- On the Problematic Political Authority of Property Rights; Kevin Vallier, a philosopher, reviews a recent book on market anarchism (be sure to check out the ‘comments’ thread as well)
- Compton as the Bellwether for Urban America; interesting article from a graduate student at UCSD
- Rand Paul is no “isolationist,” contrary to the opinion of the ill-informed
- Liberty’s lost decade; the Economist decides that enough is enough
- Tyler Cowen’s ‘international trade’ reading list
book review
Looking Backward: A Review
My Amazon review of Beth Cody’s “Looking Backward: 2162-2012, A View From a Future Libertarian Republic”
The author’s stated goal was to write a libertarian equivalent of Edward Bellamy’s socialist utopian novel “Looking Backward.” She achieves that goal with room to spare.
If I were to judge this novel by its plot, characterization, or dialogue, I would have to knock off a couple of stars. I won’t because those elements, which are crucial to most novels, don’t matter here. The flimsy plot is quite adequate to the author’s purpose which is to portray a near-ideal libertarian society. I wouldn’t call her vision a “utopia” because at several points, Prof. Seeton, the expositor and defender of the new society, admits that it has flaws. He even says it will collapse eventually and only hopes that event will be peaceful.
I almost wished that I too could crawl into a time capsule, as her protagonist does, and go back to a time before I became a libertarian. That’s because this would be such a dandy introduction for someone new to the philosophy. A novice with an open mind would find a trove of solid arguments on nearly every aspect of human life.
Get copies of this book for the young people in your world.
Borderless Economics: Chinese Sea Turtles, Indian Fridges and the New Fruits of Global Capitalism
Robert Guest, the business editor for The Economist, has organized insights gleaned from 20 years of reporting on and analyzing events around the world into a breezy yet profound account of the flow of people and ideas across borders.
Raw immigration statistics miss the “networks of innovation,” as Guest calls them. Immigrants may find it difficult to adapt to a new land with strange customs and a new language. But in just about any American city they find a community of people like themselves who can ease the transition and help them get established. This process is good for everyone involved.
For example, Indian immigrants to America—most notably Silicon Valley engineers—are tightly networked among themselves and have contacts in India and around the world. Having made their fortunes, some then return to India to pursue business or philanthropic activities. To illustrate, Guest describes the Universal Identity program. Hundreds of millions in India have no public identity beyond their immediate communities. A team of Indian expatriates returned to India and launched a program to create a computer-based system that would allow Indians to submit to fingerprinting and retina scans and to receive a national ID number that would serve as their entrée into the modern Indian economy. Libertarians look askance at government identification numbers, but in rich countries we take for granted our ability to prove our identities. Continue reading
Private Means, Public Ends: Voluntarism vs. Coercion
Do you have friends who are socialists? Show them Robert Zimmerman’s chapter, “New York’s War Against the Vans” in Private Means, Public Ends. Zimmerman shows private enterprise efficiently providing much-needed transportation, while the city transit police block passenger pickup, issue summonses, and otherwise harass van operators and passengers. If government is needed to provide such public goods, why does government keep blocking private services?
The essays in Private Means, Public Ends demonstrate how private efforts have effectively provided public goods. This collection of mostly recent articles reprinted from The Freeman will challenge those who doubt the workability of free markets and buttress the thinking of those already oriented to liberty with excellent examples. Case after case, nicely combining stories with analysis, shows voluntary and market means as more effective than government, despite state barriers and imposed costs.
The introduction by Professor Mixon begins with the metaphor of free human action as a wildflower field, in contrast to the potted plants of state institutions. If wildflowers disappear and all we see are flowers in pots, who can imagine the breathtaking beauty of the wild field—nature’s spontaneous order? Continue reading
An Act of Self-Defense: A Review
“The Tree of Liberty must be refreshed from time to time with the blood of patriots and tyrants,” said Thomas Jefferson. Erne Lewis does a terrific job of adapting this theme to 21st-century America in his new novel, An Act of Self-Defense.
Like Atlas Shrugged, his story is set in an immediate future where the economy is collapsing, and more so than in Atlas, personal freedoms are vanishing. Unemployment is at 20 percent and all communications are recorded and tracked by the NSA. RFID badges are worn by all federal employees and will soon be required for all citizens. A small group of patriots takes matters into their own hands, and the action is fast and furious.
Lewis draws the correct battle lines of our time: not left versus right but libertarian versus fascist. The f-word correctly describes anyone on the left or right who would use government power to suppress personal or economic freedom while leaving nominal ownership in private hands. The novel’s villains are of both stripes, some of them decent people who entered politics with good intentions but became corrupted. That leaves libertarians as the only consistent defenders of what Ludwig von Mises called the “Free and Prosperous Commonwealth” founded on the rule of law, particularly respect for property rights.
I had to wonder, when reading his portrayals of atrocities committed by government agents: How much of this is fiction? Can they do such things? Are they close? Have they already? The Patriot Act is law, so the atrocities seem disturbingly plausible. Continue reading
Boombustology: A Review
These days commentators near and far are announcing booms and bubbles in Treasury securities, gold, China – perhaps even a bubbles. Vikram Mansharamani is in the China camp, but his arguments stand out from the others. If you can get past the title of his book – Boombustology – you will be rewarded with a thorough, well-documented, yet mercifully brief and readable exposition of a theory of booms and busts applied to past events and China’s future.
Most macroeconomists see the boom-bust cycle as an unsolved problem. Like physicists in search of a Grand Unified Theory, they long for a model that accounts for all the major aspects of the business cycle. Perhaps they are hampered by looking through the wrong end of a telescope. Mansharamani uses not just one but five “lenses” to examine the subject. In addition to micro- and macroeconomics, they include psychology, politics, and biology. He is not the first economist to invade these fields. Rather his accomplishment lies in assembling ideas from each of those areas, applying them to past boom-bust cycles, and putting his ideas on the line by issuing a brave prediction of a forthcoming Chinese economic train wreck.
Austrian Business Cycle Theory
The author’s macro lens includes Austrian business cycle theory. That theory says inflation of the money supply causes a drop in interest rates, which is misinterpreted as an increased aggregate preference for saving over consumption, leading to investments in more roundabout means of production. When it becomes clear that there has been no such preference shift, these undertakings are seen to be at least partial mistakes, requiring write-offs and retrenchment – a bust. The boom is the problem, not the bust, which is the market’s attempt to realign itself to the realities of time preference. Austrian business cycle theory has great merit but leaves some things unexplained.
Mansharamani’s micro lens includes the concept of reflexivity. Market participants don’t just observe prices but also influence them. Reflexive dynamics occasionally give rise to instabilities in which rising prices lead to increased demand. A simpler term would be a “bandwagon effect.” I recall an office party in 1980 where one of the secretaries asked about buying gold – precisely at the peak, as it turned out. All she knew about gold was that it was way up and therefore must be going higher. I should have realized that when you see financially unsophisticated people like her climbing on a bandwagon, you can be pretty sure there’s no one left to sell to and nowhere for prices to go but down, which is where gold and silver prices went in 1980, and in a big hurry.
From psychology Dr. M. borrows ideas and data about cognitive biases. For example, subjects asked to guess some bland statistic, like the number of African countries that belong to the UN, are influenced by the spin of a wheel of fortune: When the wheel lands on a high number, they guess higher. He translates this and a dozen other cognitive biases into irrational market behavior that can foster booms and busts.
He introduces his biology lens with an analogy to the spread of an infectious disease. When the prevalence of a disease reaches a high level, the infection rate necessarily slows and the disease begins to wane, just like the 1980 gold market. But it is devilishly difficult to “inoculate” oneself against infectious ideas. Individual investors who can do so have a decent chance to beat the market averages over time, I believe. (Those who would pursue these ideas in greater depth would do well to find James Dines’s quirky and expensive but worthwhile book, Mass Psychology.) Continue reading
“Isolationism” Revisited
Socialist Zach Dorfman has a great review up over at Dissent on a recent book by a historian about American foreign policy from roughly 1890 to about 1940, Promise and Peril: America at the Dawn of a Global Age. I am really tempted to just copy and paste the whole review, but here are some juicy excerpts from Dorfman’s review (the book itself will have to wait until Christmas):
Today, isolationism is often portrayed as intellectually bankrupt, a redoubt for idealists, nationalists, xenophobes, and fools. Yet the term now used as a political epithet has deep roots in American political culture. Isolationist principles can be traced back to George Washington’s farewell address, during which he urged his countrymen to steer clear of “foreign entanglements” while actively seeking nonbinding commercial ties […] Continue reading
Systeme D
In French, a man (or woman) who is particularly resourceful is called a débrouillard (débrouillarde). In the former French colonies of West Africa, people have used this word to form a phrase, “l’economie de la débrouillardise” which refers to the vast network of “inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes.” Systeme D for short.
The concept and the quote are from a nifty and fairly new book I’m reading just now, “Stealth of Nations” by Robert Neuwirth. He claims that the world-wide Systeme D economy would, if aggregated, amount to more than any other nation’s economy save the U.S. The claim may be hyperbolic but he leaves no doubt that in most of the developing world it is a major factor in the flow of goods and services.
He cleverly begins each chapter with a quote from Adam Smith’s “Wealth of Nations” and gives accounts, mostly first-hand, of how the Systeme D economy, or the informal economy or the black market if you will, works in various countries.
The participants in this economy sometimes operate entirely outside the law and sometimes with one foot in and one foot out. They seldom count on the police or the courts for protection or redress. Yet informal systems of protection of life and property spring up and seem to work pretty well.
Take the bustling street market that operates along the Rua Vinte e Cinco de Março (Avenue of March 25) in São Paulo, Brazil. The daily routine begins at 3:30 AM when vendors of pirated CDs and DVDs set up their stands. One vendor has done well enough buying movies for 50 centavos and selling them for double that, that he has moved into the middle class. He and his wife own an apartment and a rental house. At 4:30 a woman parks her truck and opens the back, where she offers homemade cakes and bread for sale. Everyone respects her “ownership” of that particular parking space. At 6 AM come the vendors of clothing, sunglasses, pirated NY Yankees baseball caps, you name it. At 8:30, Paulo shows up and spends the next seven hours tossing plastic spider-men against a wall, watching them rappel down the wall. They are made in China, trucked to Paraguay, and smuggled across the border into Brazil. Paulo buys them for 80 centavos and sells them for about triple that. So it goes, all day long. By late evening all the stands and stalls are packed away, ready for the daily cycle to begin anew.
The rules are simple: “Vendors pay no rent to occupy the curbside, and there’s no protection money, taxes, or other fees … You simply ask, ‘Can I set up next to you?’ and if the answer is no and you do it anyway, you have a fight on your hands.”
What’s the volume of business on the Rua? An estimated 400,000 people (!) per day and up to a million on major holidays, most of whom come to buy. Annual turnover for this one street market, with its estimated 8,000 vendors, mostly unregistered, is estimated at US$10 billion. If that figure is anywhere near correct, this one market would rank with Brazil’s five largest corporations.
The description of the Systeme D economy of Lagos, Nigeria is particularly fascinating. This is a huge city that lacks most of what we would consider basic public services, even sewers and running water. Yet thanks largely to Systeme D it works, after a fashion.
Author Neuwirth does not gloss over the problems of the world’s Systeme D economies. There is fraud and sometimes violence, but not necessarily any worse than that of the above-ground regulated economy. There is wide-open pirating of software, games, music and movies.
The bizarre private bus system of Lagos, though it works for the Nigerians after a fashion, is not something any of us in the developed world would be happy with. Most of us are happy with our clean, well-lighted supermarkets (see my article “Sardines at Midnight.”) Yet there is a lesson we can take from the Systeme D economies. Our economy is becoming increasingly hog-tied with regulations. We could make a big dent in unemployment if the politicians and bureaucrats would lighten up a bit and allow the “informal economy” to grow. Yes, the politicians and bureaucrats and lawyers are to blame but they take their cues from consumers who demand near-perfection in product offerings and unlimited product liability.
I highly recommend “Stealth of Nations” as light but informative summer reading. Read it for the stories and pay no attention to occasional stumbles into bizarre generalities like “There’s nothing natural about the free market. It’s a fiction, an artificial construct created and held together with the connivance of government.”
Notes On Liberty 