Power & Market

Don't Trust the Government with the Environment

07/04/2019Gor Mkrtchian

The state is often assumed to be nature’s default, benevolent caretaker. Government agencies are free from the short-sighted profit motive, we are told, and can steward land for the long term. If only this were true. In fact, in a myriad of ways, governments are among the worst polluters in the world, and even the agencies of the state specifically devoted to environmental stewardship have themselves helped cause environmental disasters.

Land Use Planning and Subsidies

For environmental and aesthetic reasons, many believe that mass transit options like railways, as well as pedestrian routes, aren’t widespread enough in the U.S., and that Americans are too reliant on smog-emitting cars. They may be surprised to find one major culprit hidden in plain view. The state has long used tax dollars to build and maintain approximately 2.8 million miles of paved roads and highways in the U.S., subsidizing urban sprawl and automobile use, and hence undermining the market viability of substitutes like mass transit and walking.

Without tax-funded provision of roads and highways, had private enterprise had to consciously pay for each new mile of road — not to mention the sewer, gas, water, and electricity lines that suburbs require — land resources and transport would be markedly different. Cities may have instead been more compact, leaving more wilderness untrammeled. Public transportation may have been more widespread. Cities may have also been connected to one another to a greater degree by (privately-owned) trains rather than by today’s interstate highway system.

It’s impossible to know what the counterfactual world would have looked like, but it’s reasonable to assume that had the state not used tax money to fund 2.8 million miles of a particular form of transportation (paved roads and highways), then competing forms (railways, pedestrian routes), which have been subsidized to a lesser extent, would have been more prevalent.

The Military as Prime Polluter

The military provides another outlet through which the state corrodes the environment. According to Alexander Nazaryan:

The U.S. Department of Defense is one of the world's worst polluters. Its footprint dwarfs that of any corporation: 4,127 installations spread across 19 million acres of American soil. Maureen Sullivan, who heads the Pentagon's environmental programmes, says her office contends with 39,000 contaminated sites.

The purpose of the military, of course, is not to steward natural resources. So how do agencies which are dedicated to husbandry fare?

Mis-Managing Natural Resources

The four largest federal land management agencies in the U.S. are the Bureau of Land Management, Fish and Wildlife Service, National Park Service, and Forest Service. For the 2018 fiscal year, their total maintenance project backlog was an estimated $19.38 billion. The National Park Service was responsible for the bulk of this figure with $11.92 billion of delayed projects, compared to a 2016 annual budget of about $3 billion.

In addition to the inability to implement planned maintenance on schedule, federal land management has suffered from failure to formulate adequate policies to begin with. Over 1.2 million acres of California burned in wildfires in 2017, followed by over 1.8 million acres in 2018. National Forest Service policy had a direct role in the contributing to the problem. According to Robert Nelson:

Nineteen million acres of California forests—almost 20 percent of the state’s total land area—are owned and managed by the federal government. The fires are in significant part the product of past federal forest mismanagement.

The Forest Service policy of total fire suppression, in place for most of the 20th century, meant California's national forests contained large volumes of kindling-like small trees and underbrush. Before the Forest Service embarked on its crusade to suppress them, frequent but much smaller fires routinely removed these "excess fuels" while leaving the larger trees little affected.1

After helping set the stage for the fires, bureaucratic impotence failed to contain them:

Federal land management agencies remain mired in gridlock and dysfunction. This past summer, the Forest Service itself acknowledged that "catastrophic wildfires and the corresponding loss of lives, homes, and natural resources have continued to grow, partly because our treatments have been uncoordinated and not at the right scale."2

It’s difficult to imagine a private land conservation trust or forestry company being so inept as to allow millions of dollars of its own assets burn to the ground year after year, let alone in a way that resulted in the destruction of other people’s lives and property. This is true, in part, because private owners are legally and financially responsible for their actions. Employees of the National Forest Service, meanwhile, lose nothing as a result of decades of a ruinous total fire suppression policy. The taxpayers paid for the bureaucrats' mistakes — and also paid their salaries.

Communist Disasters

Given that we're often told government-planned economies are better for the environment, sure the centrally-planned Soviet Union preserved a pristine paradise within its borders? Unfortunately, the Soviets had a cartoonishly bad environmental record. To name just one example: the Aral Sea used to be the fourth largest lake in the world. Then, Stalin diverted its two major contributing rivers for crop irrigation, and now the Aral Sea — and all its surrounding ecosystems are now almost totally dried up and destroyed.

And then there are the rivers. In the 1971 New York Times article “Why Does the Volga Catch Fire?” Marshall I. Goldman comments on the five-year plan for 1971-1975, “Nothing is said about reducing the oil content of the Iset and Volga Rivers which have a tendency to catch fire so, that periodically fire men are called ‘to put out the river.’3 Most famously, the Soviet Chernobyl nuclear power plant meltdown resulted in a 1,000 square mile radioactive exclusion zone.

Why is the government such a terrible steward of the environment? Why not? When a government agency fails, it is declared to be “underfunded” and the outcry is for the agency in question to be trusted with more money and responsibility, not less. It hard to see why governments would have any incentive to change the status quo.

  • 1. Robert Nelson, “The Case Against the Case for Federal Land Management,” Reason, reason.com, 2019.
  • 2. Ibid.
  • 3. Marshall I. Goldman, “Why Does the Volga Catch Fire?” The New York Times, 1971.
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Don't Mess with the Swiss

07/02/2019Eric Margolis

Morgarten, Switzerland – Here, in 1315, a force of Swiss mountaineers ambushed an invading force of Austrian feudal knights who had come to reassert Hapsburg feudal rule over the rebellious Swiss.

The burly Swiss farmers and woodsmen from the forest cantons Unterwalden, Uri, and Schwytz fell upon the close-packed Austrian knights and men-at-arms, using long pikes or deadly pole axes known as halbards, and massacred them without quarter.

Two years later, a second Austrian expeditionary force was caught by the Swiss peasant infantry near Lucerne at Sempach and crushed.

These fierce battles were the first time in modern history that foot soldiers had withstood heavily armored mounted knights.  These epochal encounters marked the beginning of the end of European feudalism and the rise of infantry armies.  They also freed Switzerland’s forest cantons of Austrian rule, creating Europe’s first independent democratic state, the Swiss Confederation.

The always astute Machiavelli said of the Swiss warriors: ‘Most heavily armed, most free.’  Indeed, most free to this day.

Those who think of Switzerland as a quaint land of cuckoo clocks and chocolate are sorely mistaken.  To paraphrase Voltaire’s bon mot about Prussia, Switzerland is a giant fortress, disguised as a country.

I attended school and university in Switzerland.  Over the decades, I kept hearing about mountains opening up to disgorge warplanes, or cliffs studded with hidden artillery.  But even my Swiss friends didn’t know much about these seemingly fantastic sightings.

Fifteen years ago, I was the guest of the Swiss Fortress Guard Corps, a top-secret military outfit that operates Switzerland’s mountain fortresses.  I was one of the first non-Swiss to be shown the mountain forts that guard the heart of the nation’s ‘Alpine Redoubt.’  What I was shown astounded me – and continues to do so.

In the late 1930’s, as one European nation after another bowed down to Hitler’s demands, the Swiss military and its popular rifle clubs, banded together and decided their nation would not bend the knee as the Czechs, Dutch, Norwegians, Belgians, and then the French had done.

A feverish program of fortress construction was begun across the Alps.  Some 900,000 troops were mobilized. Orders went out from Gen. Henri Guisan: ‘leave your families behind in the lowlands.  Man our mountain forts.  We have no place or food for civilians in them.   Fight to your last cartridge; then use your bayonets. No surrender!’

Every road and bridge was mined; all mountain passes were rigged with explosives.  Particularly so the rail lines and tunnels that linked Germany to its erstwhile ally, Italy.

Hitler was furious.  He denounced the Swiss as ‘insolent herdsmen.’  Mussolini, Hitler’s ally, rightfully feared tangling with the tough Swiss mountaineers who had ravaged Italy during the Renaissance.  The Pope’s Swiss Guards are a memento of the era of ‘Furia Helvetica.’

Working 24/7, Swiss engineers created a warren of tunnels and gun positions guarding the main entry points into Switzerland at St. Maurice, Gothard, Thun and Sargans.  These forts were equipped with 75, 105, and 150mm cannons, machine guns and mortars emplaced in mountain sides and camouflaged so they are almost invisible.

Inside the forts are barracks, engine rooms, headquarters, clinics, observation posts and magazines filled with shells.  The hidden forts interlock their fire and support one another.  Unlike the less heavily gunned Maginot Line, each fort was protected by a special infantry unit on the outside, linked by telephone to the underground garrison.

In addition, Switzerland built bomb shelters for most of its people.

The Swiss only began decommissioning their forts in the 1990’s – after the collapse of the Soviet Union.  Switzerland was a prime target of the Soviet Red Army.  Advancing from Czechoslovakia, the Soviets planned to race across lightly defended Austria into eastern Switzerland.

Then, into the Swiss lowlands on a Basel-Neuchatel-Lausanne axis to Geneva.  From there, the Group of Soviet Forces powerful armored divisions would erupt into France’s Rhone Valley and drive north for the Channel ports, taking US and NATO forces in the rear and cutting their supply lines.  It would have been a replay of Germany’s brilliant Ardennes offensive in 1940.

But Swiss forts and solid Swiss citizen troops stood in the way.  The sons of the heroes of Sempach and Morgarten were on guard.

When Swiss mountaineers vote, they always carry rifles and swords as a symbol of how their freedom was attained and preserved.

Originally published at LewRockwell.com
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Decentralization as the Bridge to a More Libertarian Society

The state and its evils are but the shadow cast by public opinion, and this is why advocates for freedom and free markets put so much emphasis on education. We focus on spreading the arguments about the workings of the profit motive versus bureaucratic management, state monopolies versus free competition, international trade versus protectionism and so forth. But we also know that a libertarian is not made overnight. Ask anyone, and the tale of how they became a libertarian usually involves reading numerous books, and often having long conversations with those who are already convinced of the value and virtue of liberty. In short, going through a months and years-long conversion process of learning, reading, and overturning previous convictions and beliefs one after another.

Therefore, as salespeople of liberty, our conversion process might literally take many years to come to fruition. That should give us a pause. This is because we cannot make strides towards a free society by relying solely on the ideological war through arguments. Once again, these arguments are indispensable for the deconstruction of any statist proposition, but they seem to be insufficient for a positive program for liberty, especially one that has the potential to win over a majority in any democratic election.

The solution for this, I believe, is to put much more emphasis on the cause of decentralization. In short, we do not push for political decentralization hard enough.

To reiterate the argument for decentralization in the shortest possible form: the greater the degree of political decentralization in a given territory, the easier it will be for the populace to move if one government becomes ever-increasingly tyrannical. And as governments seek to retain their tax base, decentralization imposes a natural limit on state power.

[RELATED: "What Must Be Done" by Hans-Hermann Hoppe]

Often, the basic premise here can be phrased as follows: you and I may have different ideas about how to organize society to achieve the best conditions for all its members. If you believe that your ideas will bring about the best, most livable system, and if I believe the same about my convictions, why not put both of them to test? Instead of a top-down system of politics, why not have a competition of free cities, communities, districts, states and counties, each of them free to implement the policies they deem to be the best, and the rest, seeing the resulting increase in living standards, will be incentivized by those who would vote with their feet to follow them.

To implement the political program of decentralization requires only one simple step — a mere constitutional amendment — that can be effected in every country of the world: If the majority of the inhabitants of a village, town, district or a city express in a freely conducted plebiscite their opposition to any given law ratified by local, state or federal governments, they are to be exempt from the jurisdiction of that law.

One need not be a libertarian to see the value of such a decentralist program. Indeed, this is arguably the only program which has the potential to unite just about everyone globally, whether they be left or right, capitalist or socialist or anything in between under a single worldwide decentralist movement of self-determination to liberate every community, so they may shape their society according to their own values, instead of those imposed on them by the might of the centralized, leviathan state.

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Does the US Need a Rate Cut? No!

06/17/2019Daniel Lacalle

Consumer confidence is high, unemployment is low and Treasuries’ yield is at 2.1%, while credit to the economy and corporate financing are not suffering.

The weakness in core consumer prices in May, which increased by only 0.1 %, was entirely due to lower prices of used vehicles, and core CPI inflation remains within the Fed target, falling from 2.4% in mid-2018 to 2.0% in May. Headline CPI inflation fell to 1.8% in May due to lower energy prices, so there is absolutely no logic in a rate cut. With unemployment at 3.6%and annualized GDP growth expected to remain above 2.3%, demands for a rate cut are only an excuse to keep financial asset prices higher at any cost

There are some elements that point to a slight weakness in the economy but no need for a rate cut.

  • Industrial production rose 0.4% m/m in May while it stalled in other global economies.
  • A strong 0.5% rise in underlying retail sales in May, along with upward revisions to previous months’ gains which means consumption is likely to grow close to 4% annualized in the second quarter.
  • The headline confidence index declined marginally to 97.9 in June, from 100.0, but remains at very high levels.

A rate cut would only fuel the debt bubble further, and leave the Fed with fewer tools to address a slowdown. When so-called “High Yield” means 365 bps for junk bonds of companies close to bankruptcy and Treasuries yield 2.1% there is no reason at all to cut rates. Rather the opposite.

The debt bubble is dangerously inflated and lower rates would only make it worse. The ratio of US corporate debt to GDP, as well as the high-risk loan figure and securitized debt,  have risen to pre-crisis levels.  US deficit is rising because spending soars and the government finds debt cheap and abundant. Government spending rose to $440 billion in May 2019, up 21% from May of 2018. Yes, up 21% from May of 2018. All this despite record revenues. Receipts increased to $232 billion, up 7% from the same month last year.

A rate cut would only create a larger problem in the future. If the already dangerous corporate and sovereign debt bubble grow significantly more, no monetary policy will prevent a debt crisis.

Daniel Lacalle | Fed rate cut less likely than expected

Republished from DLacalle.com
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Donald Trump's Democratic Wall

02/15/2019Tho Bishop

After a month of “will he, won’t he” drama fitting for reality television, Donald Trump has announced his plans to declare a national emergency in order to get the funding he desires for his border wall. While the wall itself invites debate on subjects such as practical immigration policy, eminent domain, and government contractors – the use of a national emergency has brought a renewed look at executive power.

For weeks Trump has been warned by Republican leadership about the dangers of the precedent being set by such a decision. Nancy Pelosi has already suggested that a Democratic politician could use a “national emergency” to enact gun policy.

While such concerns are justified, it’s amusing to see such objections being raised by conventional beltway-types as the long-standing trend within Washington has been the gradual expansion of the executive branch. What is the practical difference, for example, between a president going around Congress for a border wall and a president going around Congress for military action? Or President Obama’s own immigration-related executive order that granted protection to “Dreamers” after Congress refused to bend to his will?

One does not have to support Trump’s wall to identify hypocrisy. Once again, we see that Trump is at his worst when he simply continues long-standing political trends.

While the gradual expansion of the executive leviathan is concerning, it is also predictable given the 20th century deification of American political democracy.

After all, if we are to buy in to the idea that political action is validated through participation, then it makes sense for the single political office voted on by the entire country to gradually expand its power – particularly given the obstructions to majority rules the Constitution purposefully placed on the legislative branch. The preference for general majority rule at the expense of state-based representation is also what motivates the modern lefts interest in effectively abolishing the senate and Electoral College – both of which act as checks on the imperialism of democratic excess.

While the 20th century set the stage for the modern state, it was Andrew Jackson who was the first American president to understand how the promotion of democracy could directly feed an imperial presidency. While Jackson could be praised for his views on central banking and federal debt, his presidency offered some of the most flagrant examples of hostility towards both states rights and limits to executive power.

In his first address to Congress, he outlined his vision of a truly democratic executive. He called for the abolishment of the Electoral College, and criticized the role of a large legislature in frustrating popular rule. In his view, “the first principle of our system…[is] that the majority is to govern.” As the best representative of what he saw as the will of the people, he placed his own interpretation of the Constitution as equal to all other branches of government – best illustrated by his rejection of John Marshall’s decision regarding the property rights of Native Americans leading to the Trail of Tears.

While Trump has gone the furthest in openly inviting comparisons to “Old Hickory,” Jackson’s view of the democratic presidency has long prevailed. In the words of John Yoo, “Jackson remains one of the greatest Presidents because he reconstructed the office into the direct representative of the American people.”

Unsurprisingly, it was Yoo who provided the legal defense for many of the excesses of the George W. Bush presidency.

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Debt and Deficits: They’re Unsustainable

01/21/2019Robert L. Luddy

[Editors note: Mr. Luddy will be giving the Henry Hazlitt lecture at this year's Austrian Economics Research Conference. Click here to learn more.]

The most important issue facing America today is the national debt and increasing federal deficits. Our national debt now exceeds yearly gross domestic product (GDP).

The U.S is the wealthiest country in the world, but our government has the largest spending deficits and national debt in recorded history.

The budget deficit in FY 2018 was $800 billion, but the debt increased by $1,300 trillion, and is now $21,500 trillion dollars. Government accounting (oxymoron) allows for spending and loans outside of the budget. The practice of underreporting deficits is fraud and is not legal in the private market.

Note the US Debt Clock (here).

In simple terms, the national debt consistently increases more than the federal deficit, which will cause a devaluation of the dollar and eventually, a major financial crisis.

In FY 2019, the federal budget projects the following:

  • Total revenue $3,422 trillion or 17% of GDP
  • Total spending $4,407 trillion or 21% of GDP

In the best of times, regardless of tax rates, the federal revenue rarely exceeds 18% of GDP. This means based on projected spending, we cannot grow or tax our way out of the deficit because spending is projected at 22% of GDP.

To balance the federal budget in FY 2019, it would be necessary to cut all spending by 22%.

Read the full article at The American Spectator 

 

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Discussion: Austrian Economics in America

This month’s Liberty Matters forum is a discussion of the American economist Frank Fetter. Though he is neglected today, Fetter made vital contributions to Austrian economics and was a major force in spreading the ideas of the early Austrians in the United States (see here and here). In my contributions to the discussion, I explain why Fetter’ work is important and how it can continue to provide fresh insights to contemporary economists. So far, the focus of the essays has been on key elements of economics, especially foundational concepts like price, market, equilibrium, capital, and rent. I’m joined in the conversation by Joseph Salerno, Peter Lewin, and Geoffrey Hodgson.

The first essays and responses in the discussion have now been published, and the forum will remain open for the rest of the month for short rejoinders by all the participants. I hope you’ll take a few minutes to read through some of the contributions. Here is the abstract for the discussion:

Matthew McCaffrey, assistant professor of enterprise at the University of Manchester, explores the economic and political work of the “forgotten giant” of economics, the Indiana-born Frank Fetter. At the height of his career in the early 20th century, Fetter was one of the most respected, cited, and debated economists in the United States. He taught for over 40 years at prestigious universities, including Stanford, Cornell, and Princeton, and his research appeared in practically every major publication in economics and political science. Yet today he is virtually forgotten outside a small group of Austrian economists. In his opening essay, McCaffrey explores two aspects of his thought in particular: his contributions to theoretical economics and their relationship to Austrian ideas, and his political views as they relate to the philosophy of classical liberalism. He is joined in the discussion by Geoffrey M. Hodgson, Research Professor of Business Studies in the University of Hertfordshire, Peter Lewin is Clinical Professor in the Jindal School of Management, University of Texas, Dallas, and Joseph T. Salerno, professor of economics in the Finance and Graduate Economics Department in the Lubin School of Business of Pace University in New York.

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Don't Count on the FBI to Clear up the Kavanaugh-Ford Mess

10/02/2018James Bovard

After last week’s explosive congressional hearing, the Senate and the Trump administration agreed to reopen the FBI background check into Supreme Court nominee Brett Kavanaugh. Former FBI chief James Comey wrote Sunday that “the F.B.I. is up for this” because it is “full” of "people who just want to figure out what’s true." 

But truth has often been a scarce commodity in FBI investigations. Consider these cases stretching back decades:

Click here for the full article at USA Today. 

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Defense Distributed: The Death of Gun Control?

08/23/2018José Niño

Is gun control on its deathbed?

Cody Wilson, founder of the 3D printable gun activist group Defense Distributed, recently won a landmark case against the State Department. Defense Distributed and the Second Amendment Foundation (SAF) reached a settlement with the Department of Justice that now allows for people to 3D print firearms without government interference.

Defense Distributed’s clash with the State Department originated in 2013 , when the State Department demanded that Defense Distributed remove the files for its Liberator pistol. Although Defense Distributed initially complied with the State Department’s demands, they did not go out without a fight. In 2015, Defense Distributed and the Second Amendment Foundation teamed up to fight the State Department’s mandate.

Fast forward to the present and Defense Distributed initially channeled its inner David against the federal government Goliath. However, Defense Distributed could not enjoy a proper victory celebration after federal judge Robert S. Lasnik issued a temporary restraining order on the publication of 3D blueprints.

A Game-Changing Victory

A temporary hiccup, the latest restraining order placed on Defense Distributed may end up being an exercise in futility when it’s all said and done.

In the 21st century, technology is frequently changing the rules of politics, in which traditional forms of political control are slowly being phased out.

Defense Distributed’s initial triumph against the State was a much needed moral victory for gun rights activists.

In present times, gun rights have been under assault at the state and federal level. With blatant calls for the repeal of the Second Amendment and a bipartisan consensus rallying around the need for sweeping gun control legislation, gun rights appeared to be on the chopping block.

Despite the roadbloacks ahead, Defense Distributed has given concerned owners a bit of breathing room and is opening up new avenues for human freedom.

Crypto-Anarchy in Action

Defense Distributed’s endeavors are one of the most poignant expressions of crypto-anarchism, the realization of anarchy in cyberspace.

Timothy May, author of The Crypto Anarchist Manifesto, shares one of the most powerful aspects of crypto-anarchism: “Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions.”

The history of humanity is one of power-hungry individuals using coercive institutions like the State to subjugate people and control their livelihoods. Eventually, certain groups who grew tired of the status quo of oppression rose up and attempted to create new political orders.

But two major junctures in economic history have fundamentally changed citizens’ relationships with their governments—the emergence of industrial capitalism in the 19th century and the Internet’s arrival in the late 20th century. Now, when governments try to curtail a certain activities, the market finds a way meet consumer demands.

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Don't Miss this Mises U Lecture on Healthcare

08/21/2018Tho Bishop

At Mises U this year, Timothy Terrell did a fantastic job of busting a lot of the myths out there about healthcare, in particular about the quality of US care. Some particularly noteworthy points:

1) America's life expectancy is often used as an attack on US healthcare, but this number includes a variety of factors that have nothing to do with medical care, including car fatalities, suicides, and drug abuse.

2) Infant mortality rate data from other countries is greatly skewed due to differences in reporting requirements. The US is also tends to be far more aggressive in resuscitating very premature infants, which is factored in to US data. 

3) The mortality rates for specialized US care, particularly cancer treatment, is far better than most other countries. The US also scores much better in terms of wait times and patients-per-diagnostic machines.

Of course none of this should be seen as a blanket defense of the status quo. Dr. Terrell outlines a variety of ways that government makes US healthcare unnecessarily expensive. But the quality of American care should not be taken for granted.

When it comes to the debate over nationalized healthcare, the conversation about costs shouldn't be defined by dollars - but human lives.

Dr. Terrell's lecture, along with all other Mises U lectures, can be downloaded on Soundcloud or viewed on YouTube (the video for some lectures is still being worked on, but all will be available soon.)

Free-Market Medical Care | Timothy D. Terrell

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