The saddest aspect of life right now is that science gathers knowledge faster than society gathers wisdom.
- Isaac Asimov, scientist and writer (1920-1992)
The tragedy of modern war is not so much that young men die but that they die fighting each other, instead of their real enemies back home in the capitals.
- Edward Abbey, naturalist and author (1927-1989)
I go through life constantly bemused by all the weight that people put on partisan political loyalties and on adherence to the normative demarcations the parties promote. Henry Adams observed that “politics, as a practice, whatever its professions, has always been the systematic organization of hatreds.” This marshalling of hatreds is not the whole of politics, to be sure, but it is an essential element.
Of course, it’s all a fraud, designed to distract people from the overriding reality of political life, which is that the state and its principal supporters are constantly screwing the rest of us, regardless of which party happens to control the presidency and the Congress. Amid all the partisan sound and fury, hardly anybody notices that political reality boils down to two “parties”: (1) those who, in one way or another, use state power to bully and live at the expense of others; and (2) those unfortunate others.
Cowardice asks the question, 'Is it safe?' Expediency asks the question, 'Is it politic?' Vanity asks the question, 'Is it popular?' But, conscience asks the question, 'Is it right?' And there comes a time when one must take a position that is neither safe, nor politic, nor popular but one must take it because one's conscience tells one that it is right.-Martin Luther King, Jr.
No protracted war can fail to endanger the freedom of a democratic country. -Alexis de Tocqueville
Words fail me. Except to note that when Congress spends time doing stupid things it shouldn't be doing, it is not doing even stupider things it shouldn't be doing.
The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money
- Alexis de Tocqueville
The burden of our civilization is not merely, as many suppose, that the product of industry is ill-distributed, or its conduct tyrannical, or its operation interrupted by embittered disagreements. It is that industry itself has come to hold a position of exclusive predominance among human interests, which no single interest, and least of all the provision of the material means of existence, is fit to occupy.Whether you refer to it as Western civilization, the rat race, or any other name I certainly feel this pull in my life. Perhaps this is only a problem we can have at this point in history when so many of us have so much leisure freedom. If we were living on the edge of hunger or survival from danger I am sure we wouldn't have these worries. The realities of our lives though is that we must face the question of where to place material goods and the getting of them in the priorities of our lives.
- R. H. Tawney, historian
Our kitchens and other eating places more and more resemble filling stations, as our homes more and more resemble motels. "Life is not very interesting," we seem to have decided. "Let its satisfactions be minimal, perfunctory, and fast." We hurry through our meals to go to work and hurry through our work in order to "recreate" ourselves in the evenings and on weekends and vacations. And then we hurry, with the greatest possible speed and noise and violence, through our recreation - for what? To eat the billionth hamburger at some fast-food joint hellbent on increasing the "quality" of our life? And all this is carried out in a remarkable obliviousness to the causes and effects, the possibilities and the purposes, of the life of the body in the world.
The rule of law, in its most basic form, is the principle that no one is above the law. Thomas Paine stated in his pamphlet Common Sense (1776):I can't speak to the how the rule of law applies in contemporary America, but I love the ideal.
"For as in absolute governments the king is law, so in free countries the law ought to be king; and there ought to be no other."
Expropriating property from people who did nothing more than accept money they were legally due sounds uncannily like a bill of attainder—a legislative measure declaring someone guilty of a crime, and imposing punishment, without trial. This weapon was expressly forbidden by the framers of the Constitution because it is fundamentally unfair, at odds with the rule of law and driven by mass hysteria rather than dispassionate fact-finding.I can't seem to find my Political Science Dictionary, probably a casualty of a past cleaning effort, so I am relying upon Wikipedia. The United States Constitution explicitly forbids a bill of attainder in Article I, section 9, clause 3. This is a part of our constitution because it had a history in British law (though no longer). The Wikipedia entry includes some relevant legal references that I found interesting.
Once upon a time, those were considered bad things.
from Cummings v. Missouri:Since in the case of bonuses I have read that contracts existed concerning these bonuses the following portion concerning bills of attainder from various state constitutions is intersting.
A bill of attainder, is a legislative act which inflicts punishment without judicial trial and includes any legislative act which takes away the life, liberty or property of a particular named or easily ascertainable person or group of persons because the legislature thinks them guilty of conduct which deserves punishment.
The constitution of every State also expressly forbids bills of attainder. For example, Wisconsin's constitution Article I, Section 12 reads:
No bill of attainder, ex post facto law, nor any law impairing the obligation of contracts, shall ever be passed, and no conviction shall work corruption of blood or forfeiture of estate.
Contrast this with the subtly more modern variation of the Texas version: Article 1 (Titled Bill of Rights) Section 16, entitled Bills of Attainder; Ex Post Facto or Retroactive Laws: Impairing Obligation of Contracts: "No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made".We find ourselves on a slippery slope when we forget the freedoms which the founders of this country found so important and fail to defend these freedoms in the face of a perceived public uproar or panic. I for one fear the actions of our government in attempting to protect us more than those things from which they are attempting to protect us.
Don't they know there's a recession going on? How dare they award their employees for doing a good job? They should all give a bunch of the money back to the government. What? The bonuses aren't being funded by taxpayers? How yes, I remember. This is how capitalism once worked. Successful companies rewarded their employees and lousy companies disappeared.
“Point being, U.S. corporate executives politicians are unapologetic about running their companies the country adrift, accepting giving away billions of tax dollars to supposedly help, and then spending being surprised when those tax dollars get spent on travel, huge bonuses, etc,” [Grassley spokeswoman Jill] Gerber said.I realize that this is a few days old, but I enjoyed it too much not to share.
English common law was largely customary law left unwritten, until discovered, applied, and reported by the courts of law. In theory, a judge did not create law but rather discovered it in the customs and habits of the English people. (reference)
Laws or legal principles that have been established by courts over the years. May be codified into a statute or overruled by a statute passed by the government. (reference)
I wish the bonuses would stop, too. I don't believe in rewarding people who destroyed their company. Note to the President: when you stop sending them money, the bonuses will stop.
The Austrian theory of the business cycle emerges straightforwardly from a simple comparison of savings induced growth, which is sustainable, with a credit-induced boom, which is not. An increase in saving by individuals and a credit expansion orchestrated by the central bank set into motion market processes whose initial allocational effects on the economy's capital structure are similar. But the ultimate consequences of the two processes stand in stark contrast: Saving gets us genuine growth; credit expansion gets us boom and bust.We find ourselves in a reality where economic realities may frown upon savings. It still appeals to me as something that should be held as a guiding principle in private, public, and corporate life.
[There are policies and laws] which in effect release unions of all responsibility for the unemployment their wage policies may cause and place all responsibility for the preservation of full employment on the monetary and fiscal authorities...
Since it cannot be denied that at least for a period of years the monetary authorities have the power by sufficient inflation to secure a high level of employment, they will be forced by public opinion to use that instrument...
[Inflationary developments] will continue to operate as long as we allow on the one hand the unions to drive up money wages to whatever level they can get employers to consent to-and these employers consent to money wages with a present buying power which they can accept only because they know the monetary authorities will partly undo the harm by lowering the purchasing power of money and thereby also the real equivalent of the agreed money wages.
Before I proceed with this main point, however, I must still say a few words about the alleged indispensability of inflation as a condition of rapid growth. We shall see that modern developments of labor union policies in the highly industrialized countries may there indeed have created a position in which both growth and a reasonably high and stable level of employment may, so long as those policies continue, make inflation the only effective means of overcoming the obstacles created by them.This certainly describes the situation we find ourselves in today. Perhaps we will still yet see widespread bargaining agreements were labor unions agree to decreases in pay and benefits, but it will not come without much wailing and gnashing of teeth. It is also unlikely to find management that is ready to stand up for the future of the company and not give unfulfillable promises to labor to appease the current groans for more.
But this does not mean that inflation is, in normal conditions, and especially in less developed countries, required or even favorable for growth. None of the great industrial powers of the modern world has reached its position in periods of depreciating money. British prices in 1914 were, so far as meaningful comparisons can be made over such long periods, just about where they had been two hundred years before, and American prices in 1939 were also at about the same level as at the earliest point of time for which we have data, 1749. Though it is largely true that world history is a history of inflation, the few success stories we find are on the whole the stories of countries and periods which have preserved a stable currency; and in the past a deterioration of the value of money has usually gone hand in hand with economic decay.I do not have the data to back this up, but it appeals strongly to the sense of logic that I have developed throughout my life and my experiences.
It seems to me that the depression will be well worth its cost if it brings Americans back to their senses.In Roosevelt's first inaugural address he shared something that agreed with the essay mentioned above and I believe is a good lesson for myself.
Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy, the moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days, my friends, will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves, to our fellow men.I came across the same sentiments in the scriptures as I read this past week. The message has come from so many directions that it is hard to ignore. Happiness does not lie in possessions but rather in achievements and service to others. This is not the first time I have heard this, but the truth of the statement was a welcome reminder.
I must deal with an argument that, ... seems to lie at the root of the view which represents inflation as relatively harmless. It seems to be that, if future prices are correctly foreseen, any set of prices expected in the future is compatible with an equilibrium position, because present prices will adjust themselves to expected future prices. For this it would, however, clearly not be sufficient that the general level of prices at the various future dates be correctly foreseen, and these, as we have seen, will change in different degrees.
More important, however, is the fact that if future prices were correctly foreseen, inflation would have none of the stimulating effects for which it is welcomed by so many people.
Now the chief effect of inflation which makes it at first generally welcome to business is precisely that prices of products turn out to be higher in general than foreseen. It is this which produces the general state of euphoria, a false sense of wellbeing, in which everybody seems to prosper. Those who without inflation would have made high profits make still higher ones. Those who would have made normal profits make unusually high ones. And not only businesses which were near failure but even some which ought to fail are kept above water by the unexpected boom. There is a general excess of demand over supply-all is saleable and everybody can continue what he had been doing. It is this seemingly blessed state in which there are more jobs than applicants which Lord Beveridge defined as the state of full employment-never understanding that the shrinking value of his pension of which he so bitterly complained in old age was the inevitable consequence of his own recommendations having been followed.
But, and this brings me to my next point, "full employment" in his sense requires not only continued inflation but inflation at a growing rate. Because, as we have seen, it will have its immediate beneficial effect only so long as it, or at least its magnitude, is not foreseen. But once it has continued for some time, its further continuance comes to be expected...
But if prices then do not rise more than expected, no extra profits will be made. Although prices continue to rise at the former rate, this will no longer have the miraculous effect on sales and employment it had before. The artificial gains will disappear, there will again be losses, and some firms will find that prices will not even cover costs. To maintain the effect inflation had earlier when its full extent was not anticipated, it will have to be stronger than before. If at first an annual rate of price increase of five percent had been sufficient, once five percent comes to be expected something like seven percent or more will be necessary to have the same stimulating effect which a five percent rise had before. And since, if inflation has already lasted for some time, a great many activities will have become dependent on its continuance at a progressive rate, we will have a situation in which, in spite of rising prices, many firms will be making losses, and there may be substantial unemployment. Depression with rising prices is a typical consequence of a mere braking of the increase in the rate of inflation once the economy has become geared to a certain rate of inflation.
All this means that, unless we are prepared to accept constantly increasing rates of inflation which in the end would have to exceed any assignable limit, inflation can always give only a temporary fillip to the economy, but must not only cease to have stimulating effect but will always leave us with a legacy of postponed adjustments and new maladjustments which make our problem more difficult.
In the elementary textbook accounts, and probably also in the public mind generally, only one harmful effect of inflation is seriously considered, that on the relations between debtors and creditors. Of course, an unforeseen depreciation of the value of money harms creditors and benefits debtors. This is important but by no means the most important effect of inflation. And since it is the creditors who are harmed and the debtors who benefit, most people do not particularly mind, at least until they realize that in modern society the most important and numerous class of creditors are the wage and salary earners and the small savers, and the representative groups of debtors who profit in the first instance are the enterprises and credit institutions.
There is, however, another more devious aspect of this process [inflation] which I must at least briefly mention at this point. It is that it upsets the reliability of all accounting practices and is bound to show spurious profits much in excess to true gains. Of course, a wise manager could allow for this also, at least in a general way, and treat as profits only what remains after he has taken into account the depreciation of money as affecting the replacement costs of his capital. But the tax inspector will not permit him to do so and insist on taxing all the pseudo-profits. Such taxation is simply confiscation of some of the substance of capital, and in the case of a rapid inflation may become a very serious matter.
Mises, then, pinpoints the blame for the cycle on inflationary bank credit expansion propelled by the intervention of government and its central bank. What does Mises say should be done, say by government, once the depression arrives? What is the governmental role in the cure of depression? In the first place, government must cease inflating as soon as possible. It is true that this will, inevitably, bring the inflationary boom abruptly to an end, and commence the inevitable recession or depression. But the longer the government waits for this, the worse the necessary readjustments will have to be. The sooner the depression-readjustment is gotten over with, the better. This means, also, that the government must never try to prop up unsound business situations; it must never bail out or lend money to business firms in trouble. Doing this will simply prolong the agony and convert a sharp and quick depression phase into a lingering and chronic disease. The government must never try to prop up wage rates or prices of producers' goods; doing so will prolong and delay indefinitely the completion of the depression-adjustment process; it will cause indefinite and prolonged depression and mass unemployment in the vital capital goods industries. The government must not try to inflate again, in order to get out of the depression. For even if this reinflation succeeds, it will only sow greater trouble later on. The government must do nothing to encourage consumption, and it must not increase its own expenditures, for this will further increase the social consumption/investment ratio. In fact, cutting the government budget will improve the ratio. What the economy needs is not more consumption spending but more saving, in order to validate some of the excessive investments of the boom. [emphasis added]
Thus, what the government should do, according to the Misesian analysis of the depression, is absolutely nothing. It should, from the point of view of economic health and ending the depression as quickly as possible, maintain a strict hands off, "laissez-faire" policy. Anything it does will delay and obstruct the adjustment process of the market; the less it does, the more rapidly will the market adjustment process do its work, and sound economic recovery ensue.
The Misesian prescription is thus the exact opposite of the Keynesian: It is for the government to keep absolute hands off the economy and to confine itself to stopping its own inflation and to cutting its own budget.
The Laws of Simplicity by John Maeda
