Robert Higgs is interviewed here by Scott Horton of Antiwar Radio. They discuss the economic baloney of mainstream economists, the failure of most to understand the potential for mass inflation given the money supply currently sitting around in bank reserves, the reality of the business cycle and the politicians’ and media’s failure to grasp it, and why none of us should make sweeping predictions about how the future will unfold, even if we do understand economics, since human action and the flexibility of markets are impossible to quantify.

Over at my academic freedom blog, I posted news of a Communist Theme Park in Lithuania. On college campuses, there is a “tunnel of oppression” movement to teach young people how awful this country has been to just about everyone.

Here is a link to my blog: 

Link to a NAS article on “Tunnels of Oppression.” HT: Ashley Thorne.

In the 1980s, left-liberals talked about homelessness as a plague and human rights issue. It has been over a decade since I’ve even heard about homeless people as a political issue. Now the victim class is the middle class. The Democrats and Republicans both talk about shoring up the middle class with targeted tax cuts, subsidies, entitlements and other goodies.

Now, in a sense, the middle class are particularly victimized by the state. They do the work, run small businesses, and lack the political connections of the rich. I share Murray Rothbard’s long-time dream of seeing a bourgeois revolution against the state. I believe George Carlin was onto something when he said the political establishment squeezes the masses dry while using the poor to frighten the taxpaying middle class.

But there is another sense in which the middle class have become the favorite victim class for left and right to appeal to, not in their aim of greater liberty, sound money and truly lower taxes, but in their goals to expand the state. The Democrats have long said they were the champions of the middle class, thus throwing under the bus the poorest Americans they used to claim to speak for, and the Republicans with Bush embraced an “Ownership Society” geared toward subsidizing artificially cheaper mortgages for the middle class.

Also, the main features of the entitlement state are aimed at pleasing the middle class. Social Security helps the middle class more than the poor, who are often deprived of the same benefits and die off younger, and the rich. The public school system, while a drain on the middle class, does not neglect them as much as it does the inner city poor.

On the issue of home ownership, we see this cynical politics in play. Obama is now proposing to bail out homeowners from having to pay the full principal on their mortgages. While the Democrats no longer use the homeless as a political football, they now talk as though there is some inalienable right never to lose one’s home that was never really paid for.

This is disastrous and unjust in many ways. Yes, it is unfair that marginal homeowners were suckered into deals too good to be true. But many Americans did the responsible thing — they did not buy homes they could not afford. They rented. They maintained modest living standards. They did not upgrade to McMansions or redo their kitchen just because the credit was available for them to do so. For the last decade or so, renters paid a premium for the security of knowing they could leave their homes without owing anyone anything. They avoided debt. This is the ethic of a responsible people, and to encourage debt beyond what is sustainable is not just fostering poor economic planning, it is decivilizing.

We can all sympathize with people losing their homes, and many of us know people close to us in that very sad situation. But there is no right to continue living in a home that doesn’t truly belong to you, that you cannot afford and never truly could. It is tragic many Americans were bamboozled into a fantasy of ever increasing home prices and ever decreasing mortgage liabilities. But on the other hand, many Americans were responsible, saw past the fantasy, did not buy the snake oil and instead chose to live within their means. They decided to save up, knowing that home prices would indeed fall one day and maybe they could afford to move into a house with a responsible and traditional short-term mortgage over a few years, rather than the ridiculous 30-year mortgages that have become the norm. These people—renters, those with modest homes, those who resisted the government’s easy credit—are the forgotten men and women who will be fleeced to prop up the unsustainable bipartisan “Ownership Society” program of keeping people in nice homes that they could not afford on the market. The more this house of cards is propped up, the worse it will crash when the true bust transpires. The state wants to maintain high home prices with low mortgages. This is a dangerous recipe. With millions of vacant houses on the market, there is no excuse for not letting the correction occur.

By nationalizing the middle class, the state has succeeded in making bourgeois Middle America, the people who have as much to gain from liberty as anyone else, become partisans of the government on which they depend. This is a shameful affair. It will mean that people will have to become that much more vigilant and cautious with their resources, resist the false market signals being put out by Washington, and live well within their means—not within the means they expect to have assuming house prices continue to rise and their income stays the same and no extra living costs pop up unexpectedly, but within their real means. In a free market and a responsible society, many would rent and many would buy houses much cheaper than they currently find—but what would be discouraged is moving into a big house valued at 20 or 30 years of one’s income under the assumption that it will be paid off sometime near retirement or the house could be sold off at a much higher price. The natural course of things is not for a house to raise in value reliably. Homes are liabilities, with expensive maintenance costs, and indeed probably lose value over time, and they should generally be bought only by people with the full intention to live there a long time and who have the means to buy them.

You might have read the story about the Socialist Alarm Clock. Here’s one version. A friend who wishes to remain anonymous sent his libertarian version and asked me to post it:

This morning I was awoken by my alarm clock built by the ingenuity of millions of individuals all working for their own gain, but whose efforts were coordinated by the prices for labor and materials and finished goods provided by the free market. I then took a shower in the clean water provided by the shower head, pipes, and sanitation facilities whose construction also involved the efforts of thousands of people acting in their independent interest. After that, I turned on the TV to The Weather Channel, whose owners include one of the largest multi-national corporations and private equity companies, to see the week’s forecast presented in a clear, informative (and even entertaining) manner. I watched this while eating breakfast of General Mills’ inspected food and taking drugs whose strong brand name gives me confidence in its safety.

At the time which millions of people coordinate their activities to take advantage of each other’s knowledge and skills, I leave for work. I get into my Japanese-designed, Mexican-supplied, Michigan-assembled automobile and set out to work on the roads built by construction contracting companies and named after corrupt politicians, possibly stopping to purchase additional fuel that was shipped from the Middle East by an oil company at a per gallon cost many times lower than the price of having a letter delivered across the street by the government monopoly that loses millions of dollars each year. To make the purchase there is no need to leave the pump; I am able to slide a piece of plastic into a small slot and get credit extended to me by a bank who has never met me in person. On the way out the door, I put out the Fed-Ex envelope containing the documents I need to arrive across the country tomorrow morning and drop the kids off at the public school which is attended by only the best students, thanks to the high home prices in the area.

After work, I drive my Japanese-Latino-Midwestern car back home, to a house which has not burned down in my absence because of materials developed in the research and development departments of hundreds of corporations and which has not been plundered of all is valuables thanks to the lock on the door and a sign advertising the security company whose services I employ. My piece of mind was not interrupted by the thought of these events anyway, as I have both fire and homeowners insurance through privately held insurance company.

I then log on to the internet to watch and listen to artists who don’t appeal to a broad enough audience to make it onto one of the few channels that a government monopoly allows to be broadcast. I then log onto the democraticunderground.com to post about how DEREGULATING the medical industry is BAD because low-cost, quality health care can never be provided by greedy, self-interested people.

(Cross-posted at Division of Labour and Mises Blog)

In an interview with the Wall Street Journal, Google co-founder Sergey Brin elaborated on what was apparently primarily his decision for Google to withdraw from mainland China. Mr. Brin immigrated with his family to the U.S. at the age of 6:

The 36-year-old co-founder said he was moved by growing evidence in China of repressive behavior reminiscent of what he remembered from the Soviet Union. Mr. Brin said memories of that time—having his home visited by Russian police, witnessing anti-Semitic discrimination against his father—bolstered his view that it was time to abandon Google’s policy.

Of China he remarked,

with respect to censorship, with respect to surveillance of dissidents, I see the same earmarks of totalitarianism, and I find that personally quite troubling.

We at the Independent Institute have had a close association with such dissidents, and our President David Theroux proudly displays the replica of the Goddess of Democracy from Tiananmen Square presented to him by remnant leaders of that protest. It is thus refreshing to see Google and Mr. Brin join these brave souls in standing up against bullying tactics.

It is particularly refreshing in light of accelerating corporate feeding at the government trough, when it has seemed as if such aligning of one’s moral code with one’s business practices had gone the way of the dodo bird. Such used to appear much more common, as for example, the late Bill Diehl of Defiance, OH, a principled dairyman who valiantly fought against milk price supports; Leroy and Ellen Hill, Rockford, IL manufacturers who resisted the conversion of their company to war production during World War II; and Robert Love of Love Box in Wichita, KS who provided his employees’ children the opportunity of attending an excellent private school with a curriculum heavily infused with Austrian economics, as well as summer seminars with Bob LeFevre.

In general, we agree wholeheartedly with Bastiat: When goods don’t cross borders, armies will, and of course China’s partial liberalization to date and economic improvement for its people is a direct result of such opening up to trade. Yet sometimes a statement that we cannot and will not produce under these circumstances is required, and we hope Google will be joined by others to push China—and any repressive regime—the rest of the way on a road to full freedom.

Jane Hamsher’s fact sheet is very useful in explaining to liberals why Obamacare is a corporatist scam and an expensive imposition upon the middle class.

Update: Hamsher on Fox late last year calling on Americans to stop Obamacare:

This November California voters will have the opportunity to vote for a ballot measure that would legalize marijuana for personal use.  Californians would be able to cultivate gardens of up to 25 square feet, and possess up to an ounce for their own use.

Not everybody is happy about this.  In addition to the “war on drugs” types, this article says California pot growers are unhappy, because they believe legalization would lower prices and cut into the profits they now reap from selling illegally.  They are surely right about that.

My conjecture is that marijuana will be legal throughout the United States within a decade, not for the benefit of pot heads, but because the government will want the revenue from taxing it.  We’ve been fighting a war on drugs for 30 years, apparently without success.  As the federal government continues to hemorrhage red ink, partly to pay for health care “reform” that will surely cost more than currently projected,  it will seem increasingly pragmatic to legalize drugs and tax them.

What has this gargantuan statute wrought? To this question, there can be only one answer: Nobody knows.

I am being quite serious: no single human being knows ― no one can know ― what provisions the statute’s more than 2,000 pages contain. Even if someone had the power to read and remember everything in this massive legislative enactment, he would still harbor a multitude of uncertainties about: how the courts will interpret the law’s general provisions; how the various administrative agencies will flesh out the statute with new regulations; the precise way in which each provision will be implemented; how, when, and in what amounts funds will be made available for carrying out the law’s many stipulated actions; how much resistance the law will meet, both in the courts and among the public, and how these conflicts will be resolved; and countless other matters of critical importance to those directly and indirectly affected by the massive statute ― which is to say, virtually everybody in the United States and a considerable number of people elsewhere, as well.

Already, however, we can say a few things with certainty. One is that this statute, like any other of comparable size, amounts to a Christmas tree for politically favored interests. For months, maybe for years, people will be discovering little provisions tucked into the bill, each of which provides some sort of privilege, protection, subsidy, or other benefit to a particular firm, industry, profession, or other beneficiary. Anyone who has ever toiled through the pages of statutes of comparable length and complexity, as I have for a number of defense authorization and appropriation acts, knows that each such law comprises a host of special-interest provisions. If you would care to see some appalling examples laid bare, read chapters 7 and 8 of my book Depression, War, and Cold War or, if you cannot gain access to this book, see the original version of chapter 7, which was published in the Cato Journal in 1988.

We also know that this statute will not be the end of the story of health-care politics in this country. It is, for the current phase, only the end of the beginning. The ink will scarcely be dry in the revised U.S. Code when political factions will undertake to alter or to overturn the provisions just enacted. Thus, within the act’s great expanse, hundreds of little sub-conflicts will rage, as competing interests struggle for control of the state’s coercive power in their area of contention. Politics, in general, is an endless struggle, and the politics of the federal government’s health-care intervention is no exception. Stay tuned.

Finally, because health-care-related economic activity is such a huge part of the overall economy, what happens in this sector will have significant consequences for the operation of other sectors. For example, when Obamacare turns out to be much more costly than the government has claimed it will be, the government’s demand for loanable funds will be greatly increased, with far-reaching effects on interest rates, investment spending, economic growth, and even the U.S. Treasury’s creditworthiness. It is not inconceivable that the burden of supporting this health-care monstrosity will prove to be the (load of) straw that breaks the back of the government camel in the credit markets, where the U.S. Treasury has long been able to borrow the greatest amounts at the lowest rates of interest because its bonds were considered virtually riskless. Indeed, that status as the lowest-risk borrower seems already to be approaching the breaking point, even before the new health-care legislation has taken effect. Implementation of this law can only worsen the Treasury’s plight.

Last week, Robert Higgs appeared on the “Mike Church Show.” If you missed it, you can check it out here.

[audio:2010_03_18_higgs_interview.mp3]

One of the promises of Obamacare has been that it would reduce health care costs.  The day after the House passed the Senate’s version of health care reform, this headline says “Health Care Companies Pull Stock Market Higher.” Clearly, money is being bet on health care costs increasing, putting more money, not less, into the health care sector.

That should not be surprising.  In a free market setting, individuals decide how much they want to spend on various services, including health care.  With increasing government control, spending on health care will increasingly be a political decision, not the aggregation of individual decisions.  Health care companies already have their lobbyists, who pull for more generous reimbursements.  Consumers (the elderly on Medicare, the poor (and increasingly middle class) on Medicaid, etc.)  will exert political pressures for more benefits.  Political allocation of resources will surely increase costs.

Taxpayers won’t like the idea of higher taxes, already a part of Obamacare, so expect the bulk of the increased cost to push the budget deficit higher.  Essentially, Congress has looked around the world and decided they’d like to shape our public sector to be more like Greece.  At least, by not being on the leading edge here, we can see what’s coming.