Happy New Year

Looking forward to an exciting 2009. Happy New Year!

Christmas Vacation

You've probably noticed that I've taken a little vacation for the last week or so. I will resume blogging on January 5, 2009. Until then, hope you had a Merry Christmas, and hope that your new year is filled with cheer.

Should the States be Bailed Out?

I found a short, two-page article on the CATO Institute website today entitled "10 Reasons to Oppose a Stimulus Package for the States." I recommend it.

Mr. Smith Goes to Washington

Now, more than ever, we need Mr. Smith in Washington.  The principles and ideas introduced by Adam Smith in "An Inquiry into the Nature and Causes of the Wealth of Nations" brought a great measure of liberty and prosperity into this world.  The publication of his book back in 1776 had great influence over the minds of the founding fathers of this great nation.

On the FEE website this morning, Mr. Lawrence W. Reed has published a short, two-page reminder of some of the revolutionary ideas presented by Adam Smith.  For instance, consider the power of this one idea:  “The natural effort of every individual to better his own condition . . . is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.”

It is interesting that our nation is at a point where the ideas of Adam Smith are again revolutionary.

Capitalism and Freedom

J brought up an interesting point in his comment to yesterday's post. In my response, I recommended that he look at "Capitalism and Freedom" by Milton Friedman. Part of our public school education included indoctrination of a healthy skepticism toward capitalism. Sorry to say, it just aint so. Take a few minutes to read the summary of Capitalism and Freedom on the Wiki web site. You'll be glad you did.

Big Buts

Remember that scene from Pee-Wee's Big Adventure, where Pee-Wee and Simone are sitting and talking inside the head of that big dinosaur sculpture?

-- Simone: "You're right, but... "

-- Pee-Wee: "But what!? Everyone I know has a big but. Come on, Simone. Let’s talk about your big but."

Too many people these days seem to have a big but about capitalism and the free market. All over the news you hear people saying that they are big believers in the free market, but this economic crisis calls for drastic measures (i.e. government bailout).

Listen, either capitalism works, or it doesn't. Either the free market is the way to prosperity and liberty, or it is not. An economic crisis is not time for big buts. If there was ever a good time to embrace free markets and capitalism, it is now. If we are ever going to see our bright shiny bikes again, we are going to have to get off our buts, and let the free market do its thing.

Bailout Blues

If you're like me, you've been watching this auto industry bailout thing pretty closely. I look at the FEE website every morning. I look at the CATO Institute home page, Investor’s Business Daily and National Review Online. Everybody is saying the same thing. This is a bad idea. The truth is, we really don't need some smart economics folks to tell us this. You and I can smell truth, and this aint it. This is a bad idea, and a bad idea for a lot of reasons. And I don't know about you, but I'm making myself sick thinking about it all the time.

Seriously, have you talked to anybody in the last month that thought this might be a good plan? And, if everyone thinks this is such a bad idea, what are our representatives in Washington doing? At least with the bank bailout, we were giving money in hopes of resuscitation. For the auto industry, we are just trying to keep them comfortable until they die.

Another question ... If so many smart people (not me, the FEE folks!) are so sure that these bailouts are so damaging, then what the smoke is our government doing? Whose idea was it to let attorneys-gone-politician sort out the biggest financial mess of our lifetime. Honestly, and I speak from experience, if attorneys could count, they wouldn't have gone to law school.

Common Sense

Speaking of the revolution, I am giving myself a reading assignment. I will report on it as soon as I've had the chance to finish. Common Sense, by Thomas Paine was published January 10, 1776, and was very influential in setting the stage for the American Revolutionary War. I do not remember reading it before, and I think it would be instructive. The book is published all over the internet, click here, here, and here for some sites.

Also, I found a free MP3 audio version of the book, click here! That site also has free audio versions of the Federalist Papers, the Declaration, the Constitution and the Gettysburg Address! Enjoy.

The Revolution

I enjoyed my Thanksgiving Holiday. My wife's folks have a cabin up in the Uinta Mountains, and we holed up there for about four days. I say cabin, but it's actually a really big house in the woods. Anyway, we had two or three inches of snow every night, and the kids spent most of the days sledding. When I wasn’t driving a four-wheeler, pulling the kids back up to the top of the hill for more sledding, I found time to read Ron Paul’s “The Revolution.”

I liked it! He challenged a lot of my ideas, and I do not agree with him on several issues. However, he is consistent. That’s a big deal to me. He believes things for a reason.

Here’s a “for instance.” He thinks we should abolish the income tax, and asserts that it does not need to be replaced with something else. That’s revolutionary! He says that such a move would reduce the Federal Government’s income by 40%. To return to a time when the Feds spent 40% less money than they do now, we would have to go back to … (here’s the zinger)… 1997.

Free to Choose

Free to Choose, by Milton Friedman, is the book that started my journey into understanding.  My lovely wife bought me a Barnes and Nobel gift card for my birthday a few years ago, and I bought the audio version of the book.  I don't really know why I bought it, I had never even heard of it before.  I must have looked a little silly, riding on the train in the morning, with my mouth hanging wide open.  I could not believe the things that I was hearing.  It was like I was seeing the world for the first time.  It's hard to explain, and it's a little corny to say, but it changed my life.

I would get to work, and try to corner some other associate to explain the amazing things I had discovered on the train ride to work.  They would look at me like I was some kook.  I won't be able to do any better here.  All I can say is, read it.  Just read it, that's all.  I guess that's not all, you can also listen to it like I did.  Or, I recently discovered that a TV series, based on the book, is available to watch anytime online.  Click here to go to the website.  Find it and read, listen to or watch it.

Inflation

Here's the thing, if I could count, I would not have gone to law school. No, seriously, I'm pretty good at basic math, but my quest to understand economics sometimes hurts my brain. I have published a few posts about inflation, in an attempt to help me understand it better.

Honestly, I think that I'm making it too hard. On the FEE website this morning they published "A Letter to a Ten-Year-Old." I guess that a ten-year-old wrote a letter to the Foundation for Economic Education asking what inflation was. This response was drafted by Beth Hoffman in 1981. This was a great article, very short, and the most important thing I learned from the article was that my understanding of economics is approximately at a ten-year-old level.

In the letter, Ms. Hoffman refers to another article, "Inflation In One Page", written by Henry Hazlitt. Again, a simple one page explanation. This is economics that even I can understand.

New New Deal

Sometimes, I wish that I had paid more attention in history class.  Other times, I'm glad I didn't.  Back in college, I remember reading about how the Great Depression was caused by the failure of capitalism.  Those greedy Wall Street Barons just messed up the whole country.  Lately, it seems that some folks have been taking a closer look at what really happened.  It's beginning to look like the Federal Reserve and Washington D.C. had a pretty big role to play.  I mention this because the events of the last several months have turned a discussion of the Great Depression from a history lesson into a study of current events.

Looks like we have a pretty big problem on our hands, just like back in the twenties.  The New Deal was supposed to fix the problem back then.  Instead, our Great Depression lasted about twenty years longer than the rest of the world's.  Now again, eighty plus years later, the only solution our Federal Government can come up with is more Federal regulation and intervention, a new New Deal.  Instead of looking to a failed policy from the 1920's, maybe we should look at something more recent, something that worked.  I'm thinking 1980's, 1997, 2003.  I'm thinking that some good ole' Trickle Down, Reaganomics might do the trick.  At least that has a proven track record.  Let's try capitalism and free markets, that's my vote.  For an interesting article on this topic, read New New Deal Won't Help Economy, by George Will.