Power & Market
Last June, Arkansas resident Nicole Harper was driving near Jacksonville, Arkansas when Arkansas State Police trooper Rodney Dunn pulled in behind her and signaled to her to pull over.
Nicole Harper then did exactly what the Arkansas Driver License Study Guide tells drivers to do: she slowed down, put on her hazard lights, and looked for a safe place to pull over. Since the highway shoulder was very narrow at that location, Harper began to drive toward a exit ramp.
But although she did what she was supposed to do to "comply," she didn’t comply fast enough for trooper Dunn. Within two minutes of flashing his lights, Dunn used a so-called “PIT” (precision immobilization technique) to cause Harper’s car to spin out and flip over.
Dunn rammed his front bumper into the left rear edge of Harper’s car. Harper, who was pregnant at the time, then careened across three lanes of traffic and flipped over.
Dunn then approached Harper’s car and informed her that she got what she deserved, stating that because she didn’t stop fast enough, “this is where you ended up.”
Harper is now suing Dunn and other members of the Arkansas State Police for “negligently” using a PIT maneuver which put Harper’s life and the life of her unborn child at risk.
Naturally, rather than admit the officer acted rashly in response to what was a “textbook” and recommended response to a police traffic stop, the State of Arkansas will now use taxpayer funds to fight the lawsuit in court.
State police claim that Harper chose to “flee” and that she was a danger to other drivers. Of course, many rational people viewing the dashcam footage of Dunn’s actions could just as easily come to the conclusion that by flipping Harper’s car, it was Dunn who was endangering the public.
Harper’s attorney correctly notes that Dunn chose to use deadly force against a pregnant woman who was in the process of slowing down and looking for a safe place to pull over. Moreover, it is unlikely that Dunn had any knowledge of who was in the car, and whether or not small children were inside.
Unfortunately, this is just the latest case of police employing deadly force on citizens in the process of complying with police orders. For example, in the case of Philandro Castile—who did exactly what he was supposed to do as a concealed-carry driver—was shot dead while complying with police orders. And then there was the case of Atatania Jefferson, who was shot dead in her own living room without even being given the chance to comply. One might also consider the case of Phillip White, a 77-year-old, 140-pound blind man whose face was slammed into a ticket counter by police because he wasn’t complying fast enough with police orders. White was already handcuffed at the time.
In the Arkansas case, Harper's lawsuit is unlikely to have any personal effect on Dunn who, in accordance with Arkansas law, enjoys immunity from any personal responsibility for his actions. Dunn, who has received a taxpayer-funded government salary for more than thirty years, enjoys immunity from any personal liability in virtually all cases.
In a 30 minute lecture for the Research Platform on Economic Thought, Dr. Per Bylund looks at the history of the Austrian School and its future prospects in academia and beyond.
The current debate on whether schools should be reopened or not is not just a debate on the safety of children. It should also be a debate on how much freedom we want to give to parents to pick a school best fitted to their children’s needs. The idea of school choice, that parents should have a choice on where to send their children to school, coupled with a voucher program, is paramount in taking back education from the bureaucrats in state capitals and in Washington, DC, which has become dependent upon the approval of the powerful teachers' union.
The covid pandemic has further exasperated the undue influence of the teachers' union on how education is to proceed in the near future. Parents of school-aged children have in most cases few choices when deciding on proper schooling for their kids. A growing trend among concerned parents is homeschooling (see a recent Mises Wire article by Joanna Miller). Homeschooling is the type of individual instruction envisioned by Murray N. Rothbard in Education: Free and Compulsory. Homeschooling may be the answer for some, but many families cannot afford homeschooling or simply feel not comfortable or prepared to homeschool. In the absence of individual instruction, schools developed to alleviate the cost of individual tutoring. The next best alternative option is private schools. Private schools in a free market will develop different types of schools for each type of demand.
Since the pandemic, private schools have seen an increase in applications across the country. However, the economic cost of homeschooling or private schools can be prohibitive. One issue with homeschooling and private schools is the issue of property taxes paid for services not taken. Property taxes have to be paid whether or not children attend the local school and many parents do not have the financial resources to double pay for education. As a consequence of the pandemic, private schools have become more attractive for rich parents across the country in trying to avoid school shutdowns.
The next-best solution is the expansion of school choice. First, school choice or a school voucher program would take back the power from the school administrators and teachers' union by forcing school administrators to have “more skin in the game,” as Hoppe recently pointed out in a Mises Wire article on the lockdown. Currently, teachers’ and school administrators’ salaries are funded through compulsory taxes that are secured in the short and medium term. Relying on compulsory taxes frees schools from the consequences of their actions like closing schools due to the perceived danger of the virus. School funding through property taxes, which, unlike income and sales taxes, vary with the economy, provides school districts with a more recession-proof source of funding. In a pandemic with government shutdowns that cripple the economy with often devastating effects on local public finances, school districts are much more immune to the consequences. This lack of a direct link between school performance and funding does not encourage a responsive educational system. As a result, teachers and school administrators have fewer incentives to open up schools. In addition, public choice theory says that the competition among local government units will limit local government power; however, school districts, and in particular large consolidated school districts, do not have much competition. The previous successful consolidation in effect removed the competition, allowing many school districts monopoly power.
Parents, in turn, may have only one choice, move to another school district that is more favorable, but such a move will come with a steep price in the form of social costs (losing friendships, etc.) and transaction costs (real estate commissions and transfer taxes). In addition, in large urban consolidated school districts the choices of competitive school districts may be relatively small or requiring a further move outside the school district’s boundaries. Nowhere is this more evident than in school districts in large urban centers with a consolidated school district, such as Chicago and Los Angeles, which have resisted the longest in opening schools. Parents should demand an expansion of school choice, which would make school administrators more responsive to the needs of parents and children.
A second advantage of an expansion of school choice is better matching of needs. School choice would allow parents and teachers to be better matched in terms of intelligence, aptitudes, and interests as well as modes of teaching in the current pandemic. Concerned parents and teachers can be matched in a purely online school, while parents and teachers having seen the statistics and reports by the CDC that face-to-face education does not pose a threat will be able to be matched for in-person education. An expansion of school choice would give parents more power to ensure a high level of education that meets their needs. School choice levels the playing field between parents and school administrators and teachers' unions in incentivizing a more student-centered approach to school opening.
In summary, the covid pandemic makes it even clearer that we need more school choice. In the absence of the ability to provide individual instruction and of more private schools, school choice is the second-best option in the current system. In the long run, more private schools would solve the problem, but for now, it is time to take back education and have the ballot of the market determine who have best served the needs of our children.
Emma Corrin has won the Golden Globe Award for Best Actress in a TV Series for her portrayal of Princess Diana in Netflix’s The Crown.
Confusingly, Miss Corrin rejects the use of the term “actress,” like so many left-wing luvvies.
That didn’t stop her accepting the award, of course.
What’s the rationale for eliminating the word “actress”? Well, UK newspaper The Guardian explained in its 2010 style guide that it is sexist to distinguish between genders when referring to professions, as it harks back to a "time when professions were largely the preserve of one sex (usually men)."
But isn’t it a bit disconcerting to refer to an actor winning the Best Actress award?
What if I told you that it is supposed to be disconcerting, bamboozling, and alienating?
You see, politically correct language doesn’t follow a clear logic. Instead, it is designed to simply be contrary to common practices.
It is a signaling mechanism to separate the “insiders” from the “outsiders.”
I realized this after moving to South America and becoming proficient in Spanish—a long and painful process, as I didn’t start until I was twenty-four, by which point I had lost the brain plasticity of childhood.
I was disappointed to find that the “woke” politics of intersectionality had made the journey from the English-speaking world to South America long before I touched down in January 2018.
However, when it comes to politically correct language, social justice warriors (SJWs) south of the Mexican border have not been able to simply copy the US’s handbook. Clearly, the peculiar mandates of “newspeak” cannot be mapped precisely from English onto Spanish, which is distinct in its vocabulary and grammar.
In fact, on the question of gender-neutral professions, Spanish-speaking SJWs have had to take precisely the opposite stand.
In Argentina, the socialist vice president Cristina Kirchner made headlines in December 2019 when she called an opposition party senator sexist for not using a feminized title.
In Spanish, most nouns signal male or female by ending in o or a, respectively (a male doctor would be el médico, a female doctor la médica).
However, presidente is one of those rare nouns that does not have a gender, and so—following the logic of politically correct speech in English—you would imagine that followers of “woke” politics in Argentina would be happy about that.
But no. Vice President Cristina Kirchner instead demanded that an a ending be substituted and called her colleague a sexist when he protested at this bastardization of the Spanish language.
He eventually conceded: “Perdón, presidenta.”
Could there be any clearer example that new-fangled, politically correct speech is just an arbitrary signaling mechanism? They want to watch you struggle through the growingly treacherous lexical quagmire.
And if at any moment you should trip and fall, you’ll be revealed for the outsider that they always knew you were. Maybe you’ll even get “canceled” if you’re unlucky enough to work for an organization that has capitulated to these unthinking bullies.
My advice? Learn a foreign language. Bilingual brains are less malleable to “newspeak,” as they see the inevitable inconsistencies created by a system of arbitrary verbal diktats, which cannot be neatly imposed on distinct lexical and grammatical structures.
In addition, psychologists have found that people who learn a second language are less susceptible to emotional manipulation in that language, as they have less of an emotional connection to the words. (This is easily demonstrated by thinking about how swear words in foreign languages do not evoke feelings of offense.)
So, get on a language-learning app. And let’s all raise a glass to Miss Corrin, a skilled actress and deserving winner of her Golden Globe.
Professor Philipp Bagus has published a remarkable article making the case for developing a political economy to help us understand the 2020 coronavirus and similar events prone to mass hysteria.
The article, titled "COVID-19 and the Political Economy of Mass Hysteria,"1 appears in the International Journal of Environmental Research and Public Health. Happily, it is available online in full from the Swiss outfit MDPI (which is committed to open access scholarly publishing in the face of lingering and absurd twentieth-century paywalls for most academic journals). Bagus, along with coauthors José Antonio Peña-Ramos and Antonio Sánchez-Bayón, argue that digital media effectively boosts and weaponizes information provided by authoritative state sources in times of crisis.
The invocation of "public health" tends to suspend the public's capacity for disbelief; after all, who wants to be sickened by an illness which respects no borders or strata of society? And why would politicians or media figures lie about a strange new virus emanating from China? It also tends to suspend the public's objections to plainly illegal or dubious extralegal measures, such as business closures and school shutdowns. It makes us forget about tradeoffs and alternatives, at least temporarily, because life, or at least our health, is at stake. This is especially true in the early months of a crisis, what we might call the "fog of war."
But as Bagus and company make clear, political and economic realities do not magically vanish during a pandemic. In fact, the enduring tensions between economics and politics loom ever larger when states take aggressive steps to keep citizens at home and substitute fiscal or monetary stimulus for economic activity. Public health and the broader welfare state—especially public healthcare systems—cannot be neatly separated. And the bigger the government, the more profound the magnitude of policy errors. Politicians, per Hans-Hermann Hoppe, have an everlasting tendency to think short term by their very nature. And they are at their worst when emergency powers are seized from a willing public uninterested in legislative processes.
Bagus's framework for the political economy of covid emerges when we begin to understand the politics and the economics realistically and in tandem. Mass hysteria imposes tremendous costs across society, both in human and economic terms. Tradeoffs cannot be avoided, even if they are not much discussed in popular media. Alcoholism, suicides, untreated illness, and vast psychological harms all must be considered in addition to the staggering and almost unknowable financial costs of lockdowns. Hysteria makes it all worse. The paper identifies political institutions, politicians themselves, and media actors as having colluded to intensify the degree of hysteria in society over covid during the past year:
- States banned or limited activities like dining, sports, and socializing;
- States approached the perceived threat from the virus in a centralized way;
- Heavily politicized and state-licensed media tended to promote viewpoints provided by government officials;
- Negative news stories were bolstered when provided by seemingly authoritative public health officials;
- Politicians may well haved benefited by instilling fear in the population; and
- Politicians had every incentive to overstate the threat of the virus, as they don't bear the costs
The close nexus between political actors and dominant media platforms creates a ripe environment for covid hysteria simply because the incentives and tools are so suited to it. As the authors put it:
Self-interested politicians face an asymmetric pay-off. Underestimating a threat and failing to act has great political cost, as politicians will be held responsible for the disaster caused by the threat they underestimated. By contrast, an exaggeration or even invention of a threat and bold state intervention are politically more attractive. If the existential threat claimed by politicians really turns out to be such a great danger, they can be celebrated as heroes if they enacted bold measures. If the costs of these measures ultimately turn out to be excessive compared to the actual danger, then the politicians do not have to bear the cost of the wrong decision but can pass it on to the rest of the population. Politicians enjoying a guaranteed income therefore have an incentive to exaggerate a danger and to impose exaggerated measures, also called policy overreaction, which is conducive to the emergence and growth of mass hysteria.
In sum, property rights tend not to be effective limits in curbing mass hysteria in a welfare state. Moreover, the state may inhibit the natural mechanisms that reduce stress and hysteria. The centralized nature of the state increases group and conformity pressures. Politicized mass media and negative messages from official state agencies can further increase psychological pressure. Finally, the state may intentionally want to increase anxiety, and politicians have the incentive to make bold decisions and exaggerate the threat.
Big government and big media go hand in hand, hence the public overreaction to covid. After all, collectives by their very nature do not allow for a variety of viewpoints or approaches to problems. Bagus and his coauthors have given us a wonderful and original exposition, a new way of looking at Edward Bernay's old concept of "manufacturing consent." They have also given us the solution: market incentives, property rights, and decentralized mechanisms for discovery. Top-down statecraft cannot produce competition for solutions, but instead acts as a blunt and inefficient instrument of bad policy.
Or as the authors state, "there exist important limits for a mass hysteria to harm life and liberty in a minimal state."
- 1. Philipp Bagus, José Antonio Peña-Ramos, and Antonio Sánchez-Bayón, "COVID-19 and the Political Economy of Mass Hysteria," International Journal of Environmental Research and Public Health 18, no. 4 (2021): 1376, https://doi.org/10.3390/ijerph18041376.
Pennsylvania’s Acting Secretary of Health Alison Beam said in a press release on February 12 that only four groups are allowed to handle distribution of Covid-19 vaccines going forward: hospitals, federally qualified health centers, county health departments, and pharmacies in effect shutting out primary care doctors from Covid-19 vaccine distribution. In response, the Pennsylvania Academy of Family Physicians, Pennsylvania Osteopathic Medical Society, and the Pennsylvania Chapter of the American College of Physicians (physician group) collectively expressed disappointment in the Acting Secretary of Health’s misguided allocation changes to the state’s COVID-19 vaccination distribution plan, removing primary care providers from the list of those permitted to administer the COVID-19 vaccine.
Their press release states:
Without sound justification and demonstrating a lack of understanding in the way most Pennsylvanians receive their health care, the Administration is making a woeful mistake by cutting out primary care physicians as eligible providers.
Justifying her action acting Secretary Beam said.
“As there is very limited COVID-19 vaccine supply compared to demand, every possible effort must be made so that the vaccine received in the commonwealth is effectively administered. To achieve this goal, I am issuing an order outlining appropriate steps and recognized best practices to ensure vaccine providers are effectively meeting the goal of vaccinating Pennsylvanians and creating a healthy Pennsylvania for all.”
While acting health secretary Beam’s intention of making use of every dose of the Covid-19 vaccine is commendable, what is so puzzling about this decision is the inconvenient fact that one of the most successful vaccine rollout by percent of people vaccinated is in the neighboring state of West Virginia. West Virginia, a small and mostly rural state with a large elderly population, quite similar to Pennsylvania in many aspects, showed how to roll out Covid-19 vaccinations successfully. West Virginia is now being hailed as a vaccination success story, with 85 percent of its delivered doses already used, according to data from the Centers for Disease Control and Prevention, putting it second in the country behind North Dakota. A key part of the strategy in West Virginia was the decision not to activate a federal partnership with pharmacy chains and instead relying on independent drugstores.
Dr. Clay Marsh, West Virginia's coronavirus czar and vice president and executive dean of health services at West Virginia University may have read some articles from the Mises Institute when he states “But we absolutely rely on the creativity and the innovation of all of our people. Because we don't want to rely on external resource requirements for us to be able to do what we need to do.”
Primary care physicians have plenty of experience administrating immunizations across a wide range of age groups. They are in the business of connecting and caring for people at the local level on a daily basis. They are best equipped to pull up a list of patients who qualify for the Covid-19 vaccine at each phase of the rollout. But with the new order by the acting health secretary Beam, primary care physicians are being sidelined. West Virginia has shown that good personal contact is key to the whole effort. Most people in rural areas would rather get vaccinated by their doctor that they know and trust than by large impersonal semi-governmental vaccination centers. According to the Pennsylvania Department of Health the list of approved vaccination sites will shrink from about 780 providers statewide to only 200 to 300 that will continue receiving doses from the state.
In their press release the physician groups conclude:
Many people will turn to their primary care physician for guidance as to whether they should get the vaccine. Physicians, nurses, and physician assistants who provide care in private practices are trusted by their patients. This is especially noteworthy when considering those patients who may otherwise be reluctant to get the vaccine. A pharmacist or other provider who is unknown to the patient will not be able to provide that same level of confidence. Additionally, many older Pennsylvanians may believe that they will receive the vaccine in their primary care physician’s office. The new order creates yet another hurdle for a demographic who is already struggling with navigating the vaccine distribution landscape.
A main reason and good reason for the change in policy is to ensure all vaccine doses provided are administered and not wasted. However, on February 17th acting health secretary Beam had to address a major vaccine snafu when COVID-19 vaccinations for up to 115,000 Pennsylvanians have to be rescheduled. According to Beam, the Moderna vaccine was inadvertently administered as the first of the required two shots when the serum was earmarked for the second shot instead. Pharmacies often don’t have more than a day’s notice about shipments, which complicates scheduling people for vaccinations. Each vial of the Moderna vaccine has 10 doses, and once the vial is open, the vaccine lasts only five hours. After five hours the vaccine has to be discarded, only a minority of primary care physicians can manage the logistical challenges of such a strict timeline.
Another reason for the change by acting health secretary Beam and an order by Governor Wolf is to expedite the rollout. Pennsylvania’s COVID-19 vaccine program has been marred by glitches from the start. It has been criticized over how fast its allocated shipments are administered ranking Pennsylvania in the middle while West Virginia ranks third according to the New York Times tracker.
The glitches in the vaccine rollout in Pennsylvania are even more troublesome by the fact that President-elect Joe Biden tapped Pennsylvania Health Secretary Dr. Rachel Levine to be his assistant secretary of health in the U.S. Department of Health and Human Services. Dr. Levine was in charge of the Covid-19 response in Pennsylvania and Pennsylvania is now trying to untangle its botched vaccine rollout under her leadership. What can the rest of the country expect once Dr. Levine is in charge of a larger rollout?
For several years now discussion of secession has become increasingly mainstream. A new poll highlights regional and partisan views on the topic.
Bright Line Watch asked Americans whether they would support their state seceding from the United State and joining a union with regional states. The question outlined the new unions as follows:
- Pacific: California, Washington, Oregon, Hawaii, and Alaska
- Mountain: Idaho, Montana, Wyoming, Utah, Colorado, Nevada, Arizona, and New Mexico
- South: Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Florida, South Carolina, North Carolina, Virginia, Kentucky, and Tennessee
- Heartland: Michigan, Ohio, West Virginia, Illinois, Indiana, Minnesota, Wisconsin, Iowa, Missouri, North Dakota, South Dakota, Kansas, and Nebraska
- Northeast: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Maryland, Delaware, and the District of Columbia
Support for secession was highest in the South and West, both at 33 percent, followed by the Northeast (32 percent), the Mountain region (28 percent), and the Heartland (24 percent).
Bright Line Watch’s analysis highlighted the degree to which shared political behavior correlated with higher support:
Support also corresponds with regional partisan context. In the Pacific and Northeast regions, both of which are deep blue and could be expected to be dominated by the Democratic Party (or its post-secession descendants), Democrats favor secession most, followed by independents and Republicans. In the deep red Mountain and Southern regions, that pattern is reversed with Republicans most amenable to secession. In the Heartland, a collection of mostly red states that also includes purple Michigan, Minnesota, and Wisconsin, independents are the group most inclined toward secession.
The unwillingness of respondents to reject secession outright is widespread and context-dependent. Republicans express greater support for secession overall than Democrats, but Democrats are more amenable to secession than are Republicans in regions they dominate.
The Americans most likely to support secession were Southern Republicans at 50 percent. Below is a graphical representation of the responses:
Given that a majority of Republican voters do not believe Joe Biden was a legitimately elected president, it will be interesting to see how these sentiments develop over the next few years.
Toward the end of his 2012 State of the Union speech, President Obama said “I believe what Republican Abraham Lincoln believed: that government should do for people only what they cannot do better by themselves, and no more.” But the huge gap between those limited government words and the Obama administration’s expansive government actions gave the lie to the words.
Now with Obama’s vice president about to be president, bringing with him a multitrillion dollar cornucopia of further government expansion commitments, it appears that any such limited government words we might hear (like Biden’s promise to govern in the interests of all Americans) will again represent cognitive dissonance rather than commitment to principle.
In fact, we already have important guidance as to how limited government words will be evaded by those who don’t believe what they say. Just over half a century ago, in his Let Freedom Reign, Leonard Read wrote about the loophole in the limited government formulation that will allow President Biden, like President Obama before him, to evade any such limitation. His depressingly current chapter on “Governmental Discipline” merits careful consideration.
- During the last century, several of the best American academicians and statesmen—in an effort to prescribe a theory of governmental limitation—have agreed: The government should do only those things which private citizens cannot do for themselves, or which they cannot do so well for themselves.
- This is meant to be a precise theory of limitation.
- The government should, indeed, do some of the things which private citizens cannot do for themselves….Codifying and enforcing an observation of the taboos gives the citizenry a common body of rules which permits the game to go on; this is what a formal agency of society can do for the citizens that they cannot, one by one, do for themselves….And no more!
- This proposal…does not go far enough. It has a loophole, a “leak,” through which an authoritarian can wiggle.
- What they [citizens] will not do and, therefore, “cannot” do for themselves is to implement all the utopian schemes that enter the minds of men, things that such schemers think the citizens ought to do but which the citizens do not want to do…”only” is utterly meaningless!
- Reflect on the veritable flood of taboos—against other than destructive actions—now imposed on the citizenry by federal, state, and local governments. And all in the name of doing for the people what they “cannot” do for themselves. In reality, this means doing for them what they do not wish to do for themselves.
- How might we state this idea, then, in a way that…if followed, would restore government to its principled, limited role—keep it within bounds? Consider this: The government should do only those things, in defense of life and property, which things private citizens cannot properly do each man for himself.
- The only things private citizens cannot properly do for themselves is to codify all destructive actions and prohibit them….Neither the individual citizen nor any number of them in private combination…can property write and enforce the law. This is a job for government; and it means that the sole function of a government is to maintain law and order, that is, to keep the peace…a task much neglected when government steps out of bounds.
- All else—an infinity of unimaginable activities—is properly within the realm of personal choice: individuals acting cooperatively, competitively, voluntarily, privately, as they freely choose. In a nutshell, this amended proposal charges government with the responsibility to inhibit destructive actions—its sole competency—with private citizens acting creatively in any way they please.
- The government is engaged in countless out of bounds activities…what private citizens will not do rather than something they cannot do.
- We allow government to commandeer resources that private citizens will not voluntarily commit to such purposes. In other words, private citizens are forced to do things they do not wish to do.
- Why are private citizens forced to do what they do not wish to do? After all, the formal coercive agency of society—is their agency!
- We have one test, and one only, for what private citizens really wish to do: those things they will do voluntarily!
- But here’s the rub: There are those who believe we…are unaware of what is good for us. These “needs” invented for us…have no manner of implementation except by coercion. In a word, these people who would be our gods can achieve the ends they have in mind for us only as they gain control of our agency of force: government.
- And the primary reason why they can force upon us those things we do not want is our lack of attention to what are the proper bounds of government.
By asserting devotion to limited government principles, politicians try to blunt recognition of how blatantly such words are untrue. Mouthing the same words as those truly concerned about limiting government overreach allows them to disguise the chasm between their words and their actions. But such efforts remind me of some other words of Abraham Lincoln that we would be well advised to heed:
We all declare for liberty, but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself, and the product of his labor; while with others the same word may mean for some men to do as they please with other men, and the product of other men’s labor. Here are two, not only different but incompatible things.
Americans anxiously wait for the final outcome of this election, the Federal Reserve continues on its immovable course towards nationalization of the means of production. Ironically, we vote for a president who has limited power, but a hand on the nuke button; whereas, we don’t vote for the Fed chair, who has nearly unlimited power, and a hand on the economic equivalent to the nuke button; the ability to conjure money out of thin air.
As for Fed chair Jerome Powell, who kept rates on hold, his Q&A after the committee meeting revealed that regardless who is president, as long as the Fed can expand the balance sheet at will, they continue holding all the cards. First, the good news, according to Powell:
The overall rebound in household spending owes in part to federal stimulus payments and expanded unemployment benefits, which provided essential support to many families and individuals.
It is truly owed to the Federal Reserve and government intervention that more money was digitally made into existence, of which some went into household spending.
However, despite the increase in money supply and debt levels, comes the bad news:
As we said in September and again today, with inflation running persistently below 2 percent, we will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.
Per the Fed, life did not become as unaffordable for the masses as they had hoped, therefore they expect to maintain an “accommodative stance of monetary policy” until prices rise enough, meeting their inflation objective.
And, at last, the confusing news, the part where the line between fiscal and monetary policy becomes blurred:
Fiscal policy can do what we can, which is to replace lost incomes for people who are out of work through no fault of their own. And then what we can do is we can obviously support financial stability through our lending programs, and we can support demand through interest rates and asset purchases and that sort of thing.
Perhaps it’s the size of the asset programs by the Fed or the spending programs of the government, that ideas around the two are continually intertwined. Often, Powell must define the difference between the two, in this instance noting that the government can take action such as replacing lost wages, while the Fed can buy government bonds.
Elected officials have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources.
True, Congress can tax and spend, but what the chair doesn’t seem to admit is that taxation only provides so much money, compared to spending which appears to be nearly limitless. Of course, what makes up the shortfall when spending exceeds taxation revenue, if not from debt? Considering the Fed owns $4.5 trillion of US Treasurys, of a nation with a $27 trillion debt, we should come to terms with understanding that the Fed is financing a significant portion of the US government’s spending activities.
Yet, it’s difficult to argue with one of the most powerful men on the planet when he says:
And so if the idea is money financed fiscal policy, that's not something that we would consider. So that—what I mean by that is really, you know, the central bank is really funding fiscal activities of the government fairly directly. No. That's not something we do.
As for the money expansion, which is not “money-financed fiscal policy,” we should listen when he says:
So when I say we're not out of ammo, I'm looking at, you know, a couple of our tools mainly. As I mentioned, the asset purchase program.
The majority of people will undoubtedly be watching to see how the election is called and the looming fallout, but we must remember: the government is financed by the people and also by its central bank. The trajectory we are on is one where the Fed’s balance sheet will continually increase, with a corresponding decrease in the wealth and freedom of the individual. How this fits in with the concept of a strong republic by the people and for the people is anyone’s guess.
Listen to the Audio Mises Wire version of this article.
The US foreign policy establishment has for decades been dominated by neoconservative interventionists and falsely named “humanitarian” interventionists. These people believe that because the United States is the one “exceptional nation,” no conflict anywhere in the world could possibly be solved without our butting our noses into it.
One of President Obama’s few foreign policy successes was to work with European countries on a deal that would see a reduction of sanctions on Iran in exchange for a series of Iranian moves demonstrating its abandonment of a nuclear weapon.
The American neocons as well as the hardliners in Saudi Arabia and Israel were furious at the compromise, but for a couple of years it showed real promise. Trade between Europe and Iran was increasing and there was no evidence that Iran was reneging on its obligations. Even American companies were looking to Iran for business opportunities. Whenever goods flow between nations, war becomes less likely.
President Trump has had problems with policy consistency throughout his first term in office. But, unfortunately, his few policy consistencies have been the most ill-advised ones. On the campaign trail Trump relentlessly attacked Obama’s Iran policy and promised to pull the US out of the JCPOA (Joint Comprehensive Plan of Action) Iran agreement.
Unfortunately for America, he followed through with this policy in 2018. Though he promised that by pulling out of the deal the US would get a far better deal in its place, the truth is Trump’s Iran policy has produced nothing but negative results. The Iranians have not knuckled down under the weight of Pompeo’s pressure, and putting regime change specialists like Elliot Abrams in charge of Iran policy has just moved us closer to an unnecessary war.
Iran is not a threat to the United States, no matter what lies the neocons put forth.
These past two weeks the weakness in the US “maximum pressure” policy toward Iran has been exposed for the world to see. First, Pompeo spent the summer lobbying European nations to support a US motion in the UN Security Council to extend an arms embargo against Iran. As Iran has been judged in compliance with the Iran deal, the arms embargo is scheduled to be lifted in October. Pompeo’s diplomatic skills did not produce the desired results: not a single party to the Iran nuclear deal voted with the US to extend the embargo.
Undeterred, the Trump administration is now determined to trigger the “snap-back” sanctions on Iran, which means if Iran is judged to be in violation of the Iran nuclear agreement all the previous sanctions would snap back into place.
But there’s a problem with this: because the US has formally withdrawn from the Iran agreement it has no legal standing to trigger the “snap-back” of UN sanctions on Iran. If you take your marbles and go home, you don’t get to still dictate the rules of the game.
Last week Pompeo attempted to trigger the “snap-back” and was laughed out of the room by the countries who have remained in the deal.
US policy toward Iran is an unwise consistency and the Trump administration is hopelessly floundering on the bad advice of the neocons. They want nothing more than war on Iran. But the American people do not. It’s time to end this failed policy of confrontation with Iran.