Capitalism Unbound

Andrew Bernstein has written a new book called Capitalism Unbound that, in his words:

...offers a focused, essentialized, and condensed argument ideal for the layman who admires capitalism but lacking a succinct, accessible explanation of its moral and economic virtues.

I have just finished reading it and I heartily agree. The book is an excellent shorter and updated presentation of the historical, moral and economic case for capitalism already presented in his book The Capitalist Manifesto. It is, as Dr. Bernstein put it on Facebook, "best book [he's] ever written." I think the organization of the book, in particular, is very effective in conveying the link between the historical facts and the ideas, both moral and economic. There is also enough myth busting to challenge those unfamiliar with the details of economic history, particularly the history of pre-capitalist and early capitalist eras. There are also interesting thoughts on charity as well.

Highly recommended!

Peter Schiff on the Choice Americans Face

Peter Schiff, as usual, gets it right when it comes to the economic and political choices that Americans face:

...I believe that we must restore the conditions that led to our economic preeminence. We must once again become the leader in economic freedom. This entails dismantling a significant portion of our federal and state governments, repealing countless unnecessary regulations, significantly lowering and simplifying taxes, and reinstituting sound money. If we accomplish these tasks, conditions will be ripe for a lasting recovery that solidifies our place at the top of the global economic totem pole.

Read the whole thing.

Reisman on the Laissez Faire Slander

Economist George Reisman has penned an excellent essay on the current crisis. It is entitled "The Myth that Laissez Faire is responsible for the Financial Crisis".

Reisman on Obamanomics

After an absence of three months, George Reisman returns to blogging with two posts. In the brief, more recent post, he shows that Sarah Palin and Barack Obama have much the same approach when it comes to economics. After illustrating how their equivalent policies are wrong headed, Reisman declares:

Obama and Palin are both obviously ignorant of economics. John McCain, who picked Palin to be his running mate, has admitted his own lack of knowledge of the subject. Knowing little or nothing of the subject himself, he could not be expected to realize that Palin knew nothing of the subject either. An examination of the record of Obama’s running mate, Senator Joseph Biden, would probably turn up a more extensive record of comparable ignorance of economics, given his greater number of years in public life as a leading spokesman for the Democratic Party.

But Reisman's long August 28 post is the more worthwhile one. In it Reisman defends the proposition "Why Everyone Should Be in Favor of Tax Cuts for the “Rich”" on detailed economic grounds, taking for granted that individuals are interested in greater prosperity and economic growth. In addition, it shows the counter productivity of tax cuts without corresponding reductions in government spending as well as the negative long term effects of the Federal Reserve's easy credit policy. Reisman's conclusion is as follows:

Of course, in a further display of their ignorance and blindness, members of the left will undoubtedly characterize the line of argument I’ve presented in this article as the “trickle‑down theory.” There is nothing trickle‑down about it. There is only the fact that capital accumulation and economic progress depend on saving and innovation and that these in turn depend on the freedom to make high profits and accumulate great wealth. The only alternative to improvement for all, through economic progress, achieved in this way, is the futile attempt of some men to gain at the expense of others by means of looting and plundering. This, the loot‑and‑plunder theory, is the alternative advocated by the redistributionist critics of the misnamed trickle‑down theory. The loot‑and‑plunder theory is the theory of Obama, of the Democratic Party, and of much of the Republican Party. It is time to supplant it with the sound economic theory developed by generations of intellectual giants ranging from Smith and Ricardo to Böhm-Bawerk and Mises.

New upcoming book by Gary Hull

I expected Gary Hull to take a position at Founders College that he helped found but he's not listed as staff or faculty. Seems he has elected to stay on at Duke as Director of VEM ("the program of values and ethics in the marketplace"). On the VEM web site the following has also been announced:

In progress: "Private Property: The Road to Liberty," tentative title. The book explains the true meaning of the right to property, and provides what this right has been sorely lacking: a moral foundation. It uses numerous examples of property rights violations -- including eminent domain, land-use regulations, concerted attacks on copyrights and patents -- to argue that the right to property is nearly extinct in America. Dr. Hull also shows how the Founders were right in their conviction that all rights -- the rights to life, liberty, property and the pursuit of happiness -- are a unity.

I am very much looking forward to this book. Dr. Hull's previous book, The Abolition of Antitrust which included a series of essays by different authors, including Hull, arguing against antitrust from a historic, economic, legal, and moral point of view, was excellent.

Private Disaster Response

In an article entitled Rapture Rescue 911: Disaster Response for the Chosen on TheNation.com, Naomi Klein solves a problem I've been thinking about during every recent natural disaster, and in particular the recent Southern California fires. Is it realistic to expect that in laissez-faire capitalism there will be private fire companies and emergency response companies that will be able to help people during natural disasters? It seems as there should be, since people ought to be willing to pay for these kinds of services just as they pay for insurance, but I tend to prefer to see at least some evidence for these assumptions. I had previously heard of occasional privatized fire departments in small towns but nothing larger than that. I had not heard of this:

Members of the company's Private Client Group pay an average of $19,000 to have their homes sprayed with fire retardant. During the wildfires, the "mobile units"--racing around in red firetrucks--even extinguished fires for their clients.
...
During last year's hurricane season, Florida homeowners were offered similarly high-priced salvation by HelpJet, a travel agency launched with promises to turn "a hurricane evacuation into a jet-setter vacation." For an annual fee, a company concierge takes care of everything: transport to the air terminal, luxurious travel, bookings at five-star resorts. Most of all, HelpJet is an escape hatch from the kind of government failure on display during Katrina. "No standing in lines, no hassle with crowds, just a first class experience."

HelpJet is about to get some serious competition from some much larger players. In northern Michigan, during the same week that the California fires raged, the rural community of Pellston was in the grip of an intense public debate. The village is about to become the headquarters for the first fully privatized national disaster response center. The plan is the brainchild of Sovereign Deed, a little-known start-up with links to the mercenary firm Triple Canopy. Like HelpJet, Sovereign Deed works on a "country-club type membership fee," according to the company's vice president, retired Brig. Gen. Richard Mills. In exchange for a one-time fee of $50,000 followed by annual dues of $15,000, members receive "comprehensive catastrophe response services" should their city be hit by a manmade disaster that can "cause severe threats to public health and/or well-being" (read: a terrorist attack), a disease outbreak or a natural disaster. Basic membership includes access to medicine, water and food, while those who pay for "premium tiered services" will be eligible for VIP rescue missions.

Ms. Klein, of course, sneers at all this and apparently takes for granted that people have a right to equal disaster assistance that should be provided free of charge. But leaving aside the sneers, I really think this is an awesome demonstration of the power of the market, hampered though it is, to provide services that people are willing to pay for, including services typically assumed to be the exclusive domain of the government.

Supply-side Economics as a Substitute for Smaller Government

The New Yorker's James Surowiecki (hat-tip Brendan Nyhan) makes some interesting points about supply-side economics:

The supply-side argument that, in the United States, tax-rate cuts pay for themselves—that, after cutting taxes, the government actually ends up with more revenue—has little or no support within the mainstream economic profession, and no hard empirical data to back it up.

Surowiecki suggests that:

...the absurd idea that tax cuts pay for themselves is based on an idea that is not at all absurd, which is that tax rates can have an impact on people’s behavior. Increase taxes too much, and people may work less (since they get to keep less of the income they earn) and invest less (since their gains will be taxed more heavily), and so the economy will grow more slowly. The opposite can happen if you cut taxes. (How much of an impact tax rates have—and how high taxes have to get before they have an impact—is a subject of much debate in economics, but it’s inarguable that they do matter.) What supply-siders have done is start with that reasonable idea and extrapolate it to unreasonable lengths.

They’re aided in that extrapolation by the simple fact that the American economy grows over time. As a result, even if you cut taxes the federal government will eventually take in more tax revenue than it once did. And that allows supply-siders to fashion a spurious syllogism: taxes were cut in 2001, government revenues are higher in 2007 than they were in 2001, therefore the tax cuts increased revenue. The comparison that really matters in analyzing the impact of the tax cuts, of course, is not between government revenue in 2001 and government revenue in 2007. It’s the comparison between actual tax revenue in 2007 and what tax revenue would have been in 2007 had there been no tax cuts in 2001. And studies that make these types of comparisons—including one by Bush’s own Treasury Department that looked at the tax cuts’ impact on economic growth—find that government revenues would be greater had taxes not been cut. But that hasn’t stopped President Bush from claiming victory.

The above logic makes some sense to me. But regardless if one agrees with studies linked to above, I completely agree with Surowiecki's next point:

In one sense, of course, it’s odd that a Republican President should treat higher government revenues as a point of pride. Historically, after all, Republicans have been the party of small government and fiscal restraint. But, while Republicans still talk a good game about the need for spending discipline, in practice it matters far less to them than tax cutting. After all, if tax cuts pay for themselves, then there’s not much reason to worry about restraining government spending—we can afford it all. In fact, if government spending grows too big, you can cut taxes again to pay for it.

I enjoy a tax cut as much as the next guy but the fact is that there are no mainstream Republican politicians calling for smaller government at all. If I'm wrong about this please let me know.

Various

Bush vs. Kerry
During the September 30, 2004 Presidential debate, Presidential candidate John Kerry said the following:

KERRY: With respect to Iran, the British, French, and Germans were the ones who initiated an effort without the United States, regrettably, to begin to try to move to curb the nuclear possibilities in Iran. I believe we could have done better. I think the United States should have offered the opportunity to provide the nuclear fuel, test them, see whether or not they were actually looking for it for peaceful purposes. If they weren't willing to work a deal, then we could have put sanctions together. The president did nothing. [emphasis added]

Headline today: U.S. to give Iran nuclear technology. From the article:

A package of incentives presented Tuesday to Iran includes a provision for the United States to supply Tehran with some nuclear technology if it stops enriching uranium — a major concession by Washington, diplomats said.
...
The package was agreed on last week by the United States, Britain, France, China and Russia — the five veto-wielding members of the U.N. Security Council, plus Germany, in a bid to resolve the nuclear standoff with Iran.

No comment necessary.

Brian Simpson's Markets Don't Fail!
My review of this useful book is posted at Nick Provenzo's Rule of Reason.

Tara Smith's Ayn Rand's Normative Ethics: The Virtuous Egoist
Last week I completed my reading of this excellent book which covers the Objectivist virtues including rationality, honesty, independence, integrity, justice, productiveness, and pride in detail. Despite the steep price for the hard cover, the book is well worth it since it covers material otherwise only available in far more expensive audio lectures. Among the more interesting topics covered are discussions of temperance, charity, kindness, and generosity, and their relationship to the usual Objectivist virtues, as well as to why the subject of individual rights does not fall under the purview of the virtue of justice (hint -- individual rights are not a matter of desert).