Written by Isaac Morehouse | 23 January 2009

Disagreeing with a man whose face appears on the necktie of many a freedom-lover is perhaps dangerous, but sound reason can’t be sacrificed on the altar of great men – and Smith was a great man.

Indeed, Adam Smith, in his depiction of the division of labor in a pin factory and his timeless prose on the invisible hand and the self-interest of the butcher, offers some of the greatest explanations and defenses of capitalism ever written, even some 230 years later. I consider Smith a great thinker, and a hero of liberty. That doesn’t mean he was never wrong; particularly when it comes to the question of value.

Written by Matt Fay | 13 January 2009

The forces shaping Obama’s foreign policy when he takes the reins as Commander-in-Chief

2008 was just one of those years.  It was easy to get lost among all that took place.  Everywhere you turned there was something else.  From a presidential election that may not bring much change, but undoubtedly brought a lot of history, to an economic catastrophe brought on by profligate spending and an overabundance of easy credit, that we are now told will be solved through greater profligacy and easier credit, it was an interesting year to say the least, and it was easy to forget about the many things that happened outside the United States.

2009 is already starting off with a bang.  Jan 3 saw the week-long war bombardment of the Gaza Strip turn into, to use Defense Minister Ehud Barak’s phrase, “all out war,” as Israeli tanks rumbled into Gaza for the first time since withdrawing in 2005.  An incident has already taken place in Iraq between U.S. soldiers and an Iraqi civilian that will test the recently enacted Status of Forces Agreement (SOFA).  India and Pakistan stand on the verge of their fifth war since both achieved independence in 1947 - and the first since both states acquired nuclear weapons.  And the United States just handed out yet another war guarantee, this time in the form a “strategic partnership” with Georgia - yes, the same Georgia that had a brief war with Russia this summer.

So Mr. President-Elect, sure you still want the job?

Written by Isaac Morehouse | 08 January 2009

Some snippets from my article on generational wealth posted today on Mises.org:

"It is a great irony that prosperity affords posterity the luxury of forgetting its origins. Though not a hard-and-fast rule of societal evolution, generations who grow up wealthy often lack respect for or understanding of the values and ideas that generated the very wealth from which they benefit.

There is an honesty, realism, and practical virtue often accompanying generations that have to endure difficult labor that is sometimes lost on later generations that inherit a comfortable material life. This is not a new phenomenon but is present throughout history. Compare, for example, the life and work of the ancient Greek poet Hesiod with that of the great philosopher Aristotle some 300 years later." [...]

"Aristotle provided one of the best defenses for private property, and his work in logic and metaphysics remains unrivaled today. However, Aristotle’s political and economic thought leaves something to be desired by those who value free-market capitalism, the role of the entrepreneur, and the positive power of self-interest and individuality." [...]

"The main difference between these two men was their wealth and status. Hesiod, perhaps due to necessity, was a practical thinker. Extolling the virtues of hard work was not mere speculation; I doubt Hesiod could afford to look down his nose at labor. Aristotle, on the other hand, could afford to disparage trade and labor. The wealth of Greece provided opportunity for full-time teachers and thinkers to ponder anything they chose. Indeed, the power of wealth to fund such speculative philosophy is one of its greatest advantages, and as one who spends hours studying, I would not wish to return to a poor agrarian society. Still, such generational wealth carries with it a certain danger.

Anticapitalist theories share in common an inability to take human nature as it is. Rather than analyzing man as a complex creature who will always act to achieve what he perceives as good, anticapitalist theories tend to focus on what the theorist wishes man to be and often overlook the necessity of market exchange for human improvement. From the vantage of a moneyed aristocracy, it is easy to be “above” the hustle and bustle of the marketplace, and to pursue higher ideals than material prosperity — forgetting that such prosperity is what supports the hours of speculation.

I do not believe one must be poor to understand and appreciate capitalism, nor am I opposed to generational wealth or inheritances. It does seem, however, that there is a certain danger in living a life completely detached from market processes and the pursuit of wealth through production and trade." [...]

"In our age of plenty where “higher learning” is ubiquitous, it is imperative that we remain realistic in our assessment of human nature and not forget that the basic principles that produced our prosperity still govern human action. Teaching future generations the theories of individual liberty and capitalist production is important; perhaps letting them experience the theories in practice is as well"

Read the whole thing here.

Written by Matt Fay | 07 January 2009

Examining the conflict in Gaza and the blowback that it will create for both Israel and the U.S.

The recent Israeli attack on the Gaza Strip has drawn worldwide attention, condemnation by many, and unyielding support from America’s political elite.  Much of the criticism seen in the media toward Israeli actions has focused on the idea of proportionality.  Proportionality is a key a tenet of Just War Theory, but proportionality is more of a moral concern than a strategic one.  The bombardment of the Gaza - one of the most densely populated areas in the world, housing 1.5 million Palestinians - was disproportionate, despite what Alan Dershowitz or Charles Krauthammer may claim.  The Qassam rockets launched by Hamas militants from Gaza had, up to the point of the Israeli bombing campaign, not killed a single Israeli.  Does this necessarily make Israel wrong for taking the actions they have?  To some the answer is undoubtedly yes, but to those living in Southern Israel the answer is not nearly as unequivocal - nor should it be.  The question does not stop, though, at the notion of proportionality, but instead must turn now to what the consequences will be.

Written by Devon Carr | 21 December 2008

We know that the majority of America was against the October ‘Wall Street bailout’ due to legitimate concerns of subscribing to socialism for the rich. There were many dangers including hyperinflation, additional tax burdens and shifting bad assets on the taxpayers books to name a few. Nine weeks later, many of these concerns are coming to fruition, but in some ways, it’s even worse that we expected.

Since the $700 billion bailout bill passed in early October, the level of transparency has been nowhere near what was promised by congress. We are being kept in the dark about where the money is going and what it’s being spent on. As predicted, the US treasury has revealed that they have already surpassed the $700 billion face value of the bill and they have increased the looting of taxpayer’s dollars to over $2 trillion within five weeks of the passage of the bill. In lieu of the original face value, $8.5 trillion has now been earmarked to the blank check termed ‘the bailout’ as reported by the Associated Press and Bloomberg.

The first big move occurred a couple weeks after the bill passed the house in early October when Secretary of the Treasury, Henry Paulsen, announced the first ‘stimulus package’ that allotted $250 billon to major financial institutions. JP Morgan Chase, Citigroup, Bank of America and Wells Fargo received $25 billion each and other big banks such as Goldman Sachs were given $10 billion by their Ex-CEO turned Treasury Secretary. The stated goal of the plan was to have these institutions sell preferred shares of the company to the Treasury, which would in turn allow the institutions to give loans to small businesses and consumers to stimulate the economy.

First of all, we have to ask ourselves why we are giving away our tax dollars to B of A,  JP Morgan and Wells Fargo who reported $4.9 billion, $2.5 billion and $3.4 billion in NET earnings in the past two quarters of 08’. In addition, Wells Fargo enjoyed a record setting 2Q revenue of $11.5 billion.

So let me get this straight; we’re giving our money to institutions that are making billions in profits per quarter, so they can turn around and lend it back to us? Admittedly, their profits have declined in the last year, but why do profitable companies need help from the taxpayers who represent the genuine economy and actually produce something?

We’ve been given two answers by Hank Paulsen and Ben Bernake to the questions posed above: One, they have to issue liquidity to all banks so that people don’t know which ones are struggling and two, so that they can loan it back to us and stimulate the economy. I guess they think an incoherent answer will deflect additional questions. Anyone can pull up a banks website and pull the financial reports for the past decade if they want to know the banks financial position. No matter how the second reason is spun, taking $2 trillion from consumers first through inflation, then again through taxation, then a third time on interest payments to the Federal Reserve, just to loan it back to us at interest, is completely asinine. So we pay over $4 trillion before we ever see a dollar from the loan sharks who demand interest payments in return. That is, if they decide to loan it out at all.

Five weeks after we started paying off the bankers, they still had not lent the money back to the legitimate economy. During congressional hearings the week of November 9th, and then again on November 18th, Paulsen and Bernake said that $2 trillion dollars has been lent out to institutions, but they will not disclose where the money has gone. The original bill proposal was rejected for this very reason; it lacked congressional oversight. Now that the treasury has lent out three times the $700 billion face value of the bill, they are going back on their promise of transparency. This is astounding hypocrisy from a government who can warrant a full audit and undercover IRS investigation on taxpayers for failing to provide a 79 cent doughnut receipt written off to a business trip. Bloomberg financial is fighting against this double standard and has recently filed a federal lawsuit under the freedom of information act.

Bloomberg has now calculated that as of late November, the total amount depleted from the $8.5 trillion earmark is $3.2 trillion and growing.

As stated in Screw Deal, the bankers pulled the classic move of buying up assets, and passing the inflation to the consumer. Of the money we can track, the banks have been buying up smaller corporations, financial institutions and have been cutting off liquidity to the base of the economy. In addition, the nine big banks that received the first $125 billion payout from the treasury have already set aside $108 billion in bonuses for their executives. This does not even account for the billions going to dividends and stock options.

The Rundown

Banks gambled and got us into a financial crisis. To pass the expenses back to the taxpayer, they proposed the first $700 bailout bill. Congress rejected it due to the lack of transparency and the expansion of power the bankers would gain over government. Congress was then threatened with martial law if they didn’t pass the bill, so they agreed to pass it if they could add congressional oversight, and $150 billion in pork. The bill passed with a promise to exchange our tax dollars for banks assets. The treasury has given out over four and half times more than face value without ever getting congressional approval, and not one traceable asset has been transferred back to the American people. Now that Congress is asking why the Federal Reserve and the Treasury wont reveal where the money went, Bernake’s response is “we think that’s counterproductive”.

In 1832 in his veto message regarding the proposed central bank, The Bank of The United States, President Andrew Jackson said “There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing”.

The bankers who got us in this catastrophe in the first place are stealing our hard earned wealth to pay off their execs and buy up the heart of the American economy. They chose to shower favor upon themselves only, and we get to live in a drought. They will keep coming back to mug us again and again. It’s time to get up from the fetal position and defend our wallets. Thieves only continue stealing because they haven’t been caught.