Friday, June 01, 2012

Liberty in Aquarius?

Liberty in Aquarius?

Mises Daily:Friday, June 01, 2012 by

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While "New Age" can stand for a great variety of heterogeneous movements and worldviews, there are general features characterizing its followers, apart from clothing and food habits: a conviction of being part of a new planetary force that will contribute to or witness a spiritual transformation of humanity — taking a qualitative quantum leap to higher consciousness. Although many of the invoked spiritual beliefs and practices stem from ancient and geographically diverse origins, the New Age movement appears as a mass phenomenon only after the Second World War, or more exactly, in the wake of the "hippie" movement and the student revolutions of the 1960s, and is now present almost everywhere in popular culture and among the intelligentsia.

Apart from sporadic mentions (including in the works of Murray N. Rothbard), libertarian writers seem to have paid little attention to New Age philosophies. This may originate in the perception that spirituality involves matters (until now) not unanimously observable and objectively quantifiable. The libertarian position rests on the nonaggression principle against nonaggressors, which in turn builds on a clear definition of property rights. It remains however unclear whether spiritual matters like "aura," "vibrations," or "energy" are even scarce resources. As long as all behavior under the banner of New Age remains voluntary, it represents "capitalistic acts between consenting adults" (even without the necessity of chapters on "The Sex Guru," "The Channeling Medium," or "The Aura Healer" in a future sequel to Walter Block's Defending the Undefendable).

However, since the New Age literature includes thoughts on the state and on economic matters, it seems justifiable to examine the latter from an Austro-libertarian standpoint. In the following, we will quote spiritual "authorities" on those matters. Due to limitations of space, only a small number of New Age "thinkers" will be considered. The selection does not claim to be representative for the totality of New Age thought. There is no statistical data available for such decisions to be based upon, even if, for example, several worldly or esoteric publications compile ranking lists (like the Watkins Review's list of the 100 most spiritually influential living people). On the other hand, statistical representativeness is probably not a good measure for matters spiritual. After extensive reading of New Age literature as well as numerous conversations with individuals considering themselves as part of the New Age movement, the following commonalities of thought and opinion can be formulated as descriptive for most New Age philosophers: preferences for communal over private property, consumption over thrift, intuition over rationality, nature over technology, and the commune over the family; favorable views of world government; abolition of money; renouncement of the ego and greed; antirational thought; a new class theory and high time preference ("here and now!").

While declaredly nonpolitical, in terms of political organization many spiritual teachers seem to prefer some form of world government. Indian guru Osho (1931–1990, known also as Bhagwan Shree Rajneesh) was one of them:

To make it [the United Nations] a success, the simple thing is to make it a World Government. All nations should surrender their armies, their arms, to the World Government. Certainly if there is only one government, neither armies are needed nor arms. With whom are you going to have a war?

Now each big country, each power, is loaded with nuclear weapons, so much so that if we want to, we can destroy seventy earths like this, right now.…

Politicians are basically, deep down, impotent — hence the urge to power.…

And the power is in such people's hands. Any crackpot can push a button and finish the whole of humanity — the whole of life on earth.…

Each prime minister of the existing countries will become a member of the World Government, and all the prime ministers of the countries which join into one World Government will continue to work functionally. They won't have any real power, because the question of anyone invading anyone else does not arise. They will simply run the railways and post offices, etc., of their countries.

There is a possibility that a few governments won't join the World Government; then they have to be boycotted completely as if they don't exist. There should be no relationship with them, no communication, because that is the only way to bring them to join. And they cannot stand against the World Government. They will have to surrender. It is better to surrender gracefully. And then they will have their government, they will have their internal guards, a national force which can manage internal affairs, but they will not have plants making nuclear weapons and millions of people engaged in the unnecessary exercise of killing man.

The members of the World Government will choose the world president. But the world president will be chosen not from the members of the World Government, but from outside. And one thing should be absolutely certain about him — that he is not a politician. He can be a poet, a painter, a mystic, a dancer, but not a politician. Anything except that. So in this way we will destroy the political power which has been the whole torture in the past.

The way the U.N. is now, with a few countries having veto power, should be dissolved.

It is again a power trip, and this has been the cause of many troubles: one single government can veto something for the whole world. Instead, each president from different nations will have voting power according to the nation's population of matriculates, of high school graduates.

This will change the whole power structure in the world. Then details can be worked out very easily.

While some of the sentences about politics may ring true to libertarians, this passage abounds of logical inconsistencies. Would a world government really have no use of its weapons? However, this may be compatible with a position that defies logical thought:

Question: Why are you so much against logic?

Osho: Because it is logical to be against logic. Logic proves nothing, that's why I am against logic. It only pretends to prove; it proves nothing. It is an empty game, verbal. But the pretension is such that millions of people are befooled by it, and down the ages we have been trained for logic, so it has appeal. But logic has never proved anything. Proof comes only through experience, never through logic.

This empiricist position, together with a denial of universal principles, may lead to the following statements (in 1989!):

I love the Soviet Union because it is a great experiment. It is a milestone in the history of man. Of course it is only half, but still — half is better than nothing. The other half can be raised on top of it.

What Lenin and Stalin have produced has given a good foundation for anybody to raise the temple of consciousness. And this temple will not belong to any religion; it will belong to all individuals who want to enter into initiation, who want to enter on the path.…

It looks very cruel, inhuman. But it was Joseph Stalin who managed the Soviet Union, because it was confronting on enemies two sides. Enemies from within … the Russian Orthodox Church, the intellectuals, the people who did not want to share their property — even the poor masses. As I told you, a man who has only two hens will not share — that's all he has. The masses are the greatest enemy of their own welfare. So you will be surprised to know that one million Russians were killed by Joseph Stalin, and these were not the rich people. These were the poor people who were adamant, stubborn.

Without Joseph Stalin, communism would not have succeeded — although it succeeded out of violence, murder, massacre. First he had to finish all the enemies inside the country, and then he had to make an iron wall around the Soviet Union, because the whole world was against him. All the capitalist countries were against him, against communism, because if communism succeeds in one country it is going to succeed in every country. It is better to kill it in the beginning, because soon it will be gaining more and more strength and it will become impossible to stop it.

The whole credit for protecting the Soviet Union and communism goes to Joseph Stalin. But of course he had to use murder, no trials in the courts, no wastage of time. He had not much time to waste in fighting in the courts. Simply finishing people immediately, just on a suspicion.…

It used to be said, and is still said in every capitalist country, that "You cannot kill one innocent man, even if you have to leave ninety-nine criminals just to save one innocent man." Joseph Stalin turned the whole thing upside down. He said, "You cannot leave one criminal, even if you have to kill ninety-nine innocent men.

So it is not a question of individuals, it is not a question of innocence, it is a question of saving communism at any cost.

Another spiritual authority was Jiddu Krishnamurti(1895–1986), who in his book Education and the Significance of Life writes, "We have to create a world government which is radically different, which is not based on nationalism, on ideologies, or force" (p. 57).

Generally speaking, even if New Age figures may make statements in favor of some politicians (like Deepak Chopra, currently fifth on the Watkins Review's list, who fundraises for Obama), it seems that most of them do not focus on politics and the institution of the state directly. Instead, the latter's actions are perceived to be the results of humanity's collective consciousness, which can be improved only through spiritual practice of various kinds by the greatest possible number of individuals. Sending "positive" energy or vibrations to world leaders and thereby to have a peacemaking influence seems to be the method of choice — not overtly opposing government abuse, which from a spiritual perspective would only reinforce the present "negativity." There seems little understanding of the inherent dangers and the immorality of the state's monopolies of taxation and jurisdiction. As in Marxian ideology, the institution of the state is expected to be dissolved or transformed through a universal dialectic process.

On economics, New Age authorities seem to adopt a now-conventional position of a social-market economy or of moderate interventionism. Deepak Chopra, for example, promotes a "just" capitalism:

A society marked by repression and rigid authority — which is the general political picture in China — can enforce economic growth, but that's not America. Likewise, a completely unfettered free market of the kind that existed in the robber baron era, can generate profits galore, but that's not America, either. We decided long ago that people deserve dignity, a healthy workplace, a clean environment, and lack of ruthless exploitation by owners and bosses.

Many spiritual leaders favor a voluntary reduction of consumer behavior and teach detachment from material things. An ideal lifestyle for some would be that of a man who leaves no traces behind him — like a "bird in the open sky." Economically speaking, it reflects a preference of consumption ("here and now") over saving ("hoarding"), and its result, if consequently applied, would be less capital investment or even capital consumption. However, only a few New Age leaders are outspoken critics of capitalism and the market economy — probably also due to the fact that a considerable part of their followers are from among the wealthy.

There seems to be a consensus among spiritual teachers that greed and "money" caused the current economic crises, as the 14th Dalai Lama (currently second on the Watkins Review's list) explains in an interview with Business Week:

I'm telling people, including some businessmen who are my friends, what this global economic crisis was caused by too much greed, speculation, and hypocrisy — not being transparent. These are the moral and ethical issues.

According to Buddhism, these things happen due to their own causes and conditions. Through years or through decades this present crisis developed. All the causes and conditions were fully ripe. No force could stop it. It's the natural law. So you accept it.

While Austrian economists would readily subscribe to the fact that economic crises are "somehow" related to "greed and money," New Age teachers and their followers rarely show a more profound understanding of the underlying economic mechanisms. Their statements often remain on such a general level that readers may easily find confirmations for them (this may be a strategy similar to that producing the "Barnum effect" in astrology). In the following excerpt, Eckhart Tolle explains how "the present moment can heal the world economy":

We know that ego is the source of the Pain Body — that part of our consciousness that moves toward pleasure and rejects pain. We also know that attachment causes us to care more about things than qualities like Love, Compassion, and Loving Kindness.…

Every country in the world wants growth every year. That is like saying what goes up most never come down. Every politician and statesman is looking for ways to boost GDP to higher and higher levels. But what would happen if we had economic equanimity? What if President Obama as the head of the world's strongest economy began to talk about inner peace instead of economic growth at any cost? Did making more money ever bring anyone you know permanent happiness?

We're not talking about accepting less. We're talking about accepting. Part of living in harmony with the Universe is accepting its physical laws which include the economic cycles of nations. Regardless of the recklessness of banks and stock traders, the Universe cannot sustain continuous expansion. Even the Big Bang, which states that the Universe is constantly expanding, also says that in that expansion the Universe will cool down until all the stars burn out. The Universe will continue to get larger, but it will be a cold, lifeless, and Universe bereft of planets and suns.

This too is what could happen to countries obsessed with positive economic growth. The hapless search for profit at any cost bankrupts our values and quality of life.

Returning to the Present Moment shows us where our real wealth is. And that wealth does not derive from new trade agreements; it comes from the Power of Silence inside every moment; it comes from the infinity between each though; it comes from the heart when it is open and undefended.

A recurring theme in literature on positive thinking is a supposed material superabundance. Instead of having a central warehouse as socialists like Fourier described in their collectivist utopias, some New Age thinkers assume the existence of a universal warehouse, which by inextinguishable supply provides for all material wants — by spiritual mail order so to speak. This may be achieved by the means of visualizations and positive affirmations. In Human Action, Ludwig von Mises warns of the consequences of similar wishful thinking:

Such is the myth of potential plenty and abundance. Economics may leave it to the historians and psychologists to explain the popularity of this kind of wishful thinking and indulgence in daydreams. All that economics has to say about such idle talk is that economics deals with the problems man has to face on account of the fact that his life is conditioned by natural factors. It deals with action, i.e., with the conscious endeavors to remove as far as possible felt uneasiness. It has nothing to assert with regard to the state of affairs in an unrealizable and for human reason even inconceivable universe of unlimited opportunities. In such a world, it may be admitted, there will be no law of value, no scarcity, and no economic problems. These things will be absent because there will be no choices to be made, no action, and no tasks to be solved by reason. Beings which would have thrived in such a world would never have developed reasoning and thinking. If ever such a world were to be given to the descendants of the human race, these blessed beings would see their power to think wither away and would cease to be human. For the primary task of reason is to cope consciously with the limitations imposed upon man by nature, is to fight against scarcity. Acting and thinking man is the product of a universe of scarcity in which whatever well-being can be attained is the prize of toil and trouble, of conduct popularly called economic.

An extreme form of negating scarcity is a movement called breatharianism, which promotes "pranic" nourishment, that is nourishment by sunlight alone. Although its spiritual leader Jasmuheen (Australian-born Ellen Greve) failed to demonstrate her ability in an experiment for the Australian TV program 60 Minutes (excerpts are available on YouTube), there are cases where followers eventually starved themselves to death. In the hundred-page Global Harmonization Program from Jasmuheen's Embassy of Peace the word "economics" does not appear once, at the same time as the "embassy's" programs are supposed to have the "power to … help create a more balanced economic model that because of its altruistic and educational focus, will attract powerful forces of interdimensional support."Download PDF

The Global Sufficiency Network "provides the practical tools needed to move away from the mindset of scarcity that fuels so many of our societal ills and into a new, more harmonious and sustainable way of life on the planet we all call home."

Can New Age "thought" be reconciled with a libertarian position? Since New Age thought does not contradict in principle the nonaggression axiom — on the contrary, peace and harmony representing its core values — there should be sufficient common ground for dialogue. However, rejection of formal, aprioristic logic in favor of "intuition" or empirical reasoning can make it difficult to sensitize New Age followers to the implications of the state's existence and the shortcomings of interventionism.

Since Taoist philosophy — and Asian culture in general — has been inspirational for several New Age movements, Murray Rothbard's article "The Ancient Chinese Libertarian Tradition" may resonate with New Age followers. Rothbard traces the roots of libertarianism to Chinese Taoist philosophers, for whom

Government, in sum, must be limited to the smallest possible minimum; "inaction" was the proper function of government, since only inaction can permit the individual to flourish and achieve happiness. Any intervention by government, Lao-tzu declared, would be counterproductive, and would lead to confusion and turmoil. After referring to the common experience of mankind with government, Lao-tzu came to this incisive conclusion: "The more artificial taboos and restrictions there are in the world, the more the people are impoverished…. The more that laws and regulations are given prominence, the more thieves and robbers there will be."

Even if New Agers do not acknowledge it, the market economy made much of the current New Age movement possible. Capital accumulation and economic growth allowed for time and resources to be freed up to be used for "spiritual" purposes. The appearance of spiritual professions — like aura healers, meditation coaches, or mediums supposedly channeling angels or other spirits — are just a consequence of the division of labor under the present (relatively) capitalistic conditions.

This article can only serve as a very superficial account of New Age economic and political thought, which would need to be continued by more extended research. Reasonable objections may be made about the selected authors and whether they represent the "real" New Age movement or not. Many spiritual leaders propose global solutions that cannot be falsified by aprioristic reasoning since they apply to energetic or spiritual phenomena. However, some of their statements regarding human action do not stand the rigors of formal logic and may lead to catastrophic consequences. Since New Age ideologies are influential in public life and the media, and are among others often linked to agendas of world government and environmentalism, their discussion from an Austro-libertarian standpoint is necessary to expose potentially dangerous fallacies.

Fuente:

Saludos
Rodrigo González Fernández
Diplomado en "Responsabilidad Social Empresarial" de la ONU
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Tuesday, May 29, 2012

mujerchile: This is a defining moment in history.

This is a defining moment in history.

President Barack Obama and First Lady Michelle Obama greet the U.S. Navy's first contingent of women submariners to be assigned to the Navy's operational submarine force, in the Blue Room of the White House, May 28, 2012. The 24 women were accepted into the Navy's nuclear submarine program after completing an intensive training program and serve on ballistic and guided missile submarines throughout the Navy. Also attending were ADM Mark Ferguson, left, Navy Secretary Ray Mabus and Defense Secretary Leon Panetta, right. (Official White House Photo by Pete Souza)

President Barack Obama and First Lady Michelle Obama greet the U.S. Navy's first contingent of women submariners to be assigned to the Navy's operational submarine force, in the Blue Room of the White House, May 28, 2012. The 24 women were accepted into the Navy's nuclear submarine program after completing an intensive training program and serve on ballistic and guided missile submarines throughout the Navy. Also attending were ADM Mark Ferguson, left, Navy Secretary Ray Mabus and Defense Secretary Leon Panetta, right. (Official White House Photo by Pete Souza)


Fuente:

Saludos
Rodrigo González Fernández
Diplomado en "Responsabilidad Social Empresarial" de la ONU
Diplomado en "Gestión del Conocimiento" de la ONU
Diplomado en Gerencia en Administracion Publica ONU
Diplomado en Coaching Ejecutivo ONU( 
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 CEL: 93934521
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Soliciten nuestros cursos de capacitación  y consultoría en GERENCIA ADMINISTRACION PUBLICA -LIDERAZGO -  GESTION DEL CONOCIMIENTO - RESPONSABILIDAD SOCIAL EMPRESARIAL – LOBBY – COACHING EMPRESARIAL-ENERGIAS RENOVABLES   ,  asesorías a nivel nacional e  internacional y están disponibles  para OTEC Y OTIC en Chile

Five Ways to Avoid the Next Facebook IPO Fiasco

Five Ways to Avoid the Next Facebook IPO Fiasco

On the heels of the Facebook IPO fiasco, many investors are wondering how they can find the next best thing and avoid getting "facebooked" in the process.

Tall order? Not really.

First, look for companies with ideas that can be applied across a wide variety of industries.

If I had said this five years ago, you'd be looking for Internet- related startups or companies that can do "it" better, faster or cheaper.

Going forward however, I think the true innovation will be exponential progress that's made linking living systems with their digital counterparts. Everything from synthetic biology to computational bioinformatics will grow a lot more rapidly than the broader markets.

So will key markets related to healing human illness, solving hunger and figuring out how to deliver potable water to broad swathes of the planet.

No doubt there will be tremendous ethical challenges along the way, but I believe we will see the line blur between what's needed to live and how we actually live our lives.

Though it's hard to imagine given the state of the world at the moment, I believe a fair number of the best up- and- coming investments will be outside the traditional first- tier markets of the United States, Europe and Japan.

In fact, I'd bet on it.

Second, don't confuse the ability to organize or share information with the ability to generate revenue

One might lead to the other but they are not the same thing.

The way I see it, Facebook is a classic example of everything you don't want in a business. It is 900 million users who spend an average of $1.32 a year. Compare that to Amazon.com, which clocks in at a much more valuable and consistent $36.52 per person.

Call me crazy, but I don't think Facebook stock will see the bottom for a while. As I wrote last Friday, at best Facebook is worth $7.50 a share.

Revenue is slowing. Facebook doesn't dominate the mobile markets that are becoming the preferred consumer channel for tens of millions of people. And, in what is perhaps the death knell, startups are already cannibalizing Facebook's user base.

The ability to "like" somebody is really no different than signing their yearbook in high school --only you're using a computer and the Internet to do it.

Third, hunt for ringe thinkers working in their garages.

It's not enough to think differently. The next big things will come from those thinkers operating on the fringes of what the rest of us consider normal.

For example, there's a self-taught school dropout mechanic in Wichita, KS, named Johnathan Goodwin who turned the automobile industry on its ear by figuring out how to convert gas- guzzling hummers into biodiesel trucks and 100 mpg hybrids. Detroit said it couldn't be done yet his company, H-Line Conversions, proved them wrong. Don't forget that Bill Hewlett and Dave Packard started H-P in their Palo Alto garage. Incidentally, their first product was not a computer but an audio oscillator Walt Disney purchased to make the film Fantasia.

Then there's eBay (Nasdaq: EBAY).

Now an institution, eBay has created several millionaires like Jordan Insley and Sarah Davis. Insley has sold more than $8 million worth of electronics via eBay, while Davis has moved more than $4 million worth of designer handbags online. Many eBayers operate from their garages quite literally.

Steve Jobs and Steve Wozniak also built the first Apple computers in Jobs's parents' garage. And the rest, as they say, is history.

Fourth, be a "nowist" instead of a futurist.

Joi Ito, Director of MIT's Media Lab and an early stage investor in both Twitter and Flickr, notes that the ability to respond to suddenly emerging trends is key.

I agree.

It's one thing to identify long- term trends, but it's entirely another to understand the moves you need to make ahead of time.

Consider what's happened during this financial crisis.

Most investors were totally unprepared for the chaos in 2007 just as they were in late 1999. On the other hand, those who had prepared for the unexpected did just fine, including many Money Map Report subscribers.

Why? - Because they invested in companies that had strong international sales, diversified assets, competent management and healthy cash flow. In other words, the "glocals" I've favored and will continue to favor until this mess resolves itself one way or the other.

These are the companies that are quite literally prepared for anything. Many, like ABB Ltd. (NYSE: ABB), CNH Global NV (NYSE:CNH), SPDR Gold Shares (NYSEArca: GLD), and iShares Silver Trust (NYSEArca: SLV) actually melted-up in the triple digits.

Now, with the markets getting ready to roll over again, we're preparing to repeat the process if needed.

Fifth, watch people and travel if you can.

I got started people watching with my grandmother, Mimi. You've heard me talk about her before.

She was widowed at a young age and managed to turn a small life insurance settlement into the money she needed to live out her life in style by becoming an extremely savvy self-taught investor.

We used to go to malls, the country club and even to burger joints (her favorite) just to watch the sea of humanity that paraded in front of us.

At the time, I didn't really understand what she was looking for. Over the years, though, I began to understand Mimi was also watching how and what people bought.

Were they more interested in bulk purchases? Did they favor ultra-expensive goods or counterfeits? Were they paying in cash or whipping out credit cards?

She paid particular attention to folks she referred to as the "most important consumers on the planet"...our middle class. Mimi reasoned that what and where they were buying told her a lot more about the state of the economy than any "five dollar dandy" in a suit on Wall Street ever could.

To this day, that's why I watch the same- store sales for Wal- Mart (NYSE: WMT) and McDonalds Corp. (NYSE: MCD) very closely, among other data points .

And, when I'm travelling, I go out of my way to plunk down in a local shopping mall if I can.

Sometimes this involves luxury goods carried by those stores in Shanghai's Xintiandi shopping complex or along the Avenue des Champs-Elysees in Paris.

Other times, it's simply a Publix Market in Sarasota, FL, that catches my attention or the Vivre near our home in Kyoto.

Either way, the cross section of humanity I see helps me recognize patterns that, in turn, represent opportunities others don't yet see or recognize.

T here are all kinds of ways to spot the next big thing. No one data point is going to present the single "aha" you need, but together they may form a massive blinking sign.

I hope I'm smart enough to "see" it.

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Saludos
Rodrigo González Fernández
Diplomado en "Responsabilidad Social Empresarial" de la ONU
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 CEL: 93934521
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Soliciten nuestros cursos de capacitación  y consultoría en GERENCIA ADMINISTRACION PUBLICA -LIDERAZGO -  GESTION DEL CONOCIMIENTO - RESPONSABILIDAD SOCIAL EMPRESARIAL – LOBBY – COACHING EMPRESARIAL-ENERGIAS RENOVABLES   ,  asesorías a nivel nacional e  internacional y están disponibles  para OTEC Y OTIC en Chile

Thursday, May 24, 2012

Sponsor a Mises University Student

Sponsor a Mises University Student

Mises Daily:Thursday, May 24, 2012 by

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The right instructor can change a student's life. I know. It happened to me. Looking through the course catalog at UNLV years ago, I noticed the class "EC 742 — History of Economic Thought. Instructor: Rothbard." I didn't know who Murray Rothbard was. I hadn't ever heard of Austrian economics. I didn't know what a libertarian was. I was in my late 20s but hadn't thought much about my worldview at all.

I asked a fellow student about the course, and he urged me not to take the class with Rothbard. "He's a kook," said the student, providing the worst advice in academic history. "Take the class independent study." He then suggested one of the many Keynesian instructors at UNLV.

I decided to take EC 742 with Rothbard anyway and my life was changed forever. My eyes were opened. The lightbulb was turned on. I was struck by Rothbard's Austrian lightning.

Most of my classes at UNLV were very forgettable, but classes with Rothbard changed my mindset. He made me understand that peace and prosperity can only come from free markets and liberty. It is a message that will save the world.

Although Murray is no longer with us, his colleagues and students are here to pass his wisdom on to a whole new generation of students each year at Mises University. "There exists nothing as comprehensive, learned, or world-class as Mises U," Amherst College's Gregory Campeau wrote about MU a couple years ago. "If taken seriously, it can be a life-changing week in your intellectual life."

A gift to fund Mises University is a gift that doesn't just educate the students who come to Auburn for an intense week of morning-to-night education; many of these students will go on to educate hundreds and in some cases thousands of students themselves. Students you will never meet but who, because of your gift, will be educated about the benefits of a free economy and free society instead of learning the same old Keynesian claptrap. Your generosity is leveraged many times over in the advancement of freedom.

The importance of Mises University has never been greater.

The mainstream financial press calls this the worst economic recovery in history. Bernanke's Fed and the Obama administration have thrown everything at the economy but the kitchen sink, and even the phony government numbers are punk. GDP grew 3 percent in 2010, 1.7 percent in 2011, and 2012 doesn't look any better. Millions are unemployed and many more millions have given up. Uncle Sam provides groceries for 46 million Americans.

While government and its captive press desperately want to characterize the current economy as a recovery, it is anything but. And for young people it is a tragedy. "I've never seen the world so bad for young people. The only way I can describe it is as a Great Depression," said Andrew Sum, director of the Center for Labor Market Studies at Boston's Northeastern University, who has studied young-adult unemployment in depth.

"Mises University has helped me in my search for truth and purpose — it has convinced me to become a professor."
– Michael Szpindor Watson, University of Illinois, Chicago

The number of young adults in their 20s without jobs is the highest since recordkeeping began after World War II, and the bleak outlook has barely improved even as the broader US economy has seen new hiring in recent months.

Only 55 percent of Americans in the 16-to-29 age bracket were working in 2010, which is down dramatically from 67 percent in 2000. However, the situation is even worse than those numbers indicate. That's because millions of young adults are also underemployed, working part time while looking for a full-time job — the modern term for that being "mal-employed," which means holders of college degrees working low-end jobs.

The average young college graduates don't know what hit them. They've done everything they were told. They went to good universities, persevered, earned their diplomas, and collectively piled up a trillion dollars in debt doing it. Now, depending on their major, they're tending bar or waiting tables.

Northeastern's Sum is outraged that the Obama administration hasn't created a stimulus plan to employ college graduates. "We've betrayed our young people badly," he said.

However, government has betrayed young people with its continuous meddling in the economy. The future is cloudy because of the endless stimulus plans, high taxation, and overregulation by government busybodies. The Federal Reserve continuously prints money, bailing out bankrupt businesses, allowing these capital wasters to destroy the resources that could spur job growth.

The Fed-induced booms and busts have decimated the retirement savings of older Americans, at the same time that price inflation keeps those hoping to retire from saving enough. Instead, they must remain on the job rather than enjoy retirement, denying positions to young people.

The worst of it is, Ben Bernanke has every intention of making matters worse. He believes it when people call him the foremost authority on the Great Depreciation. The Fed chair believes he must flood the world with money to eradicate deflation. He holds the dangerous notion in his head that he knows just the right amount of money to inject and just the proper interest rate to fix in order to centrally plan the economy.

He told a 60 Minutes TV audience a couple years ago that he was 100 percent certain of being able to control inflation. But the nation's high unemployment bothers him, and he thinks he can fix it with more money. He's wrong, but he doesn't understand that he's wrong.

What government is doing to the futures of young people makes Mises University more important now than ever before. They deserve to know the truth. Mises U provides students an education they can't obtain anywhere else. There is absolutely nothing like it: six days of systematic training in the Austrian School of economics from a world-class faculty — all made possible by donors like you.

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Universities aren't doing the job, so we must. With your help, we can produce more scholars like Bob Murphy, Tom Woods, Mark Thornton, Peter Klein, and Timothy Terrell, all of whom started as MU graduates and are now instructors at Mises U and making a difference on college campuses and the world of ideas.

In 26 years, Mises University has produced hundreds of talented professors teaching in universities all over the world. Imagine how important this is. Students attending state and private universities would never be exposed to the ideas of the free market if not for instructors trained at Mises University.

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In these tough economic times, we know that giving to the causes you believe in is hard. But nothing is more important than ensuring that civilization is given a chance to survive and thrive. Your tax-deductible gift of $100, $50, or any amount, would be great. Your contribution of $500 or even $1,000 would be magnificent. Since its founding in 1982, the Mises Institute has trained thousands of young scholars. But we must do more, especially now that campuses and political life and the media continue to be saturated with economic lies.

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I'm thankful every day that I took EC 742 with Rothbard. Please help other students be struck by Rothbard's Austrian lightning.



Saludos
Rodrigo González Fernández
Diplomado en "Responsabilidad Social Empresarial" de la ONU
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Thursday, May 10, 2012

Previous Mises Daily IndexThe Rawlsitarian Paradox

The Rawlsitarian Paradox

Mises Daily: Thursday, May 10, 2012 by

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[Free Market Fairness By John Tomasi • Princeton University Press, 2012 • Xxvii + 348 pages]

Free Market Fairness

To write about bleeding-heart libertarianism is no easy task. Self-professed bleeding-heart libertarians, who include well-known political philosophers, now run their own website, and the movement has aroused among libertarians considerable interest. But the bleeding hearts do not profess a unified philosophical point of view. If someone is a Rothbardian, e.g., or an Objectivist, you at once know what views you need to address; not so for a bleeding heart.

If the movement professes no fixed body of doctrine, though, many bleeding hearts seek to combine support for the free market, albeit often in an attenuated form, with a favorable view of social justice, and, in particular, of John Rawls's theory of justice.[1] Though Rawls was of course far from a supporter of the free market, a number of the bleeding hearts believe that his views can, suitably modified, provide a powerful defense of classical liberalism.

John Tomasi does not in Free Market Fairness call himself a bleeding-heart libertarian, but his excellent book offers the best and most comprehensive defense yet to appear of the position just described. Tomasi is a distinguished and imaginative political philosopher who teaches at Brown University, and every reader of his book will learn a great deal from it.

Tomasi describes in an engaging way what led him to what appears at first sight a mixture of incompatible commitments. On the one hand, he found classical liberalism appealing; on the other hand, he was attracted to a conception of justice usually taken to be inimical to that position.

Two classical-liberal ideas especially attracted him. The free market enables people to mold their own lives; no longer need they passively react to the wishes of others.

Growing prosperity seems to give an ever-wider range of people a sense of power and independence. It encourages a special form of self-esteem that comes when people recognize themselves as central causes of the particular lives they are living — rather than being in any way the ward of others, no matter how well meaning , other-regarding or wise those others might be. (p. 61)

Many have criticized the free market because, in Marx's phrase, it is an "anarchy of production": no central body coordinates the vast array of market prices. But this is of course not a failing but a virtue. Hayek has through his notion of "spontaneous order" done a great deal to illuminate why this is so, and Tomasi is impressed:

I am also drawn to the libertarian idea of "spontaneous order." … Friedrich Hayek argues that a free society is best thought of as a spontaneous order in which people should be allowed to pursue their own goals on the basis of information available only to themselves. Along with the moral ideal of private economic liberty, I find the libertarian emphasis on spontaneous order deeply attractive. (p. xii)

Among his fellow political philosophers, support for the free market is decidedly a minority view. Classical liberalism has been overthrown by what Tomasi, following Samuel Freeman, calls "high liberalism":

The distinctive political commitment of high liberals is to a substantive conception of equality. Perhaps as a result, high liberals are skeptical of the moral importance of private economic liberty. Unlike the classical liberals and libertarians, the high liberal ideal of equality leads them to affirm a conception of social or distributive justice. (p. 54)

Clearly, you cannot at the same time consistently be both a classical liberal and a high liberal. But Tomasi makes a surprising claim. The most important theorist of high liberalism is John Rawls, but Tomasi argues that Rawls's conception of justice as fairness, which he accepts, can be adapted to the defense of "market democracy," Tomasi's version of classical liberalism.

Rawls's theory is not the only left-liberal account of social justice on offer, and Tomasi does not intend to "marry market democracy to the Rawlsian program" (p. 105). But "I [Tomasi] choose justice as fairness simply because, once it has been adjusted and corrected according to market democratic principles, it is the conception of liberal justice I find most compelling" (p. 175).

In order to understand Tomasi's claim and to judge its success, it is important to grasp what market democracy means. It is by no means the same as the libertarianism of Rothbard and Nozick.

Within the framework of market democracy, economic liberties can properly be regulated and limited to advance compelling interests of the liberal state.… Unlike strict libertarians, market democrats can join high liberals as well as classical liberal thinkers such as Milton Friedman, F.A. Hayek, and Richard Epstein, who say that the liberals state should be given the power to provide a social minimum funded by a system of taxation. (pp. 91–2).

Tomasi also favors government support of education, e.g., through a voucher scheme. (A complication, which will not be pursued here, is that Tomasi distinguishes two versions of market democracy, democratic laissez-faire and democratic limited government; the second allows somewhat more direct government intervention than the first.)

But even if Tomasi is not a strict libertarian, does not his position differ entirely from that of Rawls, who expressly repudiates as inadequate the "system of natural liberty"? How then can Tomasi arrive at a Rawlsian defense of market democracy?

Tomasi's answer is not the obvious one that will first occur to most readers. Rawls's difference principle allows inequalities that make the worst-off class in society better off than they would otherwise be. Suppose that a great deal of inequality turns out to be to the advantage of the worst off because, e.g., economic incentives strongly motivate people. Would we not have a Rawlsian justification of inequality?

We very well might; but this is not the line that Tomasi takes. The point just considered depends on an empirical hypothesis about how people in the actual world are motivated. Tomasi prefers to operate at a higher level of abstraction. He is concerned, like Rawls himself, with "ideal theory." This consists of two tasks of identification. The first of these

involves identifying a set of principles of justice that expresses our commitment to treat citizens as free and equal self-governing agents. The second identificatory task concerns institutions … we seek to identify institutional regime types that "realize" the principles of justice. (p. 206)

What Tomasi has in mind, then, is this. Rawls's own social-democratic views are simply interpretations of his theory of justice. If we accept Rawls's principles of justice, we are not bound by Rawls's own views about how these principles are to be implemented, and the door to a market-democratic interpretation of Rawls lies open. To think otherwise, Tomasi holds, is to fall victim to what he calls an "ipse dixit" fallacy. "At the extreme, the exegetical approach treats justice as fairness as a plot in the archaeology of ideas rather than as a living, growing research paradigm" (p. 179).

For each of Rawls's principles of justice, then, Tomasi offers an interpretation congenial to market democracy. Rawls's first principle specifies a set of liberties that enjoys lexical priority to the distributive requirements of the second principle.[2] Rawls does not include rights to acquire and hold productive property among the set, but Tomasi does. The ability to engage in business often proves an excellent way to develop one's moral powers. Why, then, exclude it from the list of protected liberties? Tomasi intends this point to apply to what Rawls terms the "special conception of justice," where "social conditions are favorable to the attainment of social justice" (p. 181). He contends that with "prosperity, the existence of thick private economic liberty is for many citizens an essential condition of responsible self-authorship" (p. 183).

Tomasi offers his own understanding of other Rawlsian principles. For fair equality of opportunity, Tomasi stresses the need for each person to have a wide variety of choices, as opposed to efforts to counter the effects of status. For the difference principle, he emphasizes the need to increase through economic growth the wealth of the worst-off class. Not for him are efforts directly to reduce inequalities, e.g., through progressive taxation.

Those of libertarian inclination will find Tomasi's political program far more acceptable that Rawls's own program, but I do not think that Tomasi succeeds in making a Rawlsian case for market democracy. The problem as I see it is that he does not take adequate account of the originality of Rawls's approach to political philosophy.

The situation that drives Rawls to his theory is that of people in a large society like the United States who are divided by conflicting conceptions of the good. Some of these conceptions may be better than others, and one may in fact be the correct one: Rawls does not commit himself on this question. But none of these conceptions can be shown to be true in the strong sense that it would be unreasonable for anyone to reject it. This state of affairs Rawls terms "the fact of reasonable pluralism."

Given reasonable pluralism, it would be wrong for the holders of one conception to impose their views on others; respect for others requires that we defend our political views with reasons others could acknowledge. Our aim, Rawls holds, should not be a mere modus vivendi with those who profess other conceptions of the good. Rather, we should seek a stable society in which people decide disputed questions by democratic discussion.

He intends the principles of justice to give the conditions under which such democratic decisions can take place. Herein lies Rawls's originality. By inquiry into the conditions of a stable regime, given the fact of reasonable pluralism, one can avoid appeals to controversial moral intuitions or problematic moral theories like utilitarianism. His approach to justification is "political, not metaphysical."

Why did I embark on this elementary account of Rawls's theory? The reason is to bring out that to adopt a Rawlsian account of justice, one must accept democratic participation in a strong sense. For Rawls, the people in a society are bound to one another by special ties and decide political questions together. The echoes of Rousseau here are not accidental.[3]

Tomasi, it is clear, is not committed to this sort of democracy. People on his account need not value at all the process of deciding questions together with other citizens (though of course they are not precluded from doing this) He seems to me entirely right that productive business activity has great value; but this claim, right or not, derives from a particular conception of the good, not from asking for the presuppositions of democratic decision making under the condition of reasonable pluralism. In like fashion, the egalitarian implications Rawls finds in his principle of fair equality of opportunity and in the difference principle are not simply interpretations of his own that reflect distaste for wealth. Rather, once more they are plausibly taken as necessary conditions for the type of democratic participation Rawls favors.

Why does any of this matter? Suppose Tomasi responds that he rejects the democratic solidarity that Rawls wishes to promote. If he does this, though, then his defense of his interpretations of political liberty, fair equality of opportunity, and the difference principle depend on his own conception of the good. Like most political philosophers, he is reduced to his own moral intuitions or moral theory. He has abandoned the distinctive Rawlsian method of political justification.

I do not at all contend that he is wrong to do so: I am not a Rawlsian.[4] But Tomasi ought to be clear that, though he has adopted some Rawlsian themes, he has proceeded in an un-Rawlsian way. Many of the words of Rawls are present in Tomasi's book, but not the music.

Taken apart from the misleading Rawlsian framework, Tomasi's book contains many good arguments in defense of classical liberalism. But the intuitions that underlie these arguments must be weighed against other intuitions and arguments, in particular those that support the more stringent libertarianism from which Tomasi recoils.

Tomasi has little use for strict libertarians. They consider property rights "absolute"; by this he appears to mean that they would not allow the interventions by government such as the social-safety need and provision of vouchers that he thinks acceptable. He remarks that libertarians, like high liberals,

single out the economic liberties for special treatment. But instead of lowering the status of the economic liberties, libertarians elevate them above all others. Economic liberties become the weightiest of all rights. Indeed, libertarians such as Jan Narveson assert that liberty is property. (p. 48, emphasis in original)

But if, as Narveson and Rothbard think, all rights can be analyzed as property rights, how does it follow that property rights are more important than other rights? To the contrary, the conclusion negates the premise. If there are no rights besides property rights, property rights cannot be more important than property rights. If Tomasi means that libertarians believe that property rights in the ordinary-language sense exceed in importance other rights such as civil liberties, this by no means follows from the libertarian view of property. In fact, it is directly contrary to Rothbard's own view that self-ownership is the primary right.

I do not want to close on a critical note. My favorite passage in the book is this:

From George Washington's warning to avoid the dangers of exclusive economic and military pacts with other countries … to James Madison's proposal of a constitutional amendment requiring political leaders wishing to go to war to raise funds from current taxes (rather than hiding the costs through borrowing), advocates of limited government have long been among the strongest critics of the politico-military establishments common with contemporary states … the very idea of a large publically funded military-industrial complex runs against the grain of market democracy. (p. 263)

That is well said indeed.

Fuente:

Saludos
Rodrigo González Fernández
Diplomado en "Responsabilidad Social Empresarial" de la ONU
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Monday, April 30, 2012

New York Fed: Leave the Building!

New York Fed: Leave the Building!

Mises Daily: Monday, April 30, 2012 by

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[At the invitation of the New York Federal Reserve Bank, Robert Wenzel spoke and had lunch in the bank's Liberty Room on April 25, 2012. Below are his prepared remarks.]

New York Federal Reserve Bank

Thank you very much for inviting me to speak here at the New York Federal Reserve Bank.

Intellectual discourse is, of course, extraordinarily valuable in reaching truth. In this sense, I welcome the opportunity to discuss my views on the economy and monetary policy and how they may differ with those of you here at the Fed.

That said, I suspect my views are so different from those of you here today that my comments will be a complete failure in convincing you to do what I believe should be done, which is to close down the entire Federal Reserve System.

My views, I suspect, differ from beginning to end. From the proper methodology to be used in the science of economics, to the manner in which the macroeconomy functions, to the role of the Federal Reserve, and to the accomplishments of the Federal Reserve, I stand here confused as to how you see the world so differently than I do.

I simply do not understand most of the thinking that goes on here at the Fed, and I do not understand how this thinking can go on when in my view it smacks up against reality.

Please allow me to begin with methodology. I hold the view developed by such great economic thinkers as Ludwig von Mises, Friedrich Hayek, and Murray Rothbard that there are no constants in the science of economics similar to those in the physical sciences.

In the science of physics, we know that water freezes at 32 degrees. We can predict with immense accuracy exactly how far a rocket ship will travel filled with 500 gallons of fuel. There is preciseness because there are constants, which do not change and upon which equations can be constructed.

There are no such constants in the field of economics, because the science of economics deals with human action, which can change at any time. If potato prices remain the same for 10 weeks, it does not mean they will be the same the following day. I defy anyone in this room to provide me with a constant in the field of economics that has the same unchanging constancy that exists in the fields of physics or chemistry.

And yet, in paper after paper here at the Federal Reserve, I see equations built as though constants do exist. It is as if one were to assume a constant relationship existed between interest rates here and in Russia and throughout the world, and create equations based on this belief and then attempt to trade based on these equations. That was tried and the result was the blow up of the fund Long Term Capital Management — a blow up that resulted in high-level meetings in this very building.

It is as if traders assumed a given default rate was constant for subprime mortgage paper and traded on that belief. Only to see it blow up in their faces, as it did, again, with intense meetings being held in this very building.

Yet, the equations, assuming constants, continue to be published in papers throughout the Fed system. I scratch my head.

I also find curious the general belief in the Keynesian model of the economy that somehow results in the belief that demand drives the economy, rather than production. I look out at the world and see iPhones, iPads, microwave ovens, flat-screen televisions, which suggest to me that it is production that boosts an economy. Without production of these things and millions of other items, where would we be? Yet the Keynesians in this room will reply, "But you need demand to buy these products." And I will reply, "Do you not believe in supply and demand? Do you not believe that products once made will adjust to a market-clearing price?"

Further, I will argue that the price of the factors of production will adjust to prices at the consumer level and that thus the markets at all levels will clear. Again do you believe in supply and demand or not?

I scratch my head that somehow most of you on some academic level believe in the theory of supply and demand and how market-setting prices result, yet you deny them in your macro thinking about the economy.

You will argue with me that prices are sticky on the downside, especially labor prices, and therefore that you must pump money to get the economy going. And, I will look on in amazement as your fellow Keynesian brethren in the government create an environment of sticky non-downward-bending wages.

The economist Robert Murphy reports that President Herbert Hoover continually pressured businessmen not to lower wages.

He quoted Hoover in a speech delivered to a group of businessmen:

In this country there has been a concerted and determined effort on the part of both government and business … to prevent any reduction in wages.

He then reports that FDR actually outdid Hoover by seeking to "raise wages rates rather than merely put a floor under them."

I ask you, with presidents actively conducting policies that attempt to defy supply and demand and prop up wages, are you really surprised that wages were sticky downward during the Great Depression?

In present-day America, the government focus has changed a bit. In the new focus, the government attempts much more to prop up the unemployed by extended payments for not working. Is it really a surprise that unemployment is so high when you pay people not to work? The 2010 Nobel Prize was awarded to economists for their studies that showed that, and I quote from the Noble press release announcing the award,

One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times.

Don't you think it would make more sense to stop these policies, which are a direct factor in causing unemployment, than to add to the mess and devalue the currency by printing more money?

I scratch my head that somehow your conclusions about unemployment are so different from mine and that you call for the printing of money to boost "demand" — a call, I add, that since the founding of the Federal Reserve has resulted in an increase of the money supply by 12,230 percent.

I also must scratch my head at the view that the Federal Reserve should maintain a stable price level. What is wrong with having falling prices across the economy, like we now have in the computer sector, the flat-screen-television sector and the cell-phone sector? Why, I ask, do you want stable prices? And, oh by the way, how's that stable price thing going for you here at the Fed?

Since the start of the Fed, prices have increased at the consumer level by 2,241 percent. that's not me misspeaking: I will repeat, since the start of the Fed, prices have increased at the consumer level by 2,241 percent.

So you then might tell me that stable prices are only a secondary goal of the Federal Reserve and that your real goal is to prevent serious declines in the economy but, since the start of the Fed, there have been 18 recessions including the Great Depression and the most recent Great Recession. These downturns have resulted in stock-market crashes, tens of millions of unemployed, and untold business bankruptcies.

I scratch my head and wonder how you think the Fed is any type of success when all this has occurred.

I am especially confused, since Austrian business-cycle theory (ABCT) — developed by Mises, Hayek, and Rothbard — has warned about all these things. According to ABCT, it is central-bank money printing that causes the business cycle and, again you here at the Fed have certainly done that by increasing the money supply. Can you imagine the distortions in the economy caused by the Fed by this massive money printing?

According to ABCT, if you print money, those sectors where the money goes will boom; stop printing and those sectors will crash. Fed printing tends to find its way to Wall Street and other capital-goods sectors first; thus it is no surprise to Austrian School economists that the crashes are most dramatic in these sectors, such as the stock-market and real-estate sectors. The economist Murray Rothbard in his book America's Great Depression went into painstaking detail outlining how the changes in money-supply growth resulted in the Great Depression.

On a more personal level, as the recent crisis was developing here, I warned throughout the summer of 2008 of the impending crisis. On July 11, 2008, at EconomicPolicyJournal.com, I wrote,

SUPER ALERT: Dramatic Slowdown In Money Supply Growth

After growing at near double digit rates for months, money growth has slowed dramatically. Annualized money growth over the last 3 months is only 5.2 percent. Over the last two months, there has been zero growth in the M2NSA money measure.

This is something that must be watched carefully. If such a dramatic slowdown continues, a severe recession is inevitable.

We have never seen such a dramatic change in money supply growth from a double digit climb to 5 percent growth. Does Bernanke have any clue as to what the hell he is doing?

On July 20, 2008, I wrote,

I have previously noted that over the last two months money supply has been collapsing. M2NSA has gone from double digit growth to nearly zero growth .

A review of the credit situation appears worse. According to recent Fed data, for the 13 weeks ended June 25, bank credit (securities and loans) contracted at an annual rate of 7.9 percent.

There has been a minor blip up since June 25 in both credit growth and M2NSA, but the growth rates remain extremely slow.

If a dramatic turnaround in these numbers doesn't happen within the next few weeks, we are going to have to warn of a possible Great Depression style downturn.

Yet, just weeks before these warnings from me, Chairman Bernanke, while the money-supply growth was crashing, had a decidedly much more optimistic outlook. In a speech on June 9, 2008, at the Federal Reserve Bank of Boston's 53rd annual economic conference, he said,

I would like to provide a brief update on the outlook for the economy and policy, beginning with the prospects for growth. Despite the unwelcome rise in the unemployment rate that was reported last week, the recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly. Indeed, although activity during the current quarter is likely to be weak, the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so. Over the remainder of 2008, the effects of monetary and fiscal stimulus, a gradual ebbing of the drag from residential construction, further progress in the repair of financial and credit markets, and still-solid demand from abroad should provide some offset to the headwinds that still face the economy.

I believe the Great Recession that followed is still fresh enough in our minds so that it is not necessary to recount in detail as to whose forecast, mine or the chairman's, was more accurate.

I am also confused by many other policy-making steps here at the Federal Reserve. There have been more changes in monetary-policy direction during the Bernanke era then at any other time in the modern era of the Fed. Not under Arthur Burns, not under G. William Miller, not under Paul Volcker, not under Alan Greenspan have there been so many dramatically shifting Fed monetary-policy moves. Under Chairman Bernanke there have been significant changes in direction of the money supply growth five different times. Thus, for me, I am not at all surprised at the current stop-and-go economy. The current erratic monetary policy makes it exceedingly difficult for businessmen to make any long-term plans. Indeed, in my own "Daily Alert" on the economy, I find it extremely difficult to give long-term advice, when in short periods I have seen three-month annualized M2 money growth go from near 20 percent to near zero, and then in another period see it go from 25 percent to 6 percent.

I am also confused by many of the monetary programs instituted by Chairman Bernanke. For example, "Operation Twist."

This is not the first time an Operation Twist was tried. An Operation Twist was tried in 1961, at the start of the Kennedy administration. A paper was written by three Federal Reserve economists in 2004 that, in part, examined the 1960s' Operation Twist.Download PDF

Their conclusion:

A second well-known historical episode involving the attempted manipulation of the term structure was so-called Operation Twist. Launched in early 1961 by the incoming Kennedy Administration, Operation Twist was intended to raise short-term rates (thereby promoting capital inflows and supporting the dollar) while lowering, or at least not raising, long-term rates. (Modigliani and Sutch 1966).… The two main actions of Operation Twist were the use of Federal Reserve open market operations and Treasury debt management operations. Operation Twist is widely viewed today as having been a failure, largely due to classic work by Modigliani and Sutch.…

However, Modigliani and Sutch also noted that Operation Twist was a relatively small operation, and, indeed, that over a slightly longer period the maturity of outstanding government debt rose significantly, rather than falling … Thus, Operation Twist does not seem to provide strong evidence in either direction as to the possible effects of changes in the composition of the central bank's balance sheet.…

We believe that our findings go some way to refuting the strong hypothesis that nonstandard policy actions, including quantitative easing and targeted asset purchases, cannot be successful in a modern industrial economy. However, the effects of such policies remain quantitatively quite uncertain. (emphases mine)

One of the authors of this 2004 paper was Federal Reserve Chairman Bernanke. Thus, I have to ask, what the hell is Chairman Bernanke doing implementing such a program, since it is his paper that states it was a failure according to Modigliani, and his paper implies that a larger test would be required to determine true performance.

I ask, is the chairman using the United States economy as a lab with Americans as the lab rats to test his intellectual curiosity about such things as Operation Twist?

Further, I am very confused by the response of Chairman Bernanke to questioning by Congressman Ron Paul. To a seemingly near off-the-cuff question by Congressman Paul on Federal Reserve money provided to the Watergate burglars, Chairman Bernanke contacted the Inspector General's Office of the Federal Reserve and requested an investigation. Yet the congressman has regularly asked about the gold certificates held by the Federal Reserve and whether the gold at Fort Knox backing up the certificates will be audited. Yet there have been no requests by the chairman to the Treasury for an audit of the gold.This I find very odd. The chairman calls for a major investigation of what can only be a historical point of interest but fails to seek out any confirmation on a point that would be of vital interest to many present-day Americans.

In this very building, deep in the underground vaults, sit billions of dollars of gold, held by the Federal Reserve for foreign governments. The Federal Reserve gives regular tours of these vaults, even to school children. Yet America's gold is off limits to seemingly everyone and has never been properly audited. Doesn't that seem odd to you? If nothing else, does anyone at the Fed know the quality and fineness of the gold at Fort Knox?

In conclusion, it is my belief that from start to finish the Fed is a failure. I believe faulty methodology is used. I believe that the justification for the Fed, to bring price and economic stability, has never been a success. I repeat, prices since the start of the Fed have climbed by 2,241 percent and there have been over the same period 18 recessions. No one seems to care at the Fed about the gold supposedly backing up the gold certificates on the Fed balance sheet. The emperor has no clothes. Austrian business-cycle theorists are regularly ignored by the Fed, yet they have the best records with regard to spotting overall downturns, and further they specifically recognized the developing housing bubble. Let it not be forgotten that in 2004, two economists here at the New York Fed wrote a paper denying there was a housing bubble.Download PDF I responded to the paper and wrote,

The faulty analysis by [these] Federal Reserve economists … may go down in financial history as the greatest forecasting error since Irving Fisher declared in 1929, just prior to the stock market crash, that stocks prices looked to be at a permanently high plateau.

Data released just yesterday now show housing prices have crashed to 2002 levels.

I will now give you more warnings about the economy.

The noose is tightening on your organization. Vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or, if you stop printing, another massive economic crash will occur. There is no other way out.

Again, thank you for inviting me. You have prepared food, so I will not be rude — I will stay and eat.

Let's have one good meal here. Let's make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It's the moral and ethical thing to do. Nothing good goes on in this place. Let's lock the doors and leave the building to the spiders, moths, and four-legged rats.


Afterword

Here are the details surrounding my speech at the New York Federal Reserve Bank. First, I am surprised it actually occurred.

Reaction inside the New York Fed to news of the invitation for me to speak was fast and furious, once it became public inside the bank.

I am not going to go into the specifics of who invited me. I believe that economist had a true curiosity about my views, but when he put out a formal invitation via email within the New York Fed (I received a copy), it was cancelled within 15 minutes of being put out (I also have a copy of the cancellation). So much for overall curiosity at the Fed about true differing views.

The economist who invited me assured me that he was still arranging the speech. Yet as the day grew closer, I feared that I would get word that my speech time would be cancelled.

When I arrived at the bank, the economist who originally invited me told me that there was a "schedule conflict" with a seminar and that the group meeting would be smaller than originally planned. That really didn't bother me, I was in the Fed, and those wanting to hear my speech would.

However, I did detect tension in faces, while I gave my speech, and perhaps some anger. But the anger soon dissipated.

As soon as I finished my speech and to defuse the tension, I asked an immediate question as to whether the economists present believed that Austrian theory had a legitimate case to make. The eventual response came down to the statement by a Fed economist that there had been worse crashes in the economy before the start of the Fed. (Side note: this is a regular argument used by those supporting the Fed. They will claim that crises were worse before the Fed. I have seen fragmented work demolishing this view, but I think there is the opportunity for some economics student to delve into the pre-Fed period in America and delve into the crashes from an Austrian business-cycle viewpoint and point out clearly how government was involved in such crises, if they were — which I suspect they were. Such a study would be extremely valuable in knocking a peg out from under the Fed supporters who attempt to justify the Fed by this argument.)

I then asked one economist (a 20-year-plus veteran of the Fed) if he was familiar with Austrian economics. He said that in college he had taken two history-of-economics courses and then said that the Austrian School is part of the classical tradition. This told me that he was not aware of the important differences between the Austrian School and classical economics (and also the neoclassical tradition).Download PDF

Later on in the Q&A, one economist remarked that he understood the Austrian School and that they were the group that wanted a constant increase in the money supply and developed the equation PV=MT. This, of course, is not the Austrian view, but a view held by the Chicago School. Thus, in one swoop, this economist demonstrated not only his ignorance of Austrian views on monetary policy but also confusion about Chicago School views.

To diffuse the tension a bit more, when one economist made a particularly Keynesian statement, I said, "It does not sound like you are going to be walking out of here with me after lunch like I recommend." That brought laughter.

At another point, I told the story of how in a phone conversation with Lew Rockwell, Lew and I were discussing why I had received an invitation by the Fed, and Lew said, "They are probably sick and tired of all those boring speeches that they have to listen to." That really brought laughter.

A good deal of the Q&A was about my Rothbardian view that prices should be allowed to decline. They were really fascinated by this view and clearly had never heard it before. One economist raised the question of how falling prices would impact assets. The answer is, of course, that an asset is valued based on its discounted value stream and that falling prices would be taken into account in the discounted-present-value models. However, I do not believe this view has yet been developed fully, and it is another good project for a budding economist.

Overall, I was simply amazed at the lack of knowledge of these economists about the Austrian School. It was very close to nonexistent. This points out the extremely important work being done by the Mises Institute and also Ron Paul. The number of students with an understanding of Austrian economics is increasing at an exponential rate. I can't imagine that future economists, even those who work for the Fed, won't have some acquaintance with Austrian economics thanks to LvMI and Ron Paul.

My experience at the Fed points out the importance of intellectual debate and study. Clearly, the economists whom I met at the Fed were brought up in an intellectual tunnel, where they had no exposure to Austrian economic theory. They read and study within a limited range of writers. But they were very curious about my view.

One economist asked me how I knew the housing market was going to crash. I responded that because of Austrian theory, I understood that money created by the Fed enters the economy at specific points and that it was obvious the housing market was one of the those points. I told him that I also knew that this would eventually result in price inflation (as the money spread through the economy) and that at that point the Fed would slow printing and the housing market would collapse, which is just what occurred.

I suspect that at the top of the Fed, there are some very evil types who understand that the game is to protect the banksters, but I don't think that is the view held by the outer ring. They have been brought up in the system, and they don't ask questions that threaten their pay checks (it was most difficult impossible to get the economists to discuss any of the erratic moves made by Bernanke) and work developing models within the twisted Keynesian model.

If you set a firecracker under them, like with the speech I gave, and then treat them with respect while discussing their opposing views and lighten things up a bit after the firecracker has gone off, perhaps some impact will be made to the tunnel thinking that they have been exposed to their entire professional life. Even more important, hopefully my speech will help budding students to understand that the Fed propaganda machine claims lots of justifications for their money-printing machines that when looked at closely can not be justified. The greater the number who understand the failures of Fed thinking and operations, the closer we will be to ending the Fed.

Fuente:

Saludos
Rodrigo González Fernández
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