C-SPAN to Air Independent Policy Forum: “Economic Religion vs. Environmental Religion in America”

C-SPAN2’s Book TV will air the Independent Institute’s Policy Forum, “Economic Religion vs. Environmental Religion in America,” that was held in Washington, D.C., and features Senior Fellow Robert H. Nelson and his new Institute book, The New Holy Wars. Dr. Nelson is joined by Steven F. Hayward (F.K. Weyerhaeuser Fellow, American Enterprise Institute) and Max L. Stackhouse (Professor Emeritus, Princeton Theological Seminary) for a discourse on the contemporary struggles between the competing secular religions of economics and environmentalism, as outlined in The New Holy Wars (winner, 2010 Eric Hoffer Grand Prize Book Award).

C-SPAN2 will broadcast this very timely and far-reaching event as follows (times may be subject to change):

  • Saturday, December 11th at 2:00 p.m. ET (11:00 a.m. PT)
  • Sunday, December 12th at 5:30 p.m. ET (2:30 p.m. PT)

“Economics and environmentalism are types of modern religions.” So says Dr. Nelson in his analysis of the roots of economics and environmentalism and their mutually antagonistic relations in the twentieth and twenty-first centuries. So while environmentalists regard human actions that use and transform natural resources, expand human populations and increase economic growth as immoral challenges to the natural order, economists believe that all human needs can best be met by putting nature to maximum use for the efficient production of more goods and services.

Don’t miss the opportunity to watch these three top experts on the “clash of two public theologies”! The outcome of this conflict will have profound consequences for us all.

Communism’s Persistent Pull

Plato supposed communism — not only of property, but also of wives and children — to be an ideal social arrangement. Jesus told his disciples to sell all that they owned and give the proceeds to the poor. Through the ages, little sects more numerous than anyone can count have embraced some form of communism as the basis of their utopian communities. John Lennon’s immensely popular, visionary song “Imagine” includes the line, “imagine no possessions, it’s easy if you try.” Even today, when the horrors of communism are known to everyone, social democrats the world over continue to denounce and undermine private property rights and seek to replace them with some form of collectivized property. Since the late nineteenth century, most intellectuals have been hostile to private property rights and have advocated, if not outright communism, at least some “third way” closer to it than to a regime of full-fledged private property.

Why have so many people regarded communism as the most desirable form of social organization?

F. A. Hayek offers a hypothesis in his final book The Fatal Conceit. Hayek argues that human beings act in many ways according to genetic predispositions inherited from a long period of development – a million or more years – during which they lived in small bands similar to, and indeed sometimes nothing more than, extended families. The family, of course, is a sort of communist arrangement: its members, especially the younger ones, live not by producing wealth and exchanging the rights to it among themselves, but by sharing in accordance with at-least-partly altruistic allocations made by the older members. By this means, human beings survived and eventually prospered. Humans who arranged their affairs differently, one presumes, died out, leaving only those who had been molded by and sought to maintain the traditional family arrangement. Little bands and tribes amounted to nothing more than the family writ large and managed their economic affairs accordingly.

When human beings finally began to interact with one another extensively in what Hayek calls “the great society” — the wider world of various tribes and nations and of far-flung markets linking them through commercial exchanges — they retained, according to Hayek, a genetic predisposition to conduct their affairs in the communal fashion of families and small bands from time immemorial. However, Hayek argues further, the altruism and fully-shared information that had undergirded the conduct of the family and the band do not, indeed, cannot exist in the great society. Seeking to replicate those primeval arrangements on a vastly greater scale is a futile quest. It represents only “an atavistic longing after the life of the noble savage.” At its worst, it gives rise to tragic disasters such as those experienced in the twentieth century in Russia, China, and other, similarly collectivized societies.

Hayek’s hypothesis is plausible, but I have no idea whether it is the best interpretation of the persistent human longing for some form of communism. This hypothesis, like most such socio-biological explanations, seems to be a “just so story”  – it seems to make sense, but we lack a clear means of testing and possibly refuting it.

Other interpretations of the intellectuals’ penchant for communism certainly have been advanced.

For example, Ludwig von Mises argues in The Anti-Capitalist Mentality that the intellectuals suffer from frustration, envy, and resentment and blame their relatively poor position in the economy and society on “the rich,” especially the capitalists who have gained the greatest wealth by serving consumers most successfully in the markets. The obverse of the intellectuals’ hatred of the free-market system is their yearning for communism or some other system similarly hostile to private property rights.

In an essay titled “Why Do Intellectuals Oppose Capitalism?,”Robert Nozick argues similarly that the intellectuals are people who were good at school work but are not good at practical affairs and therefore fail to gain the great wealth and social position achieved by business people and investors who, however unremarkable they might have been as schoolchildren, have what it takes to succeed in the marketplace. The intellectuals, convinced that the smart people (that is, those who were good at school) should run the world and rise to the top of society, harbor intense resentment toward the people who navigate the market most successfully and hence toward the socioeconomic order that accommodates this success.

Many people have taken notice recently that John Lennon was killed thirty years ago, and a great deal of maudlin sentiment has been on display in this regard. Radio stations have hauled out Lennon’s recording of “Imagine” to adorn this weepy occasion. Although I consider Lennon to have been a gifted song writer, I do not recommend him as a political or social philosopher. Nevertheless, I do not condemn “Imagine” in every regard. The music itself is beautiful and beautifully performed, and I cherish the line, “Imagine there’s no countries / It isn’t hard to do.” After all, what is a nation-state but a sort of communism in its own right:  a violent suppression of competing private protective agencies by a single, all-encompassing, exceedingly presumptive, and often worthless guardian — and a spectacularly obnoxious one, to boot.

Edward Lopez with David Theroux on the New Book, The Pursuit of Justice

Independent Institute Research Fellow Edward Lopéz, Associate Professor of Law and Economics at San Jose State University and editor of the new Institute book The Pursuit of Justice, talks with Institute President David Theroux about the faulty incentives at the heart of government legal failures and whether market-based alternatives can provide viable solutions to the serious problems caused by the bureaucratization and politicization of the law.

[audio:2010_12_09_lopez_ipn.mp3]

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Senior Fellow Alvaro Vargas Llosa Interviewed at Pepperdine University

Independent Institute Senior Fellow Alvaro Vargas Llosa was interviewed at Pepperdine University.

[audio:2010_11_29_llosa_pepperdine.mp3]

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Also, please see the following books from him:

Liberty for Latin America: How to Undo Five Hundred Years of State Oppression

The Che Guevara Myth and the Future of Liberty

Lessons from the Poor: Triumph of the Entrepreneurial Spirit

Great Depression, Round Two? Senior Fellow Robert Higgs on The Peter Schiff Show
[audio:2010_11_29_higgs_schiffradio.mp3]

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Here also are relevant books from Dr. Higgs:

Depression, War, and Cold War

Neither Liberty nor Safety

The Challenge of Liberty

Against Leviathan

Crisis and Leviathan

MyGovCost.org Director Emily Skarbek Talks Tax Cuts and the Government Cost Calculator
[audio:2010_11_15_skarbek_madmiddle.mp3]

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The Government Cost Calculator is a project of the Independent Institute’s Center on Entrepreneurial Innovation. To find out what Washington’s spending spree is costing you, please go here!

It’s Pearl Harbor Day—Trot Out the Official Fable

Sixty-nine years ago, Japanese forces attacked the U.S. naval base at Pearl Harbor, Hawaii, provoking the United States to declare war against Japan. When Japan’s ally Germany declared war on the United States on December 11, 1941, the United States immediately reciprocated. These actions brought the United States into open warfare against the Axis powers and made it a full-fledged participant in the greatest war ever fought. For most Americans, this story is simple: they attacked us; we fought back and defeated them.

Historians have always known, however, that the true story was nothing like this patriotic fable dispensed each year on December 7 for popular consumption. Not long ago, I briefly reviewed some of the elements of this history, linking my statements to some of the most reliable histories publicly available to one and all. (See also my account of how U.S. economic warfare provoked the Japanese attack.) It behooves every educated American to learn this honest history and to pass it along to others when an opportunity arises, because the myth has long contributed, and continues to contribute, to a false view of the U.S. place in the world and to a grave misunderstanding of U.S. foreign policy. Ceaseless dissemination and widespread acceptance of this view is the very model of how the U.S. government tends to do foreign policy: provoke foreigners to attack Americans, then tell the American people that foreigners have attacked us for no reason and therefore we must strike back to defeat them or at least to teach them a lesson about treating the United States with deference.

Along with the myth of Munich, the myth of the Pearl Harbor attack has performed magnificently in keeping Americans dumb and belligerent and in preparing them to sacrifice their children’s lives in the service of the ruling oligarchy. Unless the American people can rise above these historical myths, they stand little chance of freeing themselves from those who would make them the living, breathing but unthinking means for the attainment of their masters’ ends.

The Proposed New “Tax Deal” is More of the Same Washington Bait and Switch

According to a report published on the front page of the December 6, 2010, Wall Street Journal, Congress is close to negotiating a compromise in which the so-called Bush tax cuts will remain in place temporarily (for two years) in return for an extension of yet unknown duration in federal benefits for the long-term unemployed. The pending legislative deal also proposes continuing existing tax breaks for private businesses, students and low-income Americans (under the Orwellian program known as “Making Work Pay”).

Given that the national unemployment rate now stands at 9.8 percent and job creation in the private sector remains moribund, acting to extend current corporate and personal income tax rates is a no-brainer. But continuing current rates for two years only will do nothing to cure America’s economic woes. As Nobel laureate Milton Freidman observed long ago, the spending plans of consumers and, what is more important, the investment decisions of business firms, hinge on expectations of permanent after-tax incomes, not year-to-year fluctuations in them. At best, therefore, the pending congressional compromise will shift some spending initiatives forward in time, but chill them again as yet another expiration date looms two years hence.

It is well-established in the economics literature that acceptance of offers of employment increase significantly after unemployment benefits end. Beforehand, workers are paid to remain idle. Afterwards, even if those unemployed currently take jobs paying less than what they had earned previously, many are willing to reenter the labor force as active participants.

In order for markets to adjust in today’s economic environment, wages and asset prices, including those of real estate, must be allowed to find their bottoms. Rather than continuing to pay jobless people to take vacations from the workforce and to prop up other prices, it would be far better to allow market forces to operate. If government gets out of the way by, for example, restoring predictability to the income tax code, the U.S. economy will recover and prosperity will resume.

SCOTUS Agrees to Hear Global Warming Suit

The Wall Street Journal reports:

The Supreme Court agreed Monday to decide whether eight states and other plaintiffs can proceed with lawsuits that seek to reduce carbon-dioxide emissions by utilities.

The lawsuit is part of a push by some states for “greenhouse gas” regulations that go further than efforts by the U.S. Environmental Protection Agency. The agency started to develop greenhouse-gas standards after the Supreme Court ruled 5-4 in 2007 that the EPA has the authority to regulate greenhouse gases under the Clean Air Act.

This case, which dates back to 2004, asks whether states and other plaintiffs can use federal public-nuisance law to seek court-imposed limits on the emissions, called greenhouse gases because they trap heat in the earth’s atmosphere.

The district court originally ruled that this was a political question and thus not proper for judicial consideration.  The Second Circuit Court of Appeals reversed and held that the case could move forward. 

The main issue, as taken from the petition for cert is:

Whether States and private parties have standing to seek judicially-­fashioned emissions caps on five utilities for their alleged contribution to harms claimed to arise from global climate change caused by more than a century of emissions by billions of independent sources.

Unelected judges setting rates of carbon emissions—yep, that is exactly what we need.  If any case cried out for judicial restraint and use of the political question doctrine it is this one.

Macroeconomic Booms and Busts: Deja Vu Once Again

Consider the following commentary on the economic situation:

Foolhardy procedures which are divorced from economic realities, or whose economic implications are not understood by their promoters, do not perforce become sanctified and wise merely by designating them as “action”; tilting at windmills does not draw water.

[W]hen a recovery program, which, while it may appear effective, depends for its efficacy upon much the same kind of “cheap money” inflation which . . . was the main cause of the recession from 2007 to 2009, then the present recovery must ultimately prove as illusory as the boom from 2001 to 2007, and it is the duty of economists to pierce the veil of illusion.

Certainly the recovery movement to the date of this writing [December 2010] is a peculiar one: it is shot through with anomalies. With [more than 15 million estimated to be] unemployed . . . with governmental relief rolls still at high levels, . . . there very obviously is something wrong, somewhere.

The fact would seem to be that the authorities who are undertaking the “management” of the current recovery, and congratulating themselves that prosperity is returning because they “planned it so,” are utterly oblivious of the fact that recovery is being engineered largely by the same means which produced the last boom – and recession. With this difference: whereas the banking system during the recent boom was producing an investment credit inflation by extending credit to business men and corporations, Government is now assuming the role of inducing new deposit currency in the banking system and thereby producing a consumption credit inflation. The Federal Government, instead of private corporations, is issuing the bonds which the banks are now purchasing, thereby inflating the deposit currency structure all over again. These “created” funds are in this instance being used principally to finance consumption expenditures through relief disbursements, make-work projects, and the like. . . . [T]he current inflation tends to conceal and to preserve the fundamental disequilibria which so prolonged the recession after 2007 and which we are now carrying over therefrom without having once squarely faced the problem of correcting them.

Notice, however, that the foregoing commentary, except for the terms in bold font, was written not yesterday, but, in its final form, in 1937. The authors, C. A. Phillips, T. F. McManus, and R. W. Nelson, placed this commentary, along with a wealth of related evidence and analysis, in their unjustly neglected book Banking and the Business Cycle: A Study of the Great Depression in the United States (New York: Macmillan, 1937). The quoted passages, which appear on pp. 212-14, originally read as follows:

Foolhardy procedures which are divorced from economic realities, or whose economic implications are not understood by their promoters, do not perforce become sanctified and wise merely by designating them as “action”; tilting at windmills does not draw water.

[W]hen a recovery program, which, while it may appear effective, depends for its efficacy upon much the same kind of “cheap money” inflation which . . . was the main cause of the Great Depression, then the present recovery must ultimately prove as illusory as the New Era of the ‘twenties; and it is the duty of economists to pierce the veil of illusion.

Certainly the recovery movement to the date of this writing [February 1937] is a peculiar one: it is shot through with anomalies. With [8 million to 12 million estimated to be] unemployed . . . with governmental relief rolls still at high levels, . . . there very obviously is something wrong, somewhere.

The fact would seem to be that the authorities who are undertaking the “management” of the current recovery, and congratulating themselves that prosperity is returning because they “planned it so,” are utterly oblivious of the fact that recovery is being engineered largely by the same means which produced the last boom—and depression. With this difference: whereas the banking system during the ‘twenties was producing an investment credit inflation by extending credit to business men and corporations, Government is now assuming the role of inducing new deposit currency in the banking system and thereby producing a consumption credit inflation. The Federal Government, instead of private corporations, is issuing the bonds which the banks are now purchasing, thereby inflating the deposit currency structure all over again. These “created” funds are in this instance being used principally to finance consumption expenditures through relief disbursements, make-work projects, and the like. . . . [T]he current inflation tends to conceal and to preserve the fundamental disequilibria which so prolonged the Great Depression and which we are now carrying over therefrom without having once squarely faced the problem of correcting them.

When policy makers repeat in the early twenty-first century the same mistakes they made in the 1920s and 1930s, and when mainstream economists fail to understand that these policies are misguided now, just as they were then, one can scarcely argue that the mainstream understanding of business fluctuations has advanced at all during the past eighty years. Indeed, the typical macroeconomist today is much inferior to Phillips, McManus, and Nelson, in no small part because today’s economists, owing to the high level of aggregation they employ in their theoretical and empirical work, miss what is most important for understanding business booms and busts: policy-induced structural disequilibria and malinvestments.

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