Less Than Nothing

New article on FEE discussing the pressing question, what should the Governement do to stimulate the economy.  Sheldon Richman thinks that absolutely nothing is too much, the better answer is Less Than Nothing.

The Fallacy of the Short Run

Another great article on FEE entitled Not So Fast!: The Fallacy of the Short Run, by William Anderson. In this article, the author discusses, in greater detail, the problems with economic shortsightedness. In the article, he also quotes from Lawrence Reed’s 7 Fallacies of Economics.

"Some actions seem beneficial in the short run but produce disaster in the long run: drinking excessively, driving fast, spending blindly, and printing money, to name a few. To quote the venerable Henry Hazlitt again, “The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences.”

"Politicians seeking to win the next election frequently support policies which generate short- run benefits at the expense of future costs. It is a shame that they sometimes carry the endorsement of economists who should know better.

"The good economist does not suffer from tunnel vision or shortsightedness. The time span he considers is long and elastic, not short and fixed."

We've been vandalized!

Henry Hazlitt begins his book, Economics in One Lesson, with a simple illustrative story. The story involves an act of vandalism. Some street punk has thrown a brick through the window of a local baker. Townsfolk gather round, as townsfolk often will, and they start talking, as they often do. At first, the folks are angry with the unknown vandal, and feel bad for the baker. However, as they keep talking, they decide that the act of vandalism is actually a benefit to the community. The baker must now pay the glazier to replace the glass, the cost will be a few hundred dollars. Then, the glazier will have more money, and he will spend that in the community, maybe even hire a new employee with the increased business. That money, in turn will be spent somewhere else, and so on, and so on throughout the community. Wonderful!

But, what about the baker? Maybe he had planned to buy a new suit with that $200.00. But, now he must pay for a new window, and buy a new suit. Or, maybe he will not be able to buy the suit at all. If so, then the tailor will not be paid. Either way, the baker is damaged because he has lost the ability to spend his money as he will, because of the vandal's actions. And, truly, the community is no better off in the long run if the glazier gets paid rather than the tailor.

The shortsightedness of the townsfolk's response to the vandalism is the root problem of all bad economic theory. From a family's poor economic choices to a big government trillion dollar inflate and stimulate plan, the problem is the inability to see beyond the "short run."  The long term effects of these decisions, and the potential unintended consequences, are never considered. And I think more importantly, the long term effects of economic meddling cannot be anticipated. So, when we are told that an act of vandalism, or an act of unprecedented borrowing, will provide a quick fix to the economy, we should stop and think. What about the long term?

Cliches of Socialism

You've heard it before, "the more complex the society, the more government control we need." Many years ago, Leonard E. Read published a one page rebuttle to this often heard socialist cliche.

I recommend that you read it, and begin to train your mind in the ways of liberty and freedom. We hear so many socialist influences throughout any given day, we must combat those ideas with study and practice. Lies and deception are easy to overcome. However, if you hear too much of it, you may become numb to their influences. You must be vigilant in constantly studying liberty, and being prepared to rebut the foolishness we hear all around us.

In this short, one page article, Mr. Read quickly explains away a common, and widley accepted falacy. Read the article, and then find some unsuspecting socialist who's day you might ruin with such simple truth.

Quotes of the Week

"Having federal officials, whether judges, bureaucrats, or congressmen, impose a new definition of marriage on the people is an act of social engineering profoundly hostile to liberty.

"Capitalism should not be condemned, since we haven't had capitalism.

"A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank.

"I am just absolutely convinced that the best formula for giving us peace and preserving the American way of life is freedom, limited government, and minding our own business overseas.

"In time it will become clear to everyone that support for the policies of pre-emptive war and interventionist nation-building will have much greater significance than the removal of Saddam Hussein itself.

"Legitimate use of violence can only be that which is required in self-defense.

"Our country's founders cherished liberty, not democracy.

"Setting a good example is a far better way to spread ideals than through force of arms.

"The moral and constitutional obligations of our representatives in Washington are to protect our liberty, not coddle the world, precipitating no-win wars, while bringing bankruptcy and economic turmoil to our people.

"The most important element of a free society, where individual rights are held in the highest esteem, is the rejection of the initiation of violence.

Ron Paul

A Trillion Wrongs

There is a new article on the FEE website written by Lawrence W. Reed, entitled A Trillion Wrongs Don’t Make a Right. It is a scathing review of politicians and business men alike. A short but sweet article that helps put in perspective what is truly happening in our country. However, my favorite part is his quote of a portion of Resolution No. 2 of the 85th General Assembly of the State of Indiana, passed by that state’s House and Senate in January 1947. It reads as follows:

"Indiana needs no guardian and intends to have none. We Hoosiers—like the people of our sister states—were fooled for quite a spell with the magician’s trick that a dollar taxed out of our pockets and sent to Washington will be bigger when it comes back to us. We have taken a good look at said dollar. We find that it lost weight in its journey to Washington and back. The political brokerage of the bureaucrats has been deducted. We have decided that there is no such thing as ‘federal’ aid. We know that there is no wealth to tax that is not already within the boundaries of the 48 states.

"So we propose henceforward to tax ourselves and take care of ourselves. We are fed up with subsidies, doles and paternalism. We are no one’s stepchild. We have grown up. We serve notice that we will resist Washington, D.C. adopting us."

From the news reports, it sounds like we have a few governors that may still possess such resolve.

Keep your eye on Bobby Jindal

An article on the Drudge Report today indicating that "Louisiana May Not Take Stimulus Money." Bobby Jindal is the governor of Louisiana, and "has suggested his state may not be interested in all of the roughly $4 billion allotted to it in the economic stimulus package to be signed by President Obama." Jindal said "We'll have to review each program, each new dollar to make sure that we understand what are the conditions, what are the strings and see whether it's beneficial for Louisiana to use those dollars..."

Jindal has shown signs of true conservatism, and is being called the conservative's Barak Obama. He is keeping a low profile, but is being talked about as a Republican presidential candidate for 2012.