An excellent book, brief, to the point, a great help in focusing on the essential, and a powerful and incisive refutation of the errors in fashionable/progressive constitutionalism. Though focusing on specific issues like "judicial activism", Sandefur provides a comprehensive account of the basic tasks and features of the Constitution.
Particularly interesting are his accounts of
the tug-of-war on the issue whether to vest citizenship and sovereignty in the states or on the federal level,
how state precedence was an important shield for the anti-abolitionists,
how the 14th amendment was intended to bring about an appropriate balance between state and federal power that would give citizens, in Madison's words, "a double security" as "the different governments will control each other,"
by giving the federal government "power ... to protect by national law the privileges and immunities of all the citizens of the Republic and the inborn rights of every person within its jurisdiction whenever the same shall be abridged or denied by the unconstitutional acts of any State," [p.63], and
"the Slaughter House Court removed the most potent protection against state overreaching and threw that double security out of balance." (p.70)
I am looking for similar books, preferably not too voluminous, that give the reader a concise notion of the essence of the American Constitution and the arguments behind it. I will be grateful for recommendations in the comment section.
The cow on the old wall: Since there was lots of excellent grass on the old wall, some of the citizens of Schilda proposed to let a cow graze on it. A rope was put around the cow's neck and a group of strong men hauled her up. In the process, the cow got strangulated. When the citizens of Schilda saw that the cow was sticking her tongue out, they would jubilate: "Look she's grazing!
The federal government is moving towards abolishing the Renewable Energy Target rather than scaling it back in a move that will cost almost $11 billion in proposed investment and which is at odds with the views of its own Environment Minister.
Let’s parse this sentence bit by bit.
Scaling back the RET is described as “a move that will cost almost $11 billion in proposed investment”. “Investment” is one of those hurrah words so that anything that can be described as investment is automatically given a warm reception. What cutting the RET will actually do is cut almost $11 billion dollars of waste. Eleven bil on more windmills and solar panels would not get you back ten cents in the dollar. Stopping such expenditure dead in its tracks will only promote future economic growth, or at least it will if the government doesn’t decide to spend the money itself in some other totally useless way.
Here is the message: DO NOT SPEND MONEY ON ANY SINGLE INVESTMENT THAT WILL NOT OF ITSELF AND ON ITS OWN PROVIDE A POSITIVE RETURN ON FUNDS EMPLOYED IN A REASONABLE PERIOD OF TIME (LET US SAY THE NEXT THREE YEARS). If you can’t see a return, and prove it in a published cost-benefit study, don’t do it.
I don’t say you shouldn’t provide welfare. By all means provide welfare. Let us look after the sick, the aged and the disabled. But here, since the demands are near infinite, judicious allocations of funds will be required. But while welfare expenditures may be important for those who are unable to work or are too old to work, none of these expenditures will promote economic growth and future prosperity.
We do not have an infinite pool of productive resources. We must prioritise. Removing renewable energy targets is pure profit for the economy, a 100% benefit. So would getting rid of paid parental leave. Get rid of them both at once. I wish the NBN was also up for grabs since getting rid of it would also be a net positive.
And I should finally mention since I am throwing it all into the pot, do not raise taxes on anything in any part of the economy. If the kinds of revenues you are in receipt of are insufficient to pay for everything in the basket, then take some things out of the basket.
Interesting in its own right, the below lesson in breaking open parmesan cheese strikes me as providing a graphic analogy of how spontaneous order and man-made order interlock fruitfully. To adapt to and use the possibilities of a self-generating order to your advantage you must study and understand its nature, and learn to find an interface between its features and your needs. Respect for and insight into emergent order will tend to enhance the range of wholesome applications for conscious intervention. It would be rather a surprise if people, on being given more liberty, were not to extend their efforts at controlling their environment and making it accord ever more closely with their needs. For that reason alone, politics and freedom are inseparable twins of great potential and ambivalent effects.
See also my post on Greed versus Self-Interest, in which I argue that what defines man is the urge to adapt to his environment by developing and satisfying new needs. This fundamental anthropological condition explains the incidence of the entrepreneur and free markets, no less than the presence of political ambition and creativity. Proper stewardship of liberty requires participation in the vast areas in which politics rather than market based activities determine the nature and extent of freedom in a society.
Edward Elgar publishers, in association with the Institute of Economic Affairs, are about to launch a revised Second Edition of the must-read-book by my favourite economist Steven Kates: Free Market Economics. An Introduction to the General Reader.
The author gives us a little personal background information on the book's cover:
That is very likely the mill from which the plaque has been modelled. I wished to have a cover that showed a water mill made of clay because the two most important influences on me have been John Stuart Mill and the English economist, Henry Clay. My wife, bless her, found just such a combination on the net as the plaque was being sold just then. I therefore bought it, photographed it and now the clay representation of a mill is on the cover. I also like it because it is both nineteenth century and part of the productive apparatus of an economy. And it fits in with my understanding of Jean-Baptiste Say whose factory producing textiles was driven by a water mill. Finally, I just think it’s beautiful. I could not think of a better cover. My profound thanks to Ant for conjuring the origins up.
Make sure to read the article to which the image credit links.
Economic reinvention is at the heart of business cycle recovery and economic dynamism. In the depths of an economic downturn, entrepreneurs take advantage of cheap, used capital facilities and idle workers to launch them in new uses. The productive supply-side reinvention leaves behind the broken economic model and unveils a creative venture of greater social value.
The failure to appreciate this core economic dynamic lies behind the failures of big-government attempts to micromanage the economy. Discretionary Keynesian stimulus is built on the notion of propping up the existing firms, labor market relationships, and purchase patterns. In the aftermath of the Great Recession and Obama Administration stimulus efforts, new-firm creation dropped dramatically in the U.S. and the recovery proved modest at best. This is not a coincidence. Interfering with the core mechanisms for reinvention harms the capacity of the economy to transform itself for the future. [...]
Flexible markets, a ceaseless commitment to innovation, the capacity to organize and reorganize skills, risk capital, and technologies are the mechanisms of economic reinvention. Personal freedoms, religious freedoms, and small non-intrusive government are the mechanisms of social, cultural, and personal reinvention. Our policy future should be built on these principles, and not on top-down, one-size-fits-all regulatory and discretionary fiscal approaches.
One of the most destructive popular myths is the idea that inequality is a severe problem and needs to be replaced by some state of enhanced equality - which always turns out to be inequality dysfunctionally rearranged according to the preferences of those with sufficient political clout. Why is the myth so popular? To like it you only need to regurgitate bromides that make you instantly likable and respected; to not like it you must think and look beyond appearances and face distrust and moral outrage.
Be that as it may, to some extent everyone reroutes the flow of information from a lecture like the below one by Richard Epstein through the filters of his personally preeminent themes. For me these were self ownership and first possession, which I happen to do some reading on at the moment.
A reflection on self-ownership
Let us concentrate on self-ownership, which is a concept I find awkward, maybe because one tends to associate ownership with inanimate objects or non-human creatures, and only odiously with humans (slavery). What self-ownership really means is a bundle of rights that legally entitle you to do certain things by applying your mind and body as you see fit. I have discussed the errors underlying the concept of absolute self-ownership in Elementary Errors of Anarchism (1/2) - explaining that self-ownership can have legal and moral meaning only as a relational concept, i.e. one reflecting and defining social relationships, for which reason it will always be constrained and conditional so as to allow for the necessary give and take between human beings. Absolute self-ownership (doing whatever one likes) and no self-ownership (being unable to ever apply ones mind and body as one sees fit) are two extremes that can never serve as modes of structuring social order. So self-ownership lies somewhere on a continuum between these extremes.
The attempt to qualify self-ownership by the so-called non-aggression principle fails. The principle posits never to violate a person's (bundle of rights called) self-ownership unless that person initiates aggression against you - which is why anarchists consider the state illegitimate, as it does initiate or threaten to initiate violence against people who have not initiated aggression against the state or anyone else. But this reasoning is remarkably naive, begging the all-important question: what is to count as illegitimate aggression? First, we have to settle what a person is allowed to do and what not; only then can we discern aggression from non-aggression.
The challenge then is to find a (more differentiated) system of command [a strong term admittedly, bear with me] generating rules that produce optimal outcomes from self-ownership.
It appears that now only three such systems of command remain to be considered:
The first two treat self-ownership as a residual outcome subject to communal or governmental approval, the second is based on a legal framework that seeks to leave as much discretion as possible to the individual regarding what she can or cannot do with the help of her mind and body.
(1) Communal determination of residual self-ownership - i.e. all human beings negotiating instantly and simultaneously with each other the content of self-ownership of each person, as in a Rawlsian world, where talents and other personal advantages that may be ascribed to luck are considered the property of all those not so advantaged, or the task is delegated to
(2) central determination of residual self-ownership - i.e. an authority endeavouring
(a) to approximate either the end specified under (1), or
(b) to impose a regime of rules that purport to serve an even better or morally more valid end, best known to and enforced by that authority.
Instead of self-ownership we could just as well use the term public ownership, as there will always be precepts within the bundle of rights that constitutes self-ownership which reflect public constraints on the individual - even anarchists admit this by conceding the non-aggression proviso. The term self-ownership, I surmise, is chosen to express strong support for a preponderance of decision making options delegated to the individual rather than to public discourse or public authorities.
The best system of command, the liberal would argue, occurs under a strong presumption in favour of
(3) determination of self-ownership under rules that represent a supra-jurisdiction, if you will, establishing in its turn a vast sub-jurisdiction for the individual to determine the content of self-ownership, i.e. the rule of law which enforces individually delegated decision making under common constraints, as opposed to the rule of man which is based on unconstrained decision-making by central authority.
This third approach to self-ownership amounts to an extensive privatisation of law. Rather than approval by the public or authorities, what is needed in order to act in a way covered and protected by the law is compliance with general rules that circumscribe broad areas of discretionary decision making by the individual. In fact, the modern state is the largest privatizer of law ever seen in history, enabling an unprecedented independence of decision making by individuals and organisations from the discretion of rulers - which is what we mean by civil society.
Under a law conceding extensive sub-jurisdiction to the individual, we can achieve more things and achieve them more readily and more peacefully.
Ultimately, the extent of (a) delegation empowering the individual and (b) its benign efficacy are a matter to be empirically established.
The whole belief in individual freedom is only as good as our ability to see where personal liberty ought to be fostered and where it must be enclosed.
Now, this is where Richard Epstein's lecture comes in instructively. He gives an outline of the reasons and conditions that make a preponderance of individual decision making power desirable, and indicates how liberty is strengthened by the very limits we put on her. He also explains how forcing equality damages the common weal brought about by self-ownership.
All in all, the lesson that I take away from thiinking about Epstein's belowlecture is that the key concepts of liberty such as self-ownership or private property must not be treated as conclusive dogmatic tenets but as testable scientific propositions, that in certain circumstances may prove to be incomplete and in need of complementation or contexually dependent suspension.
No such thing as market failure
Incidentally, the term "market failure" [time mark 07:15] is infelicitous, from a liberal point of view: there are things markets are not equipped to deal with, like making your neighbour fall in love with you. It would be just as inappropriate to say Georg fails because he cannot make your neighbour fall in love with you. Of course, Richard Epstein does understand this. Sometimes, however, one yields to linguistic convention. Sadly, "market failure" talk is a conventional habit that reflects the dominance of uneconomic and anti-economic thinking in our societies, and not only among "ordinary people" but very much among economists, too, who make careers by exploiting the market failure myth - like Joe Stiglitz.
George Reisman discusses Piketty's misconceived notion of capital and expounds his own view of the matter. The article is long, difficult, but a must-read, I am afraid. I couldn't say, I'm yet in a position to extemporise an account of Reisman's full argument. However, I am sure, trying to come to grips with it is a worthwhile exercise.
Over the course of several generations, the US government has taxed away trillions upon trillions of dollars that otherwise would have been saved and invested and thereby added to the capital of the American economy. Capital is the wealth owned by business firms, which is used for the purpose of earning sales revenues and profits. It consists of farms, mines, factories, machines, tools, materials, components, semi-manufactures, means of transportation, warehouses, stores, merchandize of all kinds, and more. It includes the funds used to pay wages to the employees of business firms, and the funds used to finance the purchase of expensive consumers’ goods, such as houses, automobiles, and major appliances. The trillions have been taken away through the progressive personal income tax, the corporate income tax, the estate tax, the capital gains tax, and the social security system and its taxes. In addition, the US government has diverted trillions of dollars of savings away from investment, and into its coffers, in order to finance its chronic budget deficits. And its policies of chronic inflation and credit expansion have caused the waste of a substantial portion of the greatly reduced supply of capital that remains.
Again, let me emphasise that participation in political competition, political engagement, and hence the work of politicians are of the essence in defending the system of liberty that underlies our civilization.
Just ponder these words of a politician:
…However, I leave the post with great misgivings about the power and irresponsibility of - to coin a phrase - the Green Blob. By this I mean the mutually supportive network of environmental pressure groups, renewable energy companies and some public officials who keep each other well supplied with lavish funds, scare stories and green tape. This tangled triangle of unelected busybodies claims to have the interests of the planet and the countryside at heart, but it is increasingly clear that it is focusing on the wrong issues and doing real harm while profiting handsomely. Local conservationists on the ground do wonderful work to protect and improve wild landscapes, as do farmers, rural businesses and ordinary people. They are a world away from the highly paid globe-trotters of the Green Blob who besieged me with their self-serving demands, many of which would have harmed the natural environment. I soon realised that the greens and their industrial and bureaucratic allies are used to getting things their own way. I received more death threats in a few months at Defra than I ever did as secretary of state for Northern Ireland…
Chris Berg of Australia's Institute of Public Affairs discusses "Too Big To Fail", and comes to a different conclusion than I do. He argues that the problem cannot be solved because it is an inherent concern of politicians to protect certain companies or institutions from terminal collapse.
I would argue, that only politics can change the present state of affairs. However, if libertarians are unwilling to participate in politics, eschewing the competition for political dominance of the state, matters are indeed bound to linger on in their unsatisfactory condition.
"Too big to fail" describes financial institutions, mostly banks, which have become so large and so deeply integrated into the financial system that if we let them collapse they would take everything else with them.
If a corporation is too big to fail, then, it follows, taxpayers have to bail them out.
It's quite a problem. A market economy is supposed to be dynamic, full of entries and exits. Firms that add economic value thrive. Those that do not go broke.
So bailing out failed companies makes the economy less efficient. More gallingly, it redistributes money from the poor to the rich. And it creates "moral hazard" - a belief by management that ultimately they won't have to pay for their mistakes.
Moral hazard is a particularly severe problem for banks. Banks trade on risk. A bank's basic job is to transform short-term highly liquid deposits into long-term extremely illiquid loans. Too much of the latter will prevent redemption of the former.
Too big to fail encourages banks to make riskier loans. Why wouldn't they? They're not the ones bearing the cost of failure. Taxpayers are.
So it would be great to get rid of too-big-to-fail. Or at least limit it somehow. The Murray Inquiry has a few ideas: higher capital requirements for bigger institutions, for instance, or new procedures for when banks do fail.
But the question isn't what should we do about too-big-to-fail but what can we do about it.
And the answer to that question is almost certainly nothing.