Rothbard – Fudged Money Supply Figures?

I came across this on the Mises forum, in my search for any other examples of Rothbard’s tendency (noted by several people) to manipulate facts to support his objectives.

I’ve noted some of them before. His treatment of Ayn Rand seems to be the strongest example and the best documented. The others I can’t judge yet, but they include

misrepresentation of Adam Smith (which provoked a rebuttal by David Gordon, which was then answered by David Friedman)

misrepresentation of Milton Friedman’s work (addressed by David Friedman)

and a couple of examples from banking history I’ve noted elsewhere.

Here is another example from Civil War history. Again, there could be other explanations for it (oversight, confusing data etc.), but it’s one more question mark. I have no wish to exaggerate his failings (as he did others), but it’s at the least very curious and troubling.

Here’s the comment as it appears on the forum (I’ll add links later):

I’m starting to research into the Panic of 1873 for a college project I have. Among other economic literature, I reviewed Rothbard’s “A History of Money and Banking in the United States”. Upon scrutinizing his money supply statistics, I’ve noticed either a vague (i.e, not explicitly distinguished) or downright false money aggregate of his.

At the beginning of his talk about the Civil War, Rothbard mentions that “over the entire war, the money supply rose from $745.4 [sic] million to$1.773 billion, an increase of 137.9 percent, or 27.9 percent per annum.” (p.130).

However, on page 153, Rothbard writes that “Total state and national bank notes and deposits rose from $835 million in 1865 to $1.964 billion in 1873, an increase of 135.2 percent or an increase of 16.9 percent per year.” (p.153)

So what happened here? At first I suspected that Rothbard was being ambiguous by referring to the later statistic as “bank money”, but later Rothbard seems to use it as his total statistic of “money supply”. Even if this wasn’t the true money supply, then that means Rothbard was lobbing off roughly $1billion (and more as currency increased) in all of his subsequent monetary calculations.

Did the total money supply drop by a “cataclysmic” 50% from 1865 to 1867, was Rothbard wrong on his money supply statistic for the Civil war or his later money supply statistic, or am I missing something here?

Note that if we treat $1.964 as the money supply as he seems to do, then using his earlier estimate (1.773) the expansion over nearly ten (8) years increased by a paltry10.77%, or 1.34% per year. In a similar statistic (though with different money aggregates), Friedman states that the money stock from 1867 to 1873 increased by 1.3% per year. Although this is inflationary, one wonders how such a small increase in the money supply could have caused a very serious banking panic/business cycle in 1873 (say what you will about the subsequent recession, the actual panic was very supposedly severe).

Although still optimistic there’s a way to make sense of this, I’m a little disgruntled by this mistake/ambiguity made by Rothbard. Either he just wanted to calculate a “total money supply only for the Civil War” and then proceeded to concentrate solely on bank deposits, or there is a large error in his statistics. I know he gets his money sources from the historical statistics, which I plan on consulting, but that doesn’t seem to answer his ambiguity/incorrectness.

Any thoughts on these money supply statistics? Any help is appreciated.

Well I got the book, 1957 and all. I felt an air of history as I pulled it off the shelf and sifted through its yellow and fading pages.

From what I can tell, there is good news and bad news.

The good news is that Rothbard’s money supply statistics add up, at least according to this book. All of his Civil War totals are obtained by adding total bank deposits, state bank notes, gold coins, silver  subsidiaries, fractional currencies, other U.S currency, greenbacks,  and national bank notes.

The bank news is that judging by this book, some of the statistics are questionable, and Rothbard should be severely criticized for his misleading interpretations. The most obvious is his 1865-1873, state and bank deposits and notes increased about 16.9% per annum. From the book, this is correct, but using highly suspect statistics. It is true that state and national bank notes and deposits increased from 1865 (roughly $869) to $1.964 in 1873, an increase of 16.9% per annum. However careful inspection reveals that according to the statistics, the number of deposits did not increase really increase 16.9% per annum, but rather 50% between last two reported years (1872-1332 and 1873-1964)! My guess is that the bank money (and to a greater extent total money supply) did not explode in one year, but rather the amount of banks voluntarily reported their deposits to the state banking authority. It even says in the forward to the particular section Rothbard used that “Prior to 1896, figures shown here include all national banks and all State banks that voluntarily reported to State banking departments in the United States..”. My guess is that with the Panic in 1873 and more banks under distress, they contacted the state authorities more so than before.

Taking out 1873, and just taking the totals from 1865 to 1872 (for whatever they are worth, considering that they are probably low due to faulty reports), the annual percentage increase was much lower, roughly 4% per year! For Rothbard to report these statistics that bank money increased 17% per annum when it reality it seems to have come only from 1)the last year 2)more likely bad statistics is downright sloppy and poor research.

Regardless of the factual accuracy of the Historical Statistics (I’m extremely hesitant to see bank totals increasing by 50% in one year), even with the statistics he is using they clearly did not increase 17% per year, as Rothbard is claiming.

The problem is he isn’t really stating that the annual expansion in bank deposits wasn’t 16.9%. It’d be one thing if the yearly averages were 10, 20, 12, 15, etc etc, which averaged out to 16.9%. But in the last year when you have a 50% increase lifting an otherwise 7-8 year statistical average of 4%, and then claiming that there was an average of 17% bank credit expansion,it  is very misleading and  resembles an outlier. In addition, it seems likely that the overall expansion wasn’t that great and there were less banks reporting in the late 1860s/early 1870s their financial conditions, which means the bank deposit figures for that time period (1860s) was abnormally low, giving the illusion of great bank credit growth than what actually occurred. Either the statistics are 1) Entirely truthful,which would give great doubt as to why no one has written about one of the U.S’ greatest yearly MS expansions 2)Not accurate, and Rothbard was misleading to use these aggregates and conducted poor research. Even if he wanted to use these numbers, he should have at least written in a footnote that the totals weren’t accurate, especially the 16.9% figure he was using.

EDIT: “The problem is he isn’t really stating that the annual expansion in bank deposits wasn’t 16.9%. It’d be one thing if the yearly averages were 10, 20, 12, 15, etc etc, which averaged out to 16.9%. But in the last year when you have a 50% increase lifting an otherwise 7-8 year statistical average of 4%, and then claiming that there was an average of 17% bank credit expansion,it  is very misleading and  resembles an outlier. In addition, it seems likely that the overall expansion wasn’t that great and there were less banks reporting in the late 1860s/early 1870s their financial conditions, which means the bank deposit figures for that time period (1860s) was abnormally low, giving the illusion of great bank credit growth than what actually occurred. Either the statistics are 1) Entirely truthful,which would give great doubt as to why no one has written about one of the U.S’ greatest yearly MS expansions 2)Not accurate, and Rothbard was misleading to use these aggregates and conducted poor research. Even if he wanted to use these numbers, he should have at least written in a footnote that the totals weren’t accurate, especially the 16.9% figure he was using.”

Beneath this comment is a response from someone who lays out various possible explanations and seems to think Rothbard wouldn’t have manipulated the data intentionally.

There could be many reasons for this error.  I don’t think he was lying.

He states clearly that this is the result of pyramiding of state bank deposits on top of national bank deposits and it doesn’t explicitly say that this happened in one year.  It says “…after 1870…” not in 1872.  Also, he says, “From then on [May 1871] paper money would be held consonant with the U.S. Constitution.” (p. 153)  Although, his stating it as ‘percent per year’ could be considered dubious and was very generous to his argument.

If we are to assume that the statistics prior to May 1871 (the under-reporting) would not have counted all of the paper money as some states had made it illegal. (p. 152).  And my guess is that the unreported money that was being counted after 1871 was so because the state banks had a new Federal law forcing them to redeem all of the paper they had and were using. (Kind of an argument that if the Federal government would have stayed out of it there would never have been the statistical explosion that Rothbard is exploiting, which ironically Rothbard would have wanted.)  To me this could be an explanation as to the dramatic rise that Rothbard was seeing in total money supply.  Again, he could also have been following, or interpreting, again in a possibly conspicuous manner, along with the Federal law.  But lying, I don’t think.

Rand Wants Spotlight, Ron Approves, Says Rand Staffer

Update 3 July 17:

OK. Apparently Ron Paul’s staff/campaign people are making statements at odds (deliberately? accidentally?) with what Ron Paul’s saying. Not the first time, either. Weird.

Here’s a link confirming that Romney did deny Paul a place to speak at Tampa.

Update 1: I noticed a link at LRC saying that Ron Paul would not be allowed to speak at Tampa, because Romney is terrified of him..but clicking it on it send me to an article at Jeff Berwick’s Dollar Vigilante (Berwick seems to be a Casey friend) talking about an anarcho-capitalist meet with Murphy, Woods, Casey and others. I couldn’t find anything about it at all about Romney preventing Paul from speaking, or anything about Paul on it at all. Maybe it’s a wrong link?

Update 2 (July 15) OK. I just noticed this, where it’s Ron Paul who’s claiming that Romney is too terrified to let him speak.  Maybe, but then why was he so soft on Romney for the last six months?

Sorry. All of this sounds like good marketing to me….including the Berwick stuff…directed at college age kids.

ORIGINAL POST

A report at Business Insider says the Rand endorsement shows he wants star status  in the GOP and a serious shot at the Presidency in 2016:

“For more pragmatic Paulites, however, the surprise endorsement was a shrewd political ploy that puts the younger Paul front and center in the national spotlight, and positions him as a leading figure in the Republican Party, with his eyes set on 2016.

James Milliman, Sen. Paul’s state director, explained the logic to a group of Young Republicans in Louisville, Ky., last week:

“As a practical matter, you have to endorse a candidate before the convention — Romney is going to get the nomination, no doubt about that at all, so it behooves everyone to have Sen. Paul to endorse him before the convention,” Milliman said. “It could enable Sen. Paul to have a prime speaking role at the convention, and his dad to have a prime speaking role at the convention. I think those things factored in.”

The remarks — the Paul team’s most candid comments yet regarding the endorsement — appear to suggest that the younger Paul is more concerned with attaining star status within the GOP than with retaining his father’s army of diehard fans.

Even more interestingly, the same report  quotes Milliman, Rand Paul’s state director, as saying that Ron Paul is OK with the endorsement.

“Rand would not have done this without his dad’s okay,” Milliman told the Louisville Young Republicans. “So if his dad is fine with it, I think everybody else will be fine with it.”

That’s not what Lew Rockwell has been saying.

So who’s right?

Desi Divas: Waheeda Rehman

Classic Bollywood film actress, Waheeda Rehman (1936-  ) was born into a conservative Muslim family in Chengelpattu, Tamil Nadu, in British India and was a talented classical dancer in her youth. She originally intended to become a doctor, but bad health got in the way, so she turned to acting. Starting with Tamil and Telugu films, she went on to star as the leading lady in scores of Hindi films in the 50’s to 70s, many of which ended up as classics.  After a long absence from the screen, she revived her career with character acting in the last decade.

Rand Paul: Welshing On No Aid To Israel?

If I were a young libertarian who’d emptied my wallet into Rand Paul’s campaign, I’d  be painting his face on the basement wall and throwing darts at it, especially after the recent revelation at Liberty Fight about Rand Paul’s apparent silence on the $9 billion dollars in aid guarantees to Israel.

That’s after Rand spent the whole of 2011 (just google) swearing he’d cut aid to Israel. It’s not 100 percent clear what happened with the vote, some are making excuses and giving plausible explanations,  but at this stage of the game,  it doesn’t look good.

Also, one thing that seems to have missed comment is that the Senate summary of the bill specifies support for Israel as a “Jewish state,” not just once, either. Delete Israel and substitute, say, “Malaysia as a Muslim state,” and then you’ll get how just preposterous business-as-usual in DC is.

Not only is this vast sum of tax-payer money going to a foreign government (that’s all aid is anyway), it’s going to a form of government that runs counter to something the Constitution stands for – the US is against a state establishment of religion.

Meanwhile, the same people who applaud “Israel as a Jewish state” every day of the week will foam at the mouth and bark like rabid dogs if someone suggests that the US is a Christian state or that India is a Hindu state.

The h*** with Rand.

Ten Ways To Fight The Police State

Image: technologyjones.com

There are ways to fight the police-state, on your own, without joining any group or party and giving up your independence.  Protecting your privacy on the Internet is one of them.

Just don’t forget that a lot of privacy sites are really government projects. The idea is to steer you to privacy software put out by the government’s buddies. It’s the oldest trick in the book.

But given that, there are a few things you can do to protect yourself. Here are ten of them.

1. Get your name and address off of mailing lists, subscriber lists, forms, directories, and data centers. You may need to keep doing that every year, as long as you have a credit card with your home address on it.

2.  Use Google only if you need to. Otherwise, use private/anonymous search engines. There are a few. I won’t name them, because when people start selecting one or other engine, then the powers-that-be start paying more attention and screw things up for them.

3. Use a virtual private network, but use it with caution. There’s a Catch-22 here. The free ones probably make money by selling your information… or worse. The ones that aren’t free need you to sign up on the net with an account and a credit card. Which means another vulnerability.  Passwords can be hacked and licenses can be stolen. Plus, VPN’s with servers and HQ’s in America, Britain, Europe and many other places, cannot protect your privacy if you get caught up with the police or lawyers, even tangentially.  Your ISP and VPN provider will be forced to comply with subpoenas and laws that demand data-sharing.

Completely anonymous off-shore VPN’s on the other hand can arouse government suspicion, even if you’re as innocent as a baa lamb.

Also, what if someone hijacks your VPN to commit crimes? How would you prove it wasn’t you, if someone wanted  to incriminate you?

I  asked the  FBI this recently, and they tell me that they can figure it out. But do you really want to be in a position where only the FBI can clear your name? And what if it’s the FBI that wants to get you in trouble? I mean, it’s not unheard of.

4. Limit what you do on the Internet. If you can’t stop using the net altogether (which is really the best option), try to curtail what you do. Limit what you buy on the net. Stop sending sensitive emails, even encrypted ones, over the net.  If you have to sell on the Internet to make a living, stay on top of computer crime by following a good security forum. Wilders is one.

5. Share computers or use public computers.  Lots of times, the easiest way to be private is to use a  computer used by other people you can trust, so long as you don’t input sensitive information. That way what you do is mixed up with what lots of other people are doing and it’s harder to track.

6. Don’t tell anyone your privacy tricks. I used to suggest things on this blog before, like using Scroogle or Ixquick. I don’t any more. The more people start using one trick, the more the government…or the criminals on the net…starts focusing on that trick. I’m not about to research things so people can track and harass me using my own research against me.

Who would do such a scummy thing?  Short answer – scum.

On the net, the scum rises to the top.

7. Don’t put your ideas out on the net, unless you’re prepared for everyone to take them without credit. While many people try to be ethical, a substantial number think that the ease of digital crime is a justification for it.

Keep your thoughts to yourself for other reasons, as well.  Any opinion you voice publicly is going to be held against you.

Write what your conscience demands. Just be sure you can live with how people will use it, misuse it, and abuse it.

8.  Avoid social media, unless you have to connect with someone for a reason. I deleted my Facebook account, my Digg account, Technorati, and a bunch of other things I don’t want to mention. I keep my blog up for several reasons, but from the viewpoint of privacy, it’s a terrible thing. I sometimes wish I had never begun it.

9. Keep a low profile. Even if you do have to write/blog, try to keep it under the radar. Blogging about politics is always going to get attention. You can’t avoid that. But you can always avoid  confrontations. You can always make an effort to give both sides their due,  You can filter comments, avoid posting on forums/sites you don’t know personally, and side-step flame-wars with all the cretins and sociopaths out there.

The net is a highway.  You’re driving next to strangers. Honking your horn or waving a hand at them is OK. Getting into their cars and driving off to dinner with them is another.

10. Watch your IP (Internet Protocol). Your IP address is being harvested by someone all the time. Cookies collect it, forums and boards record it, email providers and search engines track it.  You can disguise it or change it, but determined people can always get hold of  an IP.

That means they can figure out where you are, physically. Which is pretty unnerving. I’ve had a few nasty experiences when enemies got hold of my IP.

So change your IP as much as you need to; change your computer and  ISP provider every year, or even every six months. It’s not so hard to change a computer if you buy it refurbished or second-hand. A good Dell laptop can be had for about $120.  You can always sell the old one and get back some of your money.

On the other hand, you might want to arrange for a few traps for any would-be spies. In that case, your approach might be a bit different…..Be creative.

As for ISP’s, there are always deals, if you look for them.  Quote a price and ask your ISP if they will match it.  In this economy, companies are willing to lower their rates to attract customers.

Gender Wars: A Word To The Wise

Comment at A Voice Of Men.com

“If men were all that into how women look, why does she think that 99,9% of the men on the planet will shy away from the question: ‘Does this dress make my ass look fat?’
Besides the trouble you might get into if you actually dared answer the question truthfully, I find it really hard to believe that men give a rat’s ass to begin with. On a very basic level men will look at a woman and go:
‘Is she young and fertile?’
‘Yes.’
‘Ok, she will do.’
All you have to do is look at all the fat, bleached and self-centered women out there, that are some man’s wife, to prove this point.

If women spend half the amount of time they spend in front of the mirror, trivializing over petty details about their looks, on actually having sex with us, and doing something serious about what’s going on on the inside, there would be no shortage in men loving them.”

Comment:

Blog comments are often more enlightening than the blogs themselves. Digging around for more information about the crime of battery-acid throwing, common in some parts of Asia including India, I came across a masculinist blog, on which I found this gem of a comment.

I call it a gem, because although it’s ill-tempered and unfair (we women do spend time on fixing our “insides”), it manages to say more in one paragraph, intentionally and unintentionally, than many an essay in ten.

A truth that is uncomfortable to many women is that sex is more important to men than it is to women (we’re talking averages and generalities).

Despite all the media hype, beyond a few attributes signifying youth and health (which are both important for fertility),  a high level of beauty is simply not needed for male sexual and emotional engagement, as even men readily admit.

(See here and here and even here (Naomi Wolf: “The Beauty Myth,” Anchor, 1992), although Wolf’s other contentions are controversial and not something I want to bring into this blog post.

Then, what is important for male sexual engagement?

Evidently, the opposite of female self-involvement.

That would be a woman’s awareness of the needs, thoughts, and feelings of people around her.

Something your neighborhood padre would be happy to celebrate.

Women concerned about the raging gender-wars should chew on that.

Maybe Shakespeare was onto something, after all.

Vox Day: Free Trade Violates The Property Rights Of The Nation

Christian libertarian Vox Day turns propertarian arguments against free-traders:

“In the comments, PG constructed an interesting and effective logical argument against free trade, which I have organized thusly:

1. Free traders insist upon the existence of property rights and the sovereign exercise of those rights as axiomatic. From this foundation, they argue that all actions concerning with whom one will trade, regardless of their location or nation, are protected by those property rights and cannot be morally infringed.

2. If a group of people happen to share the rights to a property in an ownership group, they must decide together on how those rights are exercised. No single individual can sell the property or permit its use by others without the agreement of the other rights holders. The ownership group collectively has the right to decide who and what are permitted to enter their property. It is not an infringement of any one owner’s property right if the greater part of the ownership group does not wish to sell the property or to permit entry to certain parties or items.

[Lila: Libertarians and classical liberals would argue that property rights cannot be exercised by an abstract collective entity like “the nation” and can only be exercised unjustly by any government that claims to represent the nation.]

3. A nation is a group of people who share a common property that is delineated by the national borders. This group of people must therefore decide in some consensus manner how the rights to that property are exercised. They can therefore decide who and what are permitted to enter the national property in precisely the same manner that a house-owning group decide who and what are permitted to enter their house. It is not an infringement of any one individual’s property right if the greater part of the nation does not wish to sell the land possessed by the nation or permit entry to certain parties or items.

4. To deny a nation the property right to enact tariffs or refuse permission for goods, capital, or labor to cross its borders, is tantamount to either denying a) property rights or b) the nation’s existence.

[Lila: Rather than enact laws against the property rights of companies wanting to trade under the present “managed trade” regime, it might be more conducive to freedom to undo the subsidies that currently exist, whether in the form of fixed prices, welfare, preferential tax treatment,  or any other grant by the government.  Doing so, would probably make it far less beneficial for some companies to trade, discourage some movements of labor, and generally have the same effect as a sanction or tariff, without needing to invoke group property rights.]

5. However, denying the existence of nations is not only empirically false, it creates a logical contradiction for the free trader because it requires denying the individual property-owner the right to form collective property-ownership groups from which nations are made. The free trade position depends upon the idea that individuals possess property rights, but groups of more than one individual cannot.

6. Therefore, free trade doctrine requires the denial of the very property rights upon which it is founded. As PG correctly concludes, “their whole argument is an outright logical contradiction”.

As evidence in support of PG’s logical construction, I offer the following statements concerning the existence of nations from two champions of the dogma, Mr. Gary North and our own Unger.

North: “Defenders of tariffs present themselves as defenders of the nation, when in fact the nation, from the point of view of economics, is not a collective entity. The nation, from an economic standpoint, is simply a convenient name that we give to people inside invisible judicial lines known as national borders.”

Unger: “I do not consider myself an ‘American’, except as a verbal convenience, or have any care at all for ‘America’.”

Now, it can certainly be pointed out that the mere existence of a nation does not mean that all of its members are voluntary members of it and it cannot be denied that the legitimate property rights of the nation can be abused or ignored just as they are in the case of individual property rights. But PG’s logic suffices to demonstrate that the property rights argument upon which many free traders heavily rely is far from the conclusive one that they believe it to be.”

[Lila: A version of this argument was made by David Boaz in reviewing the movie, Avatar]

On Veracity As An End In Itself…

A libertarian-turned-royalist explains why fudging for the sake of whatever you consider “good,” will leave you on the opposite side of the field, in the enemy’s camp:

“I see this Hitler-was-a-liberal trope catching on all over the right. Of course, it is a leftist trope – in two senses. First, the tactic of tarring all political adversaries with some abstruse connection to fascism in general, and Hitler in particular, is of course a characteristic tactic of the Left. Second, the tactic of disseminating a palpable misreading of history, for political purposes – etc.

To a Carlylean, Satan is the Lord of Chaos and the Father of Lies. When you lie – intentionally or unintentionally – you sacrifice a kitten to Satan. Satan loves you for this! And, since he is not uninfluential on this earth, he does what he can for you. Which is sometimes quite a bit.

[Lila: Disbelieving in the Judeo-Christian Satan, as popularly understood, but believing very much in Saturn (Shani), I translate this as follows:

[Clarification, July 25, 2014): I don’t mean to imply that Saturn/Sani is the equivalent of Satan.  Saturn is more akin to Shiva and Rahu/Ketu (the lunar nodes or Dragon’s head and tail) to Satan.]

The limitations of time and space guarantee that a very small error (intentional or not) will end by fetching you the very opposite of your intended goal.]

The Carlylean technique accepts only absolute veracity as the basis for any political strategy.

The fact is: by sacrificing the occasional kitten or two, by twisting the truth a bit for the sake of this quarter’s sales, libertarians and other rightists get nowhere. Their enemies are (a) in power today, and (b) operating an assembly-line rhinoceros abattoir for the sole benefit of His Satanic Majesty. Surely, sir, you had not thought to out-scoundrel such a bunch of scoundrels.”

Russell Kirk: A Dispassionate Assessment Of Libertarians

Update: I had a bit of time between running around to think through some qualifications I wanted to add to this post.

Kirk was my introduction to political theory…and I have never lost the influence, although I’m always trying to forge alliances with other influences on my thinking. I’ll add some more thoughts as I have time.

Russell Kirk:

Russell Kirk is a Distinguished Scholar at the Heritage Foundation. He spoke at The Heritage Foundation on April 19,1988, delivering the second of four l ectures on the “Varieties of the Conservative Impulse.” ISSN 0272-1155. 01988 by The Heritage Foundation.

First, a number of the men and women who accept the label “libertarian!’ are not actually ideological libertarians at all, but simply conservatives under another name. These are people who perceive in the growth of the monolithic state, especially during the past half century, a grim menace to ordered liberty; and of course they are quite right. They wish to emphasize their attachment to personal and civic freedom by employing this 20th century word deriv ed from liberty. With them I have little quarrel – except that by so denominating themselves, they seem to countenance a crowd of political fantastics who “license they mean, when they cry liberty.”

Descendants of Classical Liberals. For if a man believes in an enduring moral order, the Constitution of the United States, established American way of life, and a free economy – why, actually he is a conservative, even if he labors under an imperfect understanding of the general terms of politics. Such America n s are to the conservative movement in the United States much as the Liberal Unionists have been to the Conservative Party in Britain – that is, close practical allies, almost indistinguishable nowadays. Libertarians of this description usually are intelle ctual descendants of the old “classical liberals”; they make common cause with regular conservatives against the menace of democratic despotism and economic collectivism.

Second, the libertarians generally – both the folk of whom I have just approved, and also the ideological libertarians – try to exert some check upon vainglorious foreign policy. They do not believe that the United States should station garrisons throughout the world; no more do 1; in some respects, the more moderate among them have the understanding of foreign policy that the elder Robert Taft represented. Others among them, however, seem to labor under the illusion that communist ideology can be dissipated by trade agreements – a notion really fatuous. I lack time to la bor this point here; I mean to take it up again in my autumn lecture on the neoconservatives, who in foreign policy tend toward an opposite extreme. Let it suffice for the present for me to declare that so far as the libertarians set their faces against a policy of American domination worldwide – why, I am with them. I part with them when they forget that the American government nowadays, in Burke’s phrase of two centuries ago, is “combating an armed doctrine,” not merely a national adversary.

[Lila: That is, when we define war, we would be foolish to limit it to nuclear weaponry and drones, which is what libertarians do. They overlook the fact that a group of people can collude to bring down the financial system, since it also owns the media and is able at will to corrupt the judiciary. If the defense of the public is limited to catching individuals on a case-by-case basis, there is little chance of these financial warriors (they are not Islamicists, in my opinion, but Zionists) of being caught or having to return their loot. The correct response would be to determine that the financial system has been turned deliberately against the public, and then determine how sanctions can be levied across the board on the system, while simultaneously sanctioning  members of government that enabled the fraud.. All debt incurred during this period of financial war can be repudiated as illegally contracted.  But a universal repudiation of all debt seems to me to be no different than the debt jubilee proposed by the left. It is also certainly an act of bad faith to unilaterally repudiate contracts legally entered into by government lawfully authorized to enter into contracts. It is interesting that the very people who advocate this repudiation are also the people who want to legalize blackmail and extortion, who think bribery is no crime, and who consider political lobbying and commercial advertising equal to political speech. In short, having advocated for all the things that have corrupted the government, as well as the people whom the government claims to represent, they now turn around and pander to the same public by demanding the repudiation of all debt globally, with no thought for the sanctity of contract that they otherwise claim to venerate.  To appearances this is intellectual incoherence. More likely, it is deliberate and part of  the national policy – to wage war through the stock market, through the internet and every other means – full-spectrum dominance. From that angle, one has to wonder if Rothbard wasn’t in fact an agent of some larger agenda, as some have charged…]

Perils of Centralization. Third, most of the libertarians believe in the humane scale: they vehemently oppose what my old friend Wilhelm Roepke called “the cult of the colossal.” They take up the cause of the self-reliant individual, the voluntary association, the just rewards of personal achievement. They know the perils of political centralization. In an age when many folks are ready – nay, eager – to exchange their independence for “entitlements,” the libertarians exhort us to stand on our own feet, manfully.

In short, the libertarians’ propaganda, which abounds, does touch upon real social afflictions of our time, particularly repression of vigorous and aspiring natures by centralized political structures and by the enforcement of egalitarian doctrines. Rather cur iously, libertarian publications have been widely circulated in Poland – apparently with no concerted effort by the communist government to prevent their introduction. (One may suspect, in this instance, that the eagerness of certain libertarian organizati o ns for cordial relations between the West and the Soviet Union induces some toleration by the squalid oligarchies of the East.) With reason, many people are discontented with the human condition, in many lands, near the end of the 20th century; the more i n telligent among the discontented look about for some seemingly logical alternative to present dominations and powers; and some of those discontented – the sort of people who went out to David in the Cave of Adullam – discover libertarian dogmata and becom e enthusiasts, at least temporarily, for the ideology called libertarianism.

Inadequacies and Extravagances.

I say temporarily: for an initial fondness for libertarian slogans frequently has led young men and women to the conservative camp. Not a few of the people who have studied closely with me or who have become my assistants had been attracted, a few years earlier, to the arguments of Ayn Rand or of Murray Rothbard. But as they read more widely, they had become conscious of the inadequacies and extravagances of the various libertarian factions; as they had began to pay serious attention to our present political difficulties, they had seen how impractical are the libertarian proposals. Thus they had found their way to conservative realism, which proclaims that politics is the art of the possible. Therefore it may be said of libertarianism, in friendly fashion, that often it has been a recruiting office for young conservatives, even though the libertarians had not the least intention of shoring up belief in custom, convention, and the politics of prescription. There. I have endeavored to give the libertarians their due. Now let me turn to their failings, which are many and grave. For the ideological libertarians are not conservatives in any true meaning of t hat term of politics; nor do the more candid libertarians desire to be called conservatives. On the contrary, they are radical doctrinaires, contemptuous of our inheritance from our ancestors.

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They rejoice in the radicalism of Tom Paine; they even applaud those 17th century radicals, the Levellers and the Diggers, who would have pulled down all the land-boundaries, and pulled down, too, the whole framework of church and state. The libertarian g r oups differ on some points among themselves, and exhibit varying degrees of fervor. But one may say of them in general that they are “philosophical” anarchists in bourgeois dress. Of society’s old institutions, they would retain only private property. The y seek an abstract Liberty that never has existed in any civilization – nor, for that matter, among any barbarous people, or any savage. They would sweep away political government; in this, they subscribe to Marx’s notion of the withering away of the state .

{Lila: And in many crucial respects, they ARE Marxists. At least,  they think like materialists, act like utilitarians, and advance their ideas like communists]

Cooperation Aids Prosperity.

One trouble with this primitive understanding of freedom is that is could not possibly work in 20th century America. The American Republic, and the American industrial and commercial system, require the highest degree of coop e ration that any civilization ever has known. We prosper because most of the time we work together – and are restrained from our appetites and passions, to some extent, by laws enforced by the state. We need to limit the state’s powers, of course, and our n ational Constitution does that – if not perfectly, at least more effectively than does any other national constitution. The Constitution of the United States distinctly is not an exercise of libertarianism. It was drawn up by an aristocratic body of men w h o sought “a more perfect union.” The delegates to the Constitutional Convention had a wholesome dread of the libertarians of 1786-1787, as represented by the rebels who followed Daniel Shays in Massachusetts. What the Constitution established was a higher degree of order and prosperity, not an anarchists’ paradise. So it is somewhat amusing to find some old gentlemen and old ladies contributing heavily to the funds of libertarian organizations in the mistaken belief that thus they are helping restore the v i rtuous freedom of the early Republic. American industry and commerce on a large scale could not survive for a single year, without the protections extended by government at its several levels.

[Lila: Kirk is not talking about mercantilist entities. He is talking about the fact that even small businesses…the shops…cannot survive with armed insurrection or gang warfare on the streets, no matter how those things are glamorized by people who live no where near them..]

Rousseau’s Disciples.

To begin with unlimited freedom,” Dosto e vsky wrote, “is to end with unlimited despotism.” The worst enemies of enduring freedom for all may be certain folk who demand incessantly more liberty for themselves. This is true of a country’s economy, as of other matters. America’s economic success is based upon an old foundation of moral habits, social customs and convictions, much historical experience, and commonsensical political understanding. Our structure of free enterprise owes much to the conservative understanding of property and production e x pounded by Alexander Hamilton – the adversary of the libertarians of his day. But our structure of free enterprise owes nothing at all to the destructive concept of liberty that devastated Europe during the era of the French Revolution – that is, to the r u inous impossible freedom preached by Jean Jacques Rousseau. Our 20th century libertarians are disciples of Rousseau’s notion of human nature and Rousseau’s political doctrines. Have I sufficiently distinguished between libertarians and conservatives? Here I have been trying to draw a line of demarcation, not to refute libertarian arguments; I shall turn to the latter task in a few minutes.

Before I essay that task, however, let me illustrate my discourse by a parable.

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True Genius is Centric.

The typic al libertine of 1988 delights in eccentricity – in private life as in politics. His is the sort of freedom, or license, that brings on social collapse. Libertarianism and libertinism. are near allied. As that staunch Victorian conservative James FitzJames Stephen instructs us, “Eccentricity is far more often a mark of weakness than a mark of strength.” G.K. Chesterton remarks that true genius is not eccentric, but centric.

With respect to libertarian eccentricity, the dream of an absolute private freedom i s one of those visions that issue from between the gates of ivory; and the disorder that they would thrust upon society already is displayed in the moral disorder of their private affairs. Some present here will recall the article on libertarianism in Nat i onal Review, a few years ago, by that mordant psychologist and sociologist Dr. Ernest van den Haag, who remarked that an unusually high proportion of professed libertarians are homosexuals. In politics as in private life, they demand what nature cannot af ford.

Total Annihilation.

The enemy to all custom and convention ends in the outer darkness, where there is wailing and gnashing of teeth. The final emancipation from religion, the state, moral and positive law, and social responsibilities is total annihil ation: the freedom from deadly destruction. When obsession with an abstract Liberty has overcome personal and public order – why, then, in Eliot’s lines, we are –

… whirled Beyond the circuit of the shuddering Bear In fractured atoms.

Just that is the theme of my parable – or rather, of Chesterton’s parable, for I offer you now a hasty synopsis of G.K. Chesterton’s story’The Yellow Bird” – which too few people have read, though it was published in 1929. Chesterton knew that we must accept the universe that was created for us.

Russian Zealot.

In Chesterton’s tale, there comes to a venerable English country house a guest, Professor Ivanhov, a Russian scholar who has published a much praised book, The Psychology of Liberty. He is a zealot for emancipating, expanding, the elimination of all limits – in short, a thoroughgoing libertarian.

Ivanhov, under the shelter of an old English roof and enjoying not merely all English liberties but also the privileges of a guest, proceeds to put into practice his libert arian doctrines. He commences his operations by liberating the yellow bird, a canary, from its cage; once out the window, the canary promptly is torn limb from limb by a predatory bird of the forest. The next day Ivanhov proceeds to liberate his host’s go ldfish by smashing their bowl. On the third day, resolved not to endure imprisonment in the arching “round prison!’ of the sky that shuts in the earth, Ivanbov ends by blowing up the beautiful old house where he has lodged – together with himself.

“What ex actly is liberty?” inquires a spectator of these libertarian events – Gabriel Gale, Chesterton’s mouthpiece. “First and foremost, surely, it is the power of a thing to be itself. In some ways the yellow bird was free in the cage. It was free to be alone. It was free to sing. In the forest its feathers would be torn to pieces and its voice choked for ever. Then 1

began to think that being oneself, which is liberty, is itself limi tation. We are limited by our brains and bodies; and if we break out we cease to be ourselves, and, perhaps, to be anything.” The Russian psychologist could not abide the necessary conditions of human existence; he must eliminate all limits; he could not e ndure the “round prison!’ of the overarching sky. But his alternative was annihilation for himself and his lodging; and he embraced that alternative. He ceased to be anything but fractured atoms. That is the ultimate freedom of the devoted libertarian. If , per imposible, American society should accept the leadership of libertarian ideologies – why, this Republic might end in fractured atoms, with a Russian touch to the finale.

“Unwelcome Cross.” Notwithstanding, there is something to be said for the disint egrated Professor Ivanhov – relatively speaking. With reference to some remarks of mine in an earlier Heritage lecture, there wrote to me Mr. Marion Montgomery, the Georgia critic and novelist: ‘The libertarians give me the willies. I much prefer the Russ ian anarchists, who at least have a deeply disturbed moral sensibility (that Dostoevsky makes good use of), to the libertarian anarchist. There is a decadent fervor amongst some of the latter which makes them an unwelcome cross for conservatism to bear.”

Just so. The representative libertarian of this decade is humorless, intolerant, self-righteous, badly schooled, and dull. At least the old-fangled Russian anarchist was bold, lively, and knew which sex he belonged to.

It is not well-intentioned elderly ge ntlemen who call themselves libertarians that I reproach here; not, as I mentioned earlier, those persons who, through misapprehension, lend their names and open their checking accounts to “libertarian!’publications and causes and extravagances. Rather, I am exposing the pretensions of the narrow doctrinaires or strutting libertines who have imprisoned themselves within a “libertarian!’ ideology as confining and as unreal as Marxism – if less persuasive than that fell delusion.

Metaphysically Mad.

Why are these doctrinaire libertarians, with a few exceptions, such peculiar people – the sort who give healthy folk like Marion Montgomery the willies? Why do genuine conservatives feel an aversion to close association with them? Why is an alliance between conse rvatives and libertarians inconceivable, except for very temporary purposes? Why, indeed, would any such articles of confederation undo whatever gains conservatives have made in recent years?

I give you a blunt answer to those questions. The libertarians a re rejected because they are metaphysically mad. Lunacy repels, and political lunacy especially. I do not mean that they are dangerous: nay, they are repellent merely. They do not endanger our country and our civilization, because they are few, and seem l i kely to become fewer. (Here I refer, of course, to our home-grown American libertarians, and not to those political sects, among them the Red Brigades of Italy, that have carried libertarian notions to bolder lengths.) There exists no peril that American p ublic policies will be affected in any substantial degree by libertarian arguments; or that a candidate of the tiny Libertarian Party ever will be elected to any public office of significance: the good old causes of Bimetallism, Single Tax, or Prohibition enjoy a more hopeful prospect of success in the closing years of this century than do the programs of libertarianism. But one does not choose as a partner even a harmless political lunatic. What do I mean when I say that today’s American libertarian s are metaphysically mad, and so, repellent? Why, the dogmata of libertarianism have been refuted so often, both dialectically and by the hard knocks of experience, that it would be dull work to rehearse here the whole tale of folly. I offer you merely a f ew of the more conspicuous insufficiencies of libertarianism as a credible moral and political mode of belief. Such differences from the conservatives’ understanding of the human condition make inconceivable any coalition of conservatives and libertarians .

First, the great line of division in modern politics, as Eric Voegelin reminds us, is not between totalitarians on the one hand and liberals (or libertarians) on the other: instead, it lies between all those who believe in a transcendent moral order, on the one side, and on the other side all those who mistake our ephemeral existence as individuals for the be-all and end-all. In this discrimination between the sheep and the goats, the libertarians must be classified with the goats – that is, as utilitari ans admitting no transcendent sanctions for conduct. In effect, they are converts to Marx’s dialectical materialism; so conservatives draw back from them on the first principle of all.

Second, in any tolerable society, order is the first need. Liberty and justice may be established only after order is reasonably secure. But the libertarians give primacy to an abstract Liberty. Conservatives, knowing that “liberty inheres in some sensible object,” are aware that freedom may be found only within the framewor k of a social order, such as the Constitutional order of these United States. In exalting an absolute and indefinable “liberty” at the expense of order, the libertarians imperil the very freedom that they praise. Third, conservatives disagree with libertar i ans on the question of what holds civil society together. The libertarians contend – so far as they endure any binding at an – that the nexus of society is self-interest, closely joined to cash payment. But the conservatives declare that society is a comm u nity of souls, joining the dead, the living, and those yet unborn; and that it coheres through what Aristotle called friendship and Christians call love of neighbor. Fourth, libertarians (like anarchists and Marxists) generally believe that human nature i s good and beneficent, though damaged by certain social institutions. Conservatives, to the contrary, hold that “in Adam’s fall we sinned all”; human nature, though compounded of both good and evil, cannot be perfected. Thus the perfection of society is im possible, all human beings being imperfect – and among their vices being violence, fraud, and the thirst for power. The libertarian pursues his illusory way toward a Utopia of individualism – which, the conservative knows, is the path to Avernus.

Fifth, th e libertarian asserts that the state is the great oppressor. But the- conservative finds that the state is natural and necessary for the fulfillment of human nature and the growth of civilization; it cannot be abolished unless humanity is abolished; it is ordained for our very existence. In Burke’s phrases, “He who gave us our nature to be perfected by our virtue, willed also the necessary means of its perfection. – He willed therefore the state – He willed its connection with the source and original archt ype of all perfection.” Without the state, man’s condition is poor, nasty, brutish, and short – as Augustine argued, many centuries before Hobbes. The libertarians confound the state with government; in truth, go vernment is the temporary instrument of the state. But government – as Burke continued – “is a contrivance of human wisdom to provide for human wants.” Among the more important of these wants is a “sufficient restraint upon their passions. Society require s not only that the passions of individuals should be subjected, but that even in the mass and body, as well as in the individual, the inclinations of men should frequently be thwarted, their will controUed, and their passions brought into subjection. This can be done only by a power out of themselves; and not, in the exercise of its function, subject to that will and to those passions which it is its office to bridle and subdue.” In short, a primary function of government is restraint; and that is anathema to libertarians, although an article of faith to conservatives.

Sixth, the libertarian fancies that this world is a state for the ego, with its appetites and self-assertive passions. But the conservative finds himself in a realm of mystery and wonder, whe re duty, discipline, and sacrifice are required – and where the reward is that love which passeth all understanding. The conservative regards the libertarian as impious, in the sense of the old Romanpietas: that is, the libertarian does not respect ancien t beliefs and customs, or the natural world, or love of country. The cosmos of the libertarian is an and loveless realm, a “round prison”. “I am, and none else besides me,” says the libertarian. But the conservative replies in the sentence of Marcus Aureli us: “We are made for cooperation, like the hands, like the feet.”

These are profound differences; and there exist others. Yet even if conservative and libertarian affirm nothing in common, may they not agree upon a negative? May they not take a common grou nd against totalist ideology and the omnipotent state? The primary function of government, conservatives say, is to keep the peace: by repelling foreign enemies, by administering justice domestically.

Burke’s Admonition. When government undertakes objecti ves far beyond these ends, often government falls into difficulty, not being contrived for the management of the whole of life. Thus far, indeed, conservatives and libertarians hold something in common. But the libertarians, rashly hurrying to the opposit e extreme from the welfare state, would deprive government of effective power to conduct the common defense, to restrain the unjust and the passionate, or indeed to carry on a variety of undertakings clearly important to the general welfare. With these fai lings of the libertarians plain to behold, conservatives are mindful of Edmund Burke’s admonition concerning radical reformers: “Men of intemperate mind never can be free. Their passions forge their fetters.”

Von Mises On The State Versus Statism

From Monopoly Politics.com:

Liberalism is not anarchism, nor has it anything whatsoever to do with anarchism. The liberal understands quite clearly that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat of force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel the person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society. This is the function that the liberal doctrine assigns to the state: the protection of property, liberty, and peace.

“The German socialist, Ferdinand Lassalle, tried to make the conception of a government limited exclusively to this sphere appear ridiculous by calling the state constituted on the basis of liberal principles the “night-watchman state.” But it is difficult to see why the night-watchman state should be any more ridiculous or worse than the state that concerns itself with the preparation of sauerkraut, with the manufacture of trouser buttons, or with the publication of newspapers. In order to understand the impression that Lassalle was seeking to create with this witticism, one must keep in mind that the Germans of his time had not yet forgotten the state of the monarchical despots, with its vast multiplicity of administrative and regulatory functions, and that they were still very much under the influence of the philosophy of Hegel, which had elevated the state to the position of a divine entity. If one looked upon the state, with Hegel, as “the self-conscious moral, substance,” as the “Universal in and for itself, the rationality of the will,” then, of course, one had to view as blasphemous any attempt to limit the function of the state to that of serving as a night watchman.”

“It is only thus that one can understand how it was possible for people to go so far as to reproach liberalism for its “hostility” or enmity towards the state. If I am of the opinion that it is inexpedient to assign to the government the task of operating railroads, hotels, or mines, I am not an “enemy of the state” any more than I can be called an enemy of sulfuric acid because I am of the opinion that, useful though it may be for many purposes, it is not suitable either for drinking or for washing one’s hands.

“It is incorrect to represent the attitude of liberalism toward the state by saying that it wishes to restrict the latter’s sphere of possible activity or that it abhors, in principle, all activity on the part of the state in relation to economic life. Such an interpretation is altogether out of the question. The stand that liberalism takes in regard to the problem of the function of the state is the necessary consequence of its advocacy of private ownership of the means of production. If one is in favor of the latter, one cannot, of course, also be in favor of communal ownership of the means of production, i.e., of placing them at the disposition of the government rather than of individual owners. Thus, the advocacy of private ownership of the means of production already implies a very severe circumscription of the functions assigned to the state.

“The socialists are sometimes wont to reproach liberalism with a lack of consistency, It is, they maintain, illogical to restrict the activity of the state in the economic sphere exclusively to the protection of property. It is difficult to see why, if the state is not to remain completely neutral, its intervention has to be limited to protecting the rights of property owners.

“This reproach would be justified only if the opposition of liberalism to all governmental activity in the economic sphere going beyond the protection of property stemmed from an aversion in principle against any activity on the part of the state. But that is by no means the case. The reason why liberalism opposes a further extension of the sphere of governmental activity is precisely that this would, in effect, abolish private ownership of the means of production. And in private property the liberal sees the principle most suitable for the organization of man’s life in society.

“Liberalism is therefore far from disputing the necessity of a machinery of state, a system of law, and a government. It is a grave misunderstanding to associate it in any way with the idea of anarchism. For the liberal, the state is an absolute necessity, since the most important tasks are incumbent upon it: the protection not only of private property, but also of peace, for in the absence of the latter the full benefits of private property cannot be reaped.

“These considerations alone suffice to determine the conditions that a state must fulfill in order to correspond to the liberal ideal. It must not only be able to protect private property; it must also be so constituted that the smooth and peaceful course of its development is never interrupted by civil wars, revolutions, or insurrections.

Mises, Liberalism (In the Classical Tradition),
pp 36-39, published by Sheed Andrews, &
McMeel, Inc. 1978

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Epilogue
by Sam Wells

“Thus, the great Austrian economist advocated and recognized the necessity of political states, laws, and governments while he was one of history’s most powerful intellectual opponents of statismContrary to a common misunderstanding by some followers of the late Murray Rothbard, “statism” is not the mere existence of a political state or when a given geographical area has one government.  Statism is the doctrine or policy of subordinating the individual unconditionally to a state or government with unlimited powers. Statism includes welfare statism (modern American “liberalism”), mercantilism, fascism, and other systems of systematic positive government interventionism on up to and including full socialism. (See Mises, Bureaucracy pp. 74-76 & 78 and Omnipotent Government pp. 5, 44-78, & 285) Statism is not the same thing as the state, and the classical liberal political system of a constitutional republic and the concomitant private property order and unhampered market economy which Mises advocated fervently until his death is not a system of statism and is in contradistinction to statism.  Under a policy of laissez faire, the scope of authority of government is limited by the rule of law to the protection of the private properties and individual liberties of peaceful citizens from violence and fraud, and the government itself is proscribed from interfering with non-violent, non-fraudulent activities of production and exchange.  Under statism, in contrast, the state may do whatever it wants to an individual or his property unconditionally and without limitation.”