Power & Market

Janet Yellen Needs to Brush Up on Her ABCT

09/19/2023Doug French

“I am feeling very good about that prediction,” Treasury Secretary Janet Yellen told Bloomberg when asked whether the U.S. would avoid a recession while still containing inflation. “I think you’d have to say we’re on a path that looks exactly like that.”

Tell that to the 39,000 Americans who filed bankruptcy in August. That number is an 18% increase from a year ago and with unemployment now just 3.8%, imagine when more people are laid off with over $1 trillion in credit card debt outstanding.

At the same time commercial bankruptcies increased nearly 17% in August compared to July, reports Fortune.com, marking the 13th consecutive month that total bankruptcies, including families and individuals, have logged year-over-year increases, according to the American Bankruptcy Institute.

Chapter 11 filings surged 54% from the same month from a year ago. US bankruptcy courts recorded six new, large filings ($50 million +) last week alone. At least 23 big filings happened last month. The jump in business failures, especially for big firms, is clear, Ed Flynn, a consultant with ABI who studies bankruptcy statistics told Fortune. “I think a lot of it is interest rates,” said Flynn. “There have been an unusually large number of large cases.”

If that’s the case more bankruptcy filings are on the way. The September 11th treasury note auction produced the highest yield since before the great financial crisis, 4.66%. 

“Treasury yields also have also been pushed higher by growth in the supply of new notes and bonds to finance the US government’s widening budget gap. The three-year tenor increased by $2 billion this month and last month,” Elizabeth Stanton reported for Bloomberg.

If Secretary Yellen was familiar with the Austrian Business Cycle Theory she’d know the ongoing increase in interest rates means the landing will not be just hard, but historic in its brutality.

JLS: Are Pay Equity Policies Justified?

09/19/2023Bruce Gilley

ABSTRACT: This article identifies the lack of policy analysis as a major research gap in pay equity policies. Applying a policy analytic approach, the article applies comparative empirical evidence to the tasks of problem structuring and policy prescription as well as to three different evaluation methods: effectiveness, cost-effectiveness, and benefit-cost analysis. The results show that pay equity policies lack fundamental justification as public policies. Implications for research and policy revision follow.

Read the full article at the Journal of Libertarian Studies. 

Javier's Milei's Populist Strategy in Argentina Is Working

09/14/2023Philipp Bagus

The Austro-libertarian movement has the better ideas. They continue to be discussed, elaborated, and intellectually defended. But how can the right ideas be implemented? What good is it to be right if the reality is left-wing? In fact, most of the population, or at least public opinion, seems to be drifting further and further to the left, with cancel culture, climate hysteria, a sprawling welfare state and ever higher taxes and levies.

The right ideas and theories are there, but they have not yet been put successful in practice. How can this be changed? Of course, ideas are important, they must also be disseminated, from below, from the grassroots up. It's an arduous process. And there has been undeniable progress in recent years. Nevertheless, the left-wing zeitgeist is rolling over the freedoms of citizens almost unhindered; most shockingly during the Covid crisis. The left tries to paint anyone who stands in the zeitgeist´s way as an extremist or even a Nazi.

Against this background, what can a successful strategy look like? Murray Rothbard addressed this question in an article in the Rothbard-Rockwell Report entitled Right-Wing Populism: A Strategy for the Paleo Movement. His contribution is groundbreaking and forward-looking. He anticipates the successes of Donald Trump in the United States and, more recently, of Javier Milei in Argentina.

Javier Milei is making a splash on all sides, because on August 13, 2023, he won the primaries for the presidency in Argentina. In the German media, he is described as ultra-right and ultra-libertarian. Recently, the Financial Times dealt with the self-confessed anarcho-capitalist in a column, in which the author insinuated that the libertarian Milei would follow the strategy of right-wing populism designed by Murray Rothbard in 1992. This gives rise to the question if that claim is true and what exactly is this right-wing populism?

According to the paleo-libertarian Rothbard, the program of right-wing populism includes 8 main points:

  1. Radical tax cuts
  2. Radical reduction of the welfare state
  3. Abolition of privileges for "protected" minorities
  4. Crushing criminals
  5. Getting rid of bums
  6. Abolition of the Federal Reserve
  7. A program of America First (anti-globalist and isolationist)
  8. Defending traditional family values

Indeed, Milei's election manifesto is very much in line with Rothbard's right-wing populism and paleo-libertarianism. Milei wants to radically reduce taxes. He never tires of calling taxes what they are, theft. He also wants to radically grind down the welfare state and likes to illustrate the reduction in government spending and his proposal of reducing Argentinian ministries from 18 to 8 with a chainsaw. His "Chainsaw Plan" is intended to radically trim the state.

Milei repeatedly speaks of equality before the law as a fundamental liberal principle and wants to abolish privileges for minorities. As a result, he repeatedly clashes with radical feminists who defend legal privileges for women.

The imprisonment of criminals is also on Milei's agenda. Gun freedom is in his program so that victims can defend themselves against criminals. Those who refuse to work are no longer supported by the state in his Argentina.

Milei also has the 6th of Rothbard's points in his agenda: Milei wants to abolish the central bank of Argentina. Using right-wing populist rhetoric he aims to physically blow up the central bank. In doing so, he would wipe out the power of one of the most inflationary central banks, which willingly financed all Peronist and Kirchnerist spending programs. He wants to dollarize the country and open it up to currency competition.

Milei also puts his own country first: Argentina first. Right-wing populism opposes the globalist agenda. It cuts development aid, climate programs and military adventures. Milei likes to point out that Argentina was one of the richest countries in the world at the beginning of the 20th century thanks to classical liberal policies and was destroyed by socialism in the 20th century. In 35 years, Milei promises, Argentina can be a superpower again. The prerequisite for this to happen is a return to libertarianism.

Finally, Milei also defends traditional family values and opposes the state takeover of family responsibilities. The vehement opponent of abortion has defended the right to life several times in debates with radical feminists.

Milei used to be chief economist at various institutions and a professor of economics. He is a follower of the Austrian School of Economics. One of his dogs is named Murray. He contributor a chapter two-volume Festschrift in honor of Jesús Huerta de Soto edited by David Howden and myself. A couple of years ago he was guest via zoom in my seminar in our Master's degree in Austrian Economics that we offer in Madrid, and spoke about his strategy.

In short, Milei is one of us. And he can win the election. He can become president of Argentina. An Austrian. An anarcho-capitalist. With an openly radical libertarian election program. In a country that has paid homage to socialism for decades. Amazing.

Milei has been very present in the public debate in Argentina for years. He gained fame as a polarizing and fiercely arguing talk show guest. Later, he decided to create his own party to lead the culture war against socialism and statism more effectively and to bring the right ideas to more people.

His rhetorical strategy in debates is vociferous, belligerent, and is sometimes perceived as offensive (if the truth can be offensive at all). He does not allow himself to be intimidated or belittled by left-wing opinion-makers. In a debate, he simply shouts louder than the leftists, whom he calls "Zurdos", and interrupts them to tell them to their faces that they are saying an absolute stupidity and have no idea what they are talking about. You should read Hayek, Mises and Rothbard first, Milei recommends to them. He also calls leftists and politicians parasites and thieves, in a debate. For taxes are theft. 

In keeping with Rothbard's strategy of right-wing populism, he clearly names the profiteers of the state apparatus. He rails again and again against the caste of politicians and bureaucrats. He calls them parasites that live at the expense of the hard-working and decent citizens. Politicians are completely useless and could not live without the productive Argentinians. Politics is not the solution, but the problem. And politicians form part of the problem. In this way, Milei wins over those decent Argentinians who suffer most from the yoke of the state. Equally clear are his remarks on the concept of social justice. So-called social justice is a monstrous injustice because it means unequal treatment of people before the law. It is a fig leaf for envy and resentment.

Milei's emotional and polemical nature resonates with many, especially among young people. After winning the primaries in mid-August, he has legitimate hopes for the Argentine presidency.

Milei's successes have become a topic of everyday conversation, especially in the Hispanic world. One speaks of Milei with astonishment and appreciation. Acquaintances and friends send short videos of his rhetorical gems. Libertarian ideas are back in vogue. People are venturing forward with libertarian opinions, everywhere and unexpectedly. The window of public and permissible opinions is shifting in the direction of freedom. Thanks to Milei.

Regardless of whether the charismatic Milei ultimately wins the election, his campaign has sparked a young and powerful libertarian movement. His triumph in the primaries may be more significant than the Ron Paul Revolution of 2008 and 2012. The incredible fact is that he is successful. With a right-wing populism that Rothbard recommended, in a run-down country, with his charismatic personality, with aggressive rhetoric. Nothing is impossible. Even a libertarian can win a democratic election. It's the strategy that counts. ¡Vamos Javier! ¡Viva la libertad, carajo!

Image source:
Ilan Berkenwald via Flickr

JLS: Should the State Prohibit the Production of Artificial Persons?

ABSTRACT: This article argues that criminal law should not, in general, prevent the creation of artificially intelligent servants who achieve humanlike moral status, even though it may well be immoral to construct such beings. In defending this claim, a series of thought experiments intended to evoke clear intuitions is proposed, and presuppositions about any particular theory of criminalization or any particular moral theory are kept to a minimum.

Read the full article in the Journal of Libertarian Studies. 

JLS: José Osvaldo de Meira Penna on Brazil's Paternalistic State

ABSTRACT: The purpose of this article is to investigate the intellectual influences of José Osvaldo de Meira Penna’s arguments on the origins of the Brazilian paternalistic state. As a classical liberal, Meira Penna is easily connected to different schools of thought such as the Chicago, Virginia, and Austrian schools. In his book, O dinossauro, Meira Penna argues that Brazil’s paternalism stems from past constructivist ideas that were imported into the country. Meira Penna’s arguments display influence from different schools of thought; however, most of Meira Penna’s arguments demonstrate a clear influence from the Austrian school. Meira Penna’s critique of constructivism and call for the formation of a spontaneous order support the conclusion that Friedrich Hayek has had the greatest influence on Meira Penna’s critique of the Brazilian paternalistic state. In the history of ideas, O dinossauro is best understood as a robust Austrian critique of the Brazilian Leviathan.

Read the full article in the Journal of Libertarian Studies.


JLS: Taxation and Forced Labor—The Two Bodies of the Citizen in Modern Political Theology

New from the Journal of Libertarian Studies:

ABSTRACT: This article will show that there is nothing innocent about taxation. While coercion had various and rather ruthless forms in premodern times, with the birth of the state, the expansion of taxation has increasingly become the repudiation of a visible brutality. The Enlightenment period marks the beginning of the fiscal state, an impeccable marriage of modern rationality and new forms of control. Tax imposition rendered political exploitation less painful, but at the same time, it inaugurated an expansion of dominion over individuals and society unparalleled in history. Taxation was the decisive cause of Rome’s downfall. After almost two millennia, Western civilization could implode again and for similar reasons, but the veil of ignorance of modernity will render it impossible for people to comprehend how it happened and why.

Read the full article in the Journal of Libertarian Studies. 

JLS: Rejoinder to Thommesen on “Stealing” from Thieves

08/14/2023Walter Block

From the Journal of Libertarian Studies, edited by David Gordon.

ABSTRACT: Is it possible to “steal” from a thief? Rothbard (1969) and Block (2018a, 2018b) maintain this to be an utter impossibility. In their view, one can only “liberate” the ill-gotten gains of the robber. In contrast, one can indeed steal, but only from the rightful owner of the property in question. Thommesen (2020) defends the opposite point of view; that one can indeed steal from a thief. He uses this perspective in criticism of Rothbard and Block. The present paper is an attempt to refute Thommesen’s critique of these two other authors.

Read the full article at the Journal of Libertarian Studies. 


Joseph T. Salerno on Murray Rothbard, Demagogic Politics, and the Austrian Economists with ISI

Dr. Joseph Salerno recently joined Tom Sarrouf on the podcast Conservative Conversations with ISI, a product of the Intercollegiate Studies Institute.

In this episode, they discuss Murray Rothbard’s political and economic thought, why a demagogue is necessary for the masses to re-establish control over their government in the age of social democracy, and a primer on the economic theory of the Austrian economists, as well as their underlying anthropology and praxeology.

Listen to the episode here

Jamaica's Uncertain Political and Economic Future

03/13/2023Lipton Matthews

Lisa Hanna has indicated her desire to exit the political landscape, but this could turn out to be a major tragedy for Jamaicans. Although her tenure as Culture Minister in the previous PNP (People’s National Party) administration was controversial, Hanna has redeemed herself with a slew of captivating proposals published in Jamaican dailies.

Unlike her peers who pander to tribal constituents, Lisa Hanna is one of the few politicians trumpeting issues that people find relevant. In her articles, Hanna discusses complex issues in a simple manner to empower the average person. Recently, Hanna pointed out that complying with the know your customer (KYC) policy of banks can be quite taxing for clients who endure the hassle of providing proof of address, financial statements, references, and other documents. Such measures are consistent with anti-money laundering regulations, though they hurt the poor according to a 2012 World Bank report. 

 Despite the popularity of AML regulations, they fail to put a significant dent in money laundering and erect barriers for working-class people to participate in the financial market. Many self-employed people desire a business account; however, they are unregistered, indeed they can choose to register, but being unregistered should not prevent them from opening an account. Hanna and average Jamaicans find it disconcerting that ordinary people must comply with onerous regulations, yet financial companies can ignore red flags without penalties. Moreover, these policies are not always enforced because a colleague opened a bank account with relative ease due to banking connections. 

The truth is that AML requirements are crafted by developed countries and imposed on Caribbean countries even if they are inapplicable in a regional context. But luckily, citizens in developed countries are not enslaved to such regulations, because some American institutions don't require financial statements or character references to open accounts. So, there is no reason to think that Jamaica can't adopt flexible options. We should find it hilarious that politicians in both parties like to protest neo-colonialism, but only a few like Lisa Hanna are willing to confront real oppression. On another note, Lisa Hanna is embracing free market economics rather than battling for protectionism.

Speaking in parliament Hanna informed the public that the national import substitution policy has only enriched a few by creating monopolies. Hanna instead recommends improving productivity and human capital to boost agricultural production. Hanna's arguments are corroborated by a 2017 paper in the Review of Economic Perspectives that observes a link between trade openness and economic growth. The savings derived from imports are immeasurable so only fools will purchase inferior products and expensive products because they were manufactured in Jamaica.

Build Jamaica, Buy Jamaica is a nonsensical slogan and it's great that Hanna prefers economic reasoning to ignorant nationalism. Leader of the Opposition Mark Golding and Prime Minister Andrew Holness can continue to boast that they are committed to the poor, however, Hanna appreciates that entrepreneurs and innovators will propel the country into the future rather than poor people. Instead of loving the poor, she prefers to equip them with the tools to compete on a global scale. Undoubtedly, Lisa Hanna is the free-market champion Jamaica needs to be a powerhouse and she must reconsider retiring.

Jefferson Was Right: The SOTU Address Should Be Written, Not Spoken

02/14/2023Ryan McMaken

The absurdity of those State of the Union Speeches. Like many political traditions accepted as unchangeable or timeless by Americans, the State of the Union Speech is neither required nor wise. First of all, the constitution merely states that the president "give to the Congress Information of the State of the Union, and recommend to their Consideration such measures as he shall judge necessary and expedient." It doesn't say anything about this information being conveyed in a speech. Naturally, Washington gave these addresses as speeches because he liked that sort of thing, and Adams used speeches because he was obsessed with the pomp of government power. 

Thomas Jefferson, on the other hand, realized that no such speech was necessary. Instead, he opted for written statements. His first "annual address," as it was called back then, was delivered to the Congress via a clerk.  In the letter below, Jefferson explains that a written letter is better because it is more respectful of everyone's time, and it allows for proper reflection before a response is made:

Letter to the President of the Senate and to the Speaker of the House of Representatives Regarding the President's Annual Message

December 08, 1801


SIR: The circumstances under which we find ourselves at this place rendering inconvenient the mode heretofore practiced of making by personal address the first communications between the legislative and executive branches, I have adopted that by message, as used on all subsequent occasions through the session. In doing this I have had principal regard to the convenience of the Legislature, to the economy of their time, to their relief from the embarrassment of immediate answers on subjects not yet fully before them, and to the benefits thence resulting to the public affairs. Trusting that a procedure rounded in these motives will meet their approbation, I beg leave through you, sir, to communicate the inclosed message, with the documents accompanying it, to the honorable the Senate, and pray you to accept for yourself and them the homage of my high respect and consideration.


We know from other sources that Jefferson thought it was dangerous for the president to provide a "big speech" to Congress because it made it him look like a monarch. This is a reasonable concern since it was a tradition in the monarchies of Europe for the reigning monarchs to deliver a "speech from the throne" in which the monarch would preside over parliament and deliver a speech surrounded by much ceremony. Having such a speech might also send the message that the president somehow calls the House and Senate into session, as many monarchs did with their parliaments. The US president does no such thing, however, and he does not preside over either the House or the Senate. He is president of the executive branch only. He is commander-in-chief of only the armed forces. 

Unfortunately, the lack of quasi-religious rites promoted by Jefferson didn't catch on.  It is now more apparent than ever that far too many Americans delight in having an earthly king to either lionize or despise, and to which to direct some sort of emotional connection. Lacking the self-disciple or stamina to provide his own life with meaning or gravitas, this sort of American needs to watch empty ceremonies of pageantry with politicians which make the viewer— watching from home in his sweat socks and short pants—feel as if he is part of something important.  

Fortunately, however, the internet has made it much easier to just read the transcripts of a president's vapid speeches as soon as they are delivered. Those who have better things to do, if they are interested, can simply skim the speech text in minutes, rather than wasting more than an hour of valuable time that could be spent raising children or tending to one's community. 

Of course, if one insists on watching the speech, the best one can hope for—as recently explained by Jim Bovard—is a refreshing lack of decorum.