Wednesday, April 29, 2009

Obama and the Rule of Law

When a bank must ask the federal government if it can get its permission to give bonuses, the rule of law is at an end for American citizens. Of course, we have seen the rule of law being thrown out ever since the Obama administration took over. With every bank chosen or not chosen for a bailout, for every CEO chosen or not chosen to stay in a corporation, the rule of law has been ignored. We see nothing but coercion and the rule of man, arbitrary decisions dominating with the Obama administration. The only difference between the Obama and the Bush administrations is who they choose not to apply the rule of law to: with Bush, it was with enemy combatants and potential terrorists; with Obama it is the American people.

Thursday, April 23, 2009

Wednesday, April 22, 2009

Call For Papers

First Paper call

The Fund for the Study of Spontaneous Orders at the Atlas Economic Research Foundation is seeking papers exploring the theme

“Organization and Emergence:
Tensions and Symbiosis”
at its
December 3-6, 2009

We seek original work in three areas:

1. Exploring the relations between emergent orders and the instrumental organizations within them. To what degree are they benign, mutually beneficial, or conflicting? For example, the role of interest groups and political parties within democracy considered as an emergent order; the role of corporations and unions within the market considered as an emergent order; schools of thought within science considered as an emergent order.

2. Exploring organizations that straddle the borders of different emergent orders, such as the market or politics and the environment, the market and science, democracy and science, and so on. Different emergent processes are coordinated by different rules biased towards different values. How do they interact?

4. The nature of rules that generate and sustain emergent processes compared to rules that generate organizations.

Acceptable papers may be either case studies or more general theoretical explorations. Revised papers will be published in our new, open source online journal, Studies in Emergent Order.

To be guaranteed consideration, proposals must be in by May 20. The proposal should describe the anticipated argument and how it relates to at least one of the conference themes. Proposals should be no more than two pages double-spaced, not including an optional bibliography of works the author anticipates discussing. Submit your proposal to

The Fund will select a maximum of 12 papers for inclusion in its conference, and will notify their authors by May 30, 2009. Final papers must be submitted to the Fund by September 1, 2008.

Authors of accepted papers will have their expenses met to, from, and during the conference, to be held in a still to be determined location in upstate New York. They will also receive $1250 for accepted papers. In return, authors will participate in the conference and we will have the right to first publish any accepted papers in the journal Studies in Emergent Order.

for the Fund for the Study of Spontaneous Orders

Gus diZerega

William C. Dennis

Art Instinct Review

Great review of Dennis Dutton's The Art Instinct that begins with a discussion of current philosophical fads. Well worth the read just for that.

Hug a Thug

Just a little reminder of what you get when the Left takes over a country, here. ANd what more will this thug in Venezuela do to his people before it's all over? But don't worry, Obama is busy handing out hugs to people like him.

Friday, April 17, 2009

Wednesday, April 15, 2009

Thought Crimes

There's been a lot of hubbub on the right in regards to a document released by the Dept. of Homeland Security on the threat from right-wing groups. I read it. Standard boilerplate. Not nearly as offensive as the one out of Missouri. No different than similar reports put out in the past on left-wing groups.

So why do I bring it up? Primarily because I object to the very existence of such reports in the first place, whether they are for right-wing or left-wing groups. The government has no business engaging in anything of this sort, right or left. Their job is to follow up on actual crimes committed. In the end, intent is irrelevant when it comes to a crime being committed. Intend is useful to persuade a jury of guilt, but if a murder or robbery or bombing is done, then intent is and should be irrelevant. There should never be crimes of thought, only crimes of action. And those crimes of action should apply to everyone equally.

Now someone may come along and say, "Well, what if you catch someone planning something?" Well, have they actually done anything? Are they on the way to actually doing the thing they were supposedly planning? Just because someone talks about doing something, does that mean they are actually going to do it? How many times have you said, "Man, I sure would love to . . ." but you in fact have no actual intention of doing a thing?

We think of the government as being there to prevent crimes, but in a real sense this isn't actually true. in an indirect way, by punishing criminals, many if not most crimes perhaps are in fact prevented. But we will never know of these crimes. Otherwise, unless the criminal is caught right as he's getting ready to act, the government cannot prevent crime, but only follow up on crimes committed and punish the criminals.

So what of releases such as this? They amount to the government saying, "Here's some people who we think are thinking wrongly about us. Be on the lookout for them." Is there any other explanation?

Perhaps the real irony here is that this was a Department created by Republicans, and now it's Republicans complaining about it. Might want to be careful what you ask for. The party in power changes, and the system you set up might be able to be turned around on you (an unlikely scenario in this case, as it seems likely the report was in the works during the Bush administration -- but this doesn't invalidate my point). The Democrats might want to keep this in mind as well, that whatever they set up, the Republicans will one day be in charge of.

Tuesday, April 14, 2009

Interest Rate Manipulation and the Recession

The current financial crisis was caused in no small part by false signals created by the Federal Reserve. Others have pointed out the role of government pressure to increase home ownership as a source of this crisis – which was the source of Fannie Mae’s and Freddie Mac’s troubles – but, in the end, such pressure would have come to naught had it not been for the low interest rates created by the Federal Reserve’s keeping the interest banks can charge each other so artificially low, which put downward pressure on overall interest rates.

Nobel Prize winning economist F. A. Hayek observed in “Individualism and Economic Order” that “general reluctance to undertake any risky business might drive the rate of interest down to nearly zero.” If we invert this, we see how interest rates act as a signal to the economy regarding risky behavior. If people are reluctant to take risks, interest rates go down, because loaning money costs less, being less risky. This makes money more available, encouraging borrowing for all sorts of ventures, including risky ones, which are also more affordable to pursue. As risky ventures and investments increase, interest rates go up, reflecting the costs of those risks. Low interest rates arise out of a low-risk culture, and encourage more risk-taking; high interest rates arise out of a high-risk culture and encourage less risk-taking.

This, of course, is under natural market conditions. What we have not had for almost two decades now is natural market conditions in the determination of interest rates. Rather, we have had the controlling hands of Alan Greenspan and Ben Bernanke, who thought centralized control of interest rates to be superior to market forces. To “cool” the economy – discourage economic activity by encouraging saving and discourage risk-taking – interest rates were increased; to “warm” the economy – discourage saving and encourage risk-taking – interest rates were decreased. But in fact, interest rates were kept low during most of the past twenty years. Thus, risky loans were encouraged, since risk-taking had such low costs. Throw in a government saying how nice it would be if more people owned their own homes, and you have economic, social, and political enticements to make riskier home loans. Other kinds of risks were also encouraged by such low interest rates.

Even though riskier and riskier loans were being made, the interest rates remained low. This acted as a false signal to the financial sector. The low interest rates told lenders there was not a lot of risk being taken in the economy, even when in fact there was. And, as we have since learned with the subprime mortgages, there most certainly was.

In other words, central planning by the Federal Reserve caused this current collapse of the financial system and of the world economy into a severe recession. The manipulation of interest rates by the Federal Reserve sent false signals to the financial sector regarding the relative risks being taken by borrowers. Had market forces been allowed to work, interest rates would have been and would be much higher, reflecting the true level of risk-taking in the economy at large. This would have resulted in fewer home sales and, thus, would have prevented the housing bubble whose collapse brought about the collapse of the financial sector. Home ownership would be at a healthy level – those who could afford a house would be in one, while those who could not would not be – and risk-taking overall would be at a healthy, sustainable level. We are on the verge of another depression not because free markets failed to work, but because the Federal Reserve did not allow them to work. In other words, even limited central planning (or, if you will, Keyneseanism applied to interest rates) fails yet again.

Saturday, April 11, 2009

Human Evolution and Running

Here is an interesting article on human evolution and distance running. THe argument is essentially that humans evolved to be distance-runner hunters. Toward the end, objections are raised by University of Wisconsin paleoanthropologist John Hawks, who "questions how a trait that is supposedly specific to endurance running could persist today, when tools and farming have long since replaced the old selective pressures of hunting. “If these features really were distinctive to long-distance running, shouldn’t they have disappeared?”" Such a statement shows a true ignorance of evolution. So long as traits aren't maladaptive, they don't disappear. Species don't "revert back" to what they were. And so long as there were wars, long-distance running could still be quite adaptive. Equally ridiculous: "Hawks says of the finding that toe-length variation does not affect walking. “If we see that toe length makes a big difference for running, that’s relatively good evidence that toe length wasn’t selected for.”" This statement doesn't even make any sense. If short-toed people could run farther and get more food, of course they would be selected for. Here we have evidence that even scientists can believe some pretty stupid things about evolution.

Wednesday, April 08, 2009

Philosophy: A New Beginning

Except for the title, this article on ethics and emotions by David Brooks is dead-on. The reason the title, "The End of Philosophy" is dead wrong is that just because we now know we have a moral instinct (or set of instincts), that does not mean that moral reasoning or -- better -- moral training is not still necessary. Quite the contrary, if you understand how instincts work.

Lions have an instinct to hunt. However, lion cubs play to learn how to hunt, and learn even more through observing adults hunt. The fact that they have to learn how to hunt does not negate the existence of a hunting instinct (as Stephen Pinker points out in regards to language in 'The Language Instinct"). Rather, the instinct makes learning occur much more quickly than if the instinct were not there. We learn how to speak a language with a complex grammar and syntax and a vocabulary well into the thousands, but have a hard time learning math, which has far, far fewer variables and transformations to learn. This is because we have a language instinct, but not a math instinct (beyond the ability to give rough approximations).

Likewise, the fact that we have an ethics instinct does not mean that we don't still have to learn ethics. Quite the contrary. It simply means that ethics will be learned quickly once taught. It also implies that certain ethical rules are more natural than others. It may also imply that certain aspects of human belief and behavior that are not so nice are also there and will need to be wound down. Our instinct for altruism is the source of our best and worst (such as racism) behaviors.

An end to philosophy? Hardly. More like a new beginning.

Monday, April 06, 2009

Melina and Jack

Now, to offset the doom and gloom that too often pervades this blog, I present to you . . . too much cuteness!

The Real Unemployment Rate


That's right. As this report points out, our government misrepresents the unemployment rate by how they calculate unemployment figures. For example, I am not included in their calculations. Why? I don't receive unemployment, due to my work record -- much of which involved part-time work. So if you count those who have stopped looking for work, who no longer qualify for unemployment, who have gone back to school, and those who are underemployed, the true unemployment rate jumps from over 8% to over 15%.

When it comes to government numbers, you must always remember that they are always engaged in a game of how to lie with statistics.

Why Government Should Avoid Purpose in the Economy

This is perhaps the single most important essay on the nature of the economy and on economics I have ever read. It explains why government needs to stay out of the economy and why it definitely should not try to set up any sort of goals for industries (as though the practical reason that in doing so, the companies in question get run into the ground -- like GM and Chrysler -- weren't enough).

And if you want to know what actually happened to cause this current depression we're entering, you must read this article. Among the insights, they point out how the government masked the upcoming problem with the way they miscalculated inflation.

Both articles together should give the reader pause when it comes to what our government is doing at the present time.

Also, Harvey Mansfield argues that economists should be more careful with their predictions -- since economic predictions don't work, especially when it comes to big things like the situation we're in now. In the end Mansfield is only parroting what Hayek warned about as far back as the 1930's. Of course, if people had listened to Hayek, we wouldn't need Mansfield to parrot him now. Of course, this also relates to the first article.

The bottom line: accurate calculation, planning, and prediction are impossible, meaning good intentions cannot be matched with good outcomes in any sort of rational way. Chaos theory shows us that we have to have every single element exactly right to get the models to match reality. Bios theory shows us that creativity is even less predictable than is chaos. And Wolfram shows us that if you let a system run, you will find out sooner how it will turn out than if you try to model it mathematically. Isn't it time we applied these insights to political economy (also known as "macroeconomics"?)

Saturday, April 04, 2009

Obama Wants to Control the Banks

IN an article yesterday, Charles Krauthammer assured readers that the recent WHite House forays into running GM and the banks was all a historical mistake, something Obama's not really interested, and that we may rest assured that he will dump them as soon as possible to focus on socializing and federalizing health care and education, respectively, and redistributing wealth through taxes. It seems that Krauthammer was wrong. Stuart Varney reports that the White House is refusing to accept TARP paybacks. Why? Those banks which accepted government money have to do what the government says. Those who accepted TARP money have to accept government control. And many of the banks were in fact forced to take money in the first place, even if they didn't want it. Now, they are being told they cannot pay the money back, even if they can. Mr. Kruathammer thinks that Obama doesn't want to control the banks. The refusal to accept payment for those "loans" shows quite the opposite to be true. Dont' think Obama doesn't know that controlling the banks means controlling the country. He does.

Friday, April 03, 2009

Economics, Government, Morality

Walter Williams notes that our economic problems are in fact moral problems -- only they are not moral problems in the way you are probably thinking of them. And that, indeed, is the problem.

Academic Entitlement Syndrome

An interesting article on the very problems I had as a teacher at a DWF-area community college and university. The author of the piece gets more at the heart of the problem than do the authors of the Academic Entitlement study. THe good news is that more and more are beginning to notice what I noticed several years ago. Not that I expect anyone to actually do anything about it in the near future.