The Best Economic Illustration Ever

We do not live in a "free market" society. We live under a crony system of rent-seekers. John Kay succinctly explains:

The fall of the Berlin Wall was the symbol of the most important economic development of our lifetimes, opening the way to the creation of market economies not just in the former communist states but in countries such as India with great unrealised economic potential.

Yet many misunderstood the lesson of the failure of centrally directed economic systems. Market economies succeed when they advance through disciplined pluralism – the process that gives maximum scope for experiment and innovation, while ensuring that when experiments and innovations fail they are terminated, and that when occasionally they succeed they are imitated. That is the origin of the advances in the IT sector.

The success of market economies is not achieved by policies that encourage people to be greedy and imposing as few restrictions as possible on what the greediest of them do. That was the world of Shah Jahan and it produced very little in the way of economic advance.

Read it all here.

Have We Crossed the River, Children?

My partisan Republican friends have turned Facebook into Jonestown.

I haven't seen such weeping and gnashing of teeth, such apocalyptic doomsaying, such moroseness.

What I want to say to them is that America's political and economic difficulties have been at least 40 years in the making -- actually a lot longer; but I like to go back to the Nixon administration for ironic effect. For it was under a Republican presidency that the "gold window" was closed, the Fed given a free hand to inflate, and Politburo-like wage and price controls were tried. The dollar has lost 80% of its value since that time. And America has gone after foreign dragons to slay -- at no small expense.

But only since this past Tuesday we suddenly find flags flown at half-mast or upside down, and lyrics to hymns circulated via email. Even evangelical leaders I respect are bemoaning the green light given to the "pro-death" forces in government -- when all the while the rate of abortions is actually falling, especially among younger women. But if we have in fact crossed the river, that happened some time ago

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Regardless, I'm not ready to drop arm-in-arm with others, bidding "goodbye, cruel world."

Jack Hunter has put forth another splendid piece at The American Conservative that points to the only sensible way forward -- a return to constitutional conservatism. Now, this is a conservatism based on the old wisdom of the old republic, in which the individual states decide what will stand within their own spheres -- which doesn't necessarily sit comfortably with culture warriors (if it's gun rights, okay, but marriage and legalized pot, no way).

I would simply add that a diminished role for the federal Leviathan and increased space for civil society can only enhance the influence of the Church on cultural matters. As long, that is, as we don't succumb to a spirit of fear -- like the poor souls in Jonestown.

A Pro-Life View on Drones

I am pro-life.  I have raised two adopted daughters and a step-son; my wife and I have two of our own, and we took in three foster children for a year. This summer we were privileged to become godparents to a little one in our church.  We consider all of these and everyone else who has lived or boarded under our roof as family.  Each of those lives is precious and unique.

A pro-life attitude is cultivated not by the state but by the home.  And if not the home, then in the church, among the Lord's people -- or among others who cherish life and goodwill.

The president of the United States cannot overturn Roe v. Wade by executive decree.  The past decade has demonstrated that voting to restrict federal court jurisdiction over abortion "rights" has not been a top priority of Republican majorities in Congress.  And really, its legality is a matter to be decided by the state legislatures.  If Congress won't act, or won't ratify a pro-life Supreme Court nominee, then the states that care about this issue should assert their 10th Amendment powers and retain jurisdiction for themselves.

But the president, as commander-in-chief of U.S. armed forces, does have tremendous say in the use of arms, in making war, in matters of life and death for the troops, enemy combatants, and innocents.

There is pro-life, and then there is pro-life.  Here is Jack Hunter, aka the "Southern Avenger," in perhaps the best and most important video blog he has yet made, speaking to our country's selective conscience:

Bibi, Obamney, and a Rebuke

A note from the ESV Study Bible by Marvin R. Wilson:

"Eschatology should never annul justice. If evangelicals believe Israel has an unconditional divine right to the land, it would be unwise to uphold such a claim without first thinking through its implications for justice and compassion toward every inhabitant of the land. For evangelicals to express their 'solidarity' with Israel, however, it need not imply evangelical support for any unjust treatment of Palestinian Arabs... The preservation and return of the Jewish people to their ancestral homeland is, at the very least, evidence of God's ongoing faithfulness and love for them (Rom. 11:1, 28-29). Whatever millennial view evangelicals hold, they must not absolutize the land, nor in any way idolize it. God alone is sovereign; he is Lord of life, Lord of history, and Lord of land."

A short post from Samuel Goldman on the "morally ambiguous realities" that pro-Israel evangelicals ought to consider:

And what about Israel itself? Romney implicitly condemns apartheid as an intolerable violation of human rights. According to a survey released today, however, 58 percent of Israel’s own citizens believe that it practices apartheid policies. What’s more, many Israelis are quite satisfied with that state of affairs. The ultra-Orthodox, in particular, express overwhelming approval for denying votes, jobs, and even public roads to Arabs both within Israel proper and in the territories.

And finally, a rebuke to everyone -- including yours truly -- with a little perspective:

It’s hardly an original observation, but watching the last month of the American presidential contest from Europe really brings home how crackpot Americans are about their elections. From here, there appears to be very, very little difference between Obama and Romney. Obama is generally more conservative than the French conservatives, for crying out loud! Hell, he’s more conservative than Richard Nixon. And for American liberals who think Romney is a right-wing whack job, and that crazy crypto-fascists are steadily advancing, they should be in a country where the National Front is a major political player.

An American friend who lives here with her French husband and kids told me the other day that her folks back home keep sending her alerts warning her that the United States is in maximum peril from four more years of the Kenyan Muslim Marxist in the White House. If Obama is re-elected, the story goes (and I get this same narrative in my e-mail in-box daily), we will LOSE AMERICA! We just looked at each other, shook our heads, and laughed.

After watching a couple of excellent documentaries last night on the Cuban missile crisis (this week being the 50th anniversary of that event), I was reminded that we are nowhere on the brink -- which is why brinkmanship toward Iran or anyone else is completely unnecessary.

It's personally disappointing that our general government has stepped grossly outside its constitutional bounds, that fear-mongering (among Christians!) has led to the build up of a broadly accepted surveillance state, and our economy is forced to swim upstream against monetary policies and regulations that are partial and unjust.

Nevertheless, the fate of civilization does not hinge on this election.

Searching for Fearless Leader

Over the weekend (10/6) I posted this blurb on Facebook:

I've heard a number of people say that what our country needs is better leadership in the White House. Actually, under our constitution the president is not the "leader" of the government or the American people. He (she) is the chief of the executive branch of the federal government. That position's duties under Article 2 include serving as commander-in-chief of the armed forces (not the people), entertaining foreign dignitaries, appointing cabinet ministers and reporting to Congress on the state of the union.

A republic is not founded on the notion of leadership vested in an individual. Our president cannot make laws by decree. He can propose and advocate for many things. He can represent the American people in foreign matters. But in theory the power is vested in the people. A republic doesn't need a "leader," and the notion of a national leader (Führerprinzip) is a very dangerous one, indeed.

Iran and North Korea have supreme leaders. "Oh, but those are dictators." Yes; but investing the president with the power to set a national agenda takes us well down the road of despotism. We need to reacquaint ourselves with the principles of republican government and the intent of our founders.

How we think of government dictates how we act and vote. And voting for a "leader" is not the mark of an (ostensibly) free people.

Later the same day Jack Kerwick wrote the following for Beliefnet:

Our founding fathers, recognizing that liberty requires as wide a dispersion of power and authority as possible, bequeathed to their posterity a government that is self-divided. In spite of the singularity of the term, the American “government” actually consists of many governments, each sovereign in its own specifically delineated arena. Even the federal government is comprised of multiple branches, and within these branches, authority and power is further distributed. As the founders conceived it, the federal government—precisely because it was a federal, and not a national, government—was severely limited in its scope.

Although we still talk the talk of liberty, our vocabulary reveals that we have long since stopped walking the walk. For example, we insist on crediting politicians when they “lead,” and blaming them when they fail to do so. But this concept of leadership in politics is inimical to liberty. The last thing that a liberty-loving people should want is a political leader. Indeed, a champion of liberty who elects a leader is a contradiction in terms: the lover of liberty is not about to “follow” any politician anywhere...

The lover of liberty abhors the notion of a political leader. He wants nothing more or less than for his representatives to govern or, what amounts to the same thing, to rule in accordance with constitutionally sound law.

Just One Book

I am of the opinion that the main and final cause why the prince pretends to the power of altering the coinage is the profit or gain which he can get from it; it would otherwise be vain to make so many and so great changes.... Besides, the amount of the prince’s profit is necessarily that of the community’s loss.

~ Bishop Nicholas Oresme, 14th century

If there is only one book that I would recommend to anyone on the subject of economics, it is The Ethics of Money Production by Jörg Guido Hülsmann, professor at the University of Angers, France. The recommendation is made all the sweeter by the fact that the link takes the reader to a free pdf version of the book. But the work is of such import that one would likely want a hardcopy at hand. Despite a rather soporific title, the book tackles with sparkling clarity the most pressing economic issue of our time -- the nature, origin, use, and debasement of money. It includes a thorough history of coin debasement, credit money, banknotes and fractional-reserves, legal tender laws and business cycles. While there are myriad economic issues worthy of better understanding -- land controls, wages, regulations, subsidies and the like -- money lies at the heart of all modern economic systems. The manipulation of currency is the jugular of economic boom/bust cycles. Hülsmann takes a dull sounding topic and turns it into a page-turner.

There's probably not another economic subject on which there is more widespread misunderstanding. People throughout the developed world have been conditioned to the idea that money emanates from, and must therefore be controlled by, a central authority. Hülsmann shows how all media of exchange arise naturally out of social cooperation, and how through the process of social discovery a free monetary system regulates itself from inflation, deflation and unstable prices. Not that these phenomena wouldn't occur at all, but the natural market process renders them short-lived. It is only when an authority takes control of the production of money that sustained trouble arises.

What makes Hülsmann's analysis unique is that he addresses the issue from a moral and ethical standpoint. At root is the violation of the ninth commandment: "You shall not bear false witness against your neighbor." By inflating the currency in order to raise revenues and enrich both the government and its allies, the monetary authority lies to the users of money, and makes economic decisions more difficult as a result of tampered weights and measures (Proverbs 20:10, 23).

Economics not only deals with moral beings—human persons—but it also addresses a great number of questions that have direct moral relevance. In the present case, this concerns most notably the question of whether any social benefits can be derived from the political manipulation of the money supply, or the question of how inflation affects the moral and spiritual disposition of the population (p. 5).

I would boldly say this is the only book on economics a layperson needs. In developing his argument Hülsmann breezily carries the reader through the fundamentals of supply, demand, utility and interest (vs. usury). He also skillfully debunks all modern concerns over a lack of centralized control and oversight of money. That he does so in a calm and warm tone is a testament to Hülsmann's Christian faith and mastery of the subject.