The Pentagon Doesn't Want to Report on Its Failed War in Afghanistan

The Pentagon Doesn't Want to Report on Its Failed War in Afghanistan

05/02/2019Ryan McMaken

The US military's Afghanistan operation is going so well, the US military wants to stop telling you about it.

According to the AP:

Amid a battlefield stalemate in Afghanistan, the U.S. military has stopped releasing information often cited to measure progress in America’s longest war...

The move fits a trend of less information being released about the war in recent years...

A government watchdog agency that monitors the U.S. war effort, now in its 18th year, said in a report to Congress on Wednesday that the U.S. military command in Kabul is no longer producing “district control data,” which shows the number of Afghan districts — and the percentage of their population — controlled by the government compared to the Taliban.

The last time the command released this information, in January, it showed that Afghan government control was stagnant or slipping.

In other words, the US's 2-trillion-dollar effort there is going nowhere. So they're going to stop telling you about it.

This shouldn't be surprising, of course. Government legitimacy in general relies to a large extent on deception and on withholding information about the true cost, incompetence, and destruction of government programs and government policies.Governments hate releasing data on employee salaries, audits, spending, and metrics. Unless, of course, those metrics make the government look good.

Coming up with that make-us-look-good metric is often easy to do because it's easy for government agencies to track data on "how much stuff bought for x number of people" or "how many jobs created for Y number of government employees." Then, all they have to do is exclude any data about how many people weren't hired in the private sector because of government regulations and government taxes. They never mention the "stuff" that millions didn't get because of higher taxes. Governments naturally don't even try to collect that sort of data.

A similar phenomenon is seen in foreign policy. We hear all about how the government killed a dictator (i.e., Saddam Hussein or Moamar Qaddafi) while conveniently leaving out the fact these "humanitarian" missions just created power vacuums which paved the way for the rise of terrorist organizations like Al Qaeda.

When it comes to government programs, it's all benefits, and no costs.

So who can be surprised the Pentagon now wants to hide the fact the Afghanistan War is accomplishing nothing. After all, this might make it easier to point out the Pentagon is hugely over-funded. Moreover, the Pentagon has no idea what it even does with its money, since, as Reuters reported in 2016:

The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and invoices to support those numbers or simply made them up.

Disclosure of the Army’s manipulation of numbers is the latest example of the severe accounting problems plaguing the Defense Department for decades.

Unfortunately, it's fairly easy for military organizations to get away with this sort of fraud and data manipulation because they can always claim "national security" demands it. Many voters — often including those who fancy themselves proponents of "limited government" are happy to play along and declare the taxpayers have no right to second-guess the "experts."

The idea is the taxpaying public is too stupid or too ignorant to have anything other than worthless opinions when it comes to military and foreign affairs beyond the borders of the United States. Modern Americans have typically caved to this bullying tactic. Writing in the 1990s, however, at the end of the Cold War, Samuel Francis noted that such an attitude is incompatible with a free society :

The self-sufficiency, the civic independence, of the citizens of a republic, the idea that the citizens should support themselves economically, should be able to defend themselves,educate themselves, and discipline themselves, is closely connected to the idea of public virtue…A self governing people is simply too busy, as a rule, with the concerns of self-government to take much interest in other peoples’ business…A self-governing people generally abhors secrecy in government and rightly distrusts it. The only way, then, in which those intent upon…the expansion of their power over other peoples, can succeed is by diminishing the degree of self-government in their own society. They must persuade the self-governing people that there is too much self-government going around, that the people themselves simply are not smart enough or well-informed enough to deserve much say in such complicated matters as foreign policy…We hear it…every time an American President intones that “politics stop at the water’s edge.” Of course, politics do not stop at the water’s edge unless we as a people are willing to surrender a vast amount of control over what the government does in military, foreign, economic, and intelligence affairs.

Meanwhile, the government insists that the taxpayers have no right to privacy themselves. It's the taxpayers who need to be monitored, it seems. And Donald Trump apparently agrees. The Washington Post reported yesterday:

The Trump administration has signaled in recent weeks that it may seek the permanent renewal of a surveillance law that has, among other things, enabled the National Security Agency to gather and analyze Americans' phone records as part of terrorism investigations, according to five U.S. officials familiar with the matter.

So, while the military is cutting back on letting the public see its failures, the national security state insists that those who pay the bills submit to ever higher levels of surveillance.

Image source:
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The Fallacies behind the Wealth Tax

09/09/2020Dakota Hensley

Kevin Carson and I had a tiny Twitter fight on the wealth tax (taking place a few days ago as of August 21, 2020). He defended such an anti-individualist and authoritarian measure, and I criticized it. Twitter, however, is not the place for discussion (seeming to be nothing but a swamp of radicalism), and here I shall disprove the idea that a wealth tax is in any way beneficial to workers or the poor or to the nation as a whole.

The first major problem with a wealth tax is quite obvious. If such a tax were implemented, the wealthy would abandon the country and take their money and businesses elsewhere. This would lead to mass poverty and hurt hundreds of thousands or even millions of families. A 2006 Washington Post article on France's experimentation with a wealth tax showed that it led to capital flight. The French tax raised $2.6 billion a year, but cost the economy $125 billion.

If you'd like to see this in action in the US, look at cities affected by white flight. Black people moved to the city hoping to start a new life. White people, fearing the idea of having to live next to someone not of their race, moved away and took their businesses and money elsewhere. The new black residents don't have the skills to run the now abandoned factories and businesses (and, even if they could, the sheer number of businesses would be too much to handle) thus leading to widespread poverty and disrepair to infrastructure.

The second major problem is that the wealth tax raises too little revenue to be effective. According to the OECD (Organisation for Economic Co-operation and Development) tax economist Sarah Perrett, the wealth tax was ineffective "because many assets were exempt, and wealth taxes were easy to avoid." Asked about its track record, she responds, "I would say, in general, it hasn't been great."

How, then, can we redistribute wealth? Mutual banks, privatized currency, deregulation, and the free market. This will allow individuals the means to found their own businesses and have less barriers to enter the market. This will allow the raising of incomes and eat away at corporations and their wealth. We see this in Vietnam and Mexico. In Vietnam, street food is so abundant and cheap that corporations like Burger King and McDonald's cannot enter the market. In Mexico, tacos are so common and so cheap that Taco Bell could not enter the market. Mutual banks and privatized currency will allow individuals the ability to borrow the money to fund a startup. Deregulation will allow the cost of doing business to be low. This will create so much competition that no corporation could survive and there would be better products, cheaper products, and lower prices. This will be like the situation in Vietnam and Mexico but across all sectors of the economy.

My friend believes in authority, not liberty. His belief that the free market cannot redistribute wealth is proof he is a statist dressed in anarchist clothes. The wealth tax would create job loss and result in the decimation of the American economy. Just because my colleague has a Wikipedia page doesn't mean he is right.

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A Strategy to Restore Liberal Education

09/08/2020Atilla Sulker

The term “liberal education” is very commonly thrown around in American political discourse pertaining to higher education. But what does it really mean?

The University of Mississippi notes that a liberal education is “about nurturing human freedom by helping people discover and develop their talents.”

The Concise Oxford Dictionary of Politics defines liberalism as “the belief that it is the aim of politics to preserve individual rights and to maximize freedom of choice.”

A host of different political factions have adopted the label “liberal” over the years—each with differing views on economics and society. But liberalism—broadly conceived—always signified the welcoming of debate and an open society. It encouraged seeing all sides of the issue.

In higher education institutions, liberalism meant that students would be taught how to think, not what to think. What has emerged in recent years is hardly a liberal education. It is pure indoctrination.

What can those seeking to advance a genuine liberal education do?

Rage and frustration alone do not suffice in the effort to restore the liberal education. This indignation must be translated into tangible pressure put on the American higher education bureaucracy.

There are at least three ways in which pressure can surmount the higher education thought police:

1. Drying up money resources: the old cliché “money talks” never seems to fall short. The higher education bureaucracy consists of many people who couldn’t be categorized as leftists. Generally, these are centrist Republicans at best, and moderate Democrats at worst. Some decision-makers may be on the far left, but these people generally don’t represent the majority.

On the other hand, far leftists are very vocal and can—to some extent—push around moderate and fair-minded administrators. At the end of the day, higher education administrators are required to raise funds for their university or college. Sometimes, this goes against the demands of leftist students and professors. But other times, raising money may well fall in line with certain “what to think” agendas. It’s easy to see how a mandatory antiracism course can funnel in more money to a university.

Many wealthy conservatives also become big donors to universities. They are often blind to the fact that their contributions fund the efforts of leftist professors.

Thankfully, some efforts have been made to reach out to such people. DivestU, a project of Turning Point USA (of which I’m no fan!), focuses on drying up the donor money stream to universities. Imagine if millions of dollars of donations all of a sudden disappeared. Administrators would have to change something.

Donors alone would not suffice. Fans who attend football games must be willing to forgo buying tickets. They must be willing to see that the same people who sell them overpriced tickets also imply the broader community—which includes fans—is “racist.”

Paradoxically, fans may even lose their mascots and the names of their favorite football stadiums if they keep giving universities money.

2. Embarrass higher education administrators: too often, Americans get absorbed in abstract notions that the roles of policymakers and administrators encompass “uniting” the interests of everyone. More often than not, this means compromising something, or favoring one group over another. It is unwise to heckle policymakers, so the argument goes.

But this is precisely the way to take back the university. When administrators clearly bend the knee to small, vocal mobs of leftists, they need to be called out—in one form or another. Frustrated students should write to their local papers, try to appear on media outlets, and file complaints to their universities. Negative attention is a very tangible form of pressure on administrators.

One poll cites that Republican college students are three times more likely to self-censor than Democratic students. To bring back the liberal education, this epidemic of indifference must be reversed.

3. Troll the heck out of administrators: if all else fails, and students are forced to participate in mandatory “diversity” trainings, they may best be suited by trolling administrators—giving them a taste of their own medicine, so to speak.

For example, if students are told by staff that they are “inherently oppressive” and have “implicit biases” against LGBTQIA+ people, they may want to respond with something along these lines: “Why aren’t you voicing your concern for the rights of aromantic people? Why is this minority never represented? Therefore, why are you perpetuating hate and exclusivity?”

All in all, it doesn’t matter if a student uses this line or a different one. The point is to completely delegitimize the efforts of leftists trying to indoctrinate students by arguing within their framework. Say things that are just as ridiculous as what they say.

The Future of Higher Education

There is a lesson to be learned from all of this: all it takes to sway and push around a diffident majority is a small, vocal, and vigilant mob. And this is how the academy was taken over.

Luckily, independent institutions have slowly been proliferating around the country, holding true to the promise of a liberal education. The Mises Institute—a free market economics educational organization in Auburn, Alabama—for example, recently launched a new graduate program led by carefully selected professors from around the country.

This new decentralized approach to learning may pave the future for a free society. If the liberal education can’t be restored in universities, it will be restored elsewhere. No consolidation of power can stop the spread of powerful ideas.

Originally published by Townhall.

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The Fed's Brilliant Plan? More Inflation and Higher Prices

09/08/2020Ron Paul

Listen to the Audio Mises Wire version of this article.

Federal Reserve chairman Jerome Powell recently announced that the Fed is abandoning “inflation targeting,” where the Fed aims to maintain a price inflation rate of up to 2 percent. Instead, the Fed will allow inflation to remain above two percent to balance out periods of lower inflation. Powell’s announcement is not a radical shift in policy. It is an acknowledgment that the Fed is unlikely to reverse course and stop increasing the money supply any time soon.

Following the 2008 market meltdown, the Fed embarked on an unprecedented money creation binge. The result was historically low interest rates and an explosion of debt. Today total household debt and business debt are each over $16 trillion dollars. Of course, the biggest debtor is the federal government.

The explosion of debt puts pressure on the Fed to keep increasing the money supply in order to maintain low interest rates. An increase in rates to anything close to what they would be in a free market could make it impossible for consumers, businesses, and (especially) the federal government to manage their debt. This would create a major economic crisis.

The Fed has also dramatically expanded its balance sheet since 2008 via multiple rounds of “quantitative easing.” According to Bloomberg, the Fed is now the world’s largest investor and holds about one-third of all bonds backed by US home mortgages.

Congress has expanded the Fed’s portfolio by giving the central bank authority to make trillions of dollars of payments to business as well as to state and local governments in order to help the economy recover from the unnecessary and destructive lockdowns.

Contrary to what most “mainstream” economists claim, a general increase in prices is an effect—not a cause—of inflation. Inflation occurs whenever the central bank creates money. Increasing the money supply lowers interest rates, which are the price of money, distorting the market and creating a bubble (or bubbles) that provides the illusion of prosperity. The illusion lasts until the inevitable crash. Since the distortions come from money creation, the system cannot be “fixed” by just requiring the Fed to adopt a “rules-based” monetary policy.

Once the lockdowns end, the Fed’s actions may lead to a short-term boom. However, the long-term effect will be even more debt, continued erosion of the average American’s standard of living, and the collapse of the fiat money system and the welfare-warfare state. The crisis will likely be brought on by a rejection of the dollar’s reserve currency status. This will be supported both by concerns about the stability of the US economy and resentment over America’s hyperinterventionist foreign policy.

The question is not if the current system will end. The question is how it will end.

If the end comes via a meltdown, the result will likely be chaos, violence, and increased support for authoritarian movements as desperate people trade their few remaining liberties in hopes of gaining security.

However, if proliberty Americans are able to force Congress to begin cutting spending—starting with the money wasted on militarism—and to move toward restoring a sound and sane monetary policy that includes ending the Federal Reserve, we can minimize an economic crisis and begin restoring limited constitutional government, a free market economy, and respect for liberty.

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The Fed Embraces a "Whatever It Takes" Model on Inflation

09/03/2020Robert Aro

The level of Fedspeak last week tells us something peculiar happened at the Fed. After the Jackson Hole meeting, and with the release of the new goals and strategy updates, members of the Fed are providing detailed explanations about the new framework. Perhaps by design, each explanation raises more questions than provides answers.

On Monday, Vice Chair Richard Clarida gave a speech, The Federal Reserve’s New Monetary Policy Framework: A Robust Evolution, expanding on the new vision, which aims for “average inflation targeting” and will continue to “remain focused exclusively on meeting the dual mandate” of maximum employment and stable prices.

He mentions that going forward changes to unemployment will not, in and of themselves, nevessarily be a cause to raise interest rates. The “new” idea flies in the face of the widely held central banker belief in the Phillips curve, the idea there is a tradeoff between inflation and unemployment. To his credit, Clarida said one of the most honest things that has ever been publicly stated by a central banker:

This is a robust evolution in the Federal Reserve’s policy framework and, to me, reflects the reality that econometric models of maximum employment, while essential inputs to monetary policy, can be and have been wrong.

The serendipitous event of abandoning failed economic models does not leave us without a sense of irony. The question remains: If employment data is no longer as important as it once was and if “appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time,” what will it take to raise rates again?

If the intent is to never raise rates, then the concepts of asset bubbles, unsustainable debt levels and malinvestments, among other things, continue to go unnoticed by our planners. And if they succeed in suppressing rates for another decade, the next economic crisis, the level of risk and the Fed’s response become almost unfathomable.

Tuesday offered Governor Lael Brainard giving us one of the greatest Fedspeak-laden speeches of the year, entitled: Bringing the Statement on Longer-Run Goals and Monetary Policy Strategy into Alignment with Longer-Run Changes in the Economy. Championing the commitment to achieving their goals by any means, she noted:

It will be important to provide the requisite accommodation to achieve maximum employment and average inflation of 2 percent over time, following persistent underperformance.

We are left wondering what exactly the “requisite accommodations” will be that will achieve any of these objectives. Given their track record on inflation, there’s little reason to believe that the Fed has finally found a way to control it.

Continuing with the idea of a less narrowly defined employment goal, she expanded on employment “inclusiveness” to aid those from diverse socioeconomic backgrounds:

The statement defines the statutory maximum level of employment as a broad-based and inclusive goal and eliminates the reference to a numerical estimate of the longer-run normal unemployment rate.

With no economic theory to draw upon, nor plan to reach these goals, the Fed has given us nothing more than wishful thinking. We have no idea what the Fed can do to help disenfranchised groups who, in the Fed’s own words, “face the greatest structural challenges in the labor market.” We don’t know the maximum unemployment goals. Nor do we know how inflation of over 2 percent can be met. To make matters worse, it appears they don’t either.

Economic policy has come a long way. But we’re a far cry from 1989, when Alan Greenspan wrote a letter to the Senate Banking Committee saying that he desired “approximately zero” inflation. Yet, after all the recent speeches, we remain in the same boat as the Fed, with no clue as to how these goals can be reached nor the reason for the goals in the first place. We’re entering this decade in crisis mode, guided by those who need guiding themselves. They remain willfully ignorant of the world around them and the damage they inflict.

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The Fed Lays Out a Future Road Map

09/02/2020Robert Aro

Day 1 of the Economic Policy Symposium at Jackson Hole saw the release of the revised Statement on Longer-Run Goals and Monetary Policy Strategy. This was last updated eight years ago. It’s a big deal! True to expectation, the Fed never fails us:

The Committee seeks to explain its monetary policy decisions to the public as clearly as possible. Such clarity facilitates well-informed decision making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.

Because nothing screams “democratic society” like a clandestine group of economic planners given a government-enforced monopoly on the nation’s money supply. That said, let’s see what the future holds, starting with interest rates:

The federal funds rate is likely to be constrained by its effective lower bound more frequently than in the past.

Considering we’ve been in a relatively “low rate” environment since 2008, the Rubicon on never raising interest rates again has long been crossed. And sure, there was that one instance when it took three years to get the federal funds rate to a whopping 2.4 percent in 2019; but that didn’t last very long. And here we are again, approaching zero, no end in sight.

On employment, much was said, but little offered:

The maximum level of employment is a broad-based and inclusive goal that is not directly measurable and changes over time owing largely to nonmonetary factors that affect the structure and dynamics of the labor market. Consequently, it would not be appropriate to specify a fixed goal for employment.

How a goal which cannot be “directly measurable” can ever be achieved remains unclear. But if anyone knows how to reach impossible targets, it is the Fed. However, with the unemployment rate still in the double digits, we can bet more monetary stimulus will be coming soon. If that doesn’t work, maybe they can ask the government to refrain from shutting businesses down whenever the next pandemic arises?

But the showstopper goes to inflation. It’s been confirmed “average inflation targeting” is now policy. Per the Fed:

The Committee seeks to achieve inflation that averages 2 percent over time, and therefore judges that, following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.

What tools will encompass the “appropriate monetary policy” given that rates are in the lower bound? Other than negative interest, there isn’t much more the Fed can do. They could always stick with the tried and true methods of more financial accommodations, such as new money-printing schemes or coordinated efforts with other central banks to bring the highly sought-after inflation to America. With the inflation rate being “too low” for the better part of a decade, how can we expect to overshoot the target now?

It was a bad day for democracy indeed. Those who apply monetary policy show the world how little understanding of economics they have to draw upon, or even cite. We know interest rates are expected to stay low, while unemployment should be reduced and inflation increased. Yet this is concerning, as we’ve only been given the desired outcomes. Nowhere have we been advised how this will be achieved. They’ll continue doing more of the same (money printing), only this time the expectation is that it will be different.

If it’s any consolation, the Fed concludes its strategy by noting that in roughly five years a new public review of these policies will take place. For those able to read between the lines, we must make those “well-informed” decisions now and consider what America will look like five years from today.

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The CDC Is America's New Landlord

09/02/2020Jeff Deist

Listen to the Audio Mises Wire version of this article.

This is astonishing, even by 2020 standards.

The Centers for Disease Control and Prevention, operating under the US Department of Health and Human Services, has asserted jurisdiction over private residential leases nationwide. It intends to curtail evictions until at least the end of the year, and in fact its new directive threatens federal criminal penalties against landlords who ignore tenant "declarations" made using CDC forms.

It is unclear, to put it mildly, exactly how this jurisdiction over private contracts and state/local courts flows even to Congress, much less an administrative agency acting on its own. One federal official justifies the bizarre and legally dubious action based on the CDC's broad charter to stop the spread of communicable diseases—a charter at which they've failed miserably with covid:

Congress has delegated broad authority to HHS, the Surgeon General and CDC, to take reasonable efforts to combat the spread of communicable diseases, and frankly I think it makes sense for those authorities abroad because we don't know for any given situation or scenario what steps will be needed to stop the spread. I think, in this particular order, the CDC has made a very compelling case that it is quite problematic at this particular time. It's focused on this particular pandemic, which is obviously the uniquely powerful grasp in the nation's entire history in terms of the effect it's had that for a bunch of reasons in particular, that the home has been sort of the focal point of people social distancing and building, sort of a safe space themselves over the past few months, and also the fact that if people get kicked out, they may end up in overcrowded congregated living facilities or homeless shelters, and that is a potential recipe for a big spread of COVID-19.

Thanks to the oft-criticized but in fact essential Zero Hedge for the nice bit of early and original reporting here—a full day before NPR, Bloomberg, et al.—and for details from a phone conference with CDC officials.

Again, this was announced without congressional input or approval and purely by administrative decree. At least the eviction and mortgage moratoriums in the CARES Act, passed by Congress in March, were enacted by politicians who face voters this fall. And while those earlier moratoriums may well be constitutionally suspect too, at least in times of sanity, they were limited to federally backed rentals and mortgages. The CDC's new action is much broader, applying conceivably to all private residential leases across the country.

The fallout from suspending rental contracts will be deep and long lasting. Many landlords will find their situations untenable and stop making mortgage and property tax payments. New rental housing stock will be depressed, as owners worry about the next suspension of rent payments now that the precedent has been set. After all, why wouldn't moratoriums happen again when the next pandemic or financial crisis hits? Rental housing units will drop in price as more landlords abandon the business—setting the stage for commercial and private equity buyers to grab units on the cheap from individuals and small owners. Ultimately, foreclosures, evictions, and tax sales will happen no matter what the federal government does. The likely outcome is bigger players owning more and more of the rental housing stock, consolidating the permanent renter class and adding to the rootlessness many Americans feel. Even the most modest home ownership creates skin in the game and encourages better neighborhoods, while areas dominated by rentals lack the same incentives for improvement. And the new owners of rental units will pass all the uncertainty, risks, and potential losses on to millions of Americans in the form of higher rents.

Even during the most turbulent periods in American history, including the Great Depression, World War II, and an 1880s tuberculosis outbreak which killed one in seven people, virtually no one expected the federal government to suspend rent. This action by the CDC, in response to a very manageable and retreating cold virus, is the kind of quietly unprecedented development we've come to expect this year. This is a watershed moment for the US: when you destroy trust in contract enforcement you create terrible ripple effects throughout society. Something this radical should not be rushed into place with such little forethought, especially when it amounts to buying votes in a national election. But of course in a managerial state we should expect just this type of shortsighted political consideration to prevail over good sense and justice.

The CDC wants to effectively vitiate contracts: when you tell one party that it need not perform and the other that it cannot sue for nonperformance, you radically alter the bargaining power of those parties. The contract they signed becomes nothing more than an aspirational document, a legislative (or administrative!) tool to be rewritten at the will of politicians. The effects of this moratorium undoubtedly will spill over in unforeseen ways as Americans get used to the idea that their financial obligations can be erased by state edict. The tremendous costs will be borne by all of us, because when contracts are not enforceable every transaction must account for much higher risks.

Image source:
RomanBabakin via Getty Images
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Kenosha Kyle, the McCloskeys, and Standing against Barbarism

08/31/2020Tho Bishop

Listen to the Audio Mises Wire version of this article.

Last week we once again saw far too common sights of small businesses being burned to the ground and unarmed civilians being beat in the street. The epicenter this time was Kenosha, Wisconsin, where rioters and looters from around the area joined protesters in the city outraged by the police shooting of Jacob Blake. Kenosha was by no means the only terrorized community in recent days, however, as Twitter timelines have become filled with scenes such as renewed looting in Minneapolis, mobs threatening restaurant patrons in Washington, DC, and businesses destroyed in Denver, Colorado.

While the destruction of the American downtown is nothing new to 2020, the sense of escalating violence—coupled with rising concerns about the impact the unrest is having on Joe Biden’s polling numbers—is starting to change the way the media is framing these incidents.

As is usually the case with the corporate press, the framing is fundamentally dishonest.

For example, after an aggressive campaign by Democratic politicians, the media and even corporate giants trying to demonize Kyle Rittenhouse, the seventeen-year-old who shot three individuals attacking him in Kenosha last week, the shooting of a Trump counterprotester in Portland over the weekend has the media focused on equating the two events. The underlying theme: the street violence is Trump’s fault. Joe Biden, who once equated members of the Tea Party movement as "terrorists," is now very concerned about inflammatory political rhetoric.

Of course, the two incidents are similar only in the fact that both ended with a death. Thanks to the widespread dispersal of cameras in the form of smartphones, we have footage of both incidents.

In the case of Kyle Rittenhouse, we know from photos, interviews, and footage that he was in Kenosha to assist in cleaning up graffiti and protecting businesses that had been victimized in prior nights. At a time when government police had largely abandoned their duty to protect taxpayers, instead focusing on the preservation of state buildings, it is inevitable to see the mobilization of armed private individuals filling the role of property defenders.

It is unfortunate that while assisting in this role Rittenhouse ended up taking the lives of others. However, we can vividly see two of his victims aggressively attempt to attack him while on the ground after being chased. The first victim can be seen chasing him and throwing objects, followed by another who fires a handgun, though the shooting itself does not appear to be captured on camera. Witnesses claim the victim attempted to grab Rittenhouse’s gun, while video before the incident shows a heated confrontation between the first victim and a group of militia-styled individuals who were apparently asked to defend one of the many businesses that had been attacked in the prior nights. What’s truly remarkable is that Rittenhouse was able to avoid wounding any bystanders while defending himself during this incident.

The case in Portland, on the other hand, appears to be quite different. The counterprotests by Trump-supporting groups appeared aimed to simply antagonize and attack those in the city who have been confronting local authorities for the last several months. According to those on the scene, and supported by video, the victim appeared to fire mace at the shooter before his death. This street violence was perhaps inevitable given the months of disorder in a hyperpoliticized environment. Whether it leads to any changes in the city is yet to be seen.

These, however, are not comparable incidents. The attempt to conflate the defense of property with tribal street violence reflects the anticapitalist bias of the modern zeitgeist.

As Ludwig von Mises explained throughout his life, property rights are the foundational bedrock of not simply a liberal society, but civilization itself.

If history could teach us anything, it would be that private property is inextricably linked with civilization. (Omnipotent Government, p. 58)

Mises also noted how easy it is to whip up mobs against the property-owning classes.

Politically there is nothing more advantageous…than an attack on property rights, for it is always an easy matter to incite the masses against the owners of land and capital. (Liberalism, p. 69)

While Mises was writing in the context of government-created scapegoats, in the modern world the assault on property extends out to the ranks of academics and the corporate press. The timing of the attack on Kyle Rittenhouse made this particularly vivid, as he was instantly attached to two other media-created villains, Mark and Patricia McCloskey.

As with Rittenhouse, the McCloskeys' sin—in the eyes of the media—was their willingness to use deadly force in the defense of property rights. Their high-profile appearance at last week’s Republican National Convention made it easy for the Left to argue that the celebration of the McCloskeys' armed stand against trespassers emboldened individuals like Rittenhouse to use deadly force against rioters.

As a leading Democrat state senator tweeted:

While it’s unclear what, if any, impact the McCloskeys had in inspiring Rittenhouse and others to organize in Wisconsin, if the Left’s narrative is correct, it would make this year’s Republican Convention the very rare political event that is a net positive for the country.

The normalization of normal people standing up and protecting their property and their communities should be celebrated by those who want a free and liberal society. The widespread example of government institutions failing to fulfill this vital role in communities confronted with mob violence highlights the necessity of parallel private defense institutions to fill that void. Be it in the form of volunteer militias or professional private security, a healthy civilization cannot allow looting and rioting to go unchecked in the name of “justice.” No matter what NPR guests may tell you.

Those hostile to property rights in America today should be seen as modern-day barbarians, wanting to justify destruction under the insidious faux banner of justice. While political polling may be forcing a rhetorical pivot on this destruction from the likes of CNN and anti-Trump politicians, their sympathetic tone to this antisocial behavior should not be forgotten, nor should their desire to destroy those willing to stand in their way.  

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Big Business versus Monopoly

CNN Business reports that Exxon, which was the world’s largest company in 2013, is today being kicked out of the Dow. As CNN Business puts it, “Exxon is now a shell of its former self.” The company is losing money and its “market value has crumbled by a staggering $267 billion from the peak.”

What? That’s not possible! Haven’t we always been taught that big corporations just keep getting bigger and bigger? Don’t Keynesian economics professors all across America teach that oil companies are “oligopolies,” which enables them to raise their prices whenever they want and to make as much money as they want? Haven’t statists told us for years that it’s necessary for the federal government to break up these “big companies” because they have so much power over American consumers?

Well, if all that is true, then what’s the deal with Exxon? It was a big company. Why didn’t it keep growing?

What is happening to Exxon is just one more demonstration, among many, that no matter how big a company is, it can begin losing market share to competitors and even be driven out of business.

In a genuine free market, the consumer is sovereign. Through his buying decisions, the consumer decides which businesses are going to stay in existence and which ones are going to go out business. Those businesses that succeed in pleasing consumers with goods and services that consumers find attractive are the ones that are going to do well.

There is another factor involved here—the possibility of mismanagement or the making of bad or erroneous management decisions. That is one of the reasons for Exxon’s fall, given its heavy investment in natural gas more than ten years ago just before the price of natural gas collapsed.

Exxon’s fall goes to show that antitrust laws are ridiculous and destructive. They have no place in a free society. Bigness in a free-market system simply means that a company has pleased customers and made good management decisions. If a big company fails to please customers or makes one bad management or investment decision, it goes down.

Compare Exxon with a genuine monopoly, one that most leftists and Keynesian economics professors love—the Postal Service. It holds a privileged position in American society, because federal law protects it from competition in the delivery of first-class mail. If a private company tries to compete, a federal judge immediately orders it to shut down.

Imagine if Exxon had asked the federal government for a grant of monopoly. Why, statists would be screaming to the rafters—and rightly so. That is the type of “bigness” that is bad—because it is bigness based on government-granted monopoly privilege rather than on satisfying consumers and making sound management and investment decisions.

America should rid itself of monopolies, starting with the Postal Service, and restore a free market system to our land, one where company bigness reflects success in satisfying consumers and running a sound business.

Originally published by the Future of Freedom Foundation.

Image source:
Mike Mozart via Flickr
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The Elites Are at It Again

08/28/2020Robert Aro

Once a year, one of the most important central banking conferences in the world takes place, in Jackson Hole, Wyoming. Per the Federal Reserve Bank of Kansas City, the purpose of the two-day event is to “discuss long-term policy issues of mutual concern:”

The event brings together economists, financial market participants, academics, U.S. government representatives and news media…

Despite touting diversity, we need not look at the symposium program guide to know that Austrian economics will not even be discussed. However, “average inflation targeting” will most certainly get top billing!

In a speech that CNBC promises will be “profoundly consequential,” the mainstream news outlet explains average inflation targeting:

Simply, it means that the Fed, which has pegged 2% as a healthy level, will let inflation run higher than that for a while if it has spent a considerable time beneath that level. The Fed’s preferred inflation gauge has stayed below that level for all but two years since the Great Recession ended in mid-2009.

We can only imagine what anyone who knows about Austrian economics would say at the meeting, but of course no one with these “radical” ideas would be invited to Jackson Hole. So let’s see what those who support the Fed are saying. One pundit from CNBC expects

the Fed to “seek a moderate inflation overshoot during the recovery phase of this cycle” as a way to avert “Japanification.”

Indeed! Deflation is not the only threat to civilization. Add to the list “Japanification,” which CNBC describes as an “extended period of low growth marked by weak inflation.” The desire to avoid Japanification is ironic, considering that Japan was the first major economy to turn to zero interest rates, doing so in 2001, and then quantitative easing and negative rates, which it put in place in 2014. Neither growth nor inflation increased according to plan. Therefore the Fed is implementing a similar strategy, using the same low rates and stimulus measures. The only difference is that what failed in Japan will somehow work in America! We can only hope that the alternative to Japanification won’t turn out to be “Venezuelaficaton.”

It gets better. CNBC goes on to say:

Along with the inflation move, the Fed also, as indicated by the minutes from its July meeting, appears likely to reinforce its commitment to full employment.

And thus the Fed’s infamous dual mandate of stable prices and maximum employment will be achieved. The Fed often cites its mandate as underpinning a holistic idea of perpetual economic growth. They use phrases like “stimulate aggregate demand,” which is a fancy way to say “increase GDP in the long term,” because they see increases to GDP as good. What they won’t say is that these efforts to stimulate demand, via money creation and interest rate manipulation, cause adverse side effects.

Monetary stimulus leads to currency debasement, which destroys purchasing power, causing a rise in asset prices and increases in the cost of living. But the central bankers downplay this. All they see is the inflation data point. Even worse, they have the audacity to look at the last decade and tell us that inflation has been far too low, such that in the years ahead they must take stronger efforts to “overshoot” their inflation target. The central bankers tell us that these increases in consumer prices are inextricably linked to this notion of full employment: when the right amount of inflation meets the right amount of employment, the dual mandate will be achieved, ushering in a new era of prosperity!

It’s a daunting task to say the least. But there are still more tricks in the Fed’s toolbox, including the powerful option of Fedspeak:

To fulfill both pledges, the Fed will need to commit to keeping rates anchored near zero until the goals are met. Where the move to what it calls the “zero lower bound” had been previously considered unusual, it now will become standard practice, at least until the Fed meets its mandate.

Because “zero bound” wasn’t good enough, their new goal is to move closer to the “zero lower bound” in due course.

The world waits in anticipation to find out what central planners will think of next, but this will definitely be one to remember.

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Venezuelans Must Reject Not Just Chavismo, but Also Keynesianism and Mercantilism

There is a decision that no person, nor foreign government, can make for Venezuelans: decide how Venezuela will be after Chavismo. We think and are always asserting that our fellow Venezuelans have to reject any “kind of socialism," because if the society accepts a return to the practices and policies that were in place before the Chavez era, they will be condemned to repeat history.

The truth is that there is not a nonsocialist or nonmercantilist option in the political arena. Indeed, some self-proclaimed “classical liberal,” “right-wing,” or “conservative” options are just mercantilists, liberal socialists, or social democrats trying to disguise their real nature. This is hopeless for our relatives, friends, and anybody who still lives in Venezuela, hopes to continue living there, or who must remain and is faced with deciding whom to support. Worst of all, the only thing that is true of all those options is that to support any of them is to support the imminent repetition of the corruption, cronyism, and bad policies of the past.

Neither a quick and painless international military operation nor a long, painful, and corrupt “democratic” negotiation to overthrow Maduro will be enough if people allow Juan Guaido and his comrades to apply the socialist agenda called “Plan País.” Keeping the status quo—a central bank, a minimum wage and other laws that increase the cost of starting a business, economic controls, barriers to international trade, state ownership of the commanding heights, and a high level of fiscal independence from the government—will not solve the problem forever.

We understand that eradicating tyranny would solve, in the short run, great problems for other countries, such as a massive and increasing migration, and for Venezuela, such as access to basic goods and services. Nevertheless, these solutions would just be short lived. Many of those more than 10 million Venezuelans living in other countries would not return, and all the economic, social, and political problems would arise in the middle to long run in a scenario like this. Why? Because, as in the past, the system that Guaido and his comrades propose will collapse at any moment and a new and stronger "kind of Chavismo" will grip the country once again and jeopardize freedom and stability in the region.

The GDP per capita has been widely criticized as an index of quality of living. Notwithstanding, we will use it to support our argument that the social democratic era paved the road to harder socialism like Chavismo with its policies. The following graph shows the average income per capita of Venezuelans:

After a great and sustained period of economic growth (1950–57), Venezuelans enjoyed an average income of $8,400 (in 2011 US dollars). Immediately after the social democracy started, Venezuelans suffered a decrement in their incomes, and by 1963 they had incomes similar to 1953 levels. Nevertheless, from 1964 incomes started to increase, achieving their highest level in 1980, of around $10,500. After that year, incomes started to plummet, reaching around $6,400 in 1998, when Chavez won his first election. Strictly speaking, Venezuela passed the 1957 threshold during just fifteen of the forty years of the social democratic era. The maximum incomes represented 124 percent of the 1957 incomes, but the social democracy era closed with an average income of just 76 percent of 1957 levels, which is almost the same income that Venezuelans had in 1951. Then, Venezuelans suffered a sustained and continuous impoverishment process, one of the reasons they trusted the radical and harder socialist promises of Chavez.

From this graph, we can extract many undesirable truths. For example, not even with Maduro did the average incomes decrease as much as they did during the social democratic era. We are not saying that Chavismo has been better than social democracy (in fact, to us Chavismo is its offspring). We want to remark the unfeasibility of the “Plan País,” which is just an extension of a failed plan called “El Gran Viraje” (the great turn) that was in place from 1989 to 1993; even in that period the failure of such Keynesian policies is evident.  Chavismo and social democracy have relied on oil prices, and you can see high instability and volatility in the graph for that reason. Plan País would be funded and supported with oil and international debt. Despite the fact that poverty was increasing before Chavez, there was not the great problem of scarcity and the humanitarian crisis that we see today. People should understand that these problems are the symptoms and what we have to eliminate is the bacteria that causes them. That is socialism.

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