David Stockman on Crony Capitalism

In the video below David Stockman shares an insightful interview about how the United States is far from a free market economy. Instead, he posits, "Crony Capitalism" is supported by both parties as our current economic system--leading to a lack of accountability, the prevalence of the too-big-to-fail mentality, and a system that favors big business over free market competition. Informed on the issue or not, this is a good video that will leave you better off for taking the time to watch it.


David Stockman on Crony Capitalism from BillMoyers.com on Vimeo.

Hat Tip: TN Libertarian Republicans

An Ayn Rand Movie Recommendation

I've not seen the new Atlas Shrugged movie; therefore, I cannot offer a comment on it at this time. I heard it is a bit clunky and suffers from poor technical film-making, but without seeing it myself I cannot deny or confirm these claims.

What I can do is recommend another movie based on an Ayn Rand novel that I have seen. That film is the 1949 classic The Fountainhead--a film written by Ayn Rand in which she exercised a large amount creative control.

If you have never seen The Fountainhead, I recommend you remedy that loss as soon as possible. More than just a great defense of individualism, the film is a great movie experience. While I do not endorse Rand's Objectivism as a political or moral philosophy, I do appreciate her contributions toward the pursuit of human freedom and free markets. 

I have heard from those who have read the book, which the movie was based on, that the book will satisfy any Rand fan.

Below is a video of the philosophical highpoint of the movie.

Great Article on Austrian Economics

This article is well worth the read.

“Peter, you have been mocked on all of these financial shows going back to 2005. Going back to 2005! Not only did you predict problems, you actually explained what was going to happen. Why didn’t anybody listen? You were Cassandra!” — MSNBC commentator Joe Scarborough to “Austrian school” economics adherent Peter Schiff on Morning Joe, March 25, 2009

Scarborough’s reference to Cassandra — the character from Greek mythology given the gift of prophecy and the curse that nobody would believe her predictions — was particularly apropos to the Austrian school of economic theory until the latest economic crash. The name of this free-market economic school acknowledges the fact that many of the school’s “founding fathers” were Austrian nationals and disciples of the Austrian economist Karl Menger. Of course, the “Austrian school” is not a school in the traditional sense of the word denoting a physical structure; the term defines those who believe in pure free-market economics and laissez-faire principles. The Austrian school has a long history of amazingly accurate economic predictions while at the same time being completely ignored by the political establishment and virtually ignored by the mainstream media. (Continue reading here).

Hat Tip: Lew Rockwell

Regulatory Reform Support Shows Misunderstanding Across the Board

Politico reported yesterday:

The Republican rhetoric sounded tough on financial regulatory reform early this week...

...But behind such tough talk is a realization within Republican ranks that several of their own may find themselves voting with Obama when the final Wall Street reform deal comes together.

Of course, this sort of behavior is nothing new. In it we see more evidence of talk lacking action in Washington, and we see that principle has little place in the actions of many in government. When pressed on the issue I would venture that many of those who support the financial regulatory reform package would claim to support free market economics. Their support for such a measure, however, points in the opposite direction.

More than just lacking principle, anyone supporting the proposed legislation must also lack sound economic understanding. Simply put, the regulatory reform bill is indicative of the incorrect diagnosis going around as to what cause the recent financial collapse.
William L. Anderson correctly notes:

The meltdown did not occur for lack of regulation, but because of moral hazard. When the government agreed both tacitly and openly to backstop Wall Street losses, and when huge pyramids of "investments" were piled on mortgage securities (also tacitly backed by the government) that turned bad, a meltdown was inevitable.

The meltdown did not occur in a "free market orgy." Indeed, the market exposed the foolishness on Wall Street, which long ago had jumped into bed with the politicians.(Wall Street has been a major campaign contributor, and politicians don't want to lose their cash cow.) Furthermore, the bailouts have not prevented us from going into a depression; they only have prolonged the financial agony.

Dr. Anderson is dead on. An incorrect storyline is going around regarding to the cause of the economic collapse. The free market was not to blame for our crisis, contrary to the cries of statists and economic fools. Rather, the free market was not even able to operate! Instead, the government's involvement in the market drove malinvestment and created moral hazard. This resulted in economic ruin, just as the Austrian free market folks predicted years in advance.

In addition to the failed reasoning behind the bill, it is also bad policy (here's why)--plain and simple. Folks on the left and right both fear that the bill will harm upstart businesses, and others are concerned about the impact it will have on the greater world of business, investing, and on our economic system itself. Still others feel that more government influence is not the solution. Indeed, it was the government that brought about our problems in the first place.

The Republican senators looking to jump on-board the Obama Administration regulatory reform wagon, should do their homework before they support poor policy based on bad information. And if they do support such a measure, they should never claim support for the free market system again. Instead, they will forever show their statist colors.

Actions Fall Short of Words

I came across the following article in which an self-proclaimed "old Republican" laments the party abandoning him by pursuing too conservative an agenda. (He must  see a GOP that I do not. Contrarily, I lament a party that has left me because it refuses to be conservative.) The author has some legitimate concerns, but for the most part, I believe his argument fails to hold water. He looks back to the Rockefeller Republicanism of the past that has long been cast to the fray--at least in open speech. Of course, the liberals never left, but the Reagan coalition put an end to much of their influence. But that is beside my point.

My point is not to challenge this man for his Republicanism. Rather, I would like to draw on the fallacy found in his opening paragraph.  

I am an old Republican. I am religious, yet not a fanatic. I am a free-marketer; yet, I believe in the role of the government as a fair evenhanded referee. I am socially conservative; yet, I believe that my lesbian niece and my gay grandchild should have the full protection of the law and live as free Americans enjoying every aspect of our society with no prejudices and/or restrictions. Nowadays, my political and socio-economic profile would make me a Marxist, not a Republican.

Truly, I doubt he would be considered a Marxist. Rather, I think he would be considered for party leadership. Remember, it was Bush not Obama who abandoned free market principles in order to save the free market.

The author claims, "I am a free-marketer; yet, I believe in the role of the government as a fair evenhanded referee." Well,sir, you are not a free-marketer!

This type of statement is so flawed. It is like saying, "I'm no murderer, but I do murder people."

If one believes in market intervention, one cannot be committed to free markets. Such betrays the term "free market." (Moreover, it must be added that if he expects the government to fair and evenhanded in anything, he will always be found wanting.)

It is time that we hold people accountable for what they label themselves. If you claim to be a conservative, just be conservative. If you claim to be a libertarian, just be libertarian. If you claim to be a modern liberal, just hate America. (I jest, of course...sorta.)

Many problems in politics stem from people not holding to consistent worldviews and positions. People assume that everything should conform to them and their view of reality, but that cannot be the case. I cannot call myself a black American and expect people to accept my white tail as such. So why can I call myself a free marketer and not hold to free market economics? Likewise, I cannot expect free market economics to conform to my meaning. I am limited to its meaning, not the other way around.

When people make statements like this or betray what they claim to be, we must hold them accountable. We must correct the error. Lack of doing so has left us with a government full of "conservatives" but little conservative governance, an anti-war president who escalates the wars in the Middle East, and "supreme law of the land" that is disregarded at every turn.

Starbucks Sees the Value in Guns?!?!

A couple of weeks ago my world was shaken. For the first time in my life I found myself lavishing praise on my archenemy, Starbucks.

I hate Starbucks. I hate their cultural influence, and I hate their product. In fact, the only time I've even purchased something from the coffee Leviathan was when I needed to spend the last of my Chinese currency before flying out of Beijing. I bought a water and sandwich, grumbling the entire time, and haven't been back since.

So why the change of heart all of the sudden? It's because of Starbucks' recent stance on gun carrying.

If you are not familiar with the situation, here is a quick rundown. An upscale coffee chain in California named Peet's banned the carrying of firearms on their property--even by officially permitted carriers. (That is fine, and they are well within their rights to do so. Surely, we who value gun rights should also value property rights.) Seeing a chance to appeal to a newly marginalized customer base--the firearm carrier--Starbucks made it known that they would not forbid licensed carriers from exercising their gun rights in Starbucks establishments. They made it quite public that if you carry a gun within the confines of the law, feel free to stop in at Starbucks and bring your gun with you.

This has been a brilliant act on their part to attract gun rights supporters to their establishments, but it has also been a firestorm of controversy among the anti-gun groups, including the Brady Campaign, who demand that Starbucks stop accommodating its gun-toting customers. Thankfully, Starbucks has ignored the cries of “espresso shots, not gunshots" and has stuck to its guns--so to speak (editor's note: that was not intentional in the original draft).

What we see here is classic free-marketing. Two coffee shops with roughly the same product are going after two different markets by taking two different stances. Peet's has decided that the business of gun carriers is not needed in their establishment, while Starbucks has reached out to that demographic. Both have seen results one way or the other for their decisions.

I love it. We see in this simple example a testament to self-regulation by the market. Private property owners are determining the gun policies on their premises, and consumers are able to reward or discourage businesses based on their beliefs. No government had to step in to protect gun owners from discrimination; the money did the talking. 

I speak of the theory behind market-based regulation (as opposed to government mandated regulation) on a daily basis. It is vital to true constitutional government and a truly free society. Therefore, I'm quite glad to see yet another real world example of principle in action.

So for the time being, in regard to your position on gun carriers, bravo Starbucks. Who knows? Maybe I'll stop in and get a muffin sometime--gun in tow--for no other reason than to show my support for this policy.

Now maybe we can get you to allow the words "Laissez Faire" printed on your customized Starbucks cards.

PS: Here is Chuck Baldwin's take. Haven't read it yet, but I'm sure it's good.