RCH: Calvin Coolidge

I took on Calvin Coolidge this week. My Tuesday column dealt with Coolidge and his use of the radio, while this weekend’s column argues why you should love him:

2. Immigration. At odds with the rest of his anti-racist administration, Coolidge’s immigration policy was his weakest link. Although he was not opposed to immigration personally, and although he used the bully pulpit to speak out in favor of treating immigrants with respect and dignity, Coolidge was a party man, and the GOP was the party of immigration quotas in the 1920s. Reluctantly, and with public reservations, Coolidge signed the Immigration Act of 1924, which significantly limited immigration into the United States up until the mid-1960s, when new legislation overturned the law.

Please, read the rest.

Monetary Progression and the Bitcoiner’s History of Money

In the world of cryptocurrencies there’s a hype for a certain kind of monetary history that inevitably leads to bitcoin, thereby informing its users and zealots about the immense value of their endeavor. Don’t get me wrong – I laud most of what they do, and I’m much looking forward to see where it’s all going. But their (mis)use of monetary history is quite appalling for somebody who studies these things, especially since this particular story is so crucial and fundamental to what bitcoiners see themselves advancing.

Let me sketch out some problems. Their history of money (see also Nick Szabo’s lengthy piece for a more eloquent example) goes something like this:

  • In the beginning, there was self-sufficiency and the little trade that occurred place took place through barter.
  • In a Mengerian process of increased saleability (Menger’s word is generally translated as ‘saleableness’, rather than ‘saleability’), some objects became better and more convenient for trade than others, and those objects emerged as early primative money. Normally cherry-pick some of the most salient examples here, like hide, cowrie shells, wampum or Rai stones.
  • Throughout time, precious metals won out as the best objects to use as money, initially silver and gradually, as economies grew richer, large-scale payments using gold overtook silver.
  • In the early twentieth century, evil governments monopolized the production of money and through increasingly global schemes eventually cut the ties to hard money and put the world on a paper money fiat standard, ensuring steady (and sometimes not-so-steady) inflation.
  • Rising up against this modern Goliath are the technologically savvy bitcoiners, thwarting the evil money producing empires and launching their own revolutionary and unstoppable money; the only thing that stands in its way to worldwide success are crooked bankers backed by their evil governments and propaganda as to how useless and inapt bitcoin is.

This progressively upward story is pretty compelling: better money overtake worse money until one major player unfairly took over gold – the then-best money – replacing it with something inferior that the Davids of the crypto world now intents to reverse. I’m sure it’ll make a good movie one day. Too bad that it’s not true.

Virtually every step of this monetary account is mistaken.

First, governments have almost always defined – or at least seriously impacted – decisions over what money individuals have chosen to use. From the early Mesopotamian civilizations to the late-19th century Gold Standard that bitcoin is often compared to, various rulers were pretty much always involved. Angela Redish writes in her 1993 article ‘Anchors Aweigh’ that

under commodity standards – in practice – the [monetary] anchor was put in place not by fundamental natural forces but by decisions of human monetary authorities. (p. 778)

Governments ensured the push to gold in the 18th and 19th centuries, not a spontaneous order-decentralized Mengerian process: Newton’s infamous underpricing of silver in 1717, initiating what’s known as the silver shortage; Gold standard laws passed by states; large-scale network effects in play in trading with merchants in those countries.

Secondly, Bills of Exchange – ie privately issued debt – rather than precious metals were the dominant international money, say 1500-1900. Aha! says the bitcoiner, but they were denominated in gold or at least backed by gold and so the precious metal were in fact the real outside money. Nope. Most bills of exchange were denominated in the major unit of account of the dominant financial centre at the time (from the 15th to the 20th century progressively Bruges, Antwerp, Amsterdam and London), quite often using a ghost money, in reference to the purchasing power of a centuries-old coins or social convention.

Thirdly, monetary history is, contrary to what bitcoiners might believe, not a steady upward race towards harder and harder money. Monetary functions such as the medium of exchange and the unit of account were seldomly even united into one asset such as we tend to think about money today (one asset, serving 2, 3 or 4 functions). Rather, many different currencies and units of accounts co-emerged, evolved, overtook one another in response to shifting market prices or government interventions, declined, disappeared or re-appeared as ghost money. My favorite – albeit biased – example is early modern Sweden with its copper-based trimetallism (copper, silver, gold), varying units of account, seven strictly separated coins and notes (for instance, both Stockholms Banco and what would later develop into Sveriges Riksbank, had to keep accounts in all seven currencies, repaying deposits in the same currency as deposited), as well as governmental price controls for exports of copper, partly counteracting effects of Gresham’s Law.

The two major mistakes I believe bitcoiners make in their selective reading of monetary theory and history are:

1) they don’t seem to understand that money supply is not the only dimension that money users value. The hardness of money – ie, the difficulty to increase supply – as an anchoring of price levels or stability in purchasing power is one dimension of money’s quality – far from the only. Reliability, user experience (not you tech nerds, but normal people), storage and transaction costs, default-risk as well as network effects might be valued higher from the consumers’ point of view.

2) Network effects: paradoxically, bitcoiners in quibbling with proponents of other coins (Ethereum, ripple, dash etc) seem very well aware of the network effects operating in money (see ‘winner-takes-it-all’ arguments). Unfortunately, they seem to opportunistically ignore the switching costs involved for both individuals and the monetary system as a whole. Even if bitcoin were a better money that could service one or more of the function of money better than our current monetary system, that would not be enough in the presence of pretty large switching costs. Bitcoin as money has to be sufficiently superior to warrant a switch.

Bitcoiners love to invoke history of money and its progression from inferior to superior money – a story in which bitcoin seems like the natural next progression. Unfortunately, most of their accounts are lacking in theory, and definitely in history. The monetary economist and early Nobel Laureate John Hicks used to say that monetary theory “belongs to monetary history, in a way that economic theory does not always belong to economic history.”

Current disputes over bitcoin and central banking epitomize that completely.

RCH: MacArthur’s battles

That’s the subject of my weekend column over at RealClearHistory. There’s not a whole lot of information out there about Douglas MacArthur’s battle history, so it’s gotten a lot of attention. I think most people avoid writing about MacArthur because he’s such a polarizing figure. At any rate, here’s an excerpt:

8. Battle of Chosin Reservoir (Nov.-Dec. 1950). Fought on the Korean Peninsula, take a quick moment to reflect on the rapid, violent change that catapulted the United States from regional hegemon in 1914 to world power less than half a century later. And MacArthur served in the military throughout the whole change. The Battle of Chosin Reservoir decisively ended MacArthur’s plans for reuniting Korea under one banner and established the two-country situation of the Korean Peninsula found today. One hundred and twenty thousand Chinese troops pushed 30,000 American, Korean, and British troops out of what is now North Korea and changed the trajectory of the Korean War once and for all. It also led to MacArthur’s political downfall, as his increasingly public calls to attack China’s coastline (with atomic bombs) angered Washington and eventually led Truman to dismiss MacArthur.

Please, read the rest…

RCH: MacArthur’s rule over Japan

That’s the subject of my latest over at RealClearHistory. An excerpt:

The relative graciousness of the American occupation of Japan led to the most peaceful and prosperous era in Japanese history. MacArthur’s governing strategy for a conquered people was so successful that it was aped by Washington in 2001 and 2003 when the United States invaded and occupied Afghanistan and Iraq. What went wrong? You could write a dissertation trying to answer that question, but the most straightforward answer is that Iraq and Afghanistan were not conquered. The governments of Kabul and Baghdad never officially surrendered to Washington, and they never really had the capacity to wage war the way that Japan was able to wage war on the United States.

As always, I appreciate the clicks…

RCH: Annexation of the Hawaiian islands

That’s the topic of my latest over at RealClearHistory. An excerpt:

That is to say, there are theoretical lessons we can draw from the American annexation of Hawaii and apply them to today’s world. The old Anglo-Dutch playbook turned out to serve American imperial interests well, especially when contrasted with the disastrous Spanish-American War of 1898, when the United States seized the Philippines, Cuba, Guam, and Puerto Rico from Spain in an unwarranted act of aggression. Hawaii, now an American state, has one of the highest standards of living in the world (including for its indigenous and Japanese citizens), while the territories seized by the U.S. from Spain continue to wallow in relative poverty and autocratic governance.

Please, read the rest.

Semiotics in national dialogue: an observation

One thing the Notes on Liberty community may not know about me is that I worked for a while as a research (and writing) extern for the Victims of Communism Memorial Foundation. Because of my academic background in history and the arts, most of my work focused on historical communism, especially as related to propagandist representations from inside communist countries. The experience provided me with an opportunity to immerse myself in the documentation and wording of communism.

Most people know how the Soviet and Maoist propagandists portrayed their own people: the moral, brave underdogs who are hated and despised by rich, corrupt weaklings. Any of the sufferings connected to communism – famines, shortages, economic instability – these were all the fault of external forces. Except in the case of the Chinese, to whom Mao refused to offer explanation and simply told the people that their sufferings were glorious and were sacrifices to the revolution. Hua Yu in his memoir China in Ten Words conveys quite poetically exactly how “glorious” everyone’s sufferings were. Even today, we are still treated to a modern iteration in the form of Nicolás Maduro and his wild accusations regarding the cause of Venezuela’s collapse. Most of the time, the perpetrators are the White House and CIA, though in August 2018 he blamed Colombia and some unidentified Floridians and in December 2018 he threw in Brazil, along with the traditional “White House did it” trope.

What is less commonly known – outside of film and literature aficionados – about Cold War era portrayals is their representation of those who live on the other side of the divide, i.e. in capitalism. Across the board, the portrayals were fairly simplistic – the rich were evil, the poor were good. The premise was always that the former were useless and the latter were meritorious, belonging in a socialist workers’ paradise, instead of in a system that metaphorically chewed them up and spat them out. The propagandists were masters of imposing this interpretive paradigm universally, from traditional Western literature (or even their own traditional literature in the case of China) to news items. For example, the failed yachtsman and minor-league conman Donald Crowhurst became a proletariat hero in the Soviet film Race of the Century in which he is driven to his death by a greedy, capitalist sponsor (in real life, Crowhurst’s angel investor). The propaganda point being that in capitalism human life is expendable. One has only to read Alexander Solzhenitsyn’s Gulag Archipelago to see under which system an indifference to human life was, and still is, ingrained.

There is a reason that Marxist and post-structuralist theory and criticism focus on the concept of “the other.” It is because communism can only arise from chaos and conflict. In order to justify its existence and explain its ills and failures, there must be an “other” which opposes it. The other can be the White House, foreign intelligence services, or foreign bankers. “Othering” can be imposed on practically any person or group of people, and the dynamic can be read into any relationship. If one wants to find an “other” in Solzhenitsyn, a very good candidate is Fetyukov from One Day in the Life of Ivan Denisovich. For a literary criticism standpoint, Ivan Denisovich Shukov’s contempt for Fetyukov is a case of the former “othering” the latter. “Othering,” while a development of Marxist thought, is not a domain exclusive to communist writing. Ian Fleming used the paradigm, consciously or unconsciously, in his James Bond series, with their black-and-white portrayals of who was the good and who was the bad party.

Study of the language and structures of Marxist thought and propaganda is both lacking and overwhelming today. Yes, on the one hand, our universities have been overtaken with grievance studies and criticism classes. But on the other, the tropes and thought processes of Marxism have subtly appeared in contemporary American dialogue. More insidiously, they are not coming necessarily from the overt socialists, such as Alexandria Ocasio-Cortez, but from figures that identify as center and right. Ocasio-Cortez and her idol Bernie Sanders might be pardoned for regurgitating Marxist tropes, given that at least these politicians have had the decency to acknowledge their ideological leanings, but for “Conservative” [note the big “C”] intellectuals to do so is indicative of either ignorance or manipulation, both of which are unforgivable.

Consider what Michael Lind, a prominent neo-conservative, wrote in an article titled “Classless utopia versus class compromise,”published in American Affairs in summer 2018,

Democracy, then, requires strategically strengthening institutions that working-class people can control or at least influence. That means, among other things, defending the institutional independence of diverse religious communities, while sometimes favoring pragmatic municipal socialism. Whatever form an authentic grassroots working-class movement might take in the twenty-first-century United States, it is likely to look like historic precedents, including old-fashioned Milwaukee-style “sewer socialism” (municipal ownership of public utilities) and the Salvation Army. It will not look like the campus-based social justice and climate-change NGOs of progressive upper-middle-class professionals or, for that matter, free-market agitprop groups funded by the libertarian rich.

Lind has had a decades-old, well-publicized bugbear with libertarian thought, and to some extent his language reflects this. What is concerning about his words is the justification of localized socialism (history shows that this would not remain local for long) using the language of agency. The entire argument is built upon the fundamental Marxist assumption that the proletariat has no agency, wants it, and must collectivize to have it. In Marxist speak, Lind’s acceptance of the laborer-has-only-his-labor paradigm effectively “others” everyone on the other side of an indeterminate class line – upper-middle-class professionals (progressive or not), college students, free-marketeers, oh, and rich libertarians (one wonders where poor student classical liberals and middle-class libertarians fall in this equation).

In old fairy tales, a common theme is a beloved plant, usually a tree, that begins to wither away. The tree is externally healthy, and no one can discern a logical reason for it to be dying. After a long search, consulting of necromancers, and other typical fairy tale activities, the hero digs around the tree’s roots and discovers that there is a repulsive, venomous animal, usually a snake or a toad, living there, and it is the cause of the plant’s slow decline. Marxist thought and paradigms, not Marxism as an ideology, have become that snake for American Conservatism and center-right politics. Its poison is exacerbated by the fact that its acolytes and proselytizers appear to be unconscious of its presence as they argue that their only desire is to preserve the American Republic through preventing class conflict. But if they are doing is to hurl us faster and faster, more inexorably toward this very breakdown, as their ideas begin to overlap with those of the acknowledged far-left.

RCH: Cassius Clay as the “greatest American” of the 20th century

My latest at RealClearHistory:

It was also the heyday of the Cold War, a nearly 50-year struggle for power between the liberal-capitalist United States and the socialist Soviet Union. The struggle was real (as the kids say today). The United States and its allies were losing, too, at least in the realm of ideas. The Soviet Union was funding groups that would today be considered progressive — anti-racist and anti-capitalist — around the world. One of the sticks that Moscow used to beat the West with was racism in the United States, especially in the officially segregated South.

It is doubtful that most of the African-American groups who took part in the struggle for liberty were funded, or even indirectly influenced by Soviet propaganda. The clear, powerful contrast between black and white in the United States was enough for most African-Americans to take part in the Civil Rights revolution. Yet Soviet propaganda still pestered Washington, and Moscow wasn’t wrong.

Please, read the rest.