Amy Peikoff Interview with John Allison

From Don’t Let It Go:

At the top of the second hour of today’s show I’ll have the pleasure of interviewing John Allison, who is currently President and CEO of The Cato Institute, and formerly was the CEO of BB&T, the 10th largest financial institution in the United States. We’ll be discussing his book, The Leadership Crisis and the Free Market Cure: Why the Future of Business Depends on the Return to Life, Liberty, and the Pursuit of Happiness, in which Allison presents the principles necessary to achieve success and happiness—principles applicable to individuals, organizations and society as a whole.

During the first hour I’ll be discussing some news more generally, most likely focusing on the current hostage situations in France, one of which involves the jihadists who massacred 12 journalists and cartoonists working for Charlie Hebdo, the French satirical magazine that dared to mock Islam and Mohammad.

Join in live, either by phone or in the chatroom.

The show can be accessed here.

DOLLAR: New Book on the Business Cycle and a Free Market in Money and Banking

Dr. Brian P. Simpson, author of Markets Don’t Fail! (Lexington Books, 2005) and an economist at National University in San Diego, CA, has written a new book on the business cycle and a free monetary and banking system.  The book shows how government interference—particularly in the monetary and banking system—causes the business cycle, including the recessions, depressions, and financial crises that are a part of it.  The book also shows how establishing a free market in money and banking can virtually eliminate the business cycle.

This book is a major contribution to the monetary, banking, and business cycle literature.  It builds on the business cycle theory developed by Ludwig von Mises and Friedrich Hayek.  The two-volume book is published by Palgrave Macmillan and is titled Money, Banking, and the Business Cycle, with subtitles of Integrating Theory and Practice for volume one and Remedies and Alternative Theories for volume two.  Volume one was published in April.  Volume two is due out in July.

Part one of volume one shows how manipulations of the supply of money and credit by the government are the primary cause of the cycle.  Part two applies the theory to over 100 years of U.S. history to illustrate the explanatory power of the theory.  The author uses extensive quantities of data to make his case, including data for interest rates, the rate of profit in the economy, the money supply, the velocity of money, industrial production, GDP/GNP, gross national revenue (a more comprehensive measure of spending and output than GDP/GNP), and more.  He shows how the theory explains the Great Depression, the Great Recession, the recession of the early 1980s, and all episodes of the cycle in the U.S. since 1900.  In addition, he goes back to 18th century France and the Mississippi Bubble to demonstrate the explanatory power of the theory.

Part one of volume two critiques alternative theories of the cycle, including Keynes’s theories of depressions and fluctuations, Keynesian “sticky” price and wage theory, and real business cycle theory.  Part two shows what a free market in money and banking would look like, provides an outline to transition to a free market in money and banking, and gives a detailed explanation of why it would lead to greater stability in the monetary and banking system and raise the rate of economic progress in the economy.

Here are links to the two volumes:

Volume 1: http://us.macmillan.com/moneybankingandthebusinesscycle/BrianPSimpson
Volume 2: http://us.macmillan.com/moneybankingandthebusinesscycle-1/BrianPSimpson

It is also available at Amazon at a discounted price.

Money, Banking, and the Business Cycle: Volume I: Integrating Theory and Practice: 1
Money, Banking, and the Business Cycle: Volume II: Remedies and Alternative Theories

The book is highly recommended for anyone interested in free-market ideas or monetary, banking, and business cycle theory.  Economics professors will find both volumes excellent for courses on “macroeconomics,” money and banking, Austrian economics, or the business cycle.  Both volumes would also be great additions to the collections of university libraries and libraries of free-market institutions.

DOLLAR: Binswanger Torpedoes Piketty

Thomas Piketty’s latest book, “Capital in the Twenty-First Century” has had its fair share of criticisms.  The political right continues to bludgeon the latest critique of capitalism by challenging the veracity of the book’s mathematics, formulas, and quantitative reasoning.  But Harry Binswanger understands that the basis for every attack against capitalism is grounded in the idea that capitalism is inherently immoral.  Therefore, any defense of capitalism cannot, and should not, be grounded in statistics, but must challenge the existing moral premises that permeate today’s society…

“Capital in the Twenty-First Century” offers up the same failed, blood-soaked doctrines as its forbearer, “Das Kapital.” But in our Twitterized culture, yesterday’s disgraced notions, now forgotten, can be re-Tweeted as revelations.

[…]

Evil cannot be combated by offering counter-statistics, as many conservatives are doing. No one is concerned with the statistics, only with the moral narrative. And the book’s opening epigraph gives us that, via a quote from France’s 1789 “Declaration of the Rights of Man and the Citizen”:

“Social distinctions can be based only on common utility.”

In quiet, understated language, that statement lays down the formula for total collectivism. It cuts the ground out from under individual rights, substituting “common utility” as the standard for state action. It demands the yoking of the individual to the group.

M. Piketty doesn’t mention that four years after that ill-named Declaration of Rights came the Reign of Terror. The sequence is logical: the Declaration appealed to the raw envy of the mob, whose instrument became the guillotine.

The whole thing can be read here.

Cradle To Grave? Brook and Watkins on The “On Your Own” Economy

Write Yaron Brook and Don Watkins in The “On Your Own” Economy – Forbes:

Are you bothered by the thought of government embedding itself in every aspect of your life? According to President Obama, the only alternative is “a government that tells the American people, you are on your own. If you get sick, you’re on your own. If you can’t afford college, you’re on your own. . . . That’s not the America I believe in.”

[…]

Did people shrink from the twin values of freedom and responsibility? On the contrary, the vast majority of Americans during the 18th and 19th centuries eagerly embraced life’s challenges and flourished under the new system. People didn’t flee from America, they fled to America. They
came here poor, but ambitious—ready to carve out a life for themselves in a country that offered them the only thing they asked for: an open road.

Of course, Americans during this era were not “on their own” in the lone-wolf, asocial sense implied by Obama. Free Americans developed complex webs of association based on voluntary agreement. An unprecedented division of labor—capitalists, businessmen, and workers
coming together to create wealth on an industrial scale—was a product of this new found freedom.

Read the full article at: The “On Your Own” Economy – Forbes]

Obama’s Christmas Tree Tax

Writes David S. Addington over at Heritage on Obama’s Christmas Tree Tax:

President Obama’s Agriculture Department today announced that it will impose a new 15-cent charge on all fresh Christmas trees—the Christmas Tree Tax—to support a new Federal program to improve the image and marketing of Christmas trees.

In the Federal Register of November 8, 2011, Acting Administrator of Agricultural Marketing David R. Shipman announced that the Secretary of Agriculture will appoint a Christmas Tree Promotion Board.  The purpose of the Board is to run a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” (7 CFR 1214.46(n)).  And the program of “information” is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States” (7 CFR 1214.10).

To pay for the new Federal Christmas tree image improvement and marketing program, the Department of Agriculture imposed a 15-cent fee on all sales of fresh Christmas trees by sellers of more than 500 trees per year (7 CFR 1214.52).  And, of course, the Christmas tree sellers are free to pass along the 15-cent Federal fee to consumers who buy their Christmas trees.

[…] The economy is barely growing and nine percent of the American people have no jobs.  Is a new tax on Christmas trees the best President Obama can do?

And, by the way, the American Christmas tree has a great image that doesn’t need any help from the government. [Obama Couldn’t Wait: His New Christmas Tree Tax]

Insight Into America’s Largest Ponzi Scheme

In recent debates GOP presidential rivals have been sparring on Social Security, with some (Rick Perry) insisting it’s a “Ponzi scheme” that should be decentralized (run by fifty states), and others (Mitt Romney) conceding that it’s shaky and needs “reform” but isn’t fraudulent because “millions of people depend on it.” (Mitt Romney). Another (Herman Cain) says privatize it, as Chile did. They’re all wrong, because they don’t name the real problem with the system – and they forego an easy fix that might boost their election chances.

That we’ve only seen GOP rivals “spar” on this key issue is an apt description, for there’s no real fight going on. It’s mere shadow-boxing. Worse, the GOP contenders are mostly on the same side of the issue (the wrong one) and aren’t sufficiently distinct from the rival party. Yet Democrats don’t even try to be candid about Social Security, or try to present a real fix; they’re content to run ads with GOP suits tossing granny off a cliff, which means they’re content to be infantile – which means they’re unfit to lead this great nation.

The facts about Social Security are these. Yes, it’s a Ponzi scheme, thus criminally fraudulent (as I’ll explain), but even worse, because it coerces us to be a part of it. Since the scheme began in 1935 the full force of the U.S. government has compelled a growing portion of citizens to suffer by it, such that we all do so by now. A scheme of such widespread, compulsory fraud is unprecedented in U.S. history, and one of the most shameful (and popular) of FDR’s schemes.

Rationality and justice require that this atrocity be terminated – now. Yet neither virtue can be found in Perry’s proposal to pawn it off to fifty states and thus to decentralize the fraud – or in Romney’s plan to “reform” and “save” the scheme and thus to perpetuate the fraud – or in Cain’s notion that it be operated by quasi-profit-seeking (loss-imposing) “firms” like Bernard Madoff Investment Securities LLC, and thus to privatize the fraud. A fraud remains a fraud regardless of its size, scope, or duration, and it is simply evil to evade this plain fact and deliberately enact policies to decentralize the fraud, perpetuate it, or profit by it.

Read the rest.

“Baseline” Gimmick: “Cut” is in Reality a Lower Increase in Spending

Richard Salsman crunches the numbers at Forbes on the attempt to “cut” the size of the public debt:

[…] Even the most “radical” GOP plan, to “cut” $9 trillion, would boost federal outlays by 30% in the coming decade versus outlays in the past decade, while the most modest GOP plan, to cut a mere $2 trillion, would boost outlays by 55%. Yet Democrats lambaste GOP plans as “Draconian,” prone to trigger a “depression.”

By “baseline” federal spending over the coming decade, the CBO means the sum that’ll be spent even with no changes in current fiscal policy, whether in tax rates or spending schemes. As mentioned, the CBO says $45.8 trillion in outlays over the coming decade are effectively on “auto-pilot,” so any proposed “cut” is relative only to this huge number. As mentioned, Washington spent $28.3 trillion over the past decade, so embedded “baseline” spending of $45.8 trillion in the coming decade already entails an astounding increase of 62%. In the coming decade neither U.S. population nor real economic output would rise nearly so much.

[…] Why are today’s politicians, journalists and economists so complicit in deliberately misleading the public about the current and future state of U.S. finances? Why do they speak of “cuts” in future federal spending when the CBO routinely projects increases in the range of +30% to +65%? Check those numbers again, dear citizen: they’re positive, not negative. “Baseline budgeting,” which blithely presumes a perpetually-growing government, was first enacted by the U.S. Congress in 1974, in order to side-step White House efforts to “impound” (limit) federal spending; but that doesn’t condone the gimmick – or justify lying to the public. When people hear that Washington will “cut” spending by $2 trillion over the coming decade, they think that’s a lot of money and that outlays might be $2 trillion lower a decade hence – not higher by 50% or more. Even Boehner’s budget plan, like many others, backloads the “cuts” into later years; he’d “cut” outlays by only $23 billion in 2012, equivalent to less than three days of total federal spending at the current spending rate.  [Richard Salsman, Forbes,  Washington’s Budget “Cuts” Would Boost Spending 50%]