Federal Reserve

Note from the Poet: Perl is a computer language that programmers are able to write poetry in, due to the large number of available commands.  It’s a game to try to write something that makes sense and also compiles. I’ve wanted to write some Perl poetry for years. This poem actually runs (and doesn’t do anything).

#!/usr/bin/perl

# The first need is to free ourselves of that worst form of contemporary obscurantism. -FAH
# Perl code can be treacherously obfuscated. -Larry Wall, inventor of Perl

for (each %western_democracies) {
    fork;
    
    if (require state) {
        FREEDOM::dump unless reverse;
        
        $socialism->$facism->$totalitarianism;
        $freedom=>$planning;

        while ($you != $me) {    
            push @people, %minority_will;
            bind MEN, POLITICS;   
            close $markets and unlink BUYER, SELLER;    
            exit DEMOCRACY and bless SOCIALISM;
        };
        
        do not sleep; do not wait && wait && wait until time;
        do alarm; do join my $cause, %values; do split /power/;
        
        listen YOU, EVERYONE or "serfdom";
    }    
}

Each week, Mr. Reed will relate the stories of people whose choices and actions make them heroes. See the table of contents for previous installments.

Readers of this series are likely aware of my affection for Poland and the Polish people. Previous essays featured such Polish heroes as two-time Nobel-winning scientist Maria Sklodowska (Marie Curie), the anticommunist martyr Father Jerzy Popieluszko, the courageous undercover fighter Witold Pilecki, and science fiction writer Stanislaw Lem.

Though I have no Polish blood in me — my father was of Scots-Irish ancestry and my mother was German — I would be very proud if I did. Polish bravery in the face of invasions, occupations, and tyranny is exemplary. In recent times, Poles played a critical role in the momentous unraveling of the Soviet Empire in the 1980s. To millions of Polish freedom fighters who ushered communism into the dustbin of history nearly 30 years ago, the world owes an unending debt of gratitude.

My first of several visits to the country was in 1986. The experience left me with unforgettable memories. For seven days in November of that year, I glimpsed something of the nature and effectiveness of those who opposed the communist regime. Escorted by activists in Poland’s illegal Freedom and Peace movement, I conducted many hours of interviews in Warsaw and Krakow. What I discovered went far beyond anything I had expected.

“The people of Poland are giving us an imperishable example of courage and devotion to the values of freedom in the face of relentless opposition.” — Ronald Reagan </span…

It’s so much easier to sympathize with our own problems and with the problems of those we love than with the problems of complete strangers.

Adam Smith observes in The Theory of Moral Sentiments that our ability to sympathize with ourselves is, in fact, so out of all proportion to our ability to sympathize with others that the thought of losing one of our little fingers can keep us up all night in fearful anticipation, while we can sleep easily with the knowledge that hundreds of thousands on the opposite side of the world have just died in an earthquake.

Hayek makes the same point in The Fatal Conceit:

Moreover, the structures of the extended order are made up not only of individuals but also of many, often overlapping, sub-orders within which old instinctual responses, such as solidarity and altruism, continue to retain some importance by assisting voluntary collaboration, even though they are incapable, by themselves, of creating a basis for the more extended order. Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within different kinds of orders according to different rules.

It may not be the best part of our humanity, but it is a very human part. We care more about those we see more often, understand more thoroughly, and with whom we share more in common.

We care more about those we see more often, understand more thoroughly, and with whom we share more in common.

And maybe that’s not so bad. We treat family differently, after all. My daughter will get a giant pink fluffy stuffed unicorn from me on her birthday. I…

Science is undergoing a wrenching evolutionary change.

In fact, most of what we consider to be carried out in the name of science is dubious at best, flat wrong at worst. It appears we’re putting too much faith in science — particularly the kind of science that relies on reproducibility.

In a University of Virginia meta-study, half of 100 psychology study results could not be reproduced.

Most of what we consider to be carried out in the name of science is dubious at best, flat wrong at worst.

Experts making social science prognostications turned out to be mostly wrong, according to political science writer Philip Tetlock’s decades-long review of expert forecasts.

But there is perhaps no more egregious example of bad expert advice than in the area of health and nutrition. As I wrote last year for Voice & Exit:

For most of our lives, we’ve been taught some variation on the food pyramid. The advice? Eat mostly breads and cereals, then fruits and vegetables, and very little fat and protein. Do so and you’ll be thinner and healthier. Animal fat and butter were considered unhealthy. Certain carbohydrate-rich foods were good for you as long as they were whole grain. Most of us anchored our understanding about food to that idea.

“Measures used to lower the plasma lipids in patients with hyperlipidemia will lead to reductions in new events of coronary heart disease,” said the National Institutes of Health (NIH) in 1971. (“How Networks Bring Down Experts (The Paleo Example),” March 12, 2015)

The so-called “lip…

My student, the color drained from his face, explained that a blood feud had just begun that would continue for generations.

I had been teaching an MBA class when this student — a Kurd from Turkey — received an emergency phone call from home. In his village, police had responded to one neighbor’s complaint that the chickens of another neighbor were running loose in the street. The patriarch of the family whose chickens were loose was incensed when he came home to learn that the “honor” of his family had been insulted by the police visit. In rage, he shot to death the members of the family that had called the police.

I had been lecturing about the rule of law.

At about the same time that the chicken feud began, Chinese journalist Zhou Qing was exposing Chinese food scandals. Clenbuterol is a pig-feed additive that makes pork redder and meatier; because it’s poisonous to humans, it has been banned. Newsweek related this story reported by Zhou:

Zhou hears from a food-safety official about a provincial political leader told by a farmer that his pigs still get the banned chemical because it makes their meat a hot seller in urban areas. “Don’t you know that it harms people?” asks the official. “Yes,” replies the farmer. “But city people have free medical care, so it’s no problem.”

Both events have the same root cause: tribalism.

My Clan über Alles

Tribalism is the belief in the supremacy of one’s group identity over the rights of individual human beings. Tribal identity fosters negative feelings, even hatred, toward those outside the tribe. Prejudices are reinforced while commerce and contact with those outside of the tribe are minimized. Tribal societies tend to be closed societies.

Tribalism is a failed system that has brought poverty, misery, and destruction to the world. Political scient…

If a building were to collapse and crush a man, would you blame a witch?

In the early 20th century, the Azande people of what was then British-controlled Sudan believed that witches or sorcerers caused almost every misfortune in life. And they believed that almost every death — whether due apparently to a falling building, a rampaging elephant, or a simple disease — was in fact a murder by magic.

Indeed, they believed that a witch’s spite and jealousy could inflict bad luck, harm, and death on other people — without the witch needing to cast any spells or even be aware that he or she was a witch.

You and I might be tempted to sneer at such “primitive” superstition. Certainly, the Azande represented an extreme case. But beliefs along the same general line — that our misfortunes are somehow caused by the ill will of our jealous enemies — are still exceedingly common.

Hardly anyone thinks they can explain, predict, or control the rain by appealing to the jealousy of witches or the actions of spirits.

Consider the price at the pump. Whenever oil prices rise, progressive commentators decry the greed of capitalists or speculators.

Natural Causation, Human Design, and Spontaneous Order

All over the world, in every culture, from time immemorial, humans have looked for a human or humanlike will or meaning behind everything from falling buildings to rising gas prices.

But over the last few centuries, the natural sciences have made enormous strides in changing the way humans think about physical events.

Even though no one knows for certain today whether it will rain in New York a week from now, practically everyone believes that the precipitation (or lack thereof) will be caused in a mechanical sense by something impersonal: convection currents,…

Each week, Mr. Reed will relate the stories of people whose choices and actions make them heroes. See the table of contents for previous installments.

Most lovers of a free society want to be optimists. All that has to happen for liberty to be widely embraced is for people to open their minds and shed the baggage of the statist or socialist impulse. Simple enough, right? No. It isn’t simple at all, and that’s why too many lovers of liberty fall into the pessimism trap.

If winning the day were simple, we’d have won overwhelmingly — and permanently — long ago. Alas, it takes work. It takes time. It takes commitment. It entails setbacks along the way.

In spite of all that it has to offer, liberty enters the intellectual fray with two substantial disadvantages:

1. It demands risk and restraint today in exchange for a better life a little later; and
2. Like anything truly worthwhile, it must be painstakingly explained.

Socialism and other risky, interventionist schemes that push society in that direction appeal far more to thoughtless and immediate self-gratification — and they rest heavily on gimmicks, demagoguery, and bumper stickers.

Think about it. Mere slogans like the vapid “I’m for people, not for profit!” or the moronic “Socialism = Sharing” carry instant weight with the naturally large numbers of people who want politicians to give them something (whether power, subsidy, or attention) at the expense of their fellow citizens. We who advocate the restraint of political power and respect for property must take the time to invoke reason, logic, history, and economics.

We who advocate the restraint of political power and respect for property must take the time to invoke reason, logic, history, and economics. 

But facing a tough hill to climb is no reason to be pessimistic. Pessimism…

Ludwig von Mises claimed that any “middle way” between free-market capitalism and pure state socialism was doomed, yet interventionism is as alive and well today as ever.

In 1929 he wrote,

The middle system of property that is hampered, guided, and regulated by government is in itself contradictory and illogical. Any attempt to introduce it in earnest must lead to a crisis from which either socialism or capitalism alone can emerge. (A Critique of Interventionism)

How does this statement square with over 80 years of subsequent interventionist practices around the world?

To understand how interventionism has survived for so long, we must first distinguish between two basic kinds of interventionism. We also need to ask what it means for interventionism to be sustainable.

There’s “Regulatory Dynamics”

The version of “interventionist dynamics” that people who have read Mises’s critique of intervention are most familiar with focuses on the negative unintended consequences of price controls. In that version, the attempt to impose a price ceiling (or price floor) on X creates a shortage (or surplus) of X, which the authorities try to fix by imposing price regulations elsewhere (in the market for inputs for X or in the substitutes for X). Those regulations, in turn, generate negative unintended consequences elsewhere that induce even further interventions.

A country that pursues a pure form of welfare state capitalism might last longer than a country that pursues a pure form of regulatory state capitalism.

Each successive intervention imposes more harm an…

Many now credit government for past progress in gender equality, mostly because of late 20th-century legislation that appeared to benefit women in the workplace. This is a distorted view. Few know that government at all levels actually sought to prevent that progress.

A century ago, just as markets were attracting women to professional life, government regulation in the United States specifically targeted women to restrict their professional choices. The regulations were designed to drive them out of offices and factories and back into their homes — for their own good and the good of their families, their communities, and the future of the race.

By 1910, fully 45 percent of the professional workforce was made up of women. 

The new controls — the first round of a century of interventions in the free labor market — were designed to curb the sweeping changes in economics and demographics that were taking place due to material advances in the last quarter of the 19th century. The regulations limited women’s choices so they would stop making what elites considered the wrong decisions.

The real story, which is only beginning to emerge within the academic literature, is striking. It upends prevailing narratives about the relationship between government and women’s rights. Many cornerstones of the early welfare and regulatory state were designed to hobble women’s personal liberty and economic advancement. They were not progressive but reactionary, an attempt to turn back the clock.

Women’s Work Is Not New

It was the freedom and opportunity realized in the latter period of the 19th century that changed everything for women workers, opening up new lines of employment.

The growth of industrial capitalism meant that women could leave the farm and move to the city. They could choose to leave home without having married — and even stay in the workforce as married women. Th…

Even as many Americans continue to experience a very slow recovery from the Great Recession, the official unemployment rate has dropped below 5 percent, leading some to credit presidential policies for that positive sign. In response, some critics of President Obama have taken to social media to suggest that the official unemployment numbers are “lies,” part of an intentional conspiracy to hide the real state of the economy.

Their argument is based on the claim that the unemployment figures don’t count people who have given up looking for work or who are working under the table. The critics claim that those numbers, which no one is talking about, have risen and should be included in the unemployment rate.

These critics are correct to point to an increase in the number of people not in the labor force or engaged in part-time or unreported work. That increase may well be related to the poor policy choices of the last seven years. But the numbers aren’t lies, the decrease in the number of people seeking work isn’t a secret, and there is no conspiracy to boost the current administration’s record. The way these data are reported reflects how economists have measured unemployment for decades.

Labor Force Ins and Outs

To understand what’s going on, we need to clarify some basic definitions. The first distinction economists make is whether a person is in or out of the labor force. Being “in” the labor force means that you are interested in paid employment and are actively looking for work or have a job. So, for example, stay-at-home parents and retired people are not in the labor force.

We define unemployed as those people who are in the labor force but not currently employed. That is, you are unemployed only if you do not have a job and are actively looking for one. (The Bureau of Labor Statistics has some specific criteria to determine “actively looking” that need not concern us here.)</p…