018

I am writing to you today about an issue of grave concern to me . . . an issue that could set the liberty movement and our country back decades or worse. Campaign for Liberty emailed you recently about dangerous bills applying for an Article V [...]

Oppose the con in Mississippi
Posted on Thursday January 11, 2018

I am writing to you today about an issue of grave concern to me . . . an issue that could set the liberty movement and our country back decades or worse. Campaign for Liberty emailed you recently about dangerous bills applying for an Article V [...]

It's the craziest thing in the world!
Posted on Thursday January 11, 2018

It’s the “craziest thing in the world.” That’s what Bill Clinton said about ObamaCare mere weeks before the 2016 general election. It’s not often I find myself agreeing with Bill Clinton, but on this point, I do. Repealing [...]

This Week in Congress: 702 Update
Posted on Thursday January 11, 2018

Today the House votes on legislation reauthorizing Section 702 of the FISA Act, so please call your Representative and tell them to oppose reauthorizing this unconstitutional program. Before the final vote, the House will vote on the amendment [...]

It's a terrible time for a Con Con
Posted on Wednesday January 10, 2018

I am writing to you today about an issue of grave concern to me . . . an issue that could set the liberty movement and our country back decades or worse. Campaign for Liberty emailed you recently about dangerous bills applying for an Article V [...]

Exciting News!
Posted on Wednesday January 10, 2018

I have some exciting news! While Campaign for Liberty continues to push for passage of Audit the Fed, there is something you can do RIGHT NOW to help end the Federal Reserve’s money monopoly! Wyoming Campaign for Liberty is working [...]


PBS/NPR Poll Finds Trump's First Year a 'Failure', NPR Exaggerates It
Posted on Friday January 19, 2018

<p>Your taxpayer-supported news producers at PBS and NPR are presenting their latest poll and pronouncing Trump’s first year flopped with the voters: 53 percent said Year One was a failure, while 45 percent picked Success.  </p> <p>But break down the numbers by party, and the division is predictable: 87 percent of Democrats pronounced Trump a failure, and 87 percent of Republicans checked the success box. Among independents, it was 50 percent failure, 41 percent success, nine percent unsure.</p> <p>Naturally, NPR didn’t go anywhere near breaking down the parties. Anchor David Greene and political analyst Domenico Montanaro underlined Bad News:</p>

The Top 5 Worst Pro-Abortion TV Scenes of the Year
Posted on Friday January 19, 2018

<p>Forty-five years ago, on January 22, 1973, the Supreme Court handed down the infamous <em>Roe v. Wade</em> decision that made abortion on demand the law of the land. Sixty million abortions later, we are still battling over the disastrous ruling, in court and in the culture wars.</p>

'Will & Grace' Blasphemes Apostles as 'Gay Best Friends'
Posted on Thursday January 18, 2018

<p>The January 18 episode of <em>Will & Grace</em> was as offensive as ever. They took a bizarre number of shots at the Bible out of nowhere as well as delivering some stale Russia "jokes."</p>

Networks Skip HHS Creating New Conscience and Religious Freedom Division
Posted on Thursday January 18, 2018

<p>The Trump administration took a large step in defending religious freedom on Thursday when the Department of Health and Human Services unveiled its new Conscience and Religion Freedom Division. The new division, which was a part of its civil rights office, was tasked with ensuring “doctors, nurses and other health providers to opt-out of services that violate their moral or religious beliefs.” In spite of the good news, the three major network news outlets (ABC, CBS, NBC) and both Spanish-language networks (Univision and Telemundo) ignored the story during their evening broadcasts.</p>

FNC Uniquely Highlights Illegal Immigrant Who Bragged About Killing Cops
Posted on Thursday January 18, 2018

<p>This week there has been a stark contrast in the selection of illegal immigration-related stories by FNC and by the other networks as <em>Fox and Friends</em> has been covering the trial of an illegal immigrant in California who murdered two police officers in 2014, and bragged about it in court. By contrast, not only have the other networks ignored the cop killer trial, but CNN's <em>New Day </em>morning show and <em>CBS This Morning </em>have made a point of giving sympathetic attention to an illegal immigrant who was recently deported, being forced to leave his family in the U.S.</p>

Daily Caller

BREAK UP GOOGLE: There Is A Solid Conservative Antitrust Case Against Alphabet-Google
Posted on Friday January 19, 2018

Every trust leads to less economic growth, fewer jobs and stagnant innovation. And Google is certainly a trust

The Naïve Irony Of Hollywood Feminists
Posted on Friday January 19, 2018

A number of Hollywood actresses recently used the occasion of the Golden Globe Awards to express their opposition to sexual harassment. Many people, while agreeing with the sentiment, have perceived the naïve irony: perpetually half-naked starlets decrying the reduction of women to sex objects. How funny and strange! It as though a person should spend […]

BROKEN WINDOWS AND IMMIGRATION: Let’s Stop Holding Our Laws In Contempt
Posted on Friday January 19, 2018

No one who entered the country illegally should be able to become a citizen

America’s Economy Remains Sapped By Fringe Environmental Ideologues
Posted on Thursday January 18, 2018

The Sierra Club and its fringe partners have become radical, hypocritical attack dogs

Here Are Three Democrats Who Will Lose U.S. Senate Races In 2018
Posted on Thursday January 18, 2018

The electoral map is chock-full of vulnerable Democrats running in Trump territory

John Locke Foundation

The Charter School Money Drain Blame Game
Posted on Thursday January 18, 2018

A new working paper by Helen Ladd and John Singleton, The Fiscal Externalities of Charter Schools: Evidence from North Carolina, appears to confirm the long-held suspicions of district school advocates that public charter schools drain money from districts.  The authors find “large and negative fiscal impact from $500-$700 per pupil in our one urban school district […]

Cafe Hayek

Freeman Essay #53: “Freedom of Association”
Posted on Friday January 19, 2018

(Don Boudreaux) TweetIn the August 2000 Freeman I argued that restrictions on immigration are restrictions not just on the freedom of would-be immigrants, but also on the freedom of citizens of the receiving countries.  One such freedom that is violated is freedom of association.  My column is below the fold.

Quotation of the Day…
Posted on Friday January 19, 2018

(Don Boudreaux) Tweet… is from page 214 of Vol. 19 (Ideas, Persons, and Events [2001]) of The Collected Works of James M. Buchanan; specifically, it’s from Jim’s 1997 article “The Epistemological Feasibility of Free Markets”: Absent such minimal understanding [of basic economics], the collectivized alternative tends to be chosen over the market because it tends to be […]

Freeman Essay #52: A Review of Thomas Sowell’s “The Quest for Cosmic Justice”
Posted on Thursday January 18, 2018

(Don Boudreaux) TweetIn the July 2000 Freeman I reviewed Thomas Sowell’s 1999 book, The Quest for Cosmic Justice.  My review is below the fold.

Bonus Quotation of the Day…
Posted on Thursday January 18, 2018

(Don Boudreaux) Tweet… is from Douglas Irwin’s January 31, 2009, New York Times op-ed, “If We Buy American, No One Else Will”: Buy American provisions can raise the cost and diminish the effect of a spending package.  In rebuilding the San Francisco-Oakland Bay Bridge in the 1990s, the California transit authority complied with state rules mandating the use […]

Trump Confused
Posted on Thursday January 18, 2018

(Don Boudreaux) TweetResponding on Facebook to this letter of mine, Dennis Foster writes: All good points except we have run a current accounts deficit (goods and services) with Mexico since 1995, I believe that is what the President’s tweet was referring to… not Mexico’s overall trade imbalance. The confusion is understandable, for my letter is distressingly unclear, […]

Another Open Letter to Trump
Posted on Thursday January 18, 2018

(Don Boudreaux) Tweet18 January 2018 Mr. Donald Trump 1600 Pennsylvania Ave., NW Washington, DC  20500 Mr. Trump: This morning you tweeted the following: “The Wall will be paid for, directly or indirectly, or through longer term reimbursement, by Mexico, which has a ridiculous $71 billion dollar trade surplus with the U.S. The $20 billion dollar Wall is […]

Freeman Essay #51: “Markets, Politics, and Civility”
Posted on Thursday January 18, 2018

(Don Boudreaux) TweetThis July 2000 Freeman column was inspired by a John Stossel t.v. special.  My column is below the fold.

Some Links
Posted on Thursday January 18, 2018

(Don Boudreaux) TweetGeorge Will is not much impressed by the new book by historian David Goldfield.  A slice: Goldfield’s grasp of contemporary America can be gauged by his regret that the income tax, under which the top 10 percent of earners pay more than 70 percent of the tax and the bottom 50 percent pay about 3 percent, is not […]


Posted on Wednesday December 31, 1969

Posted on Wednesday December 31, 1969

Posted on Wednesday December 31, 1969

Posted on Wednesday December 31, 1969

Posted on Wednesday December 31, 1969

Advocates for Self-Government

Pennsylvania Court Tells Amish Family What To Do With Their Property
Posted on Tuesday January 16, 2018

The Amish have a long history of standing up to government for religious and philosophical reasons. So when a government entity uses its power to restrict their freedoms, forcing them ...

The post Pennsylvania Court Tells Amish Family What To Do With Their Property appeared first on The Advocates.

Governments Have Always Used The Media To Shape Public Opinion
Posted on Sunday January 14, 2018

Whenever we hear about Russia’s alleged role in persuading the U.S. population into voting for President Donald Trump, reports often mention news organizations operating in the United States that are ...

The post Governments Have Always Used The Media To Shape Public Opinion appeared first on The Advocates.

Missouri May Soon Close Loophole Allowing Government-Sponsored Theft
Posted on Wednesday December 13, 2017

Missouri state legislators are looking into putting an end to state-sponsored theft of private property by closing a loophole that allows state officials to go to the feds for the ...

The post Missouri May Soon Close Loophole Allowing Government-Sponsored Theft appeared first on The Advocates.

After Nestor: Henry George and State Socialism
Posted on Thursday January 18, 2018

Instead of a Book, By a Man Too Busy to Write One

Part Four: Land and Rent


Mere Land No Saviour for Labor. 

(published in Liberty on May 7, 1887)

Here is a delicious bit of logic from Mr. George: “If capital, a mere creature of labor, is such an oppressive thing, its creator, when free, can strangle it by refusing to reproduce it.” The italics are mine. If capital is oppressive, it must be oppressive of labor. What difference does it make, then, what labor can do when free? The question is what it can do when oppressed by capital. Mr. George’s next sentence, to be sure, indicates that the freedom he refers to is freedom from land monopoly. But this does not improve his situation. He is enough of an economist to be very well aware that, whether it has land or not, labor which can get no capital—that is, which is oppressed by capital—cannot, without accepting the alternative of starvation, refuse to reproduce capital for the capitalists.

It is one thing for Mr. George to sit in his sanctum and write of the ease with which a man whose sole possession is a bit of land can build a home and scratch a living; for the man to do it is wholly another thing. The truth is that this man can do nothing of the sort until you devise some means of raising his wages above the cost of living. And you can only do this by increasing the demand for his labor. And you can only increase the demand for his labor by enabling more men to go into business. And you can only enable more men to go into business by enabling them to get capital without interest by abolishing the money monopoly, which, by limiting the supply of money, enables its holders to exact interest. And when you have abolished the money monopoly, and when, in consequence, the wages of the man with the bit of land have begun to rise above the cost of living, the labor question will be nine-tenths solved. For then either this man will live better and better, or he will steadily lay up money, with which he can buy tools to compete with his employer or to till his bit of land with comfort and advantage. In short, he will be an independent man, receiving all that he produces or an equivalent thereof. How to make this the lot of all men is the labor question. Free land will not solve it. Free money, supplemented by free land, will.


Henry George’s “Secondary Factors.” 

(published in Liberty on September 24, 1887)

In trying to answer the argument that land is practically useless to labor unprovided with capital, Henry George declares that “labor and land, even in the absence of secondary factors obtained from their produce, have in their union to-day, as they had in the beginning, the potentiality of all that man ever has brought, or ever can bring, into being.”

This is perfectly true; in fact, none know it better than the men whom Mr. George thus attempts to meet.

But, as Cap’n Cuttle was in the habit of remarking, “the bearin’ o’ this ere hobserwation lies in the application on’t,” and in its application it has no force whatever. Mr. George uses it to prove that, if land were free, labor would settle on it, thus raising wages by relieving the labor market.

But labor would do no such thing.

The fact that a laborer, given a piece of land, can build a hut of mud, strike fire with flint and steel, scratch a living with his finger-nails, and thus begin life as a barbarian, even with the hope that in the course of a lifetime he may slightly improve his condition in consequence of having fashioned a few of the ruder of those implements which Mr. George styles “secondary factors” (and he could do no more than this without producing for exchange, which implies, not only better machinery, but an entrance into that capitalistic maelstrom which would sooner or later swallow him up,—this fact, I say, will never prove a temptation to the operative of the city, who, despite his wretchedness, knows something of the advantages of civilization and to some extent inevitably shares them.

Man does not live by bread alone.

The city laborer may live in a crowded tenement and breathe a tainted air; he may sleep cold, dress in rags, and feed on crumbs; but now and then he gets a glimpse at the morning paper, or, if not, then at the bulletin-board; he meets his fellow-men face to face; he knows by contact with the world more or less of what is going on in it; he spends a few pennies occasionally for a gallery-ticket to the theatre or for some other luxury, even though he knows he “can’t afford it”; he hears the music of the street bands; he sees the pictures in the shop windows; he goes to church if he is pious, or, if not, perhaps attends the meetings of the Anti-Poverty Society and listens to stump speeches by Henry George; and, when all these fail him, he is indeed unfortunate if some fellow-laborer does not invite him to join him in a social glass over the nearest bar.

Not an ideal life, surely; but he will shiver in his garret and slowly waste away from inanition ere he will exchange it for the semi-barbarous condition of the backwoodsman without an axe. And, were he to do otherwise, I would be the first to cry: The more fool he!

Mr. George’s remedy is similar—at least for a part of mankind—to that which is attributed to the Nihilists, but which few of them ever believed in,—namely, the total destruction of the existing social order and the creation of a new one on its ruins.

Mr. George may as well understand first as last that labor will refuse to begin this world anew. It never will abandon even its present meagre enjoyment of the wealth and the means of wealth which have grown out of its ages of sorrow, suffering, and slavery. If Mr. George offers it land alone, it will turn its back upon him. It insists upon both land and tools. These it will get, either by the State Socialistic method of concentrating the titles to them in the hands of one vast monopoly, or by the Anarchistic method of abolishing all monopolies, and thereby distributing these titles gradually among laborers through the natural channels of free production and exchange.


The State Socialists and Henry George. 

(published in Liberty on September 24, 1887)

Just as I have more respect for the Roman Catholic Christian who believes in authority without qualification, than for the Protestant Christian who speaks in the name of liberty, but does not know the meaning of the word, so I have more respect for the State Socialist than for Henry George, and in the struggle between the two my sympathy is with the former. Nevertheless the State Socialists have only themselves to blame for the support they have hitherto extended to George, and the ridiculous figure that some of them now cut in their sackcloth and ashes is calculated to amuse. Burnette G. Haskell, for instance. In his Labor Enquirer, previous to the issue of August 20, he had been flying the following flag: “For President in 1888, Henry George.” But in that issue, having heard of the New York schism, he lowered his colors and substituted the following: “For President in 1888, any man who will go as the servant of the people and not as their ‘boss,’ and who understands that poverty can only be abolished by the abolition of the competitive wage system and the inauguration of State Socialism.” When Haskell hoisted George’s name, did he not know that his candidate believed that poverty was not to be abolished by the abolition of the wage system? If he did not know this, his knowledge of his candidate must have been limited indeed. If he did know it, the change of colors indicates, not the discarding of a leader, but a revolution in ideas. Yet Haskell is undoubtedly not conscious of any revolution in his ideas, and would admit none. All of which tends to show that he has no ideas definite enough to be revolutionized.


Liberty and the George Theory.

(published in Liberty on November 5, 1887)

There is much in Liberty to admire, and in Anarchism that I believe has a divine right of way. But I see little of these qualities in the criticisms made by Editor Tucker on the George movement, and much, as I think, of the exaggeration and inconsistency inherent in the Anarchistic temper and teachings.

You have “more respect,” you say, “for the State Socialist than for Henry George,” and “in the struggle between the two your sympathy is with the former.” This is vague, to say the least; and the meaning is not helped by the comparison with “the Roman Catholic who believes in authority without qualification, and the Protestant who speaks in the name of liberty, but does not know the meaning of the word.” Such expressions seem to me to point no issue, but to dodge or confuse issues. The question is threefold, relating to tactics, spirit, and doctrine, which are not always one, or of the same relative importance. You do not say whether the expulsion of the Socialists was just, whether they acted in good faith as members of the United Labor party, or believed their doctrine had any logical filiation with its platform. This ought to have something to do with our “respect” and “sympathy.” To hold to the belief of a Roman Catholic is one thing, and to enter an evangelical body as an emissary of the Pope is quite another. You seem to slur this issue in speaking merely of “the ridiculous figure the Socialists now cut in their sackcloth and ashes,” for “ridiculous” is not a word of a very specific meaning. But your closing remark appears to be a contradiction of the first so praiseful of the simple stable views of the State Socialist; for of the act of the Labor Enquirer in hoisting Henry George’s name one day and pulling it down the next you say it shows, not a revolution in ideas, but that it had “no ideas definite enough to be revolutionized.”

And do you really believe that Protestantism is not an advance on Roman Catholicism; that such men as Luther, Wesley, Channing, are not as “respectable” as the Roman pontiffs? Do you think the apostate or rebellious element in both Church and State is not as deserving of respect as the older body, simply because it does not reach the goal of freedom at a bound? Have you more sympathy with Asia than Europe, with Europe than America, with unqualified despotism than with a constitutional monarchy, with monarchy than with republicanism? And is there no room for theory or experiment between State Socialism and Anarchism, no foothold for large views and manly purposes? Are Henry George and his co-workers of the class who “speak in the name of liberty, but do not know the meaning of the word?” Is their talk and spirit rubbish by the side not only of Anarchism, but its opposite, State Socialism? Did liberty have nothing to do with the writing of Progress and Poverty,—that book that has set so many to thinking and acting, and has done more to popularize the science of political economy than the writings of any dozen men, if not of all men, on that theme? Had liberty nothing to do with the starting of the Standard, the Anti-Poverty Society, the anointing of McGlynn, Pentecost, Huntington, Redpath, McGuire, and the rest of the new apostolate of freedom? I am aware there are things connected with this reform to which exceptions can and must be made; but they do not prove it is not Liberty’s offspring, an onward movement freighted with benefit for the race.

Of a piece with this criticism is another article in the same number, in which you go even farther, and say: “Mr. George may as well understand first as last that labor will refuse to begin this world anew. It never will abandon even its present meagre enjoyment of wealth and the means of wealth which have grown out of its ages of sorrow, suffering, and slavery. If Mr. George offers it land alone, it will turn its back upon him. It insists upon both land and tools.” That is an astounding assertion that he asks labor to “begin this world anew,” and to “abandon” what it already has, and ought to be backed by some show of argument; but I see none. How are the people to lose by being made their own landlords? How are they to be robbed of their present advantages in having the land made free? Your whole argument, filling a column, is that “the city operative will not be tempted to leave what he has for the semi-barbarous condition of the backwoodsman without an axe, building a hut of mud, striking fire with flint and steel, and scratching a living with his finger nails”! Now, if the vacant lots and tracts of land in and about all the cities are brought into use by being built upon or cultivated, will not the stimulus given to industry and the increased opportunity for employment resulting therefrom not only enable the operative to buy an axe, rake, hoe, hammer, saw, and even a horse and plough? And not only this, but to find a suitable patch of land without going so far beyond the boundaries of civilization as you imagine? But the idea is not that every one will become a farmer or landowner, but that the cheapening and freeing of this primary factor of production, the land, will make it possible for those of very limited means and resources to do more for themselves and for the world than now, besides rendering capital more active, more productive; the clear tendency of which would be to relieve the labor market, and make the demand for labor greater than the supply, and so raise wages and secure to labor its just reward. And you do not see how this is in the interest of freedom; how the freeing of land will enable men to become the possessors, not only of the tools they need, but of their individuality as well! Taking taxes off industry, and substituting therefor the social values given to land, you call retrogression, or rather “a remedy similar—for a part of mankind at least—to that attributed to the Nihilists, the total destruction of the existing social order, and the creation of a new one on its ruins”! This is wild talk, and is none the less so because of the use of the feeble adjective, “similar”, and the halting phrase, “at least a part of mankind”, which destroy the value of the comparison for the purpose of argument, and, like the words “respect,” “sympathy”, “ridiculous”, and “semi-barbarous”, show that Liberty, the Anarchist organ par excellence, may dogmatize instead of reason, and make personal dictum or caprice the standard of right.

But there is something of more consequence than the vulnerable points in Liberty’s logic, for it goes deeper. Granting that this reform does mean the creation of a new order involving losses and sacrifices to the individual for a generation, is that its condemnation? Words cannot express my astonishment at the manner in which Liberty tells its readers that the city operative cannot be tempted “to begin life as a barbarian, even with the hope that in the course of a lifetime he may slightly improve his condition,” for he would be a “fool” not to prefer to this the city with its “street bands”, “shop windows”, “theatres”, and “churches”, even though he have to “breathe tainted air” and “dress in rags”. Ah, it is indeed true, as you say, “man does not live by bread alone,” and for that reason he prefers pure air and independence along with isolation and struggle, to tainted air and serfdom along with brass bands and hand organs, gaudy windows, and Black Crook performances. But is that “beginning life as a barbarian,” no matter with implements however rude, at places however remote from the centres of pride and luxury, with fruits of toil however slow in ripening, if the persons are moved by the thought of bettering, not their own condition merely, but that of the world, of the generations to come? Have not the pioneers of freedom, the vanguards of civilization, again and again “begun life as the barbarian,” so to speak? This reform, it is true, means “bread,” but bread for all, though there by luxury for none. We know the advantages of city life, and for that reason we would deny ourselves those advantages in order that cities might spread and civilization expand.

We want the earth, but do not mean to run away with it; there will still be plenty of room,—yes, more than before, far more. It will be the beginning, not the end, of reform; not the last step, but a great stride forward. Socialism and Anarchism will both have a better chance than now, if the insufficiency of the principle is proven. For it is Socialistic in asserting the common ownership of the soil and governmental control of such things as are in their nature monopolies, while it is Anarchistic in leaving all else to the natural channels of free production and exchange, to free contract and spontaneous co-operation.

T.W. Curtis

Mr. Curtis’s criticisms are based upon a series of misapprehensions of Liberty’s statements, and in one instance upon something that looks very like deliberate misrepresentation.

In the first place, he misapprehends my expression of greater respect for and sympathy with the State Socialists than Henry George, seeming to think that this preference included in its sweep not only matters of doctrine, but matters of tactics and spirit. The form of my assertion shows that I confined it to doctrine simply. The declaration was that I have far more respect for the State Socialists than for George, “just as I have more respect for the Roman Catholic Christian, who believes in authority without qualification, than for the Protestant Christian, who speaks in the name of liberty, but does not know the meaning of the word.” No one but Mr. Curtis would dream of inferring from these words that I prefer the tactics and spirit of Torquemada to those of Channing. I left tactics and spirit entirely aside in making the above statement. In respect to conduct I asserted superiority neither for the State Socialist nor for George. Whether the State Socialists went to George or he went to them, or which seceded from or betrayed the other, are questions which interest me only in a minor degree. To me reason is the highest and grandest faculty of man; and I place George lower in my esteem than the State Socialist, because I consider him the greater offender against reason. This is the sense in which I prefer Catholicism to Protestantism, Asia to Europe, and monarchy to republicanism. The Catholic, the Asiatic, and the monarch are more logical, more consistent, more straightforward, less corkscrewy, more strictly plumb-line than the Protestant, the European, and the republican. This is not a novel idea, and I am at a loss to account for Mr. Curtis’s surprise over it. Did he never here that there is no half-way house between Rome and Reason? Likewise there is no room for logical, consistent theory or intelligent, systematic experiment between State Socialism and Anarchism. There is plenty of room between them to jumble theories and to experiment blindly, but that is all. The pity is that room of this kind should be so popular.

Yes, Henry George and his co-workers are of that class who “speak in the name of liberty, but do not know the meaning of the word.” Mr. George has no conception of liberty as a universal social law. He happens to see that in some things it would lead to good results, and therefore in those things favors it. But it has never dawned upon his mind that disorder is the inevitable fruit of every plant which has authority for its root. As John F. Kelly says of him, “he is inclined to look with favor on the principle of laissez faire, yet he will abandon it at any moment, whenever regulation seems more likely to produce immediate benefits, regardless of the evils thereby produced by making the people less jealous of State interference.” The nature of his belief in liberty is well illustrated by his attitude on the tariff question. One would suppose from his generalization that he has the utmost faith in freedom of competition; but one does not realize how little this faith amounts to until he hears him, after making loud free-trade professions, propose to substitute a system of bounties for the tariff system. If such political and economic empiricism is not rubbish beside the coherent proposals of either Anarchism or State Socialism, then I don’t know chaff from wheat.

Liberty, of course, had something to do with the writing of Progress and Poverty. It also had something to do with the framing of divorce laws as a relief from indissoluble marriage. But the divorce laws, instead of being libertarian, are an express recognition of the rightfulness of authority over the sexual relations. Similarly Progress and Poverty expressly recognizes the rightfulness of authority over the cultivation and use of land. For some centuries now evolution has been little else than the history of liberty; nevertheless all its factors have not been children of liberty.

Mr. Curtis tries to convict me of contradiction by pointing to my statement that Burnette Haskell, a State Socialist, has no definite ideas. This he thinks inconsistent with my praise of the simple stable views of the State Socialist. Here is where the color of misrepresentation appears. In order to make his point Mr. Curtis is obliged to quote me incorrectly. He attributes to me the following phrase “the ridiculous figure the Socialists now cut in their sackcloth and ashes.” My real words were: “the ridiculous figure that some of them now cut in their sackcloth and ashes.” It makes all the difference whether in this sentence I referred to the whole body of State Socialists or only to a few individuals among them. It was precisely because I was about to criticise the conduct of one State Socialist in order to show that he had no real idea of State Socialism that I felt it necessary to preface my criticism by separating doctrine from conduct and declaring my preference for the State Socialist over George in the matter of doctrine. But Mr. Curtis will have it that I took Haskell as a typical State Socialist, even if he has to resort to misquotation to prove it.

He next turns his attention to the editorial on Secondary Factors. He thinks that my assertion that George asks labor to begin this world anew ought to be backed by some show of argument. Gracious heavens! I backed it at the beginning of my article by a quotation from George himself. Dislodged by his critics from one point after another, George had declared that “labor and land, even in the absence of secondary factors obtained from their produce, have in their union to-day, as they had in the beginning, the potentiality of all that man ever has brought, or ever can bring, into being.” When such words as these are used to prove that, if land were free, labor would settle on it, even without secondary factors,—that is, without tools,—what do they mean except that the laborer is expected to “begin the world anew?” But if this is not enough for Mr. Curtis, may I refer him to the debate between George and Shewitch, in which the former, being asked by the latter what would have become of Friday if Crusoe had fenced off half the island and turned him loose upon it without any tools, answered that Friday would have made some fish-hooks out of bones, and gone fishing? Isn’t that sufficiently primitive to substantiate my assertion, Mr. Curtis? Tell Mr. George that the laborer can do nothing without capital, and he will answer you substantially as follows: Originally there was nothing but a naked man and the naked land; free the land, and then, if the laborer has no tools, he will again be a naked man on naked land and can do all that Adam did. When I point out that such a return to barbarism is on a par with the remedy attributed to the Nihilists, Mr. Curtis asserts that” this is wild talk”; but his assertion, it seems to me, “ought to be backed by some show of argument.”

He is sure, however, that there is no need of going to the backwoods. There is enough vacant land in the neighborhood of cities, he thinks, to employ the surplus workers, and thus relieve the labor market. But this land will not employ any workers that have no capital, and those that have capital can get the land now. Thus the old question comes back again. Make capital free by organizing credit on a mutual plan, and then these vacant lands will come into use, and then industry will be stimulated, and then operatives will be able to buy axes and rakes and hoes, and then they will be independent of their employers, and then the labor problem will be solved.

My worst offence Mr. Curtis reserves till the last. It consists in telling the workingman that he would be a fool not to prefer the street bands, the shop windows, the theatres, and the churches to a renewal of barbaric life. Mr. Curtis again misapprehends me in thinking that I commend the bands, the windows, etc. I said explicitly that there is nothing ideal about them. But society has come to be man’s dearest possession, and the advantages and privileges which I cited, crude and vulgar and base as some of them are, represent society to the operative. He will not give them up, and I think he is wise. Pure air is good, but no one wants to breathe it long alone. Independence is good, but isolation is too heavy a price to pay for it. Both pure air and independence must be reconciled with society, or not many laborers will ever enjoy them. Luckily they can be and will be, though not by taxing land values. As for the idea that persons can be induced to become barbarians from altruistic motives in sufficient numbers to affect the labor market, it is one that I have no time to discuss. In one respect at least Mr. George is preferable to Mr. Curtis as an opponent: he usually deals in economic argument rather than sentimentalism.

Cato Op Eds

Gov’t Shutdown Friday? Congress Must Stop Kicking Debt Can down the Road
Posted on Thursday January 18, 2018

Ryan Bourne

Fears are mounting that the current Congressional funding impasse will lead to a government shutdown by Friday. So far three continuing resolutions to fund the government have been passed during fiscal year 2018. Now, the impending deadline is the focus of horse-trading and negotiation, with many in Congress pushing for yet higher spending.

President Donald Trump’s original budget last May proposed higher defense spending financed by discretionary spending cuts elsewhere of $54 billion. House Republicans followed up with a more modest proposal with cuts of $5 billion. Now though, there is talk that the two parties might eventually agree to spending increases totaling over $200 billion over the next two years, busting existing caps. At the moment details cannot be agreed upon, and Democrats are trying to attach other issues to any spending bill, driving talk of a shutdown. But eventually a compromise will no doubt be reached.

The truth is any such agreement that does not cut spending would be another example of Congress kicking the U.S.’ debt problem can down the road. The Congressional Budget Office has already projected that the federal deficit (spending beyond revenues) will be $563 billion this year, or 2.8 percent of GDP. The Joint Committee on Taxation believes tax cuts will add another $103.5 billion to that. But the real problem is not the $100 billion here or the $100 billion there for this or that program, but the long-term trajectory for the debt path as a proportion of GDP.

Rather than kicking the can down the road with large spending increases or simply delaying a deal with another resolution, Congress should spend much more time considering options to bring the debt path under control.

At 77 percent of GDP, the federal debt is already at its highest level since 1950, and much higher than the 40 percent average seen in the whole post-war period. Debt fell sustainably after the war due to a combination of steep military spending cuts, robust growth and high inflation. In contrast, now debt is projected to rise exponentially, driven mainly by the interaction of entitlement promises with an aging population.

Over the next ten years, the CBO projects debt held by the public to rise to 91 percent of GDP, even before the tax cuts. By 2047, the CBO reckons it will rise further to around 150 percent and show no signs of letting up. It’s worth noting that in this analysis the tax burden was expected to rise naturally by around 2 percent of GDP, meaning all of this extra debt was driven by rising spending.

Congress knows this is unsustainable and there are costs of inaction. There is ample economic evidence that such high levels of debt seem to be associated with substantially lower economic growth. Add to that the fact that high debts increase the fiscal risk associated with unforeseen events requiring drastic budget cuts, and consider the intergenerational consequences of such liabilities, and it’s no wonder most economists agree that getting the debt-to-GDP ratio back on a downward path is a worthy medium-term aim.

Yet Congress so far seems to have no plan nor ambition to do it. In continuously delaying action, current members are making the job of future Congresses that much harder.

To see why, suppose that the aim was to get the debt-to-GDP ratio back down to the historic average of 40 percent of GDP by 2047. That would require spending cuts now and forever equivalent to 3.1 percent of GDP, or about 15 percent of current federal outlays. But to achieve that same aim starting in 10 years’ time would require cuts then at 4.6 percent of GDP, or 20 percent of total spending.

In the long-term the only realistic means of curbing this burgeoning debt is entitlement reform. But given that President Trump seems to have cooled on this idea and the politics around entitlement reform are so difficult, substantial discretionary spending cuts are needed to create the fiscal space for the coming entitlement headwinds.

Congress sadly does not seem up to the challenge of re-thinking the scope of the federal government. But thankfully my colleagues at the Cato Institute are. This week, we published Downsizing Federal Government Spending, a collection of essays on where spending cuts could be made, edited by my colleague Chris Edwards.

Rather than kicking the can down the road with large spending increases or simply delaying a deal with another resolution, Congress should spend much more time considering these sorts of options to bring the debt path under control.

Ryan Bourne holds the R Evan Scharf Chair in the Public Understanding of Economics at the Cato Institute.


Trump’s Nuclear Posture Review Must Keep Us Safe
Posted on Friday January 19, 2018

Bad decisions produce undesirable consequences, which is why the U.S. needs to make wise decisions about its nuclear posture. A bad decision on nuclear policy could lead to greater proliferation of nuclear weapons, a fundamentally more violent world, and devastating attacks against us and our allies. The Trump administration will release a new Nuclear Posture Review next month. It is expected to take a very different tack from that of the previous administration, which trumpeted its commitment to creating “a world without nuclear weapons.” And a different tack is sorely needed. Obama’s “Russian reset” never took hold. It is now clear that
Read More ...

The Greatest Showman and Darkest Hour: Showmanship and Leadership
Posted on Friday January 19, 2018

The Greatest Showman, about Phineas T. Barnum, is interesting mostly for its politics while Darkest Hour, about Winston Churchill, is ideological theater. That may seem topsy-turvy but it reflects the fact that we have entered a strange (dark?) period in which show business flaunts its politics. Neither film is the historical biography you expect: Barnum’s bootstrap entrepreneurship is romanticized into a family-friendly movie musical starring Hugh Jackman, strutting about among an America’s Got Talent array of motley performers who represent some trendy demography. Churchill’s ascension to Britain’s prime ministership at the onset of World War II, after Neville Chamberlain’s unpopular appeasement
Read More ...

A Conservative Energy Reset
Posted on Friday January 19, 2018

Conservatives crave an energy-policy reset. Timing is essential, and given last week’s decision by federal regulators to reject the Trump Energy Department’s proposal to subsidize old power plants, that time has arrived. The conservative answer to the administration’s anti-competitive bid lies in embracing future-shaping competitive forces, especially the ones driving old plants into retirement. Regions with competitive electricity markets have seen aggressive investment in innovative resources, which has expanded customer options and lowered customer bills. From 2008 to 2016, electricity prices declined 8 percent in competitive states, compared with a 15 percent increase in monopoly states. No state has performed better
Read More ...

Women Deserve Better than Abortion: The Ultimate Exploitation of Women
Posted on Friday January 19, 2018

The largest pro-life feminist organization will not participate in — or protest — this weekend’s Women’s March in Washington, D.C., or others across the country. Feminists for Life of America has worked alongside other feminists to pass the Violence Against Women Act and the Child Support Enforcement Act, but unlike other feminists, we have also consistently supported the Unborn Victims of Violence Act, a.k.a. Laci and Conner’s Law. We agree with this unity principle of the Women’s March: “Women deserve to live full and healthy lives, free from all forms of violence against our bodies.” But the next section, about “reproductive freedom,”
Read More ...

Life Is Winning in America
Posted on Friday January 19, 2018

Today, tens of thousands of Americans have traveled to Washington, D.C., for the 45th annual March for Life. They come from all across our nation, and from every walk of life – students of every age, blue-collar workers, people of many backgrounds, mothers and fathers, sons and daughters. Yet no matter their story, today they will join hands and hearts on the National Mall, and with one voice they will call on the United States of America to rededicate itself to the most fundamental right enshrined in our Declaration of Independence – the unalienable right to life. Thanks to their courage, and
Read More ...

The Great Leap Forward
Posted on Friday January 19, 2018

China was supposed to have its Great Leap Forward from 1958 to 1962, under the leadership of Chairman Mao. That didn’t work out — Mao’s policies ended up killing about 50 million people instead. China later had its genuine Great Leap Forward after the market-oriented reforms implemented by Deng Xiaoping. “To get rich is glorious,” he declared. “It doesn’t matter if it is a white cat or a black cat, as long as it catches mice.” (He was a prolific aphorist.) Deng’s program was “socialism with Chinese characteristics,” which turned out not to be socialism at all. But beginning in
Read More ...

Net Right Daily

Posted on Wednesday December 31, 1969

Thomas Sowell

'Tax Cuts for the Rich'? for 05/01/2017
Posted on Monday May 01, 2017

One of the painful realities of our times is how long a political lie can survive, even after having been disproved years ago, or even generations ago.

A classic example is the phrase "tax cuts for the rich," which is loudly proclaimed by opponents, whenever there is a proposal to reduce tax rates. The current proposal to reduce federal tax rates has revived this phrase, which was disproved by facts, as far back as the 1920s — and by now should be called "tax lies for the gullible."

Updated: Mon May 01, 2017

The Real Lessons of Middlebury College for 03/13/2017
Posted on Monday March 13, 2017

Many people seem shocked at the recent savagery of a mob of students at Middlebury College, who rioted to prevent Charles Murray from addressing a student group who had invited him to speak. They also inflicted injuries requiring hospitalization on a woman from the faculty who was with him.

Where have all these shocked people been all these years? What happened at Middlebury College has been happening for decades, all across the country, from Berkeley to Harvard. Moreover, even critics of the Middlebury College rioters betray some of the same irresponsible mindset as that of the young rioters.

The moral dry rot in academia — and beyond — goes far deeper than student storm troopers at one college.

Updated: Mon Mar 13, 2017

Education at a Crossroads for 02/04/2017
Posted on Saturday February 04, 2017

In just a matter of days — perhaps next Monday — a decision will be made in Washington affecting the futures of millions of children in low-income communities, and in the very troubled area of race relations in America.

An opportunity has arisen — belatedly — that may not come again in this generation. That is an opportunity to greatly expand the kinds of schools that have successfully educated, to a high level, inner-city youngsters whom the great bulk of public schools fail to educate to even minimally adequate levels.

What may seem on the surface to be merely a matter of whether the U.S. Senate confirms or rejects the nomination of Betsy DeVos to be head of the U.S. Department of Education involves far bigger stakes.

Updated: Sat Feb 04, 2017

Education at a Crossroads: Part II for 02/04/2017
Posted on Saturday February 04, 2017

One of the painful realities of our time is that most public schools in most low-income, inner-city neighborhoods produce educational outcomes that are far below the outcomes in other neighborhoods, and especially in more affluent neighborhoods.

Attempts to assign blame are too numerous to name, much less explore. But as someone who has, for more than 40 years, been researching those particular minority schools that have been successful, I am struck both by their success and by how varied are the ways that success has been achieved.

In doing research for a 1976 article, "Patterns of Black Excellence," I discovered that the educational methods used to educate low-income, minority children in successful schools ranged from very traditional and strict methods in some parochial schools to very different approaches in other schools.

Updated: Sat Feb 04, 2017

American Thinker

Did Christopher Steele Write His Dossier, or Did a Russian Associate?
Posted on Thursday January 18, 2018

Authorship issues are cropping up.

Bannon's Refusal to Testify
Posted on Thursday January 18, 2018

The Washington establishment is hyperventilating over the Trump administration's assertion of the Touhy doctrine.

Three Reasons Why Bitcoin Is Not Money
Posted on Thursday January 18, 2018

Not all that glitters is gold.  Likewise, what appears to be money often is not.

'White Privilege' and the Great Stink of 1858
Posted on Thursday January 18, 2018

European engineering is what brought Western civilization out of a world of constantly smelling the worst of others.  And that's a privilege available to everyone.

The 'Case Study' against Trump and the Threat of Nazi Psychiatry
Posted on Thursday January 18, 2018

There's a foul wind blowing from the "psychologists condemn Trump" book just published by the notorious Dr. Bandy Lee.

Facebook's Expanding Insanity
Posted on Thursday January 18, 2018

The company now wants people to send it nude help prevent blackmail.  Riiiight...

Foolish and Dangerous Jews
Posted on Thursday January 18, 2018

Is Jewish identity so weak that Jews can no longer stand up for themselves?

Breaking: Donald Trump Is Not Pregnant
Posted on Wednesday January 17, 2018

No one in the legacy media ever suggested that Hillary Clinton was crazy or unfit for the presidency following her lengthy list of health crises.

The FBI and Collusion: An Inside View
Posted on Wednesday January 17, 2018

A former FBI agent accuses the leadership of having become corrupted.

If Democrats Take the House, They'll Impeach Trump
Posted on Wednesday January 17, 2018

One of the things a congressional majority has the power to do is bring articles of impeachment against a sitting president.

Michelle Malkin

Insane: Calif. AG threatens legal action against employers who help feds take action on illegals
Posted on Friday January 19, 2018

Lawless state-level "law enforcement"

Dare to dream: Newsweek renews hope for Hillary fans
Posted on Thursday January 18, 2018


CNN’s chief WH drama queen no longer recognizes America after Trump orders him ‘out!’
Posted on Wednesday January 17, 2018

Some heroes don't wear capes

Dems boycotting Trump SOTU might leave some empty seat opportunity for GOP
Posted on Tuesday January 16, 2018

Seat fillers

Samantha Power’s U.N.-a-Palooza election night ‘victory’ party for Hillary was the funniest thing ever
Posted on Monday January 15, 2018

When sanctimony, overconfidence and bureaucratic gobbledygook collide

Confirmed: Simone from Ferris Bueller’s Day Off had more reliable sources than ‘Fire and Fury’ author
Posted on Sunday January 14, 2018


Hawaii Dem Rep. REALLY conflicted about how Trump should respond to N. Korea
Posted on Sunday January 14, 2018

Plus: Super brilliant actors blame Trump for missile warning error

Dems holding emergency tax bill ‘teach-ins’ to explain Armageddon delay
Posted on Friday January 12, 2018

Spinning the spin

Nancy Pelosi calls GOP tax cuts ‘pathetic’ but she’s actually describing the collapsed Dem narrative
Posted on Thursday January 11, 2018

She's nuts

Fossil fool: NYC mayor sues Big Oil, Gore-ifies city pension funds
Posted on Wednesday January 10, 2018

**Written by Doug Powers This is a textbook example of what “climate change” alarmism is at least partly about: Attempting to blame the deepest available pockets for natural occurrences in order to re-fill the coffers emptied by spendthrift progressive ways while at the same time shifting money more in the direction of fellow travelers: New […]

Cato Weekly Video

Opioid Myths
Posted on Thursday November 09, 2017

Dr. Jeffrey A. Singer discusses the four myths of the ongoing opioid crisis. To learn more, please visit:

Trade Terrorism Hits the Global Aircraft Industry
Posted on Tuesday October 24, 2017

Trade terrorism hits the global aircraft industry as Boeing takes trade law abuse to a new level.

Unforced Error: The Risks of Confrontation with Iran
Posted on Friday October 06, 2017

The Federalist

Why It’s Insane To Welcome North Korea To The Olympic Games
Posted on Friday January 19, 2018

Before you start popping champagne bottles or using white-out on your map of North and South Korea, let’s pause and consider what led to this announcement and its consequences.

Canadian Linguistic Delight ‘Letterkenny’ May Be The Best Comedy On TV Right Now
Posted on Friday January 19, 2018

The show’s mostly middle-of-the-road politics are refreshing next to so many other comedies that have surrendered their creativity to wallow in the sloughs of progressive hate.

No, Washington Post, Socrates Was Not A Social Justice Warrior
Posted on Friday January 19, 2018

Social justice warriors are not the heirs of Socrates; they are precisely the sort of people who had Socrates sentenced to death.

How To Take Control Of Your Children’s Education
Posted on Friday January 19, 2018

In her new book, 'Rethinking Schools,' Susan Wise Bauer offers a host of practical suggestions and alternatives for parents struggling with traditional education environments.

Why Pregnancy Loss Should Be A Unifying Principle In The Women’s March
Posted on Friday January 19, 2018

If organizers want to talk about reproductive rights, they need to address the widespread but completely neglected issue of pregnancy loss.

Shoving PC Down Viewers’ Throats Made ‘Bright’ A Terrible Movie
Posted on Friday January 19, 2018

Netflix's 'Bright' is not a movie, it’s not even a commentary—it’s a boring regurgitation of common political narratives.

Lamar Alexander Wants To Bail Out Health Regulators Who Misjudged Billions
Posted on Friday January 19, 2018

Tennessee Sen. Lamar Alexander seems more interested in stuffing the coffers of the insurance industry than in conducting robust oversight of his state’s regulatory debacle.

Jordan Peele’s ‘Get Out’ Is A Racist Version Of ‘Stepford Wives’
Posted on Friday January 19, 2018

‘Get Out’ has been chatted up for best picture, best actor, best director, and best film editing for Oscar nominations. The nomination lists come out January 23.

In Album Debut ‘Starfire,’ Caitlyn Smith Shows What Songwriters Can Offer
Posted on Friday January 19, 2018

'Starfire' is wistful, even as it drives along. There is always hope, particularly as we learn to settle down and stop fighting.

Here Are The Media’s Rules For Deciding Who To Blame For Government Shutdowns
Posted on Friday January 19, 2018

When the shutdown comes this Friday, or anytime thereafter, please consult these rules to determine exactly who you should blame.

Ellen Pompeo Is Now TV’s Highest-Paid Actress. Here’s Her Salary Negotiation Advice
Posted on Friday January 19, 2018

In an interview with The Hollywood Reporter, 'Grey's Anatomy' star Ellen Pompeo said women need to speak up to get paid what they deserve. 

What Is FISA? Rand Paul And Others Debate Privacy And Surveillance
Posted on Thursday January 18, 2018

The Federalist Radio Hour discusses FISA and data collection with Senator Rand Paul and national security experts Julian Sanchez and Jamil Jaffer.

No, Politico, Conscience Protections Are Neither ‘So-Called’ Nor ‘Controversial’
Posted on Thursday January 18, 2018

There is simply no historical ground upon which Politico can claim that protecting the right of medical professionals not to participate in abortion has been ‘controversial’ since Roe v. Wade.

Woman Behind Aziz Story Attacks Ashleigh Banfield’s Age, Lipstick In Nasty Email
Posted on Thursday January 18, 2018 reporter Katie Way mocked the HLN anchor's lipstick and highlights, writing of Banfield in the email, 'she DISGUSTS me.'

John B. Taylor

Application Deadline Approaching for Free Public Policy Program
Posted on Thursday January 18, 2018

After a very successful launch last summer, Stanford’s Hoover Institution is again offering a one-week public policy boot camp this coming August 19-25. This “residential immersion program” is aimed at college students and recent graduates. It consists of lectures, workshops, informal … Continue reading

Unique Cooperative Research Effort
Posted on Wednesday January 17, 2018

This week marks the 20-year anniversary of a “notable conference” on monetary policy as Ed Nelson, who reminded me, puts it.  The conference took place at the Cheeca Lodge in the Florida Keys on January 15-17, 1998, and it resulted … Continue reading

The Fed’s Inflation Target and Policy Rules
Posted on Tuesday January 09, 2018

The Brookings Institution held an interesting conference yesterday organized by David Wessel on “Should the Fed Stick with the 2 Percent Inflation Target or Rethink It?” Olivier Blanchard and Larry Summers argued, as they have elsewhere, that the Fed should … Continue reading

Happy New Decade!
Posted on Sunday December 31, 2017

The Great Recession began exactly one decade ago this month, as later determined by the NBER business cycle dating committee chaired by my colleague, Bob Hall. There is still a great debate about the causes of the Great Recession, its … Continue reading

What’s Past is Prologue. Study the Past
Posted on Monday December 18, 2017

  Each year the Wall Street Journal asks friends for their favorite books of the year. Two years ago I chose Thomas Sowell’s history of income distribution in Wealth, Poverty, and Politics and Brian Kilmeade’s history on Thomas Jefferson and the Tripoli … Continue reading

A Policy Rule Presented at a Conference 25 Years Ago Today
Posted on Tuesday November 21, 2017

Ed Nelson sent me a nice note today saying that the past two days (November 20-21) mark “the twenty-fifth anniversary of the Carnegie-Rochester Conference at which you laid out your rule.” I had forgotten about the specific dates, but his … Continue reading

New Results on International Monetary Policy Presented at the Swiss National Bank
Posted on Friday September 22, 2017

This week I gave the Swiss National Bank’s  Annual Karl Brunner Lecture in Zurich, and I thank Thomas Jordan who introduced me and the hundreds of central bankers, bankers, and academics who filled the big auditorium. Karl was a brilliant, … Continue reading

Still Learning From Milton Friedman: Version 3.0
Posted on Monday July 31, 2017

We can still learn much from Milton Friedman, as we celebrate his 105th birthday today.  Here I consider what we can learn from his participation in the monetary policy debates in the 1960s and 1970s. I draw from a 2002 … Continue reading

Outside The Beltway

Global Opinion About The United States Dropped Precipitously In Trump’s First Year

Thanks to Donald Trump, public opinion around the world about the United States is at its lowest level in ten years.

The Fake News Awards

So, the The Highly-Anticipated 2017 Fake News Awards are now available and they are, well, underwhelming.  Ends up they are a list of errors at a GOP blog.  While there are a few that are clearly significant mistakes (such as the Brian Ross mistake about Michael Flynn), a lot of them are simply inconsequential (like the […]

About the Idea that Trump’s Tweets Don’t Matter? Well…

You know that debate in the comment section here at OTB about whether or not Trump’s tweets are important or not because they are just tweets? Well, note the following via CNN: Tillerson’s staff prints out the President’s tweets for him to read. Secretary of State Rex Tillerson’s staff prints out President Donald Trump’s tweets for […]

Congress Drifts Closer To A Government Shutdown

With less than two days to go, the prospects for Congress finding a way to prevent a government shutdown aren't looking good.

Two Republican Senators Rebuke Trump For His Attacks On The Press

Two Republicans spoke out today against the President's war on the news media, but don't expect their colleagues to follow suit.

States File Suit Against F.C.C. Decision To Dismantle Net Neutrality Rule Changes

A group of 21 states has filed a petition to review the F.C.C.'s recent net neutrality rule changes, but it faces an uncertain future.

Steve Bannon Subpoenaed In Connection With Mueller’s Russia Investigation

Former White House and Trump campaign adviser Steve Bannon has been subpoenaed in connection with special counsel Robert Mueller's Russia investigation.

Norway Poised To Decriminalize All Illegal Drugs

Norway is poised to make some big changes to its drug laws.

Government Shutdown Looms As Friday Approaches

With only days to go, Congress seems unable to come up with either a funding deal for the Federal Government or a solution to the DACA issue.

Supreme Court To Hear Case Dealing With Sales Taxes On Online Purchases

Late last week, the Supreme Court agreed to hear a case involving the question of whether online and out-of-state businesses can be required to collect sales taxes in states with which they have no connection.

Photos for MLK Day

A friend shared a photo of the MLK statue and it may me remember these, and today is the best day to share them: Both taken June 17, 2015

GOP Growing Increasingly Nervous About Governor’s Races

The GOP's potential troubles in 2018 don't just exist at the Congressional level.

Romney Reportedly Telling Close Associates That He’s Running For Senate

That "Romney for Senate" campaign seems pretty much inevitable.

Foundation for Economic Education

Posted on Wednesday December 31, 1969

Downsizing Government

Earmark Supporters Should Run for Local Office
Posted on Wednesday January 17, 2018

  • Chris Edwards

If you are interested in national issues such as defense, foreign policy, and trade, and want to hold public office, you should run for Congress. If you are interested in roads, beaches, subways, and policing, you should run for city council or the state legislature.

The push to restore earmarks in Congress is led by politicians who got elected to the wrong democratic body. In a pro-earmark story today, the Washington Post highlights projects that members say justify the narrow spending set-asides:

  • “There is a 14-mile gap in Interstate 49 outside Fort Smith, Ark., and Rep. Steve Womack, who represents the area, would very much like to secure the estimated $300 million in federal taxpayer money needed to fill it.”
  • “Rep. Thomas J. Rooney (R-Fla.), who is pushing a proposal that would allow Congress to earmark money for … a pair of water projects he said have been neglected in his district: a beach restoration in an area where the Gulf of Mexico is starting to lap at homes, and repairs to the massive Herbert Hoover Dike that surrounds Lake Okeechobee.
  • “The Second Avenue Subway in New York City, which opened last year, received more than $600 million.”
  • “Dozens of police departments received money to improve their equipment and communications systems. 

I have questions for the members supporting federal spending on these projects:

  • Why doesn’t the Arkansas legislature fund the I-49?
  • If Florida beach restoration is important but neglected, why don’t landowners and city councils along the coast fund it?
  • New Yorkers may support their subway project, but why should taxpayers elsewhere pay for it? And when asked to vote on it, how could members from other states judge whether it made any sense?
  • Since policing is a crucial function of local government, wouldn’t citizens support local taxes to buy needed equipment?

The earmark issue is usually framed as a battle of the purse between federal politicians and federal bureaucrats. But the more important issue is ensuring that activities are funded at the level of government that makes the most sense. I discuss here why state and local funding makes sense for state and local activities. As for Congress, it suffers from structural failures that cause it to spend wastefully much of the time, so the less money flowing through it the better.

Econ Talk

Bill James on Baseball, Facts, and the Rules of the Game
Posted on Monday January 15, 2018

Baseball stats guru and author Bill James talks with EconTalk host Russ Roberts about the challenges of understanding complexity in baseball and elsewhere. James reflects on the lessons he has learned as a long-time student of data and the role it plays in understanding the underlying reality that exists between different variables in sports and outside of sports. The conversation closes with a discussion of our understanding of social processes and the connection to public policy and the ideologies we hold.

Cato Headlines

Has the Fed Been a Failure?
Posted on Wednesday December 31, 1969

As the one hundredth birthday of the Federal Reserve System approaches, it seems appropriate to once again take stock of our monetary system. In the latest issue of Cato Policy Report, economists George Selgin, William D. Lastrapes, and Lawrence H. White survey the relevant research and conclude that the Federal Reserve System has not lived up to its original promise. Also in this issue, new president John A. Allison shares his thoughts on joining the Cato Institute.

Liberty Unbound

Alas, Zimbabwe!
Posted on Thursday January 18, 2018

Mugabe was not its only problem.

I had visited several African countries, but my 2009 flight to Harare turned out to be the most stomach churning. The ongoing expropriation of farms owned by people of European descent and the associated violence in Zimbabwe was international news in those days. On the plane, I watched two movies, Blood Diamond and The Last King of Scotland. Aided by a couple of glasses of wine, the two movies and the news from Zimbabwe got mixed up in my mind. I was expecting to encounter a violent society, general chaos, and militants with AK-47s. I was craving for my plane to somehow turn around.

But Harare proved safer than many other places I had been to in Africa. When we arrived, the airport was in complete darkness because of a shortage of electricity. The officials looked bored and sleepy. Yet interesting events awaited me. I was to get arrested in Harare. I was to spend time with Morgan Richard Tsvangirai, who was at that time an international star, a hero of human-rights activists for his opposition to President Robert Mugabe, and soon to be prime minister (a position without much power) under him. I was to be befriended by a relative of Mugabe, with whom I spent two days. I was also soon to become, to use a word that is yet to find a place in the dictionary, a multitrillionaire.

When I asked for it, someone soon brought me a bundle of 100-trillion dollar bills, all for free.

Zimbabwe had recently lost control of its currency. Inflation was so rapid — reaching as much as one million percent at one point — that the nation’s money was left with no value. A few months before I arrived, people had stopped using the local currency. The only medium of transactions was the US dollar, the South African rand, or the euro. When I asked for it, someone soon brought me a bundle of 100-trillion dollar bills, all for free. By this time, you couldn’t even buy a local bus ticket with those notes.

Nothing was cheap. Even for simple food and fruit, the prices were much higher than I would have paid in Canada. A kilo of onions was US $1.60, sugar was $0.85, and potatoes were a dollar. I could have bought a cheap table fan for something between $50 and $110. A 300-gram packet of Kellogg’s cornflakes was $2.10. A 400 ml of Pantene shampoo was $7.

In Zimbabwe, labor is dirt cheap — a couple of dollars or less a day — and land amply fertile. Development economists struggle to explain why even basic foodstuffs are so expensive in such countries. Why does manufacturing from China or at least from Europe not flood into places like Zimbabwe?

The explanation is very easy, but very incorrect, politically. I will zero in on it at the end.

Despite the high price of goods that should have provided huge incentives for people to work, the roads of Harare were full of thousands and thousands of unemployed men. Those trying to do something were selling produce — exactly the same produce — from small roadside shops. Prepaid vouchers for cellular phones were being sold everywhere, partly as currency or a hedge against inflation.

In Zimbabwe, labor is dirt cheap. Why does manufacturing from China or at least from Europe not flood into the country?

But what I was exploring was the economy that represented the higher tail-end of the national GDP, which was then $606 per capita. Harare, not the hinterland, was my principal location.

Despite extreme poverty and unemployment, Harare was a safe city. I tried striking up conversations in fast-food joints with those of European descent, and contrary to what I expected, they told me about the lack of ethnic conflicts in Zimbabwe. Most of the land expropriation and violence that had been happening was the responsibility of a minority of the populace, mostly connected with the ruling party. I got the impression that it wasn’t necessarily the violent aspects of Zimbabwean culture but its relative sheepishness that allowed violent people to rule the country’s institutions and not get challenged. If a significant minority doesn’t get fired up about liberty and proper institutions, the society must fall into political tyranny and chaos. I soon lost my fear and walked around freely, but bad things managed to happen, evidence of the tyranny beneath the calm.

At one point, a policeman came out of nowhere, started shouting at me, and held my wrist while I was midway crossing a road. He was shouting at me and pulling me in the other direction. I declined to go with him unless he let go of my wrist. We agreed that I would walk with him to his small post at the corner of the road. He had seen me photographing the parliament building, which is illegal. For him not knowing that law was the ultimate crime. He was obviously looking for a bribe, but not knowing how much to give, I could have easily fallen into a never-ending negotiation. My only other option was to look important and name-drop. So that’s what I did. In a tribal society, it is pecking-order and might-is-right that rule. The rule of law is not just unimportant, it isn’t worth the paper it is written on — it is incomprehensible to anyone, including the judges.

Most of the land expropriation and violence that had been happening was the responsibility of a minority of the populace, mostly connected with the ruling party.

One evening, Morgan Tsvangirai visited the hotel bar, where I managed to have a private conversation with him. Before becoming a politician, he was a trade union leader and had worked in a nickel mine. He told me bluntly that if he came to power he would be “fair” but would expropriate whatever he needed for the good of Zimbabwe. When I told him that international investors would not put money into Zimbabwe unless they saw profits and safety for their capital, the idea made no sense to him. He seemed to have absolutely no understanding of the concepts of private property and profit. Lack of ideas was in him so palpable that I doubt he could even be labeled a Marxist.

The truth was staring nakedly at my face: Zimbabwe after Mugabe would be much worse. Ironically, that understanding had completely escaped the international media and other international organizations that were lobbying to have Mugabe replaced by Tsvangirai.

I had met a lot of well-educated Zimbabweans who were living in London and New York. They expressed their patriotism and their craving to return. But they made it amply clear that they weren’t going to do so except as expatriates with hardship allowances added to their Western salaries. In the economic structure of Zimbabwe this would simply not add up. So they did not return.

He was obviously looking for a bribe, but not knowing how much to give, I could have easily fallen into a never-ending negotiation.

For whatever reason, I had come to be seen in Harare as a man wielding huge money power. A relative of Mugabe befriended me and decided to show me around during the last two days of my visit. He showed me his fleet of cars and his several palatial houses. He also showed me expropriated properties and farms of ethnically European farmers. Genteel readers may find my happily “enjoying” a trip to such farms a bit repulsive. But revulsion would simply have meant that I wouldn’t have had the experience, or have been able to write about it. We drove around Harare and surrounding areas like royalty, with the police now extremely servile. Our vehicle always picked up pace when we drove closer to police blockades.

So what does the future hold for Zimbabwe?

Zimbabweans are extremely unskilled and have a very high time preference. The moderately skilled Zimbabweans have moved on to greener pastures. Brain-drain is real, in Zimbabwe as in the rest of the Third World. None of this augurs well.

I reflected on what the “liberation” movement of Zimbabwe must have been like. I had good laughs with a lot of Zimbabweans and found them very friendly, but I found no ingredient in them that would make them fight for liberty and freedom, if they had any concept of what those words meant. The nationalist movements of the colonized countries are too sugarcoated in history books. Those movements were mainly about local goons fighting for power when Europeans were getting tired and colonization had started to become less profitable.

The truth was staring nakedly at my face: Zimbabwe after Mugabe would be much worse.

As I write this, Robert Mugabe has been removed in a coup. He had been in power since the foundation of the republic in 1980. He was, in effect, installed by a relatively rational entity: the British. No such entity exists in the extremely irrational and tribal Zimbabwe. The concepts of liberty, planning, reason, and the rule of law do not exist there. Zimbabwean democracy is incapable of finding another Mugabe. It will by definition find a significantly worse “leader.”

The world today is celebrating the end of Mugabe and the rise of new light in Zimbabwe. Zimbabweans danced and celebrated the removal of Mugabe and the appearance of their new-found “freedoms.” But behind the facade they are happy for something completely different. When they use the word “freedom” they are expecting the end of Mugabe to produce an era of free-stuff, goodies that flow without having to put in any effort. In their worldview, free-stuff should come to them without obligation to plan, invest, or strive for something more than momentary pleasure, including the pleasure of political “liberation.”

Let us zero in.

Zimbabwe was once the breadbasket of Africa. Gleaning out the key factors that made it a comparatively prosperous society is fairly easy, but hard to utter. In the old days its institutional spine was British rule and farmers of European heritage. Without their return in some form, Zimbabwe has no hope.

A year or two from now, the World Bank, the UN, and the media will again be complaining about Zimbabwe not turning out to be what they thought it would.

Of course, the milieu of Western society and international organizations is such that anyone who holds a politically incorrect view is immediately thrown out. So these organizations simply do not have the capacity to prescribe corrective action for Zimbabwe. They recite “democracy” as a treatment for all ills. But a “democratic” society that lacks the concepts of practical reason, limited government, and the rule of law does not have the ability to find a good leader. It will merely feel attraction toward the person who offers the most goodies.

A year or two from now, the World Bank, the UN, and the media will again be complaining about Zimbabwe not turning out to be what they thought it would. They will be expecting fresh elections to do the job. This demand for elections and democracy has been the never-ending, simplistic prescription of international organizations in the postcolonial world. But the prescription does not work. Zimbabwe will, unfortunately, get worse, much worse.


Best of Overlawyered — September 2017
Posted on Friday January 19, 2018

“Utterly worthless,” “no better than a racket”: Subway sandwich settlement comes in for criticism at Seventh Circuit; Defamation suit after being called patent troll; Publishing a gun design online = arms export? Drug company hands patents over to Indian tribe; No, “The Star-Spangled Banner” is not an “ode to slavery” as some have mistaken it; […]

Best of Overlawyered — September 2017 is a post from Overlawyered - Chronicling the high cost of our legal system

Save the date, Feb. 8: Lenore Skenazy on the sex offender registry
Posted on Thursday January 18, 2018

Coming to Cato in Washington, D.C. noon Feb. 8, register or watch online: You May Be a Sex Offender if… Featuring Lenore Skenazy, Author and columnist, founder of Free-Range Kids; with comments by Dara Lind, Senior Reporter, Vox; moderated by Walter Olson, Senior Fellow, Cato Institute. In 1994, responding to a terrible murder, Congress passed […]

Save the date, Feb. 8: Lenore Skenazy on the sex offender registry is a post from Overlawyered - Chronicling the high cost of our legal system

A southern border wall: the eminent domain angle
Posted on Thursday January 18, 2018

“The federal government’s boldest land grab in a generation produced the first border wall — and a trail of abuse, mistakes and unfairness.” It happened back in 2007. [T. Christian Miller, ProPublica, and Kiah Collier and Julián Aguilar, Texas Tribune; related, Ilya Somin] Tags: eminent domain, immigration law

A southern border wall: the eminent domain angle is a post from Overlawyered - Chronicling the high cost of our legal system

Wage and hour roundup
Posted on Thursday January 18, 2018

Among this administration’s most notable accomplishments — hurrah for Labor Sec. Alex Acosta and team — is to ditch its predecessor’s horrible overtime rules [Juliet Eilperin, Washington Post on opinion letters and internships] DoL rollback of Obama rules on tip pooling is fully justified [Christian Britschgi] “A Seattle Game-Changer? The latest empirical research further underscores […]

Wage and hour roundup is a post from Overlawyered - Chronicling the high cost of our legal system

“Split up the Ninth Circuit—but Not Because It’s Liberal”
Posted on Wednesday January 17, 2018

Arizona Attorney General Mark Brnovich and Ilya Shapiro on the case for breaking up the overburdened, overbusy Ninth Circuit, which can be made independently of the usual ideological concerns [Cato/WSJ] Because of the Ninth’s unique practice of forming en banc panels by randomly selecting 11 of its 29 judges rather than summoning the full number, […]

“Split up the Ninth Circuit—but Not Because It’s Liberal” is a post from Overlawyered - Chronicling the high cost of our legal system

Climate change suit roundup
Posted on Wednesday January 17, 2018

Biggest recruit yet for climate recoupment suits: NYC Mayor Bill De Blasio sues blaming five oil companies for Superstorm Sandy [Seth Barron/City Journal, John Timmer/ArsTechnica, WSJ; Stephen Bainbridge on parallel divestment effort] California cities/counties suing oil companies: climate change will be our ruin. Same cities/counties selling bonds to investors: risk? what risk? [Andrew Scurria/WSJ; John […]

Climate change suit roundup is a post from Overlawyered - Chronicling the high cost of our legal system

German social media law: early takedowns spur outcry
Posted on Tuesday January 16, 2018

“A new law meant to curtail hate speech on social media in Germany is stifling free speech and making martyrs out of anti-immigrant politicians whose posts are deleted, the top-selling Bild newspaper said on Thursday” under the headline “Please spare us the thought police!” [Michelle Martin, Thomson Reuters] In one probably intended effect of the […]

German social media law: early takedowns spur outcry is a post from Overlawyered - Chronicling the high cost of our legal system

Best of Overlawyered — August 2017
Posted on Tuesday January 16, 2018

“California: ADA lawsuit mill destroys family’s restaurant dream“; “UK tourists abroad file wave of food poisoning claims“; Brady Campaign talks couple into suing gun dealer, guess who gets left high and dry; EEOC: “gentleman’s club” broke law by refusing to hire male barkeep; $41.7M verdict against school for failing to warn of tick bites on […]

Best of Overlawyered — August 2017 is a post from Overlawyered - Chronicling the high cost of our legal system

Conservative Tribune

Prosecutors Investigating Additional Suspects in LV Shooting
Posted on Friday January 19, 2018

Courtroom testimony from prosecution officials indicates that law enforcement is investigating additional suspects in the Las Vegas massacre, KVVU-TV reported. The revelation came during a Tuesday hearing in a Las Vegas courtroom as prosecutors tried to keep some evidence in the massacre sealed from the press; according to KVVU, “lawyers for multiple media outlets argued…

The post Prosecutors Investigating Additional Suspects in LV Shooting appeared first on Conservative Tribune.

Peace Corps Volunteer Does 180 After Living in Africa: ‘Trump Was Right’
Posted on Friday January 19, 2018

We’re just a little over halfway through the month of January, but I think we’ve pretty much established what the “covfefe” of 2018 is going to be: “s***hole countries.” It’s not even clear whether or not the president actually said those words, mind you, but it’s sparked a debate about the diversity lottery and other…

The post Peace Corps Volunteer Does 180 After Living in Africa: ‘Trump Was Right’ appeared first on Conservative Tribune.

After Defeating Viet Cong 4-1 in Major Battle, Cronkite Convinced US We Lost
Posted on Friday January 19, 2018

CBS’ Walter Cronkite spent his entire career convincing America “that’s the way it is.” There are few people of a certain age who can’t remember some of Cronkite’s most legendary orations, whether it was announcing the death of President Kennedy or the monumental news that man had set foot on the moon. Perhaps his most…

The post After Defeating Viet Cong 4-1 in Major Battle, Cronkite Convinced US We Lost appeared first on Conservative Tribune.

The New American

Just Two Congressmen Voted Against a Pro-UN Resolution on Iran
Posted on Friday January 19, 2018


Based on how Congress voted, it would be easy to assume there are no longer any problems in America. That is because just two members of Congress, both conservative Republicans, voted to put “America First” and defy the bipartisan establishment by voting against a warmongering resolution targeting Iran. Among other concerns, critics said House Resolution 676, which purports to be about “supporting the rights of the people of Iran to free expression,” legitimizes the United Nations and inches the U.S. government closer to another disastrous Middle East war.

Dueling Climate Change Studies and the Doubt That Surrounds Both of Them
Posted on Friday January 19, 2018


So, two highly educated and respected groups release studies within one month of each other, with one study contradicting the other. Whom do we believe?

A U.S.-Turkish Clash in Syria?
Posted on Friday January 19, 2018


The war for dominance in the Middle East, following the crushing of ISIS, appears about to commence in Syria — with NATO allies America and Turkey on opposing sides.

Leftists Bully and Fat Shame Trump
Posted on Thursday January 18, 2018


The latest conspiracy theory, over which the media was aflutter, concerns alleged secret cells in the White House — fat cells. Dubbed the “Girther” movement, the suspicion is that President Trump is lying about his height and/or weight. 


New Phenomenon of “Fake Hate Crimes” Creates Perplexing Problems for Law Enforcement
Posted on Thursday January 18, 2018


Though little reported by the mainstream media, the U.S. has been hit by a series of “fake hate crimes,” also known as “hate crime hoaxes,” that have created a perplexing new set of circumstances for state and local law enforcement.

Hoover Institution

Condoleezza Rice, Susan Rice To Speak On Campus
Posted on Wednesday April 11, 2018

Condoleezza Rice gives the before-dinner remarks titled “US Global Leadership?”

In the News
via Hamilton

Condoleezza Rice and Susan Rice, two former national security advisors with differing points of view, will discuss current issues on Wednesday, April 11, 2018, at 7 p.m. in the College’s Margaret Scott Bundy Field House.

Independent Institute

Nativists Don’t Know the Future
Posted on Monday January 15, 2018

Immigrants continue to blend into American culture, generally speaking, in the same way that previous arrivals blended in.

How a Charity Uses Fake Money and Auction Markets to Help Feed America
Posted on Friday January 12, 2018

Feeding America is a network of 200 food banks and 60,000 food pantries and meal programs that helps to feed 46 million Americans annually, including 12 million children and 7 million seniors. The network fights hunger and poor nutrition by working with manufacturers, distributors, retailers, food service companies, and farmers to gather food before...
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Medical Apps: Improving Healthcare on a Global Scale
Posted on Thursday January 11, 2018

Health apps use smartphone technology to provide medical assistance or access to medical professionals.

Progressive Democracy
Posted on Thursday January 11, 2018

The ideology of Democracy legitimizes the actions of democratic government by validating them as being approved by the people.

Tax Cut Doomsayers Need a History (and Economics) Lesson
Posted on Tuesday January 09, 2018

The recent federal tax cut is creating a lot of fear and angst that a quick historical survey would go far to allay. Consider, for example, this recent opinion piece by two officials of the Council of Nonprofits, “Nonprofits Must Move Swiftly to Fight for Sound Public Policies.” Characterizing the tax bill as unleashing...
Read More »

The Middle of the Road Leads to Socialism
Posted on Thursday January 11, 2018

The fundamental dogma of all brands of socialism and communism is that the market economy or capitalism is a system that hurts the vital interests of the immense majority of people for the sole benefit of a small minority of rugged individualists. It condemns the masses to progressing impoverishment. It brings about misery, slavery, oppression, degradation and exploitation of the working men, while it enriches a class of idle and useless parasites.

This doctrine was not the work of Karl Marx. It had been developed long before Marx entered the scene. Its most successful propagators were not the Marxian authors, but such men as Carlyle and Ruskin, the British Fabians, the German professors, and the American Institutionalists. And it is a very significant fact that the correctness of this dogma was contested only by a few economists who were very soon silenced and barred from access to the universities, the press, the leadership of political parties and, first of all, public office. Public opinion by and large accepted the condemnation of capitalism without any reservation.

1. Socialism

But, of course, the practical political conclusions which people drew from this dogma were not uniform. One group declared that there is but one way to wipe out these evils, namely to abolish capitalism entirely. They advocate the substitution of public control of the means of production for private control. They aim at the establishment of what is called socialism, communism, planning, or state capitalism. All these terms signify the same thing. No longer should the consumers, by their buying and abstention from buying, determine what should be produced, in what quantity and of what quality. Henceforth a central authority alone should direct all production activities.

2. Interventionism, Allegedly a Middle-of-the-Road Policy

A second group seems to be less radical. They reject socialism no less than capitalism. They recommend a third system, which, as they say, is as far from capitalism as it is from socialism, which as a third system of society’s economic organization, stands midway between the two other systems, and while retaining the advantages of both, avoids the disadvantages inherent in each. This third system is known as the system of interventionism. In the terminology of American politics it is often referred to as the middle-of-the-road policy.

What makes this third system popular with many people is the particular way they choose to look upon the problems involved. As they see it, two classes, the capitalists and entrepreneurs on the one hand and the wage earners on the other hand, are arguing about the distribution of the yield of capital and entrepreneurial activities. Both parties are claiming the whole cake for themselves. Now, suggest these mediators, let us make peace by splitting the disputed value equally between the two classes. The State as an impartial arbiter should interfere, and should curb the greed of the capitalists and assign a part of the profits to the working classes. Thus it will be possible to dethrone the moloch capitalism without enthroning the moloch of totalitarian socialism.

Yet this mode of judging the issue is entirely fallacious. The antagonism between capitalism and socialism is not a dispute about the distribution of booty. It is a controversy about which two schemes for society’s economic organization, capitalism or socialism, is conducive to the better attainment of those ends which all people consider as the ultimate aim of activities commonly called economic, viz., the best possible supply of useful commodities and services. Capitalism wants to attain these ends by private enterprise and initiative, subject to the supremacy of the public’s buying and abstention from buying on the market. The socialists want to substitute the unique plan of a central authority for the plans of the various individuals. They want to put in place of what Marx called the “anarchy of production” the exclusive monopoly of the government. The antagonism does not refer to the mode of distributing a fixed amount of amenities. It refers to the mode of producing all those goods which people want to enjoy.

The conflict of the two principles is irreconcilable and does not allow for any compromise. Control is indivisible. Either the consumers’ demand as manifested on the market decides for what purposes and how the factors of production should be employed, or the government takes care of these matters. There is nothing that could mitigate the opposition between these two contradictory principles. They preclude each other. Interventionism is not a golden mean between capitalism and socialism. It is the design of a third system of society’s economic organization and must be appreciated as such.

3. How Interventionism Works

It is not the task of today’s discussion to raise any questions about the merits either of capitalism or of socialism. I am dealing today with interventionism alone. And I do not intend to enter into an arbitrary evaluation of interventionism from any preconceived point of view. My only concern is to show how interventionism works and whether or not it can be considered as a pattern of a permanent system for society’s economic organization.

The interventionists emphasize that they plan to retain private ownership of the means of production, entrepreneurship and market exchange. But, they go on to say, it is peremptory to prevent these capitalist institutions from spreading havoc and unfairly exploiting the majority of people. It is the duty of government to restrain, by orders and prohibitions, the greed of the propertied classes lest their acquisitiveness harm the poorer classes. Unhampered or laissez-faire capitalism is an evil. But in order to eliminate its evils, there is no need to abolish capitalism entirely. It is possible to improve the capitalist system by government interference with the actions of the capitalists and entrepreneurs. Such government regulation and regimentation of business is the only method to keep off totalitarian socialism and to salvage those features of capitalism which are worth preserving. On the ground of this philosophy, the interventionists advocate a galaxy of various measures. Let us pick out one of them, the very popular scheme of price control.

4. How Price Control Leads to Socialism

The government believes that the price of a definite commodity, e.g., milk, is too high. It wants to make it possible for the poor to give their children more milk. Thus it resorts to a price ceiling and fixes the price of milk at a lower rate than that prevailing on the free market. The result is that the marginal producers of milk, those producing at the highest cost, now incur losses. As no individual farmer or businessman can go on producing at a loss, these marginal producers stop producing and selling milk on the market. They will use their cows and their skill for other more profitable purposes. They will, for example, produce butter, cheese or meat. There will be less milk available for the consumers, not more. This, or course, is contrary to the intentions of the government. It wanted to make it easier for some people to buy more milk. But, as an outcome of its interference, the supply available drops. The measure proves abortive from the very point of view of the government and the groups it was eager to favor. It brings about a state of affairs, which — again from the point of view of the government — is even less desirable than the previous state of affairs which it was designed to improve.

Now, the government is faced with an alternative. It can abrogate its decree and refrain from any further endeavors to control the price of milk. But if it insists upon its intention to keep the price of milk below the rate the unhampered market would have determined and wants nonetheless to avoid a drop in the supply of milk, it must try to eliminate the causes that render the marginal producers’ business unremunerative. It must add to the first decree concerning only the price of milk a second decree fixing the prices of the factors of production necessary for the production of milk at such a low rate that the marginal producers of milk will no longer suffer losses and will therefore abstain from restricting output. But then the same story repeats itself on a remoter plane. The supply of the factors of production required for the production of milk drops, and again the government is back where it started. If it does not want to admit defeat and to abstain from any meddling with prices, it must push further and fix the prices of those factors of production which are needed for the production of the factors necessary for the production of milk. Thus the government is forced to go further and further, fixing step by step the prices of all consumers’ goods and of all factors of production — both human, i.e., labor, and material — and to order every entrepreneur and every worker to continue work at these prices and wages. No branch of industry can be omitted from this all-around fixing of prices and wages and from this obligation to produce those quantities which the government wants to see produced. If some branches were to be left free out of regard for the fact that they produce only goods qualified as non-vital or even as luxuries, capital and labor would tend to flow into them and the result would be a drop in the supply of those goods, the prices of which government has fixed precisely because it considers them as indispensable for the satisfaction of the needs of the masses.

But when this state of all-around control of business is attained, there can no longer be any question of a market economy. No longer do the citizens by their buying and abstention from buying determine what should be produced and how. The power to decide these matters has devolved upon the government. This is no longer capitalism; it is all-around planning by the government, it is socialism.

5. The Zwangswirtschaft Type of Socialism

It is, of course, true that this type of socialism preserves some of the labels and the outward appearance of capitalism. It maintains, seemingly and nominally, private ownership of the means of production, prices, wages, interest rates and profits. In fact, however, nothing counts but the government’s unrestricted autocracy. The government tells the entrepreneurs and capitalists what to produce and in what quantity and quality, at what prices to buy and from whom, at what prices to sell and to whom. It decrees at what wages and where the workers must work. Market exchange is but a sham. All the prices, wages, and interest rates are determined by the authority. They are prices, wages, and interest rates in appearance only; in fact they are merely quantity relations in the government’s orders. The government, not the consumers, directs production. The government determines each citizen’s income, it assigns to everybody the position in which he has to work. This is socialism in the outward guise of capitalism. It is the Zwangswirtschaft of Hitler’s German Reich and the planned economy of Great Britain.

6. German and British Experience

For the scheme of social transformation which I have depicted is not merely a theoretical construction. It is a realistic portrayal of the succession of events that brought about socialism in Germany, in Great Britain, and in some other countries.

The Germans, in the First World War, began with price ceilings for a small group of consumers’ goods considered as vital necessities. It was the inevitable failure of these measures that impelled them to go further and further until, in the second period of the war, they designed the Hindenburg plan. In the context of the Hindenburg plan no room whatever was left for a free choice on the part of the consumers and for initiative action on the part of business. All economic activities were unconditionally subordinated to the exclusive jurisdiction of the authorities. The total defeat of the Kaiser swept the whole imperial apparatus of administration away and with it went also the grandiose plan. But when in 1931 Chancellor Brüning embarked anew on a policy of price control and his successors, first of all Hitler, obstinately clung to it, the same story repeated itself.

Great Britain and all the other countries which in the First World War adopted measures of price control, had to experience the same failure. They too were pushed further and further in their attempts to make the initial decrees work. But they were still at a rudimentary stage of this development when the victory and the opposition of the public brushed away all schemes for controlling prices.

It was different in the Second World War. Then Great Britain again resorted to price ceilings for a few vital commodities and had to run the whole gamut proceeding further and further until it had substituted all-around planning of the country’s whole economy for economic freedom. When the war came to an end, Great Britain was a socialist commonwealth.

It is noteworthy to remember that British socialism was not an achievement of Mr. Attlee’s Labor Government, but of the war cabinet of Mr. Winston Churchill. What the Labor Party did was not the establishment of socialism in a free country, but retaining socialism as it had developed during the war and in the post-war period. The fact has been obscured by the great sensation made about the nationalization of the Bank of England, the coal mines, and other branches of business. However, Great Britain is to be called a socialist country not because certain enterprises have been formally expropriated and nationalized, but because all the economic activities of all citizens are subject to full control of the government and its agencies. The authorities direct the allocation of capital and of manpower to the various branches of business. They determine what should be produced. Supremacy in all business activities is exclusively vested in the government. The people are reduced to the status of wards, unconditionally bound to obey orders. To the businessmen, the former entrepreneurs, merely ancillary functions are left. All that they are free to do is to carry into effect, within a nearly circumscribed narrow field, the decisions of the government departments.

What we have to realize is that price ceilings affecting only a few commodities fail to attain the ends sought. On the contrary. They produce effects which from the point of view of the government are even worse than the previous state of affairs which the government wanted to alter. If the government, in order to eliminate these inevitable but unwelcome consequences, pursues its course further and further, it finally transforms the system of capitalism and free enterprise into socialism of the Hindenburg pattern.

7. Crises and Unemployment

The same is true of all other types of meddling with the market phenomena. Minimum wage rates, whether decreed and enforced by the government or by labor union pressure and violence, result in mass unemployment prolonged year after year as soon as they try to raise wage rates above the height of the unhampered market. The attempts to lower interest rates by credit expansion generate, it is true, a period of booming business. But the prosperity thus created is only an artificial hot-house product and must inexorably lead to the slump and to the depression. People must pay heavily for the easy-money orgy of a few years of credit expansion and inflation.

The recurrence of periods of depression and mass unemployment has discredited capitalism in the opinion of injudicious people. Yet these events are not the outcome of the operation of the free market. They are on the contrary the result of well-intentioned but ill-advised government interference with the market. There are no means by which the height of wage rates and the general standard of living can be raised other than by accelerating the increase of capital as compared with population. The only means to raise wage rates permanently for all those seeking jobs and eager to earn wages is to raise the productivity of the industrial effort by increasing the per-head quota of capital invested. What makes American wage rates by far exceed the wage rates of Europe and Asia is the fact that the American worker’s toil and trouble is aided by more and better tools. All that good government can do to improve the material well-being of the people is to establish and to preserve an institutional order in which there are no obstacles to the progressing accumulation of new capital required for the improvement of technological methods of production. This is what capitalism did achieve in the past and will achieve in the future too if not sabotaged by a bad policy.

8. Two Roads to Socialism

Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps. It is as such different from the endeavors of the communists to bring about socialism at one stroke. The difference does not refer to the ultimate end of the political movement; it refers mainly to the tactics to be resorted to for the attainment of an end that both groups are aiming at.

Karl Marx and Friedrich Engels recommended successively each of these two ways for the realization of socialism. In 1848, in the Communist Manifesto, they outlined a plan for the step-by-step transformation of capitalism into socialism. The proletariat should be raised to the position of the ruling class and use its political supremacy “to wrest, by degrees, all capital from the bourgeoisie.” This, they declare, “cannot be effected except by means of despotic inroads on the rights of property and on the conditions of bourgeois production; by means of measures, therefore, which appear economically insufficient and untenable, but which in the course of the movement outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionizing the mode of production.” In this vein they enumerate by way of example ten measures.

In later years Marx and Engels changed their minds. In his main treatise, Das Capital, first published in 1867, Marx saw things in a different way. Socialism is bound to come “with the inexorability of a law of nature.” But it cannot appear before capitalism has reached its full maturity. There is but one road to the collapse of capitalism, namely the progressive evolution of capitalism itself. Then only will the great final revolt of the working class give it the finishing stroke and inaugurate the everlasting age of abundance.

From the point of view of this later doctrine Marx and the school of orthodox Marxism reject all policies that pretend to restrain, to regulate and to improve capitalism. Such policies, they declare, are not only futile, but outright harmful. For they rather delay the coming of age of capitalism, its maturity, and thereby also its collapse. They are therefore not progressive, but reactionary. It was this idea that led the German Social Democratic party to vote against Bismarck’s social security legislation and to frustrate Bismarck’s plan to nationalize the German tobacco industry. From the point of view of the same doctrine, the communists branded the American New Deal as a reactionary plot extremely detrimental to the true interests of the working people.

What we must realize is that the antagonism between the interventionists and the communists is a manifestation of the conflict between the two doctrines of the early Marxism and of the late Marxism. It is the conflict between the Marx of 1848, the author of the Communist Manifesto, and the Marx of 1867, the author of Das Capital. And it is paradoxical indeed that the document in which Marx endorsed the policies of the present-day self-styled anti-communists is called the Communist Manifesto.

There are two methods available for the transformation of capitalism into socialism. One is to expropriate all farms, plants, and shops and to operate them by a bureaucratic apparatus as departments of the government. The whole of society, says Lenin, becomes “one office and one factory, with equal work and equal pay,”1 the whole economy will be organized “like the postal system.”2 The second method is the method of the Hindenburg plan, the originally German pattern of the welfare state and of planning. It forces every firm and every individual to comply strictly with the orders issued by the government’s central board of production management. Such was the intention of the National Industrial Recovery Act of 1933 which the resistance of business frustrated and the Supreme Court declared unconstitutional. Such is the idea implied in the endeavors to substitute planning for private enterprise.

9. Foreign Exchange Control

The foremost vehicle for the realization of this second type of socialism in industrial countries like Germany and Great Britain is foreign exchange control. These countries cannot feed and clothe their people out of domestic resources. They must import large quantities of food and raw materials. In order to pay for these badly needed imports, they must export manufactures, most of them produced out of imported raw material. In such countries almost every business transaction directly or indirectly is conditioned either by exporting or importing or by both exporting and importing. Hence the government’s monopoly of buying and selling foreign exchange makes every kind of business activity depend on the discretion of the agency entrusted with foreign exchange control. In this country matters are different. The volume of foreign trade is rather small when compared with the total volume of the nation’s trade. Foreign exchange control would only slightly affect the much greater part of American business. This is the reason why in the schemes of our planners there is hardly any question of foreign exchange control. Their pursuits are directed toward the control of prices, wages, and interest rates, toward the control of investment and the limitation of profits and incomes.

10. Progressive Taxation

Looking backward on the evolution of income tax rates from the beginning of the Federal income tax in 1913 until the present day, one can hardly expect that the tax will not one day absorb 100 percent of all surplus above the income of the average voter. It is this that Marx and Engels had in mind when in the Communist Manifesto they recommended “a heavy progressive or graduated income tax.”

Another of the suggestions of the Communist Manifesto was “abolition of all right of inheritance.” Now, neither in Great Britain nor in this country have the laws gone up to this point. But again, looking backward upon the past history of the estate taxes, we have to realize that they more and more have approached the goal set by Marx. Estate taxes of the height they have already attained for the upper brackets are no longer to be qualified as taxes. They are measures of expropriation.

The philosophy underlying the system of progressive taxation is that the income and the wealth of the well-to-do classes can be freely tapped. What the advocates of these tax rates fail to realize is that the greater part of the income taxed away would not have been consumed but saved and invested. In fact, this fiscal policy does not only prevent the further accumulation of new capital. It brings about capital decumulation. This is certainly today the state of affairs in Great Britain.

11. The Trend Toward Socialism

The course of events in the past thirty years shows a continuous, although sometimes interrupted progress toward the establishment in this country of socialism of the British and German pattern. The United States embarked later than these two other countries upon this decline and is today still farther away from its end. But if the trend of this policy will not change, the final result will only in accidental and negligible points differ from what happened in the England of Attlee and in the Germany of Hitler. The middle-of-the-road policy is not an economic system that can last. It is a method for the realization of socialism by installments.

12. Loopholes Capitalism

Many people object. They stress the fact that most of the laws which aim at planning or at expropriation by means of progressive taxation have left some loopholes which offer to private enterprise a margin within which it can go on. That such loopholes still exist and that thanks to them this country is still a free country is certainly true. But this “loopholes capitalism” is not a lasting system. It is a respite. Powerful forces are at work to close these loopholes. From day to day the field in which private enterprise is free to operate is narrowed down.

13. The Coming of Socialism is Not Inevitable

Of course, this outcome is not inevitable. The trend can be reversed as was the case with many other trends in history. The Marxian dogma according to which socialism is bound to come “with the inexorability of a law of nature” is just an arbitrary surmise devoid of any proof.

But the prestige which this vain prognostic enjoys not only with the Marxians, but with many self-styled non-Marxians, is the main instrument of the progress of socialism. It spreads defeatism among those who otherwise would gallantly fight the socialist menace. The most powerful ally of Soviet Russia is the doctrine that the “wave of the future” carries us toward socialism and that it is therefore “progressive” to sympathize with all measures that restrict more and more the operation of the market economy.

Even in this country which owes to a century of “rugged individualism” the highest standard of living ever attained by any nation, public opinion condemns laissez-faire. In the last fifty years, thousands of books have been published to indict capitalism and to advocate radical interventionism, the welfare state, and socialism. The few books which tried to explain adequately the working of the free-market economy were hardly noticed by the public. Their authors remained obscure, while such authors as Veblen, Commons, John Dewey, and Laski were exuberantly praised. It is a well-known fact that the legitimate stage as well as the Hollywood industry are no less radically critical of free enterprise than are many novels. There are in this country many periodicals which in every issue furiously attack economic freedom. There is hardly any magazine of opinion that would plead for the system that supplied the immense majority of the people with good food and shelter, with cars, refrigerators, radio sets, and other things which the subjects of other countries call luxuries.

The impact of this state of affairs is that practically very little is done to preserve the system of private enterprise. There are only middle-of-the-roaders who think they have been successful when they have delayed for some time an especially ruinous measure. They are always in retreat. They put up today with measures which only ten or twenty years ago they would have considered as undiscussable. They will in a few years acquiesce in other measures which they today consider as simply out of the question. What can prevent the coming of totalitarian socialism is only a thorough change in ideologies.

What we need is neither anti-socialism nor anti-communism but an open positive endorsement of that system to which we owe all the wealth that distinguishes our age from the comparatively straitened conditions of ages gone by.

  • 1. Cf. V.I. Lenin, State and Revolution (Little Lenin Library No. 14, New York, 1932), p. 84.
  • 2. Ibid., p. 44.

An Austro-Libertarian View: Essays by David Gordon
Posted on Wednesday January 10, 2018

Volume 1: Economics, Philosophy, Law
Volume 2: Political Theory
Volume 3: Current Affairs, Foreign Policy, American History, European History

Review by Paul Gottfried

David Gordon, from the Foreword:

Shortly after Murray Rothbard’s lamented death in January, 1995, Lew Rockwell telephoned me. He asked me to write a book review journal for the Mises Institute, covering new books in philosophy, history, politics, and economics. Moreover, he wanted the first issue in one month. I managed to meet the deadline and continued to write the journal for a number of years. Articles from The Mises Review form the bulk of the material included in these volumes; but a few reviews from other sources are here as well. Ever since I first read Man, Economy, and State in 1962, I have been a convinced Rothbardian, and it is from this standpoint that I have written my articles.

The Progressive Era
Posted on Thursday November 09, 2017

Progressivism brought the triumph of institutionalized racism, the disfranchising of blacks in the South, the cutting off of immigration, the building up of trade unions by the federal government into a tripartite of big government, big business, big union alliance, the glorifying of military virtues and conscription, and a drive for American expansion abroad. In short, the Progressive era ushered the modern American politico-economic system into being.

From the Preface by Murray N. Rothbard

Walter E Williams

Constitutional Ignorance -- Perhaps Contempt for 01/17/2018
Posted on Wednesday January 17, 2018

Hillary Clinton blamed the Electoral College for her stunning defeat in the 2016 presidential election in her latest memoirs, "What Happened?" Some have claimed that the Electoral College is one of the most dangerous institutions in American politics. Why? They say the Electoral College system, as opposed to a simple majority vote, distorts the one-person, one-vote principle of democracy because electoral votes are not distributed according to population.

To back up their claim, they point out that the Electoral College gives, for example, Wyoming citizens disproportionate weight in a presidential election. Put another way, Wyoming, a state with a population of about 600,000, has one member in the U.S. House of Representatives and two members in the U.S. Senate, which gives the citizens of Wyoming three electoral votes, or one electoral vote per 200,000 people. California, our most populous state, has more than 39 million people and 55 electoral votes, or approximately one vote per 715,000 people. Comparatively, individuals in Wyoming have nearly four times the power in the Electoral College as Californians.

Updated: Wed Jan 17, 2018

Dirty College Secrets for 01/10/2018
Posted on Wednesday January 10, 2018

A frequent point I have made in past columns has been about the educational travesty happening on many college campuses. Some people have labeled my observations and concerns as trivial, unimportant and cherry-picking. While the spring semester awaits us, let's ask ourselves whether we'd like to see repeats of last year's antics.

An excellent source for college news is Campus Reform, a conservative website operated by the Leadership Institute ( Its reporters are college students. Here is a tiny sample of last year's bizarre stories.

Updated: Wed Jan 10, 2018

Dangers of Government Control for 01/03/2018
Posted on Wednesday January 03, 2018

We are a nation of 325 million people. We have a bit of control over the behavior of our 535 elected representatives in Congress, the president and the vice president. But there are seven unelected people who have life-and-death control over our economy and hence our lives — the seven governors of the Federal Reserve Board. The Federal Reserve Board controls our money supply. Its governors are appointed by the president and confirmed by the Senate and serve 14-year staggered terms. They have the power to cripple an economy, as they did during the late 1920s and early 1930s. Their inept monetary policy threw the economy into the Great Depression, during which real output in the United States fell nearly 30 percent and the unemployment rate soared as high as nearly 25 percent.

The most often stated cause of the Great Depression is the October 1929 stock market crash. Little is further from the truth. The Great Depression was caused by a massive government failure led by the Federal Reserve's rapid 25 percent contraction of the money supply. The next government failure was the Smoot-Hawley Tariff Act, which increased U.S. tariffs by more than 50 percent. Those failures were compounded by President Franklin D. Roosevelt's New Deal legislation. Leftists love to praise New Deal interventionist legislation. But FDR's very own treasury secretary, Henry Morgenthau, saw the folly of the New Deal, writing: "We have tried spending money. We are spending more than we have ever spent before and it does not work. ... We have never made good on our promises. ... I say after eight years of this Administration we have just as much unemployment as when we started ... and an enormous debt to boot!" The bottom line is that the Federal Reserve Board, the Smoot-Hawley tariffs and Roosevelt's New Deal policies turned what would have been a two, three- or four-year sharp downturn into a 16-year affair.

Updated: Wed Jan 03, 2018


A Second Korean War?
Posted on Thursday January 18, 2018

Originally posted at TomDispatch. Honestly, how many times in your life have you ever run across a headline like this: “Top general says he would resist ‘illegal’ nuke order from Trump”? That was Air Force General John Hyten, head of the U.S. Strategic Command, the present commander of American nuclear forces, speaking at a conference … Continue reading "A Second Korean War?"

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What Nerve! Catalonians Trying to Swear in the Coalition That Won the Most Votes
Posted on Thursday January 18, 2018

On December 21st, 2017, Catalans went to the polls to choose representatives for their Autonomous parliament. This, however, was no normal election for it did not come about because the previous legislative term had ended, or because the sitting president had called for early elections. Rather, it occurred because the central government in Madrid did … Continue reading "What Nerve! Catalonians Trying to Swear in the Coalition That Won the Most Votes"

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A US-Turkish Clash in Syria?
Posted on Thursday January 18, 2018

The war for dominance in the Middle East, following the crushing of ISIS, appears about to commence in Syria – with NATO allies America and Turkey on opposing sides. Turkey is moving armor and troops south to Syria’s border enclave of Afrin, occupied by Kurds, to drive them out, and then drive the Syrian Kurds … Continue reading "A US-Turkish Clash in Syria?"

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Why Trump’s North Korea ‘Bloody Nose’ Campaign Is a Big Bluff
Posted on Thursday January 18, 2018

The Trump administration’s leaks of plans for a “bloody nose” strike on North Korean nuclear and/or missile sites is only the most recent evidence of its effort to sell the idea that the United States is prepared for a first strike against the Democratic People’s Republic of Korea (DPRK). But the “bloody nose” leak—and the … Continue reading "Why Trump’s North Korea ‘Bloody Nose’ Campaign Is a Big Bluff"

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Mass Grave Filled with Policemen; 30 Killed in Iraq
Posted on Thursday January 18, 2018

Another mass grave was found near Mosul.

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Did Donald Trump Change His Mind on Domestic Spying?
Posted on Wednesday January 17, 2018

Late last week, Rep. Devin Nunes, R-Calif., chairman of the House Permanent Select Committee on Intelligence, repeated his public observations that members of the intelligence community – particularly the CIA, the NSA and the intelligence division of the FBI – are not trustworthy with the nation’s intelligence secrets. Because he has a security clearance at … Continue reading "Did Donald Trump Change His Mind on Domestic Spying?"

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No Foreign Bases: Challenging the Footprint of US Empire
Posted on Wednesday January 17, 2018

The United States cannot be a moral or ethical country until it faces up to the realities of US empire and the destruction it causes around the world. The US undermines governments (including democracies), kills millions of people, causes mass migrations of people fleeing their homes, communities and countries and produces vast environmental damage. A … Continue reading "No Foreign Bases: Challenging the Footprint of US Empire"

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Attacks Shift to Diyala Province; 11 Killed in Iraq
Posted on Wednesday January 17, 2018

Several small scale attacks occurred northeast of Baghdad.

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Mass Grave at Badush Prison; 66 Killed in Iraq
Posted on Tuesday January 16, 2018

A mass grave containing dozens of security personal was found at a prison near Mosul.

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Our Potemkin Village
Posted on Tuesday January 16, 2018

While the population of Hawaii dove under manhole covers, and #TheResistance screeched that The Orange Monster had finally done it and forced Kim Jong Un to nuke the island paradise, it took Rep. Tulsi Gabbard, the levelheaded, and quite personable representative from that state, to issue a statement countermanding the “take cover” message sent out … Continue reading "Our Potemkin Village"

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Volokh Conspiracy

[Orin Kerr] The Challenge of Fourth Amendment Originalism and the Positive Law Test
Posted on Friday January 19, 2018

My friend and co-blogger Will Baude argued recently that his Positive Law test of the Fourth Amendment is an originalist approach. I find that position intriguing, in part because it brings up the difficulty of identifying what it means for a view of the Fourth Amendment to be originalist. It seems to me that if the Positive Law test of searches is originalist, then all of my writings on what is a Fourth Amendment search are also originalist, or at least are perfecty consistent with originalism. Indeed, I have a hard time thinking of any proposed Fourth Amendment search tests that aren't consistent with originalism. And most of them seem more plausibly correct from an originalist perspective than the Positive Law test.

That raises an interesting question for a Supreme Court Justice who is a committed originalist: Does the method of originalism provide any guidance in interpreting what is a Forth Amendment search? The practical answer may be "no," or at least "not all that much." And the Positive Law test seems particularly hard to reach from an originalist perspective. This post will explain why.

I. The Challenge of Fourth Amendment Search Originalism

As I have written before, the big challenge of Fourth Amendment origialism is that the framing-era materials are very sparse. Here's most of what we know. First, the enactment of the Fourth Amendment was largely a response to a few high-profile English cases on general warrants, such as Entick v. Carrington and the Wilkes cases. The Fourth Amendment was largely a response to those cases, as it specifically prohibits general warrants in the warrant clause. We know that there was a body of English law covering certain aspects of search and seizure at the time of the framing, most of it focused on the standard for a lawful arrest (see, for example, 4 Blackstone's Commentaries Ch. 21), although we don't know how much of that English law would have been understood to be adopted by the Fourth Amendment's enactment.

We also know that several states had enacted search and seizure restrictions in their state constitutions before the Fourth Amendment was proposed, and we have good reason to think that the federal Fourth Amendment was designed to do more or less what they did. But we don't have much of a sense of what those state constitutional provisions did beyond ban general warrants. Finally, we have the text of the Fourth Amendment, the first clause of which states: "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated[.]"

That's at least a modest amount of history to go on, so there are some Fourth Amendment questions that originalism can shed some light on. For example, if someone proposed that the Fourth Amendment allows general warrants, we could confidently say that was inconsistent with an originalist approach.

But here's most maddening thing about trying to be a Fourth Amendment originalist. The existing historical materials shed almost no light on the original public meaning of what today is the most important issue, the scope of "searches." (I'll base this discussion in large part on this article, which you should consult if you want more details.) That specific issue didn't come up for a bunch of reasons, among them that there was no independent cause of action for unreasonable searches and seizures. The scope of law enforcement privilege in investigations generally came up as affirmative defenses to liability for other causes of action, such as civil trespass suits (where a proper warrant could justify the trespass of a house search) or a civil suit for false imprisonment (where proper cause could justify an arrest that had seized a person). Given that, it just wasn't necessary to define what counted as a search or seizure. It didn't matter.

And then as now, "searches" can mean a range of things. A search could mean physically breaking into and rummaging through a place. But then it might just mean scrutinizing something closely. Or maybe it means just looking for something from afar. Which of those definitions might have been assumed by the public at the time of the Fourth Amendment's enactment?

Based on my research, I think we just don't know. On one hand, the few cases and the occasional framing-era discussion of the Fourth Amendment involved and referred to physical entry as "searches" and physical removal of property as "seizures." The paradigmatic case of a search was physical intrusion into a home and rummaging through stuff inside, as in cases like Entick. On the other hand, the few data points don't suggest a test or say the level of generality that can answer how far beyond physical entry (if at all) the Fourth Amendment concept of searches should extend. As far as I have been able to discern, at least there just isn't a useful discoverable historical answer to the question.

II. The Non-Originalist Principle Needed to Devise any Search Test (Even For Originalists)

Why does this matter? It matters, I think, because modern doctrine now demands a test for what is a search. These days there are causes of action for Fourth Amendment violations. Criminal defendants can file motions to suppress. The subjects of searches can file civil actions under Bivens or Section 1983. The Fourth Amendment is now a sword and not just a shield. It provides a cause of action and not just the basis for an affirmative defense. That means we now need to answer something that didn't need to be answered in 1791. We need a test for what counts as a search to know what the police can do and when that legal cause of action exists.

But originalist methods just can't provide the test. As I wrote in my article a few years ago:

Devising a test from a set of examples raises a level-of-generality problem: Examples alone cannot identify how far beyond their facts the principle should extend. Clearly, physical entry of individuals inside the home to find evidence counts as a search. At the narrowest level, then, a search might be only a physical entry by government officials. A broader approach could focus on whether the officials interfered with property interests, such as whether a trespass occurred. Or perhaps the test should be whether the government interfered with privacy, with physical intrusion being just one example of government acts that violate privacy interests. Examples alone cannot identify which principle to use.

Here's the key. It seems to me that to arrive at a test -- to articulate a doctrine for what is a search -- one must adopt a non-originalist method for choosing among these possibilities. Maybe you think a broad test is right. Maybe you think a narrow approach is correct. But the historical materials can't answer the question. To use a football analogy, originalist methods can say that the rule is somewhere in the wide center of the field, say, between the 20 yard lines. But because the needs of modern doctrine demand a test for searches, you need some non-originalist principle to pick it.

As a practical matter, that makes it hard to distinguish originalist and nonoriginalist approaches to articulating a test for what is a search. Among all of the possible search tests, most of the tests I can recall having encountered -- several dozen over the years, I would guess -- are between those 20 yard lines. That is, most approaches could be articulated as being consistent with the originalist approach. When the history doesn't narrow the range, pretty much everything falls within it.

The upshot of this is that whether you claim to be an originalist or claim to reject originalism, you're actually doing pretty much the same thing when you try to articulate a test for what is a search. Everyone is picking non-originalist principles to get there, whether they are picking tests that are broad or narrow; based on property or privacy; derived from positive law or proabilistic expectations or something else. One author may claim that his theory is originalist. Another author may claim that his theory is nonoriginalist. But when you shed the label, I think that the analytical step that is doing the actual work -- the selection of some principle outside the original public meaning of the Fourth Amendment to get to a test for "searches" -- is not obviously different for originalists and non-originalists.

III. The Difficulty of Reaching the Positive Law Test From An Originalist Perspective

I think the Baude and Stern Positive Law test is a good example of this. The new and creative work that is being done to arrive that their new test strikes me as non-orignalist in nature. Consider their test. They propose that a Fourth Amendment search occurs "when government officials either violate generally applicable law or avail themselves of a governmental exemption from it" in a way "generally likely to obtain information." Under their test, as I understand it, you imagine that a private party did the same thing the government did. If it was "unlawful for an ordinary private actor to do what the government's agents did," in the sense that a private party committing the act would violate "any prohibitory legal provisions, whether legislative, judicial, or administrative in origin, and whether classified as criminal or civil in nature" -- federal, state, or local -- then it counts as a Fourth Amendment search. They further "take for granted" existing Supreme Court doctrine on reasonableness and remedies.

The key idea is that violating any kind of legal prohibition of any kind makes the government act a search, as long as the government is likely to obtain information. If enacted, this test would have extraordinary and quite radical implications.

But is it originalist? As best I can tell, Baude and Stern don't directly say in the paper that theirs is an originalist theory. In their 69-page article, the word "originalist" appears only once in passing. The word "originalism" appears only once in a footnote citing an article with that word in the title. "Public meaning" isn't mentioned at all. Most of their article is based on non-originalist arguments for why their test is a good one, largely based on a particular theory of the state and the proper role of government outside the specific context of searches and seizures. The early history and text of the Fourth Amendment itself seems to be covered only in a 5-page section, pages 1837 to 1841. And that discussion of history is super tentative. It concludes with more of a question than a conclusion: "the time has come to consider . . . whether [the Baude and Stern test] is compatible with the history leading up to the Fourth Amendment's adoption."

The tentative case Baude and Stern make that their proposed test is compatible with the history runs like this. First, the cases that inspired the enactment of the Fourth Amendment involved entering and ransacking homes that sometimes led to trespass actions such as Entick and Wilkes. "These episodes," Baude and Stern write, "have contributed to a longstanding conventional wisdom that until the mid-twentieth century, trespass was the central test for a Fourth Amendment search." So far, that's pretty standard. I should say that I happen to think that standard historical account is wrong: As I have argued here, there actually was no trespass test for what is a Fourth Amendment search until 2012 in Jones. But this is indeed the standard account most sources (including Supreme Court decisions) have repeated for the last fifty years or so.

How do we get from a trespass test to an all-forms-of-positive-law test? That's a pretty huge difference. The key passage is at pages 1839-1840:

The positive law model does not stop at the law of property, however, and neither did this history, though this part of the story is frequently overlooked. Wilkes (and the printers arrested along with him) had sued not just for a property violation but also for false imprisonment. Other suits similarly challenged searches and seizures as false imprisonment or other violations of what would today be thought of as torts relating to personal security. Of course we do not know exactly how far this went, or more accurately, would have gone. We cannot say for sure whether the same Founding-era principles would apply to a suit for, say, "intrusion upon seclusion" because no such right of action was then recognized. But the history is at least suggestive, and the most straightforward extrapolation is that the search-and-seizure principle — the idea that some actions by government officials raised questions demanding judicial scrutiny — was marked by violations of positive law, and moreover, by violations extending beyond the law of property.

Mull that over. The idea is that some lawsuits filed against what today would be seen as unreasonable searches and seizures claimed torts other than trespass -- in particular, false imprisonment or some other (unnamed) personal security torts. We don't know that those other torts were significant in those cases. We don't know that the non-trespass claims were significant in the cases that influenced the enactment of the Fourth Amendment. But torts beyond trespass were alleged in some cases. Based on the fact that there were some non-trespass claims alleged in some of the cases, Baude and Stern conclude that "the most straightforward extrapolation" is that a search occurs when any "positive law" was violated.

Woah. Whatever you make of that conclusion, it does not strike me as a "straightforward extrapolation" of the history. Consider, why should the presence of non-trespass claims in some cases expand the original public meaning of what is a "search"? And even if false imprisonment torts and maybe some other torts about personal security were considered part of the picture at the time of the framing, why would that mean that any violation of any positive law -- not just torts, or crimes, but any statute, any regulation, anything law -- would be a search?

The leap to an "any positive law" test is particularly puzzling because there's a simple explanation for why false imprisonment and other personal security torts would be claimed in search and seizure cases in the 18th century. As I noted earlier, the common law of search and seizure had a lot of law on the standards for arrests. Arrests were seizures of persons. And the way that the law of arrest would be raised was often as an affirmative defense to a tort claiming false imprisonment or some other tort relating to personal security. If the investigator broke into a house, the tort was trespass and the defense would be that the search was reasonable. If the investigator made an arrest, the tort was false imprisonment and the defense would be that the seizure was reasonable. The common law of searches and seizures provided an affirmative defense to these particular torts.

Baude and Stern try to use that switch by claiming that "the original remedial structure of the Fourth Amendment" echoes their positive law test. Because search and seizure rules originally acted as a privilege for those enforcing the law, they reason, Fourth Amendment issues came up when there was some source of positive law that created a cause of action for which search and seizure rules could be a defense. "[T]he structure of the inquiry matches our vision," they argue, in that there had to be a positive law violation alleged to trigger litigation on search and seizure law.

But that conclusion suffers from a serious level-of-generality problem. True, search and seizure issues generally came up when there was one of the causes of action for which the search and seizure privilege provided a defense. But that involved a limited set of tort claims like trespass and false imprisonment. Those causes of action arose in cases that involved, well, searches and seizures of persons, houses, papers, and effects. In contrast, much of what makes Baude and Stern's test so unique is that it goes so far beyond those traditional tort claims to cover any law, even apparently it provides no cause of action at all, and even if it has nothing to do with persons, houses, papers, or effects -- and even if it doesn't in any way involve acts that resemble searches or seizures. What makes the Baude and Stern test unique is departure from the history, it seems to me, not allegiance to it.

That gap seems a particular challenge for the positive law approach. As Baude and Stern recognize, the scenarios that triggered the Fourth Amendment involved breaking into homes, taking away stuff, and arresting people. The text of the Fourth Amendment expressly limits the Fourth Amendment along those lines, declaring a right of the people "to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." The Baude and Stern positive law approach seems to ignore that text and history. Not only does it drop the idea of any kind of invasion being required, whether physical or virtual. It also drops the idea that the invasion be of one's person, house, papers, or effects. It replaces that with the rather different idea that any kind of law violation triggers the Fourth Amendment.

In short, it seems to me that the choice of a test here isn't coming from 18th Century history. Instead, the real work of arriving at the test is coming from my friends Will Baude and James Stern, circa 2016. If their test is originalist, then it's hard to come up with a test that isn't -- or at least that couldn't be justified using originalist methods just as easily or more easily than the Positive Law approach.

Zero Hedge

Futures Jump Despite Threat Of Imminent Government Shutdown; Dollar Slide Accelerates

If US and global stocks sold off yesterday on fears of a government shutdown, coupled with a spike in US Treasury yields to the highest level since March and approaching Gundlach's "equity selloff redline"...

... then it is unclear what has precipitated their rebound this morning when the threat of a US government shutdown is even more pressing - with not enough votes in the Senate as of this moment (despite it having passed the House late on Thursday) to keep government running reflected in the latest plunge in the dollar which dropped to a fresh 3 year low - while the 10Y jumped even more overnight, breaking above the crucial 2.63% level and rising as high as 2.6407, the highest since September 2016.


While not a rout just yet, the Treasury selloff - arguably on concerns of rising inflation although we have seen many false starts in the past - spilled over across the globe, although Spanish bonds outperform in expectation of sovereign rating upgrade. Bunds underperformed despite a decent bounce off the 160.31 low to 160.56 (-2 ticks vs -27 ticks at worst), with chart support respected again.

Meanwhile, equities again ignore all risks, and overnight Japan's Topix rose first time in three days, while Europe's Stoxx 600 rose 0.5%, and was poised to close at the highest level since August 2015, and S&P futures have rebounded, wiping out all of yesterday's losses.

Predictably, Chinese stocks extended the 2018 rally, while the Nikkei 225 (+0.2%) saw initial upside pared as participants awaited developments in Washington where the stop gap bill to fund government through to February 16th was passed by the House, but faces less certainty at the Senate. Elsewhere, Hang Seng (+0.2%) somewhat took a breather from its recent ascent to all-time highs and Shanghai Comp. (+0.4%) was positive after yesterday’s GDP numbers and firm liquidity efforts by the PBoC. In Europe, the Dax is outperforming, led by ThyssenKrupp after they confirmed their targets and BASF who continue to rally after their positive trading update late yesterday.

Meanwhile, in macro, the dollar selloff accelerated, with the Bloomberg Dollar Spot Index hitting a fresh three-year low and headed for its sixth week of losses - its longest weekly losing streak in almost a year - amid concerns over a potential U.S. government shutdown that outweighed any benefit the greenback normally gets from higher yields. Some thoughts from Bloomberg:

  • BBDXY declines 0.3% Friday and is down 0.9% this week; it reached 1,130.91, lowest since January 2015
  • Temporary funding for the U.S. government is due to run out midnight Friday
  • 10-year U.S. Treasury yield was little changed at 2.63%; reached 2.6407%, highest since September 2014

The pound was among the beneficiaries of greenback weakness and extended its recent run to hit a fresh high since the June 2016 Brexit. According to Bloomberg, given it’s unlikely to get dovish headlines on the Brexit front, at least until the EU March summit gets into play, sterling finds a bid from short-term and momentum accounts.

The moves in American assets however dominated global markets, with the euro, yen, gold and base metals among the beneficiaries of the weaker dollar. The risk-on mood that helped drive up Treasury yields was still in evidence, with European stocks following Asian peers higher, U.S. futures pointing to gains and emerging-market equities climbing for a sixth day. Over in Asia, the Yuan briefly gained beyond 6.40 per dollar for first time since 2015 as the PBOC again strengthened the daily fixing and injected a net 80BN of liquidity.

In commodities, WTI and Brent and crude futures trade lower with markets keeping a close eye on US production after the DoE inventory data on Thursday and following monthly oil market reports from OPEC and the IEA. The DoE data showed US production rebounded over 2% in the latest week to 9.75mln bpd, while the IEA today said that US production could soon top 10mln bpd, and overtake Saudi Arabia and Russia. Precious metals are benefitting from the weak USD and as markets fear a potential US federal government shut down. IEA says global oil supply in December fell by 405k bpd to 97.7mln bpd due to lower North Sea and Venezuelan output. The IEA also saw US crude supply is set to push past 10mln bpd, overtaking Saudi Arabia and rivalling Russia

Bulletin headline Summary from RanSquawk

  • Stop gap bill to fund government through to mid-Feb was passed by the House, however faces dim chances of passing a Senate vote.
  • GBP back towards 1.39 following soft retail sales which had been distort by Black Friday sales in Novembers reading.
  • Looking ahead, highlights include US U. of Michigan Sentiment data and comments from Fed’s Quarles, Bostic and Williams.

Market Snapshot

  • S&P 500 futures up 0.3% to 2,805.25
  • STOXX Europe 600 up 0.4% to 400.34
  • MSCi Asia Pacific up 0.7% to 183.69
  • MSCI Asia Pacific ex Japan up 0.6% to 599.11
  • Nikkei up 0.2% to 23,808.06
  • Topix up 0.7% to 1,889.74
  • Hang Seng Index up 0.4% to 32,254.89
  • Shanghai Composite up 0.4% to 3,487.86
  • Sensex up 0.6% to 35,468.93
  • Australia S&P/ASX 200 down 0.2% to 6,005.81
  • Kospi up 0.2% to 2,520.26
  • German 10Y yield rose 0.8 bps to 0.581%
  • Euro up 0.3% to $1.2277
  • Italian 10Y yield fell 1.1 bps to 1.721%
  • Spanish 10Y yield fell 3.5 bps to 1.458%
  • Brent Futures down 0.9% to $68.68/bbl
  • Gold spot up 0.7% to $1,335.99
  • U.S. Dollar Index down 0.3% to 90.27

Overnight Top Headlines from Bloomebrg

  • The Federal Reserve is working to relax a key part of post- crisis demands for drastically increased capital levels at the biggest banks, according to people familiar with the work, a move that could free up billions of dollars for some Wall Street’s giants
  • U.S. House passes stopgap govt funding bill, Senate reconvenes at 11 a.m. Eastern today; click here for the latest on the shutdown saga
  • White House is said to consider John Williams as Fed vice chair: WSJ
  • Fed’s Mester backs three to four rate hikes this year and next; Dudley repeats concern fiscal stimulus may cause overheating
  • NAFTA: U.S. is losing patience with slow pace of talks, wants concrete progress next week; threat to withdraw is serious, according to people familiar
  • Germany’s Social Democratic Party is looking for ways to sweeten another stint in government with Angela Merkel as the political impasse in Europe’s biggest economy comes to a head
  • The Bank of Japan is optimistic about hitting its 2% inflation target within two years and is considering how best to communicate any possible policy changes, WSJ reports, citing unidentified people familiar with its thinking
  • Global equity funds see “massive” weekly inflows of $24b, with the four-week inflow to stocks the biggest ever at $58b, signaling investors’ “fear of missing out”, BofAML strategists write in note, citing EPFR Global data

Asia equity markets mostly traded in the green after a subdued performance on Wall St and with focus on whether Congress can avert a government shutdown. ASX 200 (-0.2%) was weighed by continued weakness in commodity-related stocks as well as a lacklustre financial sector, while Nikkei 225 (+0.2%) saw initial upside pared as participants awaited developments in Washington where the stop gap bill to fund government through to February 16th was passed by the House, but faces less certainty at the Senate. Elsewhere, Hang Seng (+0.2%) somewhat took a breather from its recent ascent to all-time highs and Shanghai Comp. (+0.4%) was positive after yesterday’s GDP numbers and firm liquidity efforts by the PBoC. Finally, 10yr JGBs were marginally lower as Japanese yields increased in tandem with global peers including the US 10yr yield which rose above 2.63% and its highest since 2016.
PBoC injected CNY 130bln via 7-day reverse repos, CNY 90bln via 14-day reverse repos and CNY 10bln via 63-day reverse repos for a weekly net injection of CNY 590bln vs. last week's CNY 40bln net injection. BoJ is said to be optimistic in achieving their 2% inflation target withing two years but are cautious on the next move. People close to the BoJ say the market overreacted to the change in Rinban operations, which they say wasn’t meant to signal any  roader policy shift. As a guide, this is relatively the same as recent source reports from the BoJ.

Top Asian News

  • China’s State-Backed Firms Are World Beaters Early in 2018
  • This Is How China’s Regions Fare in the Fake GDP Data Stakes
  • Japan Governor Witholding Reactor Decision During 3-Year Study
  • Bunds On Back-Foot Again as Treasuries Slide Continues to Weigh
  • Demand for Euro Calls Outweighs Puts This Week Ahead of ECB Meet
  • BOJ Is Said Optimistic to Hit 2% Inflation Target in 2 Yrs: WSJ


Equity markets are higher across the board, appearing to shrug off concerns over the potential government shutdown. The Dax is outperforming, led by ThyssenKrupp after they confirmed their targets and BASF who continue to rally after their positive trading update late yesterday. The FTSE underperforms slightly with a number of smaller companies issuing profit warnings, including: Carpetright, Dignity and Bonmarche whose shares all plummeted between 20% and 50%. Although none of these companies are in the FTSE 100, the knock on effect is clear to see with Kingfisher, a competitor to Carpetright, propping up the index. US equity futures pushed higher after reports that the Fed is said to be working on plans to relax bank leverage ratio which could free up billions in bank capital.

Top European News

  • U.K. Retailers See Black Friday Hangover as Sales Plunge 1.5%
  • BASF Aims to Muscle Itself Onto Battery Materials’ Top Table
  • Britain’s Black Belt in EU Law Says She Can’t Fight Brexit
  • GOP Conservatives Brought Russia Probe Demand to Shutdown Talks
  • Ceconomy Shares Plummet as Black Friday Discounts Erode Profit


In commodities, WTI and Brent and crude futures trade lower with markets keeping a close eye on US production after the DoE inventory data on Thursday and following monthly oil market reports from OPEC and the IEA. The DoE data showed US production rebounded over 2% in the latest week to 9.75mln bpd, while the IEA today said that US production could soon top 10mln bpd, and overtake Saudi Arabia and Russia. Precious metals are benefitting from the weak USD and as markets fear a potential US federal government shut down. IEA says global oil supply in December fell by 405k bpd to 97.7mln bpd due to lower North Sea and Venezuelan output. It maintained its 2018 global oil demand forecast at 1.3mln bpd, down from 2017 growth of 1.6mln bpd. US crude supply is set to push past 10mln bpd, overtaking Saudi Arabia and rivalling Russia.

In FX, the USD remained on the back foot in European trade as the threat of a government shutdown in the US becomes a reality ahead of the Senate vote. 60 votes in the Senate are needed to fund the government but it appears that the Republicans don’t even have the full support of everyone in their own party so getting an additional 10-15 from the Democrats seems unlikely. The JPY remained strong as sources in the WSJ said that the BoJ is optimistic of reaching its 2% inflation target within two years. UK retail sales disappointed, falling 1.5% M/M vs. expectations of a smaller 0.6% decline. Nevertheless, despite a brief dip in GBP on the back of the figures, GBP/USD reversed course as the ONS stated that shoppers are just moving their shopping earlier (NB: November data was much better than expected).

Looking at the day ahead, the December retail sales in the UK and the preliminary University of Michigan consumer sentiment print in the US are the only data of note due. Friday also marks the deadline for the US government  shutdown. Oil giant Schlumberger is due to report earnings

US Event Calendar

  • 10am: U. of Mich. Sentiment, est. 97, prior 95.9; Current Conditions, est. 114.4, prior 113.8; Expectations, est. 85.3, prior 84.3
  • 8:45am: Fed’s Bostic Speaks on U.S. Economy in Nashville
  • 8:45am: Fed’s Bostic Speaks on the Economy
  • 1pm: Fed’s Quarles Speaks on Bank Regulation

DB's Jim Reid concludes the overnight wrap

It’s still unclear whether we’ll get some political turbulence in the US as the shutdown vote gets passed to the Senate this morning. Overnight the House has voted 230-197 to pass a spending bill to avoid the US government shutdown and extend funding till 16 February. This was the easy part given the Republican’s majority in the lower House. Looking ahead, the Senate has taken an initial vote, but needs an additional procedural step that requires 60 votes, which means the Republicans need the help of at least nine Democrat votes to pass the bill. Bloomberg noted Senate Democrats say they have the votes to block the bill, in part to force Republicans to discuss other matters such as the protection for young immigrants. So an evolving situation until Friday morning when the Senate reconvenes (US time).

Staying in the US, the Fed’s Dudley has warned that the longer term risks from US tax cuts may be “that the economy could actually overheat, that inflation might not stop at 2%....or 2.2%...and then the Fed would have to step on the brakes a bit harder”. As a reminder, our US team noted that if fiscal changes only provide demand-side stimulus, they could quicken the arrival of the next recession by pulling forward demand and causing the Fed to move more aggressively on rate hikes. Refer to their note for details. Elsewhere, the WSJ reported that the White House is considering the Fed’s John Williams for the role of Fed Vice Chairman

This morning in Asia, markets are trading modestly higher. The Hang Seng (+0.24%), Kospi (+0.09%), China’s CSI300 (+0.75%) and Nikkei (+0.1%) are all modestly up. After the bell in the US, AMEX’s 4Q result was above market but guidance for next year was lower than consensus expectations (adj. EPS of $6.90ps-$7.30ps vs. $7.38ps) – its shares are trading c2.7% lower.

Now recapping performance from yesterday. After the record close on Wednesday, US equities bounced around for most of the day to close modestly lower, with the S&P (-0.16%), Dow (-0.37%) and Nasdaq (-0.03%) all down. Within the S&P, most sectors weakened with losses led by the real estate and energy sectors, while telco and tech stocks were slightly up. European equities were firmer, in part driven by the beat on Chinese GDP. Across the region, the Stoxx 600 nudged 0.19% higher, with the DAX leading the gains (+0.74%) following its underperformance back on Wednesday, while Spain’s IBEX 35 fell 0.40%. The VIX was up for the fifth consecutive day to 12.22 (+2.6%) and to  the highest since mid-November.

Over in government bonds, UST 10y bond yields rose 3.5bp to 2.627%, marking a fresh ten month high, and approaching 3 and a half year highs, in part weighed down by concerns of a potential government shutdown. Notably, yesterday’s auction of $13bn 10y TIPS went smoothly and attracted a bid-to-cover ratio of 2.69 – the highest since May 2014. Elsewhere, core European 10y bond yields were up 1-2bp (Bunds +1bp; Gilts +2.2bp) while peripherals outperformed with yields down c1bp.

Turning to currencies, the US dollar index was marginally lower (-0.05%), while the Euro and Sterling both gained c0.4%, with the latter rising to another post Brexit high. In commodities, both WTI oil and Gold were broadly flat, while other base metals were mixed but little changed (Zinc -0.12%; Copper +0.09%; Aluminium +0.72%).

Away from the markets and onto ECB central bankers speak. The ECB’s Coeure seemed relatively upbeat on the Euro economy, he noted “we ourselves at the ECB have stopped saying we want to strengthen the recovery, it’s not a  recovery anymore, it’s an expansion”.

Elsewhere, the Bundesbank’s Weidmann noted Germany needs better fiscal spending, but not necessarily more. He said “raising public spending…to reduce Germany’s current account surplus would likely be a futile undertaking”, while this does not mean no action on fiscal policy, particularly to counteract the demographic drag on growth, but “action (is) not with regard to the overall stance, but with regards to how the money is spent”. On the issue of low wage growth despite tight labour market conditions, he noted Germany is not unique here, which suggests “that the factors responsible for holding back wage growth are not only idiosyncratic, but at least partly international as well”.

Staying in Germany, the former head of the SPD Kurt Beck predicts the c600 party delegates will vote “about 60-40” in favour of coalition talks with Ms Merkel’s bloc at this Sunday’s party convention. Elsewhere, Ms Merkel’s caucus chief noted that post a potential yes vote from the SPD, there is unlikely to be major changes to the preliminary accord already agreed upon. He said “what has been negotiated in the exploratory negotiations has been negotiated  and can’t be revisited”.

Back onto Brexit, there seems to be a softening in the EU’s stance on whether to include UK based financial services firms in a trade deal post Brexit, provided the UK pays for it. The French President Macron noted “you want to  accept a single market with finance being part of it? Be my guest, but that means financial contributions and accepting European jurisdiction”. Elsewhere, he said his overriding goal is to ensure the “single market is preserved”, but it’s “very much” up to the UK to decide what it wants.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the January Philly Fed index fell 7.7pt to a still solid level of 22.2 (vs. 25 expected). In the details, the new orders index  dropped 18.1pts to 10.1 (a 16-month low) but the shipments index rose 6.4pts to 30.3 and the prices paid index rose 5.1pts to 32.9. Elsewhere, December housing starts were lower than expected (-8.2% mom vs. -1.7%), largely due to a decline in starts from elevated November levels in the South, while building permits fell less than expected (-0.1% mom vs. -0.6%). Finally, the weekly initial jobless claims fell to the lowest since 1973 (220k vs. 250k expected), while continuing claims was slightly higher than expectations (1,952k vs. 1,900k). This week corresponds to survey week for payrolls so we could get a bump to estimates.

In China, 4Q GDP was above market expectations at 6.8% yoy (vs. 6.7%) which has led to the first annual growth since 2010 (2017: 6.9%; 2016: 6.7%). Factoring in the latest readings, our economists have upgraded their Q1 and Q2 growth forecast to 6.5% and 6.3% (from 6.3% and 6.1%), but have kept their full year forecast for 2018 unchanged at 6.3%. Overall, they expect a tightening of fiscal policy and financial regulation to gradually slow the economy. Indeed, they argue that the resilient economic data will likely encourage the policy makers to maintain a tightening policy stance in the next few months.

Looking at the day ahead, the December retail sales in the UK and the preliminary University of Michigan consumer sentiment print in the US are the only data of note due. Friday also marks the deadline for the US government  shutdown. Oil giant Schlumberger is due to report earnings and I’m on a train back home so hopefully I’ll avoid a repeat of the outbound journey.


Beacon Releases New Criminal Justice Package
Posted on Thursday January 18, 2018

Advancing Sensible Justice Reform package.

Tennessee Should Lead on Medicaid Work Requirements
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These reforms are necessary as we move programs forward and assist individuals in reaching self-sufficiency

Tying Taxpayers To the Railroad Track
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As more details are unveiled, the mayor’s train plan is looking less and less like the shiny gift under the tree and more like your ugliest Christmas sweater.

Blue Collars, Red Tape
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Tennessee prides itself on being a state that values smaller government, less regulation, and respect for individual liberty. Yet, while we have made significant progress in a number of critical policy areas, the Volunteer State’s regulation of its workforce continues to be among the most burdensome nationwide. In particular, Tennessee requires a government license to...

Dirty Dozen: Court Reporter
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Dirty Dozen: Optician
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The majority of states don’t require a license to be an optician, and it doesn’t appear that those states’ citizens suffer from greater eyesight woes.

Beacon Releases 2017 Pork Report
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The Pork Report Exposes Waste, Fraud, and Abuse in Tennessee government.

Dirty Dozen: Pest Control Applicator
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Beacon Center and IJ File Lawsuit to Legalize Music in Nashville Home
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Shaw and Raynor vs. the Metropolitan Government of Nashville and Davidson County
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Why This Is TV's Golden Age!: Podcast
Posted on Thursday January 18, 2018

In the bad old days before cable and the internet, TV shows didn't need to be good to be watched by millions. Even cornball programs such as My Mother the Car pulled audiences that dwarf today's blockbusters on streaming services such as Neftlix, Amazon Prime, and Hulu. With niche marketing comes a massive increase in both the quantity and quality of shows, but some critics worry that the fragmentation of the viewing public means we no longer share common ground the way we did when there were just three national networks. "I think that's a lot of crap," says Glenn Garvin, a Miami Herald staffer and Reason's television critic. "The explosion of television material that started with cable in the 1980s has been a grand thing. What if you don't want to watch My Mother The Car, The Rifleman, or The Beverly Hillbillies?" At the same, Garvin believes that cable news and most talk shows have declined in quality because they play to narrowly defined political points of view. More worryingly, he says that the move away from accuracy and fairness in reporting toward something closer to activism makes it harder for people to get informed. Reason's Nick Gillespie spoke with Garvin, who just covered one of the industry's biggest annual events, the annual convention of The National Association of Television Program Executives, about the shift from broadcasting to on-demand viewing, the influx of shows and formats from countries such as Turkey, Korea, and Brazil, and the proliferation of programming. "There's maybe 500 or so scripted shows on at any given time," says Garvin. "That's not too many in a country of almost 350 million people."

Is Chelsea Manning the First Real 21st Century Politician?: Podcast
Posted on Tuesday January 16, 2018

On today's Reason Podcast, Katherine Mangu-Ward, Peter Suderman, Nick Gillespie, and Matt Welch discuss Chelsea Manning's candidacy for the U.S. Senate seat. "Without her there is no Edward Snowden, there is no robust debate about FISA 702 and a wide variety of stuff," says Gillespie. "I don't agree with her at all on economic issues for the most part, mostly yes on social issues, [but] she represents a totally different way of slicing American politics." Also discussed: the ongoing White House/Congress policy wrangle over immigration, the pros and cons of merit-based vs. family-based migration, missile warnings gone awry, and Kentucky's new plan to make Medicaid recipients get a job.

How the United States Can—And Cannot—Help Iranian Protesters: Podcast
Posted on Friday January 12, 2018

"There are just millions of Iranians who don't want to live under a corrupt clerical fascist state," says Bloomberg View writer Eli Lake about the current protests in Iran. That may not mean Iran is fed up with theocracy, just that they've had it with corrupt theocracy—the current protests started over the price of eggs. Reason's Nick Gillespie spoke with Lake about the protests and what they mean for Iran moving forward.

Matt Taibbi on Misogyny, the Left vs. Free Speech, and the Killing of Eric Garner
Posted on Thursday January 11, 2018

Few journalists have tossed more hand grenades or built more of a reputation for themselves than Matt Taibbi, who covers politics and culture for Rolling Stone when not writing bestselling books, such as Griftopia, Insane Clown President, and most recently I Can't Breathe: A Killing on Bay Street, a powerful account of the death of Eric Garner, who died in police custody after being arrested for selling loose cigarettes in Staten Island. In 2008, Taibbi won a National Magazine Award for his columns and commentary at Rolling Stone. With fame comes controversy. A 2005 piece for the defunct free weekly The New York Press was titled "The 52 Funniest Things About the Upcoming Death of the Pope." It was denounced by everyone from Hillary Clinton to Matt Drudge to Michael Bloomberg to that paragon of good taste, Anthony Weiner. With the publication of I Can't Breathe last fall, Taibbi has come under attack in a wide array of places ranging from Twitter to Facebook to The Washington Post for work that critics say is flat out misogynistic and sexist. Taibbi has published at least two apologies about past work (much of which appeared in The eXile), but the firestorm has barely abated. He says that his support for Bernie Sanders throughout the 2016 campaign—even after Hillary Clinton won the Democratic nomination—is part of what's motivating the attacks on him, and is leading to something approaching a media blackout on his book about Eric Garner. Reason's Nick Gillespie spoke with Taibbi about his new book, free speech and the left, the recent negative attention that his work has received, and issues on which progressives and libertarians overlap in powerful, if always uneasy, ways.

Why on Earth Are We Talking About 'Oprah 2020'?: Podcast
Posted on Monday January 08, 2018

Today's Reason Podcast, featuring Nick Gillespie, Katherine Mangu-Ward, Peter Suderman, and Matt Welch, kicks off with the media's biggest takeaway from last night's Golden Globes awards in Hollywood—whether Oprah Winfrey should run for president in 2020, or whether she should just be declared commander in chief pre-emptively. Along the way we discuss why speech-making in overrated by political junkies, the reasons there are so few female directors, and the artistic heights reached in comedian Dave Chappelle's latest two Netflix specials. Also under discussion: The fallout from Michael Wolff's White House bestseller Fire and Fury, the potential backlash against Attorney General Jeff Sessions' new directives on marijuana-related enforcement, and some possible good policy outcomes from the Trump administration in 2018.

Republicans Are Preparing to Shut Down the Government Out of Anti-Immigrant Spite
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The Challenge of Fourth Amendment Originalism and the Positive Law Test
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Brickbat: That's Crap
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Proposed California Car Ban a Perfect Mix of Hubris and Silliness
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