HoltesThoughts

Monday, April 21, 2014

Untangling the Bait and Switch of Friedman/Rand's ideas about Capitalism

If you listen to Milton Friedman in this article, he makes some points that sound perfectly rational until you deconstruct them a little:

Src: [http://t.co/0v3PqMwU8H]

"Is there some society you know of that doesn't run on greed?"

Greed is undue hunger towards power and wealth, and while there are individuals in every society who "run on greed", my own observation is that the majority of people are rarely motivated by greed, or solely by greed. Many medical personnel are primarily concerned with saving lives. People join the military and give up their lives for their country. If their leaders "run on greed" not so the cannon fodder who they direct into battle. And I've met a few Generals and it wounds them to direct young men to their deaths. A dear friend of mine was the wife of one of the few suicides in WWII because of Post Traumatic Stress from the loss of lives on a beach front in Normandy. The man was incredibly honorable. No greed doesn't dominate everyone and it has the power to corrupt everywhere it does dominate. So claiming that Capitalism is good because "greed is everywhere" is a deflection. We now know that Russia and China both run on Greed, but they've also transformed themselves into Capitalist systems so what he was saying to Phil Donohue might have made sense then but in hindsight the fact that they ran on greed didn't make capitalism look good, just showed the bait and switch nature of communism. Next he notes that:

"The World runs on individuals pursuing their separate interests."

This is true, but successful companies run on individuals working together to pursue their common interests. And men of the enlightenment maintained that tyranny and corruption are related to men pursuing "private, separate interests" [Locke] when they should be upholding some kind of public trust. Indeed Locke pretty much demonstrated that common interest ultimately protects the individual interests of people. So the world running on "individuals pursuing their separate interests" denies the important utility of common interests in an effort to protect the notion that somehow greed is a good thing.

Indeed individual success depends on governments that let people be successful. We need a level playing field, not oppressive taxation and over-sight. And we need moderation, not extremes. A little greed might be good but a lot of greed is very very bad. And nobody ever has objected to free enterprise when it doesn't involve swindles, external costs, or misery. What people object to is freebooting. Privateers who engage in crony capitalism, nepotistic capitalism or use of government control to run monopolies. People don't object to a fair and just system. They object to a rigged one.

Milton Friedman goes on to assert that:

"Einstein didn't construct his theories on orders from a bureaucrat" and "Henry Ford didn't produce his cars that way."

Which again sets up a straw argument, since most large capitalist enterprises become bureaucratic. Henry Ford produced his cars using a corporate bureaucracy that took orders from him. He essentially was a near dictator of Ford Motors company, subject only to the objections of his board of trustees. So if bureaucracy were only a feature of socialist countries his argument might make more sense but otherwise he's making a false contrast. What is true is that individual initiative is what has created most great innovations. Sometimes they've been purely individual efforts as in Einstein's thought experiments, but more often they've been collaborative efforts as with Einstein and his first wife, or Edison with his teams of scientists and technicians. Genius has always been 99% perspiration and 1% inspiration. He's claiming individual initiative for the capitalist system when capitalism has mostly provided financial support to inventors, such as Robert Fulton who had to share credit for one of his steam engine designs with a banker because the banker financed it. And modern capitalist enterprises have grown into bureaucratic monsters with armies of lawyers who think nothing of stepping on the entrepreneurs who try to compete with it.

His next comment is a bit of a whopper:

"And the only countries where the masses have escaped grinding poverty have been ones that had capitalism and free trade"

is a bit of deflection as the only reason masses escaped grinding in capitalist countries was that they organized themselves bottom up, fought for a share of the production, and the capitalists were wise enough to recognize it was in their best interest to share the loot. In the USA this was easier because relatively good government and lack of a long established aristocracy meant that many people could emerge from poverty by acquiring an education and inventing things. Up until recently most engineers and many scientists were self taught. There was a time still alive when I was a child when almost everyone in the USA dreamed of inventing something that would make them a millionaire; starting a business in a garage. So local free trade, access to markets and INDIVIDUAL access to finance is necessary for the "masses" to escape grinding poverty, but we can thank the kind of capitalism where everyone has the opportunity to become a capitalist -- and good government -- that makes markets real free markets, for that. Capitalist systems have also been agents for extreme oppression and slavery. The USA south was a place of grinding poverty for the masses because people could not even own themselves much less their inventions. The North was a place of grinding poverty because capitalists exploited their labor instead of paying a man what his labor was worth.

So while he's telling the partial truth when he says that "there is no system that can hold a candle to the wealth and productive capability produced by a free enterprise system" the key to that being reality is individual freedom, and individual enterprise being valued and rewarded. And that requires conditions of democracy, good representation, and ethical government. So a "greedy" capitalist system, in the end, is the same worse as any greedy poorly optimized system.

And when Phil Donohue asked about why the Capitalist system doesn't reward virtue (or always hard work or the innovators who come up with new enterprises) his only answer is to attack communist systems and our own system for not rewarding virtue. I find that dishonest. Fact is we need a system that rewards virtue and to have that we need a system that is fair as well as productive, and that levels the playing field and encourages good government. To do that we need the demos active in government, and active in business government. And that by definition is not pure capitalism. Pure capitalism is as tyrannical as pure marxism or fascism.

Anyway those are just my opinions. All citations are from memory except the quotes and paraphrases from Friedman's interview with Phil Donohue.

Undue influence and Dependency Corruption or why the Supreme Court Decision was so corrupt

In my last few posts I quoted from Justice Roberts Majority decision in the McCutcheon Case [http://www.supremecourt.gov/opinions/13pdf/12-536_e1pf.pdf] to illustrate why the decision was not only wrong headed but corrupt. Essentially the problem is that they redefined half of what is obvious corruption as "embody[ing] a central feature of democracy—that constituents support candidates who share their beliefs and interests, and candidates who are elected can be expected to be responsive to those concerns." And they went on to say that "Any regulation must instead target what we have called “quid pro quo” corruption or its appearance." I've already talked about how that is a corrupt decision as most corruption reflects inequality and a balance of power that is in favor of those who have excess power and wealth and who use that power and wealth to protect that power and wealth.

Defining the only kind of permissible corruption that the government can go after is "Quid Pro Quo" is deliberately making it impossible to go after 90% of corruption, including all but the most obvious quid pro quo corruption. The Supreme court in one swoop of deeper and deeper intentional process corruption after another has eviscerated 500 years of lessons on what corruption is and how to fight it, including the forms of corruption that the Founding fathers criticized. What Lessig calls "dependency corruption." A friend at the "Robin Hood Tax Site" rips into this with this graphic from an article at "Talking Points Memo":

Src: https://pbs.twimg.com/media/BlxEXjKCQAACh3I.png

I already talked some about "undue influence" but the author Lawrence Lessig explains that what we are talking about is further defined as "dependence corruption" which he explains in this article in Harvard Review [http://harvardmagazine.com/2012/07/a-radical-fix-for-the-republic] as a kind of systematic corruption where representatives lose the independence necessary to perform their function of representing and serving the people and become dependent on some outside force.

“the Framers wanted to avoid…Parliament’s loss of independence from the Crown” resulting from royal gifts of “offices and perks” that pulled members “away from the view of the people they were intended to represent.” The Founders were aware of the fragility of the system they had fledged: when Franklin walked from Independence Hall as the Constitutional Convention ended, Lessig writes, a woman asked what he had wrought. “A republic, madam,” he replied, “if you can keep it.”

Fighting dependency corruption was the reason for separation of powers.

Founders were fighting Systematic Corruption

Lessig, writing for the Daily Beast wrote [http://www.thedailybeast.com/articles/2014/04/02/originalists-making-it-up-again-mccutcheon-and-corruption.html]:

"The roots of that argument were handed to the government from an unlikely source: the Framers of our Constitution. Building upon the work of Zephyr Teachout, two researchers and I scoured every document that we could from the framing of our constitution to try to map how the Framers used the word “corruption.” What was absolutely clear from that research was that by “corruption,” the Framers certainly did not mean quid pro quo corruption alone. That exclusive usage is completely modern. And while there were cases where by “corruption” the Framers plainly meant quid pro quo corruption, these cases were the exception. The much more common usage was “corruption” as in improper dependence. Parliament, for example, was “corrupt,” according to the Framers, because it had developed an improper dependence on the King. That impropriety had nothing to do with any quid pro quo. It had everything to do with the wrong incentives being allowed into the system because of that improper dependence."

The right of course, loves "dependency corruption" because it reflects their efforts to create a new "dependency" aristocracy in which their shills would be the new "middle class" and pretty much everyone else can kiss their wealth and influence good bye. This article Seth Barrett Tillman can be found all over the internet, probably well advertized: http://news.yahoo.com/why-professor-lessig-dependence-corruption-not-founding-era-100206490--politics.html So naturally he claims that:

"No such unified concept existed in 1787-1788" as "a stable, unified meaning as to how the Framers (and the public during the Framers’ era) understood corruption in relation to the Constitution of 1787-1788: the Constitution of the Framers and Ratifiers."

Tillman is (of course) parsing. The Founders didn't use the words "improper dependence" alone but also talked about the "undue influence" of the Crown. Undue influence exists because it creates a dependence on the corruptor on the part of the corrupted, or simply involves raw power. So when the founders used the term "undue influence" or "improper dependence" they were using terms that are referring to a balanced system where money, influence and power are balanced. The line between "undue", "improper" dependence and independence are often political, arbitrary and shifting. Corruption is not just about law-breaking, but also about whether a system is functional for all it's stakeholders, optimized for the few, or completely FUBAR for the majority. So yes Mr. Tillman is right in that the founders didn't have an objective, by the numbers, standard by which to judge undue influence or dependency, but that is a straw argument. They had a definition of corruption that the entire constitution sought to remedy. And it was an imperfect remedy by imperfect (and thus corruptible) people, so the result was an imperfect document. Indeed you see just this sort of corruption referenced in the Anti-Federalist warnings about ratifying the constitution, one "Republicus":

(referring to President's powers).... "is it not probable, at least possible, that the president who is to be vested with all this demiomnipotence - who is not chosen by the community; and who consequently, as to them, is irresponsible and independent-that he, I say, by a few artful and dependent emissaries in Congress, may not only perpetuate his own personal administration, but also make it hereditary?"

For both Federalist and Anti-Federalist (who wrote this, corruption and tyranny are tied. Almost all of whom were influenced by John Locke, and when they talked about corruption they were more likely to be referring to the tyranny of monied classes and aristocrats than to someone putting a bag of coins on a desk. The subversion of dependency is process corruption that ultimately results in concentration of power and aristocracy:

By the same means, he may render his suspensive power over the laws as operative and permanent as that of G. the 3d over the acts of the British parliament; and under the modest title of president, may exercise the combined authority of legislation and execution, in a latitude yet unthought of. Upon his being invested with those powers a second or third time, he may acquire such enormous influence-as, added to his uncontrollable power over the army, navy, and militia; together with his private interest in the officers of all these different departments, who are all to be appointed by himself, and so his creatures, in the true political sense of the word; and more especially when added to all this, he has the power of forming treaties and alliances, and calling them to his assistance-that he may, I say, under all these advantages and almost irresistible temptations, on some pretended pique, haughtily and contemptuously, turn our poor lower house (the only shadow of liberty we shall have left) out of doors, and give us law at the bayonet's point.

The anti-Federalists rightly feared the corruptive influence of concentrated power.

Or, may not the senate, who are nearly in the same situation, with respect to the people, from similar motives and by similar means, erect themselves easily into an oligarchy, towards which they have already attempted so large a stride? To one of which channels, or rather to a confluence of both, we seem to be fast gliding away; and the moment we arrive at it-farewell liberty". . . .

So for the founders the fear was the creation of an oligarchy or monarchy where the people would be dispossessed and oppressed.

"To conclude, I can think of but one source of right to government, or any branch of it-and that is THE PEOPLE. They, and only they, have a right to determine whether they will make laws, or execute them, or do both in a collective body, or by a delegated authority. Delegation is a positive actual investiture"....

http://www.thisnation.com/library/antifederalist/72.html

The fact is that when Lessig did a search on terms in the founders writings before he wrote about this he notes:

"The results were striking. A significant majority of the times the Framers use the term “corruption,” corruption is predicated of an entity, not an individual (57%). Every instance of “quid pro quo” corruption is describing individual corruption, not entity corruption. And for the significant number of cases in which the Framers are discussing “improper dependence” as a kind of corruption, they are describing entity corruption (67%) not individual corruption (33%)."

And he concludes:

These numbers make it hard to believe that the Framers of our Constitution would have used the term “corruption” to refer to “quid pro quo” corruption alone. Or put more sharply, these number suggest that only a non-originalist could support the idea that “corruption” refers to “quid pro quo” corruption alone." Src: [http://www.lessig.org/2013/07/the-original-meaning-of-corruption]

Thus indeed the main reason for separation of powers, for the first 10 Amendments, and for institutions like trial by jury was to resist "undue influence" and corrupt dependency. The remedy for undue influence being representation. The remedy for corrupt dependency being independent branches, defined powers and rule of law. And the remedy for corruption being good and functional government. "A well regulated" government is one where corruption is so minimized it's not an issue. So all his examples don't prove Lessing wrong. If they took the word "corruption" out of the impeachment clause it's because it is entirely possible for the corrupt to engage in impeachment by projection of their own designs and motives. As we saw when the Republicans impeached Bill Clinton for having sex with a page and lying about it, when later it turned out the principles making the charges were guilty of the same crime. Corruption is often a subjective thing. But it's a "I see it when I see it, and I can smell it when it's present" thing too. An objective standard for "dependency corruption" is as fraught with peril as any other remedy. But certainly there are limits to what we should let our oligarchs get away with -- and we'd be a lot better off without them. Lessig is write and this author is blowing smoke.

I wrote about this somewhat in my blog on the subject. http://holtesthoughts.blogspot.com/2014/03/corrupt-court-and-undue-influence-and.html but quoting from the same source I find this argument for Jury trials:

"The excellence of the trial by jury in civil cases appears to depend on circumstances foreign to the preservation of liberty The strongest argument in its favor is that it is a security against corruption As there is always more time and better opportunity to tamper with a standing body of magistrates than with a jury summoned for the occasion there is room to suppose that a corrupt influence would more easily find its way to the former than to the latter."[The Federalist and Other Constitutional Papers by Hamilton, Jay ..., Volume 1 edited by Erastus Howard Scott

Hamilton in this excerpt pretty much assumes that there would be attempts to corrupt Juries too, but that the combination of Judge and Jury and other process guards can "provide a check on corruption".."decreasing it's obstacles to success" and reducing the prospect of Judicial "prostitution" which judges would otherwise be tempted to engage in. Sounds like Hamilton was warning of the Roberts Court. Too bad he doesn't have to convince a Jury of his rulings. They sound like Judicial prostitution to me.

Thursday, April 17, 2014

Ghosts of World War II in Ukraine

Intro

I have acquaintances who are Ukrainian, Russian, Russian Jews, and formerly Polish Jews. Some since childhood, including Shoah survivors. Poland was made "judenrein" when the Poles refused to allow most holocaust survivor Jews to return to their homes and a lot of them wound up living in displacement camps until they were allowed to emigrate to either the USA or Russia. Ukraine wasn't much better. During World War II the Ukrainians were rather infamously recruited as concentration camp guards because of their reputation as enthusiastic about the Shoah. I didn't know much about this as a kid. To me America was a melting pot where words like Irish, Jew, Ukrainian, Italian were kid fashions in skin or hair color not real ethnicities. When I was a kid I thought all Poles were Jews and wondered why Catholic poles could do such mean things to Jewish Poles. I had a teacher who was a Ukrainian and she was incredibly strict (and beautiful). It was a label that's all until I started reading the history. When you meet a Pole, Ukrainian or Russian - or for that matter a Jew or a German - it's often hard to tell them apart unless they tell you who they are. Many Europeans are full of nasty and often spun or exaggerated history. Our USA perspective counts too. None of those prejudices really mean much compared to those necessities of living together (and playing together). I wish more people would grow up with that attitude. But as we've seen with former Yugoslavia, or you learn talking to anyone about their family history -- the record of oppression, dispossession and murder puts wedges between people.

This behavior of Vladimir Putin's rankles me because of my playground perspective. It's the ancient Empire game that's been in play since before Daniel interpreted Nebuchadnessars dream to him. You get all these people trying to turn themselves into Stars and their countries into Empires, and playing God with their own people -- and you get these old revanchist one sided memories. My Grand-pa killed your grand-uncle. Your great-grand uncle killed my Great Grand Uncle... Ad infinitum. The Golden statues have clay feet.

To me Daniel's prophesy gets reinforced and reinterpreted by Christian and other Jewish prophets it is as much part of the Poem Ozzymandias as any of those prophets. The Golden Man has clay feet because ultimately no matter how great and terrible the nations that are said to form the vision, ultimately clay is not only beneath the feet but beneath the gold, silver, bronze and iron that define such civilization. Clay is humanity with all it's failings. And clay is resentment too. Humanity has clay feet and the day we wake up and realize that this is true and that we live in a tiny (from the Eternal's perspective) stone ball, the sooner we can dissolve all the insanity to dust. And this is true with Russia and the Ukraine. Ukrainian languages are similar to Russian Languages. And Ukrainian language is similar to Polish Language. The people are related from long ago. Their fight is more based on delusion than reality.

Russian Invasion

So the Russian speakers putting out a call for all Jews to register in the Ukraine probably reflects propaganda and incitement more than reality. There aren't many Jews in Ukraine anymore to register, but the call to register reflects undead zombie ideology that is suddenly coming to the top after years poorly buried in the ground. http://www.usatoday.com/story/news/world/2014/04/17/jews-ordered-to-register-in-east-ukraine/7816951/

The reason cited in the leaflets for the leaflets was allegations that Jews sided with Ukrainia at the end of WWII against Russia;

"Jewish community of Ukraine supported Bendery Junta, a reference to Stepan Bandera, the leader of the Ukrainian nationalist movement that fought for Ukrainian independence at the end of World War II, "and oppose the pro-Slavic People's Republic of Donetsk," a name adopted by the militant leadership."

A libel, but in a society where libel and myth frequently supplant any semblance of truth, something I guess one should expect. There aren't many Jews left in Ukrainia so those leaflets rightly upset the remainder. I've seen arguments from Russian loving friends that claimed that they had to fight the government of Ukraine because it was dominated by Nazis. And now we see the Russians claiming they have to expel disloyal Jews because they sided with the Ukraine Government at the end of World War II. Totally insane -- on all sides. The Ukrainians see the Russians as trying to carve up their country. It looks like they are right. But you can't tell pro-Russian westerners that.

If Putin manages to use the age old war between Ukrainians who are more Polish, more Ukrainian, or more Russian, to carve off more of Ukraine, he's fighting that old World Empire battle with the ancient divide and rule tactics. And I'm sure he feels aggrieved. And Nato isn't helping any with this. Everything Nato could do would probably make things worse. "Freedom Fighters?" will just encourage police state repression. Funding the Ukrainians, same. We can't move an army into the area without making a real war flare up. The best we can do right now is put sanctions on Russia and encourage common sense on all sides.

Ozymandias will fall. This ancient war of rival empires and wannabe emperors is built in failure. Tyranny; government for "private, separate advantage" [John Locke], and oligarchy; are disfunctional systems because they are abusively optimized and that creates bottlenecks and points of failure. The only reason the West isn't pushing back harder on Putin is that they get their oil and gas from him. Our only long run way to fight this insanity is with solar, wind, water and earth power. We all have the same problem. Russians thinking Ukraine is a bully to ethnic Russians in their state -- are being manipulated.

The enemy is Ozzymandias. The enemy is the notion that we need to make giant statues of our little men we make our officers. Like Putin. Like GW Bush. Ultimately like any of us when we get arrogant and start to suffer from hubris.

The world is one. When we realize that, we will win.

Six Basic Rights or Why Property is not an Absolute Right

Why property is not an absolute right.

The wealthy love the right to property. To them it ought to be unlimited so they can take property away from their debtors or the people they employ to dig their holes and garden their gardens -- and make them once again slaves and serfs. Property rights cannot be absolute. None of us live on this earth forever. Real Estate property if finite, and possession of property is a monopoly right that if treated as an absolute right tends to infringe on the acquisition property rights of others.

Right to Home and livelihood IS inalienable

Individual rights start where individual needs become legitimate and stop when they infringe on others [oppression] (and vice versa). Thus, justly, Jefferson talked about the right to "pursue happiness" not property rights. The reason that property rights cannot be absolute is that property must be acquired, land property is both necessary to everyone and finite. Thus property is a privilege necessary to other rights, but not an absolute right in and of themselves. Thus the right to real property is a privilege that can stem from other rights but cannot be absolute. But there are rights that the property privilege reflects and why property should be a limited right. And Franklin Roosevelt expressed these rights in his four freedoms and six new rights speeches. The argument for those freedoms in terms of natural rights, is what I'm concerned with here.

FDR's Speech

The Six Basic Rights Are:: A Job; An Adequate wage and decent living (living wage); A decent home; Medical care; Economic Protection during sickness, accident, old age, or unemployment; A good education

No question but people should have these rights. And I'll explain some of the reasons why.

Ideas are like Pandora's box.

Ideas are like Pandora's box. Once the box is opened they can't be recalled. Humans have certain inalienable rights; black, brown, round headed, long headed, fat headed or pointy headed; and one can tell they are inalienable by the suffering engendered when they are infringed. An inalienable right can't be removed without causing massive suffering. When ordinary people are dispossessed by thoughtless landlords, government officials, or the viciousness of our capital system; their lives are imperiled and they suffer awful deprivation and pain. The right isn't "property" per-se, but property in the form of a "home" -- a place with the properties of shelter, warmth, and security. The inalienable right is home. The right to a home is inalienable, because denying that right is alienating. It is self evident that families shouldn't be forced to die in the snow or flood.

Demonstrating inalienability by demonstrating alienation

It is always easier for a politician or visionary to articulate principles than it is to apply them. Often times, since politicians emerge from the natural aristocracy (as we raise them up to represent us or rule us depending on OUR maturity) -- they tend to be frightened when the implications of their own words come back to them. That was certainly true with the authors of the Declaration of Independence. For Jefferson and Adams liberty was a great principle when it was their own. When the French started believing it applied to shopkeepers and "hair dressers" folks like Adams and Edmund Burke bolted the movement. When black slaves in Haiti and parts of Virginia espousing those principles even Jefferson started having second thoughts about the idea. Our wealthy don't like the idea of the 6 Freedoms, because life is easier when they have the power to deny them. Nothing makes someone pay the rent, or put up with tyrannical employers, like the prospect of being evicted, losing access to doctors or being fired.

Thus, one can argue by deprivation that the right to a home is a right necessary to pursue and achieve happiness. Likewise with the other freedoms. People can't live without the ability to labor and feed themselves. They can't survive without medical care. And our system won't survive without universal basic education.

Affirmative Arguments

One can also argue affirmatively that these basic rights make for a stronger society, more "common weal" in our commonwealth, better representation etc... Again that frightens aristocrats and some of them will do anything to keep people down. Including denying that the six rights are in fact rights and not privileges that they should control as lords and masters. It's the logic of slavery versus the logic of liberty, but what the hey, call yourself a libertarian and say it anyway.

Tuesday, April 15, 2014

Mt. Pelarin and Milton Friedman -- fighting to make the world safe for Oligarchy since the 1940's

Introduction

I've been interested in Milton Friedman since his ideas started competing with the "Austrian School" folks as the alternative to Keynesian inspired economic concepts. His critique of Keynesian economics was blown up by his fanatic disciples into a complete "refutation" of what was status quo economics between the 1940's and the 1970's in favor of free markets, laissez faire, and a narrative that reversed the observations about the depression of those who lived it and blamed "government" for the cause of the Great Depression.

This was the 70's when I was exposed to them for the first time. Headlines talked about how false "Keynesian economics" had been. I didn't see it. I never could accept those arguments on their face, but my way is to give ideas the benefit of the doubt and I believe that whenever confronted with new ideas one has to study them critically and not reject them outright. So I was somewhat swayed by them anyway. I studied them and saw no superior arguments. For that reason I couldn't stomach them enough to embrace them. And since no money was going to come from critiques of them. I realized I wasn't going to be able to afford an advanced economic degree challenging them as all the money was going to those who either genuinely believed those ideas or could pretend to. I changed my major to the more "practical" Business Administration. I still regret that decision.

Naturally in Business School they were even more popular than in the Econ department. They were very convenient to business folks because they validated their freebooting natural beliefs. Business folks love the idea is that you can only go wrong if government tries to intervene in the economic system. The business folks I knew gravitated to Libertarianism as ideology and Republicanism as a means to get access to contracts, contacts and pots of money. Compared to the Austrians Friedman made sense. Friedman's math even mapped to Keynesian math. He later acknowledged that.

Mt. Pelarin Society

It turns out that while they argued interminably, Friedman was basically in the same orbit as other Austrians and was a founding member of the Mt. Pelarin Society. It's "about page states" (Taken 4/15/2014)

"After World War II, in 1947, when many of the values of Western civilization were imperiled, 36 scholars, mostly economists, with some historians and philosophers, were invited by Professor Friedrich von Hayek to meet at Mont Pelerin, near Montreux, Switzerland, to discuss the state and the possible fate of liberalism (in its classical sense) in thinking and practice."

Now the major powers had just defeated the Nazis. Capitalism had survived an onslaught of Fascism and while there was an assault going on from the Bolshevik countries (China and Russia) this statement has to be deconstructed. Bolshevism, it turns out was the straw enemy, but they were as much against "social democracy" as they were Bolshevism. And the Mt. Pelarin society seems have been aimed at coming up with an ideology to fight both. Their real target was the New Deal.

"The group described itself as the Mont Pelerin Society, after the place of the first meeting. It emphasised that it did not intend to create an orthodoxy, to form or align itself with any political party or parties, or to conduct propaganda. Its sole objective was to facilitate an exchange of ideas between like-minded scholars in the hope of strengthening the principles and practice of a free society and to study the workings, virtues, and defects of market-oriented economic systems."

So the Mt. Pelarin society was founded as an agency of the Anti-Communist movement. They've been quite open about it in the past. But they've also been an enemy of Republics having too many democratic attributes and it has the stamp of it's founder (Hayek).

"Members who include high government officials, Nobel prize recipients, journalists, economic and financial experts, and legal scholars from all over the world, come regularly together to present the most current analysis of ideas, trends and events."

And Milton Friedman was a founding member

Source:https://www.montpelerin.org/montpelerin/images/photos/miltonFriedman.jpg"
Milton Friedman (in light coat and with hat, in the centre) with friends in an excursion at the first meeting of the Mont Pelerin Society in 1947.
[src: https://www.montpelerin.org/montpelerin/mpsAbout.html]

Friedman, Mt. Pelarin and the Austrians

Now you wouldn't think of Milton Friedman as important in 1947. And the Austrians, almost all of them, hated some of his ideas, especially the notion that government can have any role in controlling economics other than staying out of the way of the Free Market or, sometimes, ending the Reserve Banking system. But Friedman gives his credit to the Mt. Pelarin Society in this 1995 interview:

What really got me started in policy and what led to Capitalism and Freedom was, in an indirect way, the Mont Pelerin Society. The first Mont Pelerin Society meeting was in 1947 in Switzerland. Hayek arranged it. It was his idea.

So he gives credit to Hayek, Mont Pelarin and the people he met there.

"Mont Pelerin was the first time that I came into contact with people like Hayek, Lionel Robbins, and the European contingent of that time. That widened my perspective about issues and policy."

He says:

"The Mont Pelerin Society was people who were deeply concerned about issues. It was people with whom you shared a basic common belief, who at home were isolated. Its great contribution was that it provided a week when people like that could get together and open their hearts and minds and not have to worry about whether somebody was going to stick a knife in their back--especially for people in countries where they were isolated." Src: Reason Magazine: http://reason.com/archives/1995/06/01/best-of-both-worlds/2

So regardless of how much Austrians, Friedmanista Monetarists, and others fight, they all share a common core belief.

But what is that belief?

Friedman and the Austrians

Friedman wasn't an Austrian Fanatic. He believed that if the government simply controlled the money supply so that enough money, and no more, was available to business and banks everything else would go well. He really believed in Laissez Faire. In that belief he overlapped the Austrians. Both believed that business people would never do crazy things, speculate, or recklessly gamble and so so the only role of Government was to keep the Government out of business. Friedman's monetary ideas received criticism from Austrians because Austrians preferred "hard money" and didn't trust them, but otherwise he and they overlapped a lot.

And Friedman credits the Mt. Pelarin society and the Volker foundation that funded them for his writings:

"The reason the Society ever happened was that Hayek had written The Road to Serfdom, which attracted the attention [of Harold Luhnow who had control of] the Volker Foundation, and it was the Volker Foundation that financed the American participation in the Mont Pelerin Society. A Swiss group financed the Swiss and European participation." ([] added for clarification)

The Volker Foundation may have been founded by William Volker, but it was used after his death by it's trustee Harold Luhnow to fund Right Wing and anti-Communist efforts to provide an alternative to the socialist influenced economics of the Keynesian school and people like John Kenneth Galbraith who were seen as too "socialist". Ostensibly the enemy was communism, but the RW then as now preferred to see anyone championing ordinary citizens or labor as "communists". At the time most academics still remembered the Great Depression and were rightfully skeptical about pure capitalism or laissez Faire. The task of Luhnow was to find and cultivate people like Hayek and Friedman as alternatives to "leftists" and funded them to combat liberalism as it had evolved in the 30's and 40's. Friedman writes:

In the middle '50s, the Volker Foundation undertook a program of summer institutes for junior academics who were favorably inclined toward a free-market point of view or were interested in such issues. Capitalism and Freedom was based on a series of lectures that I gave at one of those seminars.

Friedman also writes:

"Those seminars forced me to systematize my thoughts and present them in a coherent way. And they also provided a very good audience because the people who were there were lively, outspoken, didn't hesitate to criticize. It was a very good audience. There was a lot of free time as well for discussions outside of the formal seminar. And I learned a great deal, not only from the students who were there, but also the fellow lecturers."

Murray Rothbard acknowledges that he was recruited and paid by the Volker Foundation at the beginning of his career. Friedman and Hayek were also recruited by Luhnow. He was playing a long game. The goal was to recruit students and future professors to the libertarian and RW cause.

Milton Friedman and the IRS

The Republicans would love to get rid of the IRS, but they wrote it's codes and created it. And Milton Friedman takes credit for creating it when he was an employee of the Democrats he had a lifelong hatred of. An online journal [The Economic Policy Journal] gives him credit for creating the Income tax we live under:

"I was an employee at the Treasury Department. We were in a wartime situation. How do you raise the enormous amount of taxes you need for wartime? We were all in favor of cutting inflation. I wasn't as sophisticated about how to do it then as I would be now, but there's no doubt that one of the ways to avoid inflation was to finance as large a fraction of current spending with tax money as possible."

Apparently Friedman, with like minded colleagues deserves credit for moderating the inflation of World War II by using the Income Tax, not only to finance it, but to ensure that the financing of the war limited the impact on the financier class. He continued during the interview:

"In World War I, a very small fraction of the total war expenditure was financed by taxes, so we had a doubling of prices during the war and after the war. At the outbreak of World War II, the Treasury was determined not to make the same mistake again."

But the problem was that if they increased taxes many people would be unable to pay them "post hoc." So Friedman came up with the brilliant idea that it would be smarter to make the employer withhold those taxes.

"You could not do that during wartime or peacetime without withholding. And so people at the Treasury tax research department, where I was working, investigated various methods of withholding. I was one of the small technical group that worked on developing it."

Essentially the income tax went from being a tax figured up on surplus at the end of the year, to being a rent charged on labor by government and with-held by employers. This became the model for all sorts of taxes, and also for employers making employees pay for employee benefits out of their pay. Friedman stated at the time:

"One of the major opponents of the idea was the IRS. Because every organization knows that the only way you can do anything is the way they've always been doing it. This was something new, and they kept telling us how impossible it was. It was a very interesting and very challenging intellectual task. I played a significant role, no question about it, in introducing withholding. I think it's a great mistake for peacetime, but in 1941-43, all of us were concentrating on the war. I have no apologies for it, but I really wish we hadn't found it necessary and I wish there were some way of abolishing withholding now."

http://www.economicpolicyjournal.com/2014/04/how-milton-friedman-helped-invent.html

If one thinks of wages as something that ought to be a laborer's personal property and of it as improper to pay labor less than their labor is worth, then this method of raising money to fight a war might seem improper. Further if one thinks that government shouldn't be getting in the way between the master and his absolute right to pay or not pay his slaves (labor) based on their signature with blood on a contract, then income taxes seem an infringement on that absolute property and contractual right as well.

Jonah Goldberg (who is right here for the wrong reasons) notes:

"Withholding numbs workers to the pain of their taxes. As the Treasury Department Web site explained as recently as 2009: Tax withholding “greatly eased the collection of the tax for both the taxpayer and the Bureau of Internal Revenue. However, it also greatly reduced the taxpayer’s awareness of the amount of tax being collected, i.e. it reduced the transparency of the tax, which made it easier to raise taxes in the future.” (Oddly, that fact sheet no longer appears on Treasury’s Web site)."[Src: http://www.aei.org/article/economics/fiscal-policy/taxes/automatic-tax-withholding/]

A friend shared a story that Friedman boasted that this made the IRS less progressive and boasted about saving business from high taxes by instituting it. I can't find the quote, but by inventing with-holding he did make it easier for the income tax to go from being a purely progressive instrument under the tutelage of Henry C. Simons, to a tool of regressive taxation starting during World War II, and becoming more and more obvious each year. Goldberg and Rothbard have other complaints: http://archive.lewrockwell.com/rothbard/rothbard43.html

But of course Rothbard and his bunch saw the problem differently from me. To me the problem is too much power for business oligarchs. To Rothbard the problem was too much government power to limit business oligarchs.

Wednesday, April 9, 2014

Fighting Democracy since 1964

Charles Koch recently wrote a defense of his efforts which he published on the Wall Street Journal in which he stated that he believed in basic principles that he claims define us country. For him these principles are:

..."the principles that enable people to improve their lives. It is those principles—the principles of a free society—that have shaped my life, my family, our company and America itself."

Okay, free society sounds good to me, too. But then he continues:

"Unfortunately, the fundamental concepts of dignity, respect, equality before the law and personal freedom are under attack by the nation's own government."

Wait a minute! He's talking about Democrats, Democratic rule, civil rights, etc ... We are the ones attacking equality before the law? The statistics show that racial oppression is still alive and well. The Koch sponsored ALEC has legitimized murder of innocent folks on the grounds of "Stand your Ground" laws. His funding of organizations fighting for prohibition/abolition of abortion rights has started people back on the road of back alley abortions and use of dangerous drugs to terminate pregnancies without a doctor, already starting to kill people in areas where they've closed all the Ob/Gyn clinics. Equality before the law? He's got that with Citizens United by the Supreme court giving his corporation all the private, separate advantage it could want to bribe and influence politicians with impunity. He funded the Federalist Society that put those court justices on the bench. If his principles are under government assault they are from his own groups.

So anyway, he sees this world, apparently, on the John Birch Society principles he was taught as a child. And he says he has been fighting for his principles.

"That's why, if we want to restore a free society and create greater well-being and opportunity for all Americans, we have no choice but to fight for those principles. I have been doing so for more than 50 years, primarily through educational efforts. It was only in the past decade that I realized the need to also engage in the political process."

50 years ago was 1964. So he seems to feel that somehow civil rights was an infringement on personal freedom, that Lyndon Johnson's war on poverty was a war on his personal freedom. So it seems to me that Charles Koch seems to have different definitions of all these terms than the rest of us. If he's been fighting government tyranny since 1964, who is his enemy? Is it the Federal Government, or those given protection starting in 1964? Women's liberation, civil rights, religious freedom, all have been growing since 1964. And as for an "enemy" his father put out a bounty on John F. Kennedy shortly before his death in 1964. So who is Koch fighting? The Kennedy Administration? (eww, yes).

"A truly free society is based on a vision of respect for people and what they value. In a truly free society, any business that disrespects its customers will fail, and deserves to do so."

I think we can all agree that a truly free society is based on respect for all people and what they value. Keyword is "all." If one only respects the values of a minority of wealthy people, or of a particular sect, that is not a truly free society. Unfortunately, if he's right that our society has been under attack, perhaps that accounts for the concentration of wealth and power and the oligarchic competition that has replaced a genuine free-market with a free-booting market. Unfortunately what the owners of a business do with their money usually is their own business and ought not to involve their business. When one is as powerful and controls so much business as the Koch's do, then one is no longer a simple "private enterprise" but has such market control that people can't avoid buying one's products even if they want to; unless they completely withdraw from the economy.

"The same should be true of any government that disrespects its citizens.

Except I don't see any evidence that the Obama administration disrespects his citizens, even the ones who disrespect him. But I do see evidence that the Koch's and others disrespect democracy, disrespect majority rule, and are aiming to strip voting and other rights from citizens, and seem to be wanting to transfer those powers to a money based election system. One dollar one vote.

The central belief and fatal conceit of the current administration is that you are incapable of running your own life, but those in power are capable of running it for you. This is the essence of big government and collectivism."

But who has the government been disrespecting for 50 years? The Koch's have gotten richer and richer. Their father passed away and now they live on a massive inheritance they themselves would not have earned without help. He quotes Jefferson:

"More than 200 years ago, Thomas Jefferson warned that this could happen. "The natural progress of things," Jefferson wrote, "is for liberty to yield and government to gain ground." He knew that no government could possibly run citizens' lives for the better."

Actually Jefferson's theories of Government were funded on Lockean principles of commonwealth and commonweal. A government "of the people, by the people and for the people" is a government where people run their own lives. Neither at the dictates of a CEO dictator or of a demagogic dictator. He also warned about the power of monopolistic companies like the East India Company -- or Koch industries -- and fought them during the 1790's and through his Presidency; and their undue influence on government. So, thus he's half right:

"The more government tries to control, the greater the disaster,"

....is only half true. The more bad governments try to control people, the greater the disaster. But health care is not a disaster, doesn't need to be a disaster. And if it becomes a disaster it's because privateers like Charles Koch have decided to aim the guns of their pirate ships on a basic public good.

"as shown by the current health-care debacle."

When the people work together we solve problems, mitigate issues and make things work better for all of us.

But what he disparages as "collectivism, are democratic republican values applied to our processes and institutions. If something is wrong feedback from the people can fix it. Democratic republican values involve improved processes, feedback and separation of powers. They are meant to mitigate dysfunction.

"Collectivists (those who stand for government control of the means of production and how people live their lives) promise heaven but deliver hell. For them, the promised end justifies the means."

Charles Koch is projectioning here. His movement promises lottery winnings for some and hell for "losers" and delivers hell for the majority. Democracy is not about taking "the means of production" from his greedy little hands, though we'd be better off if more people owned their own productive assets and had the power to acquire and own their own lives. I don't think he would fear "collectivism so much" that he fears democracy itself, if he understood and valued the country as much as he claims he does. On the contrary he seems to have imbibed the strange idea, which his Ayn Rand teacher (and the John Birch Society) taught him, that democracy is a form of collectivism. So he is definitely projectioning:

"Instead of encouraging free and open debate, collectivists strive to discredit and intimidate opponents. They engage in character assassination. (I should know, as the almost daily target of their attacks.)"

Charles Koch is under attack in the media because he and his brother are funding anti-democratic and corrupt organizations that are seeking to undermine our system. He may not get up and assault people personally, but Faux News, AEI, etc... have unleashed a constant barrage of personal attacks and false information about the ACA, about Democrats in general, and have done everything possible to defame, invent reasons to impeach, and block our current President. Thus his own folks are now the ones who engage in all the techniques and methods that he decries:

"This is the approach that Arthur Schopenhauer described in the 19th century, that Saul Alinsky famously advocated in the 20th, and that so many despots have infamously practiced. Such tactics are the antithesis of what is required for a free society—and a telltale sign that the collectivists do not have good answers."

So Charles Koch, without realizing it, has become that which he hates; A despot. We can pray for a "Road to Damascus moment" but this is a man who operates an empire where he's the despot. We Democratic Republicans do have ideas that work. We aren't collectivists we are pragmatic and believe in the common weal which is an English Concept that is older than Marx. Even as he claims he is an enlightened one:

Rather than try to understand my vision for a free society or accurately report the facts about Koch Industries, our critics would have you believe we're "un-American" and trying to "rig the system," that we're against "environmental protection" or eager to "end workplace safety standards." These falsehoods remind me of the late Sen. Daniel Patrick Moynihan's observation, "Everyone is entitled to his own opinion, but not to his own facts."

Indeed. Exactly my thought in listening to his apologia. His industries have a reputation for shipping tar sand oil, for piling up tailings and for polluting his environment. He may believe he's a paragon of environmentalism. But he funds folks dedicated to deregulation and to removing impediments to him making money. And his organizations are doing this down to the county level. Maybe he's like Marie Antoinette and doesn't know the details.

He continues: "Here are some facts about my philosophy and our company:"

Koch companies employ 60,000 Americans, who make many thousands of products that Americans want and need. According to government figures, our employees and the 143,000 additional American jobs they support generate nearly $11.7 billion in compensation and benefits. About one-third of our U.S.-based employees are union members.

So one third of his employees are union members? Yet he supports organizations fighting Unions and fights the unions in his own companies when they try to organize.

Koch employees have earned well over 700 awards for environmental, health and safety excellence since 2009, many of them from the Environmental Protection Agency and Occupational Safety and Health Administration. EPA officials have commended us for our "commitment to a cleaner environment" and called us "a model for other companies."

I'm sure they have. Revolving door anyone?

Our refineries have consistently ranked among the best in the nation for low per-barrel emissions. In 2012, our Total Case Incident Rate (an important safety measure) was 67% better than a Bureau of Labor Statistics average for peer industries. Even so, we have never rested on our laurels. We believe there is always room for innovation and improvement.

Nice.

Far from trying to rig the system, I have spent decades opposing cronyism and all political favors, including mandates, subsidies and protective tariffs—even when we benefit from them. I believe that cronyism is nothing more than welfare for the rich and powerful, and should be abolished.

Now isn't that ironic, considering he got his job because of his father.

Koch Industries was the only major producer in the ethanol industry to argue for the demise of the ethanol tax credit in 2011. That government handout (which cost taxpayers billions) needlessly drove up food and fuel prices as well as other costs for consumers—many of whom were poor or otherwise disadvantaged. Now the mandate needs to go, so that consumers and the marketplace are the ones who decide the future of ethanol.

Well we know which side of the Ethanol fight he's on.

Instead of fostering a system that enables people to help themselves, America is now saddled with a system that destroys value, raises costs, hinders innovation and relegates millions of citizens to a life of poverty, dependency and hopelessness. This is what happens when elected officials believe that people's lives are better run by politicians and regulators than by the people themselves. Those in power fail to see that more government means less liberty, and liberty is the essence of what it means to be American. Love of liberty is the American ideal.

Trouble is Charles, you may not realize it yourself. But you and your organizations are running people's lives. They are succeeding, especially at state and local level, in creating governments in your image, where businessmen run people's lives and in the name of "liberty" force women to have vaginal ultrasounds. You organized ALEC and it's anti-Abortion child organization, which write oppressive legislation and fight civil rights.

"If more businesses (and elected officials) were to embrace a vision of creating real value for people in a principled way, our nation would be far better off—not just today, but for generations to come. I'm dedicated to fighting for that vision. I'm convinced most Americans believe it's worth fighting for, too."

Please Charles, look in the mirror. The trouble with privateers is that they talk about how bad "government" is, but they are part of government, and they seem to want to be pirate captains who can loot with impunity, but never need to share the loot.

Source: http://online.wsj.com/news/articles/SB10001424052702303978304579475860515021286

Sunday, April 6, 2014

The Real Benghazi Scandal

The only reason the attack on the USA embassy wasn't even more of a disaster is that it's defense was augmented by a nearby top secret black site which had more effective security. That is also why officials had to be discrete in talking about it. Congress cut funds to the State Department for security, but not to black sites, drone attacks or secret forces covertly invading friendly nation and foe alike. Our State Department workers risk their lives every day by actually talking to people.

The Republicans would rather shoot at them.

Source: https://fbcdn-sphotos-d-a.akamaihd.net/hphotos-ak-prn2/t1.0-9/10157183_10152051896411381_144721122_n.jpg

Written 4/16/2014. Added Image more recently