So you’ve been to a summer program sponsored by Mises, IHS, FEE, Cato, Independent, or any of a number of other organizations dedicated to economic research and education.  You’re excited, and you’re firmly grounded in your understanding of the classical liberal tradition.  You wonder: what now?  Here are a few suggestions that will help you make a difference and contribute to the discussion while developing your writing ability.

I see a couple of easy ways to contribute to the Great Conversation.  First, look for ways to write letters to editors of magazines, newspapers, and other publications.  The July issue of Scientific American, for example, has several articles that could be responded to in a 200-250 word letter to the editor.  The same could be said of any issue of any magazine or newspaper.  Some professional journals also publish letters to the editor.  If they get published, blog them.  If they don’t—and many won’t–blog them anyway.  You can pick up some tips by looking at Don Boudreaux’s letters to the editor.  Professor Boudreaux is a prolific letter-writer, and he blogs most of them at Cafe Hayek.

Here’s a quick example.  I revised this on a plane from Dallas to Albuquerque, and just to prove my point I picked up a copy of the in-flight magazine and looked for anything that could be addressed from an economic perspective.  I found an article about a shark dive in the Farallon Islands near San Francisco.  I wrote the following in about five minutes, and I emailed it to the editor (editor@americanwaymag.com) at my next opportunity:

Dear Editor,

Amy Sorlie’s 8/1/2009 article on shark diving in the Farallon Islands piqued my interest because I’m a lifelong shark enthusiast and an economist with an interest in conservation.  Perhaps counter-intuitively, the key to conservation is not government-mandated protection, but the establishment of clear private property rights over sharks and shark habitats.  Since sharks are commonly owned, no one profits directly from their survival and, therefore, no one has an incentive to conserve them.  Indeed, in some places it is actually illegal to own and farm sharks.  This is exactly the opposite of what we should be doing.

Even though we kill and eat far, far more shrimp, salmon, and catfish than sharks, no one is really worried about shrimp, salmon, and catfish going extinct anytime soon.  That is in large part because they can be privately owned and farmed.  If we really want to conserve sharks, we should take a similar approach.

Kindest regards,

Art Carden
Assistant Professor of Economics and Business
Rhodes College
Memphis TN

Why letters to editors?  They aren’t “scholarly,” but they’re a great way to practice packing a tight, easily accessible argument into a small space.  Letters to the editor also get read.  I write letters for several reasons.  First, they help me satisfy my attraction to the intellectual equivalent of bright, shiny objects.  Second, they help me satisfy my urge to (try to) save the world.  Third, they help me practice writing and thinking clearly.  When you’re writing a 250 word letter on a specific issue for an audience of novices and laypeople, you don’t have a lot of room for subtlety and nuance, but you also don’t have room for sloppiness.

A second way to contribute is to write op-eds for your campus newspaper or for another local publication (an independent weekly, perhaps).  Your local daily newspaper and other outlets might be hard to get your work into, but campus publications are usually well-read and looking for good content.  Don’t be afraid to write for free, particularly if you’re just starting out.

What should you write about?  I assume you have a lot of notes from the lectures you attended at Mises, FEE, IHS, etc.  It might take some work, but you can certainly use these as a very rich source of material for articles and letters.  If you are interested in academia, write with an eye toward a future as a researcher: look for ways to hone and sharpen your arguments, and look for opportunities to get involved in research projects.  Your professors are usually looking for help, and if you have opportunities to do your own independent research, there are outlets for these projects, too.

A third way to contribute and practice is to review books.  If you are a graduate student, you might want to volunteer to review for professional journals, organizations, or websites (not too many, and nothing that isn’t directly related to your research agenda).  Other outlets like newspapers and magazines sometimes feature book reviews, as well.  You probably won’t start out by reviewing books for the New York Review of Books or the Most Important Economics Journal, but it’s a fair bet that there is someone out there who is looking to publish well-done book reviews.  You have to engage with the books’ arguments in a way that is suitable for publication, and you can be reasonably certain that the authors will read the published reviews.

If you don’t really fancy yourself much of a writer or speaker, a fourth way to contribute would be to start and edit a publication or website.  If you’re not ready to produce your own content, there are tons of sites (mises.org, independent.org, and many, many others) that have a lot of content you can link to or reproduce for a price of $0.00.  Look at Lewrockwell.com and Strike-the-root.com for examples.

A word of caution is in order, especially if you’re blogging.  Remember that the Internet is forever, Google knows everything, and if you’re self-publishing you don’t have a gatekeeper that can keep your less civilized thoughts from seeing the proverbial light of day.  Practice the virtues of temperance, prudence, patience, and kindness.  Just as sending email while angry is a bad idea, blogging while angry is a bad idea.  Long screeds about how Eminent Scholar is a whore of The Establishment is a pretty good signal that you should probably be ignored, and anonymous cheap shots in blog comments are childish and unprofessional.  Don’t let a couple of rants or clever-but-inappropriate barbs disqualify you from the Great Conversation.

But relax.  Above all, read critically, write critically, and have fun.  Know where you’re starting, work to get better, and realize that improvement is a long and sometimes painful process.  I’m still unsatisfied with the work I’m doing right now, but it’s leaps and bounds better than what I was doing in graduate school.  A place at the table is worth the time and effort to secure.  Good luck!

Cross-Posted at the Mises Blog and Division of Labour.

The Democratic Party agenda tends to be a mixture of socialism and corporatism, whereas Republicans probably emphasize corporatism and socialism. Obama’s health care plan has always been a hybrid, as most interventionist polices are in a mixed economy. Perhaps in the longterm he wants to move toward as fully socialist a system as possible, but it is hard to know. We do know that the president would rather push something significant through than nothing. We also know that he has to play a game where corporate interests who want a captive market through mandated health care are happy, but so too are the progressive true believers in social democracy on the far left. Will he be able to do it?

It appears as though Obama may be backing off the “public option“—a socialist health “insurance” scheme to “compete” with private enterprise—as the central element of the proposal. Although some progressives and Democrats claim they would not support a program without a “public option,” Obama may be able to win them over with health-care co-ops, which would operate as non-profits with subsidies and support from the state.

Despite the Democrats’ insistence that all opposition to the plan is coming from big industry (unless it’s rooted in “racism”), Big Health is actually largely behind Obama’s general move toward more intervention. The drug companies are taking out many millions of dollars in advertising in support of Obamacare. The connection between big business and more regulation and government involvement should be no surprise. When Bush expanded Medicare, the drug companies of course cheered. (While some of his partisans denied that this was a bothersome element in the prescription drug program.)

When the dust settles, I expect if a bill passes, it will involve massive intervention on behalf of the state with just enough to satisfy the biggest players in industry as well as enough bureaucratic expansion to please the left. What will be sold as a “compromise” will actually be, in some respects (though perhaps not all respects), the worst of all worlds: A further solidification of fascism in the health care sector. This means that any further disasters, reduced quality, shortages or climbing health care costs will continue to be blamed on the market and there will be another round of calls for more socialization a few years down the line.

If we want true health care reform—and many opponents of the plan are doing a disservice by defending our very flawed system as “the best health care plan in the world” or a paragon of capitalism—we must see dramatic moves toward the free market. This would mean, among other things, eliminating the licensing of health care professionals, deregulating the insurance industry, undoing the unholy link between insurance and employment created by the tax code (while perhaps allowing pure tax credits for any health care expenditures—I see tax credits as a tricky issue), abolishing or greatly scaling back the Food and Drug Administration, which drives up prescription costs and has killed hundreds of thousands of Americans, rethinking the patent system for health care services and, ultimately, scrapping Medicare. On the last one, I’d favor immediate abolition as a matter of principle, but here’s a gradualist reform I could live with: Get rid of the illusion of government-backed old-age medical insurance of any kind. It’s a pay-as-you-go program, so it should be treated as one. The Medicare tax should be eliminated (not replaced by government savings accounts) and recipients of Medicare should be, in the transition, paid for out of the general fund. This would at least be honest accounting. Medicare is a welfare redistribution plan, not an insurance plan of any sort, and it must be treated as one. No one paying into the system would be under the illusion that the government will care for them years down the road. To lessen the burden and shrink the government’s involvement, perhaps those receiving Medicare would be free to opt out of it in return for a huge reduction in their federal taxes.

Any legitimate reform will discernably take away the government’s power over something significant and will scale back its size and involvement. That is the only antedote to our health care troubles, and the only true alternative to more socialism and fascism in American medicine.

As candidate for irony of the year award, note this news item wherein Bollywood superstar Shah Rukh Khan

was detained Friday by U.S. immigration officials at Newark Liberty International Airport in New Jersey because his name matched with some names on a computer alert list. The actor is in the U.S. to promote a new film, “My Name is Khan,” which is about racial profiling of Muslims after the Sept. 11, 2001, attacks.

Read the full account here.

Obama loudly denounced Bush’s policy of “extraordinary renditioning,” whereby terror suspects were captured, transferred through secretive CIA sites, and delivered to foreign regimes — ones denounced by Bush et al. for their cruelty, like Syria and Egypt — where they were tortured. Maher Arar is among the highest-profile victims of this policy. A Canadian citizen later deemed totally innocent, Arar was captured in New York and sent to Syria where he was genitally tortured. His is not the only horror story.

It is to Obama’s credit that he seems to have modified this policy somewhat, but he has not backed down from “ordinary rendition,” nor has his administration appeared to have put an end to torturing renditioned suspects, despite what Obama strongly implied (though perhaps never precisely promised). On the other hand, under Obama we are seeing the use of “ordinary renditioning” stretched in extraordinary ways. The renditioning of Raymond Azar had been discussed by the government as early as December, so the president doesn’t get full blame, but it was as late as April that the decision was made to grab Azar and ship him to Bagram, Obama’s legal black hole, where Azar was, according to his account, hooded, stripped naked, subjected to stress positions, sleep deprivation, food deprivation and extreme temparatures, and told that his family would be harmed if he didn’t submit, until he broke down into a tortured confession.

Azar’s crime? Was he an alleged al Qaeda operative? Or even accused of the “crime” of being drafted into the Taliban? No. He is alleged to have known that one of his fellow government contractors was bribing a government official to get a sweeter contract deal! For this — knowledge of bad faith between government and private sector profteers, something that some of Obama’s buddies on Wall Street and in the military-industrial complex might know a thing or two about — a man claims he was whisked away to a military prison in conquered Afghanistan and tortured. Fraud, defined selectively by the government, is now a torturable offense.

Extraordinary Renditioning may be gone, but the Extraordinary has just become Ordinary in Obama’s America. Here’s a chance, once again, for Obama to provide an example of being the least bit better than Bush. But I wouldn’t hold my breath.

Now that Obama is in charge, the netroots (who led the fight against the Iraq war), no longer seem to care about foreign policy. If the antiwar movement ever makes a comeback, it won’t be because of them.

At a recent gathering of the Netroots Nation, the participants were asked:

“[D]o you, personally, spend the most time advancing currently?” The winner was health care reform, with 23 percent, and second place was “working to elect progressive candidates in the 2010 elections,” with 16 percent. In 11th place—at the very bottom of the list—was “working to end our military involvement in Iraq and Afghanistan.” Just one percent of Netroots Nations attendees listed that as their most important personal priority.

“Yale Press Bans Images of Muhammad in New Book,” by Patricia Cohen (New York Times, August 12, 2009)

In 1951, Bill Buckley published God and Man at Yale, a polemic arguing that the Christian God was no longer welcome at Yale University, a school founded to train Christian ministers and educate students about their Christian faith. That was too “biased” even in 1951.

58 years later, Yale University Press decides that they do respect religion—the most biased, intolerant expressions of it. If Islam is a “religion of peace” and wisdom and tolerance, Western “progressives” are acting as if it were not. Cowardly, yes, but also condescending, insulting to thinking Muslims, and suicidal to the academic enterprise.

Book burnings horrify civil libertarians but this precensorship is far worse. Know-nothing book burners may burn a single book but copies of it remain and the ideas live on. Academic pre-censorship makes sure that the book the author wishes to write never sees the light of day.

What’s next? Pre-clearance of academic monographs by Grand Ayatollahs?

I am sure Islamofascists would be offended by the photographs of Ms. Krausen without a hajib. We won’t even mention the fashion spreads in the New York Times Magazine.

Or all the Jewish writers at the Times.

But perhaps Yale is right. The Wise and Wonderful Ayatollah Khomeini said:

We are not afraid of economic sanctions or military intervention. What we are afraid of is Western universities.

With another demonstration of chicken-sh** cowardice, Western universities have demonstrated that when it comes to Islamic threats, their only position is “prone.”

(Apologies to chickens)

Ben Bernanke’s four-year term as Chairman of the Federal Reserve System ends on January 31, 2010.

In a story published on August 12 and headlined “Economists Call for Bernanke to Stay, Say Recession is Over”, Wall Street Journal reporter Paul Izzo writes that “economists are nearly unanimous” in recommending that President Obama reappoint Mr. Bernanke for four more years.

Count me among the naysayers.

Although the Journal does not identify the full stable of experts it surveyed in reaching the conclusion that Mr. Bernanke has earned the profession’s “overwhelming” support, it turns out that the two economists quoted in Mr. Izzo’s article work on Wall Street. Many of the financial institutions headquartered there have benefited directly from taxpayer-financed bailouts on Mr. Bernanke’s watch.

Unwilling to bite the hand that has fed them, some of the approximately 43 economists the Journal surveyed nevertheless voiced concerns about mistakes Mr. Bernanke committed in responding to the “credit squeeze” that began in December 2007. The Fed’s failure to take appropriate action more quickly and its decision not to rescue Lehman Brothers up were two prominent complaints.

A different evaluation of Mr. Bernanke’s tenure might have emerged if the Journal had consulted more academic economists and fewer Wall Street economists. The academic economists might have said, as I would have said, that Mr. Bernanke erred in responding too quickly and too precipitously to the credit squeeze, thereby short-circuiting the salutary operation of market forces that would have purged the economy of the institutions chiefly responsible for the financial crisis, and that his biggest mistake was not denying a lifeline to Lehman Brothers, but rather throwing one to Bear Stearns, AIG, and other poorly managed firms deemed too big to fail. The recession would then have been sharper, but less long-lasting.

Mr. Bernanke’s Fed mistook the market’s inability to assess the risks associated with mortgage-backed securities and, hence, hesitation to lend against them, for a drying-up of bank liquidity.

But at the end of the day, Mr. Bernanke’s most venal sin has been to compromise the Fed’s independence of the U.S. Treasury. That subservience began under Hank Paulson and has continued under Timothy Geithner, both of whom, it should come as no surprise, have intimate ties with Goldman Sachs, which has been the big winner under the policies orchestrated by both the Bush and Obama economic teams.

I therefore predict that if the president confounds all expectations and does not reappoint him, Mr. Bernanke will not return to the halls of academe, but will instead take a cushy job at, well, Goldman Sachs.

Only by replacing Mr. Bernanke now does any (faint) hope remain of preventing the central bank from becoming the regulatory monster he and Secretary Geithner want it to be. A new chairperson, less mesmerized by the specter of the Great Depression, might redirect the Fed into doing the one job it was created to do: maintain price stability.

When Nancy Pelosi convenes her new House Un-American Activities Committee to call forth ObamaCare protestors (see her “‘Un-American’ Attacks Can’t Derail Health Care Debate“), I hope she’ll find room on the docket for a few other, arguably more egregiously un-American activities—and bring their perpetrators to account:

Torture
In the black-and-white films I loved as a child, the good guy Americans were always contrasted with the foreign, un-American guys—complete with identifying scars—slapping their prisoners to make them talk. So why is the Obama administration fighting in courts in San Francisco, Washington and London “to keep an official veil of secrecy over the treatment of a former prisoner who says he was tortured at Guantanamo Bay,” and why is Secretary of State Hillary Clinton threatening “to limit U.S. intelligence-sharing with Great Britain if the [British high] court disclosed details of [his] treatment in Guantanamo”? (See details here.) And of course Pelosi herself has successfully obfuscated the record on her knowledge of and complicity in the use of torture during the Bush administration.

Though perhaps short of torture, Pelosi might thank her lucky stars she’s not living in the era of those original Americans who found tar and feathering the appropriate response to government figures they didn’t like—including especially tax collectors trying to carry out unpopular founding-era taxes. Kind of makes shout-downs look civil.

Living High on the Hog
True Americans have always prided themselves on being just plain folks—especially those “serving” in government. Think of the great Capra classics like Mr. Smith Goes to Washington. But now we have the specter of members of Congress needing private Gulfstream executive jets and full-sized Boeing 737s for trips home for the weekend, or to take their families on junkets across the globe while on “recess”. Isn’t it rather un-American for Pelosi to have such public/private jets on call every weekend; or for her and other public servants to take their spouses and children on tours of the Galapagos Islands or to the Paris Air Show in the Air Force-luxury-version Boeing 737 rigged out with all first-class leather seats and sleep accommodations, with service aboard provided by gloved military personnel?

Bail-Outs and Stimulus Legislation
“The American Way” used to be that those who worked hard, were honest, and served their fellow man did well, and those who didn’t went broke. Now, those who work hard and save lose their shirts in a government-fueled trainwreck and get taxed to bail out those who took on risky ventures and paid themselves fancy bonuses to boot. Meanwhile, government bail-out programs like TARP can’t account for the billions appropriated to them, big banks-formerly-known-as-investment banks are making even greater record profits, and the average Joe playing by the rules is out of luck. Who’s responsible for this un-American state of affairs and how do we get our money back?

Immunity from Legislation
Isn’t the immunity Congress gives themselves from labor, healthcare and other laws (not to mention the aforementioned exemption from TSA checkpoints) decidedly un-American, where all are supposed to be equal before the law? There’s a great new truism making the rounds: The reason members of congress try so hard to get re-elected is that they would hate to have to make a living under the laws they’ve passed. I don’t remember seeing anything about Congress being exempt from the laws it passes in the Constitution or Bill of Rights. And if those aren’t the measure of “American,” I wonder what is?

Ms. Pelosi might thus do better to dial back her Nixonian paranoia: she might otherwise find her continued search for enemies of the republic turning the spotlight uncomfortably inward.

In a blog post last week I questioned the fairness of the $33 million settlement Bank of America had agreed to with the SEC for concealing information related to its merger with Merrill Lynch.  Now U.S. District Court Judge Jed Rakoff has put that settlement on hold, saying he is not convinced the settlement is fair to the public.

Rakoff correctly noted that the accusation was that Bank of America effectively lied to its shareholders, and was concerned that the $33 million would come from the $20 billion in TARP money the bank got in January.

Money is fungible, so if the settlement is actually paid there would be no way to say “this dollar came from this source and that dollar came from over there.”  But the judge’s concern about taxpayers paying the settlement is misguided.  As long as the TARP money is repaid—which ultimately Bank of America wants to do, to regain their independence from partial federal ownership and control—the taxpayers will get their TARP money back, and the bank’s stockholders will be the ones who will pay the settlement.

Judge Rakoff is almost on the right track here.  He is right to question who bears the ultimate burden of the settlement, and he is right to be concerned that taxpayers might be putting up that money.  On further analysis, however, we can see that his concern for the taxpayers is unfounded.  Bank of America’s TARP liability will remain the same regardless of whether the settlement goes through.

So, take the next step, Judge Rakoff.  Ask, if it’s not the taxpayers who will pay the settlement, who is it?  The answer, I argued before, is Bank of America’s shareholders, the very people the SEC said were harmed by the concealment of information.  If we conclude that it is unfair to penalize again the very people who were originally harmed through no fault of their own, the settlement should be voided.

A more difficult question is: Who, if anyone, should actually be penalized?  I don’t have a good answer for that, because I don’t have all the facts.  It was reported that when the merger was under consideration, Treasury Secretary Henry Paulson threatened Bank of America CEO Ken Lewis that he would lose his job if he backed out of the deal, as Lewis was considering doing once he found out how costly it would be.  If the merger was effectively engineered by the Secretary of the Treasury, it would be hard to fault Bank of America’s execs for its terms.  Meanwhile, Lewis said he was unaware of the bonuses until after they had been distributed.  The case is made more complicated because the SEC settlement did not identify who, if anyone, actually did anything wrong.

If the settlement goes through, will the taxpayers unfairly be footing the bill?  No. Will Bank of America’s shareholders be unfairly footing the bill?  Yes.  Should the settlement be voided?  Yes.  Should someone else be penalized for wrongdoing?  I don’t know, because the facts in this case are murky.  And one odd thing about the case is that while the SEC did cite wrongdoing in concealing information from Bank of America’s shareholders, it never said who was to blame for this concealment.

Ever wonder how the Golden State managed to run itself into the $26 billion budget hole that only recently was papered over, at least for the coming fiscal year, in a beyond-the-last-minute deal between Governor Schwarzenegger and the California legislature?

California’s Department of Transportation (CalTrans) supplies a modest but nevertheless instructive example of governmental incentives to overspend the public budget.

Every year, CalTrans identifies property it owns around the state as “surplus” and sells some of it to willing buyers. Funds raised in that way are deposited into the State Highway Account at closing and then transferred to the Public Transportation Account, from which CalTrans draws, in November. Then, in January, CalTrans estimates for the upcoming fiscal year the receipts expected from surplus property sales and informs the Department of Finance (DoF) how much new revenue it anticipates from that source.

The revenue estimate CalTrans supplies to the DoF in January is based on figures from the previous January, projected forward with a simple linear trend. But by the time the Governor actually gets around to signing the state budget, the funds raised by surplus property sales over the past twelve months already have been collected and deposited into the State Highway Account. Yet CalTrans never revises its revenue projections in light of that reality.

Failure to adjust its estimates lately has led CalTrans to overestimate the revenues it expects from surplus property sales – by $28 million in 2006, $27 million in 2007, and $60 million in the most recent fiscal year. It has a strong incentive to do so because the DoF apparently authorizes CalTrans to spend that overestimated revenue, allowing the agency legitimately to run a budget deficit, which it has now done consistently over at least the past three fiscal years.

As a result of DoF’s failure to punish CalTrans for overestimating the revenue it expects from surplus property sales, the balance in CalTrans’ current account now stands at just $10 million – an historic low.

Ex-post settling-up would easily solve CalTrans’ overspending problem. If CalTrans – or any other department of state government – does not generate as much revenue from surplus property sales as it expected (and told DoF to expect), it should not be permitted to dip into that inflated balance.

Deficit spending at CalTrans may be small beer compared with California’s multi-billion-dollar budget shortfall, but as Everett Dirksen once said, $60 million here and $60 million there eventually adds up to some real money.

Independent Institute intern Jonathan Wyse supplied able and helpful research assistance in the writing of this story.