Category Archives: Monetary Issues

Milton Friedman on Libertarianism and Humility

On August 14, 1990, Milton Friedman gave a speech at the International Society for Individual Liberty’s 5th World Libertarian Conference on the subject of libertarianism and humility. There are many adjectives which can be ascribed to libertarians but “humble” usually isn’t one of them. Among the quotable parts of the speech, Friedman said the following:

On the one hand, I regard the basic human value that underlies my own beliefs as tolerance based on humility. I have no right to coerce someone else because I cannot be sure that I am right and he is wrong. On the other hand, some of our heros…people who have, in fact, done the most to promote libertarian ideas, who have been enormously influential, have been highly intolerant as human beings and have justified their views, with which I largely agree, in ways that I regard as promoting intolerance.

In searching for the above transcription of what I thought was very profound and wise, I found a couple of bloggers who thought this particular quotation as “an inadequate defense of liberty” or one of the “failures” of Milton Friedman.

I happen to disagree with these notions.

Maybe because I have been humbled in realizing that I had been wrong on some issues of great importance. By far the most difficult (yet ultimately liberating) post I have ever written was the post in which I declared that I was wrong about my support for the war in Iraq. I was so certain that regime change in Iraq would bring about peace in the Middle East and freedom would take hold. I thought the Ron Paul and big “L” Libertarian position on preemptive war was naïve and dangerous but now I believe the opposite to be true (for reasons I stated in the aforementioned post).

Having experiencing this, I can’t help but think that Friedman was right to say that each of us should be open to the possibility we may be wrong. If we aren’t open to this possibility, what is the point of debating an issue? Obviously, if I argue that X is correct and my opponent says Y is correct, I’m going to do my best to convince my opponent that I am right and s/he is wrong (meanwhile, my opponent is doing the same).

But what if I realize in the course of the debate that my opponent is at least partially right about Y being correct and/or that my reasoning is flawed or the facts do not support X? As a normal human being, I might not concede right away but if I am being intellectually honest, I’ll revise my thinking based on new information or new reasoning I hadn’t considered.

If Milton Friedman was willing to be open to the possibility of being wrong, how could I, someone whose mind will never in the same league as his, be so stubborn?

One thing I notice in watching Friedman debate people who are diametrically opposed to his positions was how patient he was with them. Something that many of us libertarians seem to forget is that much of what we believe to be true is counterintuitive to at least half of the people we encounter on a daily basis because many of these people have not been exposed to our philosophy. Friedman understood this. He knew that much of what he was saying was new territory for many who would hear his lectures or read his books.

Before he could make the case about any of his ideas to others, he had to be satisfied that the facts backed up his theory. These two sentences from the NPR obituary for Friedman summed up his approach beautifully:

Friedman was an empiricist, whose theories emerged from his study of the evidence, not the other way around. He also was a champion of the free market and small government.

We are supposed to believe this to be a weakness? I find this to be so refreshing!

Walking Dead Economics

My wife and kids got me hooked on a series some of you may have heard of called The Walking Dead (and like the rest of the Walking Dead fans out there, I have to wait until October for the next season to begin as the characters have been left in quite a precarious situation) For those who haven’t heard of this series, basically Atlanta, GA (and as far as we know, the rest of the world) has been taken over by zombies (called “walkers” by most people who inhabit this world). While the series does have many of the elements of the zombie genre, the story and the characters in the story are quite a bit more complex.The story isn’t so much about the walkers as it is about the characters who not only have to survive this zombie apocalypse, but also manage to survive the other survivors and live with very limited resources.

One thing that becomes very clear at the beginning of this series is that many of the societal rules quickly go out the window when under constant threat of flesh eating walkers. Paper money is of no practical use (other than to start a fire perhaps). Debit cards and credit cards are even less valuable as there is no way to access your worthless money.

One other thing I noticed is that gold isn’t even a commodity that is of much use in this world.

It so happens that I have been reading Dave Ramsey’s book The Total Money Makeover as my wife and I are trying to apply his system to get our financial house in order (I highly recommend this book to anyone who wants to get out of debt). In the book I ran across the following passage in which Ramsey explains why he does not believe gold is a good investment, even as a hedge against a total economic collapse:

It is important to remember that gold is not used when economies fail. History shows that when an economy completely collapses, the first thing that appears is a black-market barter system in which people trade items for other items or services. In a primitive culture, items of utility often become the medium of exchange, and the same is temporarily true in a failed economy. A skill, a pair of blue jeans, or a tank of gas becomes very valuable, but not gold coins or nuggets. Usually a new government rises from the ashes, and new paper money or coinage is established. Gold will, at best, play a minor role, and the gold investor will be left with the sick feeling that real estate, canned soup, or knowledge would have been a better hedge against a failing economy. – The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey (Thomas Nelson, 2003, 2007) p. 55.

I don’t know that I fully agree with Ramsey here though I’m by no means an expert on the history of gold or monetary policy. It seems to me that as a new civilization emerges from economic collapse, gold (and other commodities) would play a much greater role before people would accept any new fiat money. He seems to have a legitimate point, however; with regard to a collapsing or fully collapsed economy.

This is certainly the case in The Walking Dead. The resources most necessary to survive in this world are water, food, shelter, firearms, ammunition, medicine, fuel, spare parts, etc. Without these items, you aren’t going to survive for very long. Under these circumstances, who would trade a shotgun and ammunition for a bar of gold? I sure wouldn’t. I might trade a shotgun, assuming I already have enough firearms to hold the flesh eaters at bay, for some food and water. Better yet, I might offer to provide security for a few nights in exchange for food, water, and a temporary place to stay. This arrangement would continue as long as both parties agree.

In the course of the series, these are the kinds of arrangements that are worked out. Security is a major concern because, despite apparent efforts by the federal government to impose martial law, the government failed* and the law of the jungle is now in full effect. Many resources such as firearms, water, auto parts, food, fuel, etc. are scavenged from those who were either killed or simply abandoned their property (finders’ keepers).

Earlier in this season, the main characters find themselves at a dead end on the interstate as thousands of abandoned cars litter the road. Though on one hand this is very bad news, on the other, it’s an opportunity to scavenge whatever resources were left behind. At another point, a couple of the survivors make their way into an abandoned small town where they hit the jackpot in finding an abandoned pharmacy with a decent supply of prescription drugs. At the very end of this last season, the camera pans out to a prison near where the remaining surviving characters are camped out. What, if anything, can these refugees benefit from the prison? (I’m very interested to see where the story goes from here with the prison).

“What about silver bullets, do they have any value?” you ask. Silver bullets are needed to kill ware wolves, not walkers. Ware wolves? Seriously, ware wolves? Now that would be ridiculous.

*Or did it? Perhaps all the “important” people have been relocated to a secret and secure location while the citizens are left to fend for themselves.

Ron Paul at His Very Best Confronting Ben Bernake

If Rep. Ron Paul has accomplished anything in his 2008 and 2012 presidential campaigns it would be the way he has educated the American public about monetary policy and the Federal Reserve. I’ve listened to on line lectures from the Cato Institute and read about monetary policy but more often than not its either over my head or bores me to tears. Paul manages translate the Fed’s policy and put into language people like me can understand and keep it interesting.

Today’s hearing where Paul questioned Federal Reserve Chairman Ben Bernake is a case-in-point. My favorite part is when he asks Bernake if he does his own grocery shopping driving home the point about how his inflationary policies impact average people where it matters most (cost of groceries and fuel doesn’t go into determining the rate of inflation).

Book Review: Slackernomics, by Dale Franks

Those of you that have been around the libertarian blogosphere for any length of time will recognize the name Dale Franks. His main writing gig is over at QandO, where he spends the bulk of his time writing about the economy. In addition, he’s a bit of a gunblogger, and runs a separate blog for motorcycles.

At one point a few years ago I had noticed a link to a book Dale has written called Slackernomics: Basic Economics for People Who Think Economics is Boring. Given that I’m not the type who thinks economics is boring, but had enjoyed his blogging, I wanted to get a chance to read it. At that time, the book was only available in print at a price above $20. It took a spot on my “buy when I get around to it list”, and sat there for quite some time, but I never pulled the trigger. Then, more recently, it became avaiable for the Kindle at only $2.99 — I no longer had an excuse not to buy it. So onto the Kindle it went, and after several long months of sitting there taking up space, I’ve finally gotten around to reading it.

Slackernomics is a primer on basic economic theory that, as the title suggests, is written for people who think economics is boring. It’s written in a convivial tone, and the illustrative examples that Dale uses reminds one more of Freakonomics than of Adam Smith. Don’t let that fool you, though — the book is not a “sideshow” like Freakonomics — it gets to the heart of the matter. I liken it to be similar to Henry Hazlitt’s “Economics in one Lesson”, but written for people who may not be interested in the more formal writing style of Hazlitt. In addition, having been written many decades after Hazlitt’s book, it’s obviously much more up to date.

The book covers everything from price theory, minimum wage & rent control to monetary theory and the business cycle, Keynesianism, taxes / deficit spending, savings & investment, and economic statistics. He continues with a great defense of free trade and a bit of entrance into politics (touching a tad on public choice theory). In all, for being a relatively short book, he hits all the major notes that anyone looking for an introduction to economic thought would need to learn.

But the big question, for readers of this blog, is whether it’s worth it to buy. “Am I going to learn anything new?” And I can honestly say that despite the fact that I read economic books & blogs for leisure, and that I’ve blogged a fair bit about economics myself, I learned some new things from Slackernomics. Dale’s fourth chapter, unwinding the mess of the myriad of economic reports and statistics he’s constantly posting on Twitter, Google+, and at QandO, was wonderful. I’ve looked at many of these reports merely reading analysts *reaction* to the numbers (Higher jobless claims? How unexpected!), but rarely understood which group (public or private) was putting out certain reports nor how they all fit together. For me, a layman who is conversant on a lot of economic theory but not as perhaps on the technical reports, I have never seen an explanation of the reports that come out each week and each month as simple and readable as that chapter. That was more than worth it for my $2.99.

So my recommendation is simple: at $2.99, if you have a Kindle (or a device with a Kindle app), it’s hard to pass it up. You’re almost assured to get your money’s worth from the book. Even further, if you know someone in high school or college that may not have received good schooling in economics (which is, unfortunately, most of them), and who isn’t exactly about to tackle The Wealth of Nations, find a way to get them a copy of Slackernomics. Dale’s writing style will keep them interested.

All in all, it’s a book that lives up to its title, and goes well beyond.

Peter Schiff to OWS: “I Am the 1% Let’s Talk”

Here’s a very fascinating video taken at New York’s Zuccotti Park where Peter Schiff has a dialogue with some of the Occupy Wall Street protesters. Schiff brought a sign that read “I Am the 1% Let’s Talk,” and talk they did.

One of the things that occurred to me watching this was how little true discussion is going on between the OWS movement and their critics. Notice how some of the protesters say things like “you rich people” or “you Republicans” etc. Just as its unfair for these protesters to lump everyone into these groups is a mistake, I think it’s also a mistake to assume that all of these protesters are clueless and don’t have some legitimate grievances.

Kudos to Peter Schiff for going out among the protesters and having this much needed conversation. There seems to be some common ground concerning these grievances; the real differences are what the solutions should be.

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