Arizona law a blow to liberty

by Roger Koppl

Kris Kobach defends Arizona’s new immigration law, SB 1070, in today’s New York Times.  He says, “Presumably, the government lawyers . . . will actually read the law, something its critics don’t seem to have done.”  Well, I read the law and I do not like it.

Whenever a  law enforcement officer makes a “lawful contact” with a person, the officer must attempt to determine that person’s immigration status if he or she has “reasonable suspicion” the person is an illegal immigrant.  It is a “lawful contact” if the cops ask for a statement at the scene of an accident, for example.  Illegals now have an incentive to flee even as mere witnesses.  The local police or sheriff’s office cannot have a policy to counter this incentive lest they be sued.  The law provides that “a person” may bring suit against any “official or agency” that has a policy that “limits or restricts the enforcement of federal immigration laws to less than the full extent permitted by federal law.”  The central provision of SB 1070 threatens to reduce the ordinary protections of the law for illegal aliens, which threatens order and security for them and everyone else.

Goldman Sachs Hate Week

by Chidem Kurdas

George Orwell’s classic novel, Nineteen Eighty-Four, describes a political ceremony called the Two Minute Hate, featuring Public Enemy Number One, a reprobate named Goldstein. People attend official rituals to work up a frenzy of hatred against Goldstein and love for their protector, Big Brother, or B-B.

To quote Orwell, at the climax of the Two Minute Hate, “the entire group of people broke into a deep, slow, rhythmical chant of “B-B! … B-B! …B-B!” – over and over again…” This daily rite is supplemented with elaborately prepared Hate Weeks.

In the past week there has been a similar fury in the media against Goldman Sachs, with herds of pundits all expressing their horror of the derivatives deal that is at the center of the Securities and Exchange Commission’s fraud case against the investment bank. This campaign starts with chants of “Social Benefit! Social Benefit! Social Benefit!” and climaxes with “Regulation! Regulation! Regulation!” Thus a mythical regulator stands in for B-B.

To pick one example out of many, George Soros writes that “Whether or not Goldman is guilty, the transaction in question clearly had no social benefit.” Mr. Soros is wise to hedge his bet about Goldman’s guilt—the SEC complaint contains holes the size of the real estate bubble. But was the mortgage-based collateralized debt obligation really devoid of social value?

Hayek after 35 Years

by Jerry O’Driscoll  

Today I reread F. A. Hayek’s Nobel Lecture, “The Pretence of Knowledge.”  Hayek was awarded the Nobel Memorial Prize in 1974 and delivered his lecture on December 11, 1974. I was amazed at how modern it was, and appropriate once again for the times.  

The 1970s were terrible times: stop-go demand management policies had produced stagflation that would continue for the rest of the decade.  Hayek said that “we have indeed at the moment little cause for pride: as a profession we have made a mess of things.” He charged that the mess had been produced by policies the majority of economists “recommended and even urged governments to pursue.”  

The Republic and the NAP

by Gene Callahan

Having discussed in a previous post the libertarian contention that following the non-aggression principle implies holding libertarian policy views, I wanted to follow up here with an example from The Republic.

Now, let us begin by noting that Socrates, towards the beginning of the work, states a non-aggression principle (NAP) even stronger than the one usually framed by libertarians. It is not merely wrong, he claims, to do injury to one who has not injured you, it is even wrong to do injury to someone who has injured you. The details of the argument need not concern us here; the relevant point is that Socrates endorses a strong version of the NAP.

But then, of course, Socrates (or Plato, if you wish to consider “Socrates” here as a sock puppet) goes on to paint a vision of the just State in many ways far more extensive than anything we even have today in the US, including things like tight State control over art. How can this be?

Threats to Individual Autonomy: ObamaCare, Salt and Sugar

by Mario Rizzo  

I love-hate the word “progressive.” Its political uses derive from the so-called Progressive Era and the less-than-socialist reforms that were enacted during that early twentieth-century period.  

Today, of course, few people who use the term think about its historical origins. They think it is simply a word that means “advanced,” “better,” – well, “progressive.”  

For a long time in the nineteenth-century, “progress” meant the gradual liberation of human beings from the control of the state. For some thinkers, like Herbert Spencer, it was tied to a particular view of evolution. For others, like Benjamin Constant, it was based on certain historical changes that involved increasing complexity of life spurred on the process of “globalization.” Increasing division of labor, specialization and trade were critical in this view. Others, like Sir Henry Maine, emphasized the legal changes: from status (serf/nobility) to contract – each of us now decides how to relate to others in commerce.  

Constant reminded us that the “liberty of the ancients” was a collective liberty. The citizens of Athens could do whatever they liked. The “liberty of the moderns” is an individual liberty. The individual is sovereign. It is a liberty against the state.  

Now this progress has become reversed.

Carl Menger and You

by Mario Rizzo

Did you ever wish that you could get Carl Menger’s comments and approval of your work? Maybe not. But the next best thing  (or even better) is the essay contest named after the founder of the Austrian School of Economics. If you are an undergraduate student, take a look here.

Good luck. I hope a TM reader wins!

The Abstract and the Concrete Part II

by Gene Callahan

I fear I was insufficiently clear in expressing my view of the relationship between abstract and concrete thought in my previous post on the topic; although I intended, right at the outset, to make obvious that my intention was not to dismiss the value of the abstractions offered to us by science, it is apparent that some commentators, nevertheless, read my post as just such a dismissal. Therefore, it might prove worthwhile for me to explicate further the view expressed in that earlier post, as well as to offer an example of the sort of concrete thought I suggested to be superior to its more abstract brethren.

In regards to the first matter, let me assure readers that I regard abstract thought as being of tremendous value, and that I recognize the monumental achievements of those abstract realms of theory, mathematics and science, in the last several centuries.

Hayek on the Crisis

by Jerry O’Driscoll

I have an op ed in today’s (Tuesday, April 20, 2010) Wall Street Journal.

I extend Hayek’s argument about prices as information transmitters to other essential elements of a market economy, such as accounting statements and representations made to customers.  Prices and interest prices were distorted in the boom, but so, too, accounting statements and representations made by borrowers to lenders, and lenders to borrowers.

The free market depends on truth telling, the accuracy of information and honest pricing.  Instead, as I argue, we are becoming “An Economy of Liars.”

Fiscal Stimulus, Growth Perspectives and Mal-incentives for Future Policy

by Andreas Hoffmann*  

There has been a long-lasting debate about the effects of fiscal stimulus in times of crisis. Proponents of government stimulus argue that the fiscal multiplier is quantitatively more significant than the possible negative effects. On the other hand, free market economists are in doubt of these effects and fear possible crowding-out, high future costs or malinvestment.  

While Keynesians and free market economists discuss effects on welfare, allocation and sustainability of government investment or consumption, Chicago’s Harald Uhlig recently presented an interesting paper at NYU (“Fiscal Stimulus and Distortionary Taxation,” coauthored with Thorsten Drautzburg – an earlier version is here), in which he tries to quantify the fiscal multiplier and its growth effects in the short, medium and long-run.  

What Causes Unemployment?

by Jerry O’Driscoll  

Last week, there was a testy exchange between the Editors of the Editorial Page at the Wall Street Journal and the Director of the National Economic Council, Lawrence H. Summers.  On the April 13^th Page, the editors quoted Summers from a 1999 essay on the causes of long-term unemployment.  According to Summers 1999, there are two causes: “welfare payments and unemployment insurance.”  

Summers 2010 has a different view and the Journal printed his letter on April 16^th in which he accuses the editors citing him “out of context.”  The true cause of the current unemployment is deficient aggregate demand.  Extending unemployment insurance bolsters consumer spending, “thereby contributing to employment.”  

The editors countered with an even more lengthy quotation from Summers’ 1999 essay on the microeconomic causes of long-term employment. They observe, correctly in my view, that Summers’ new theory amounts to the proposition that “pay people for not working, and more people will work!”  And they address a central issue occupying us at TM: whether macroeconomic effects outweigh microeconomic incentives.

It is instructive reading.