You are browsing the archive for 2013 April 09.

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Zwolinski on the NAP

April 9, 2013 in Economics

By David Gordon

Matt Zwolinski, a libertarian political philosopher and the founder of the Bleeding Heart Libertarians blog, has a surprising proposal. Libertarians, he suggests, should drop the Non-Aggression Principle (NAP). The NAP holds that “aggression against the person or property of others is always wrong, where aggression is defined narrowly in terms of the use or threat of physical violence.”

Zwolinski raises six objections to the NAP, targeted especially against the way Murray Rothbard interprets it. Supporters of the principle need not worry. The objections don’t hold up.

Zwolinski suggests that, according to Rothbard, it would be wrong to trespass on someone’s property to feed a three-year old child whom someone was starving to death. The person starving the child isn’t aggressing against him, but trespass is aggression.

That is nonsense. To starve someone who cannot leave is to murder him. You don’t have to touch somebody to kill him: there isn’t a special libertarian concept of murder, different from the ordinary one. Neither is it the case that you are free to violate people’s rights, so long as you do so on your property. Rothbardian libertarianism is not the doctrine that each person is an absolute despot over his own property.

Zwolinski finds another flaw in the NAP. If, as Rothbard thought, industrial pollution violates the NAP, then must we not prohibit the slightest bit of smoke blown onto someone’s property, if the owner objects? Further, he asks in an earlier post, what if someone objects to a few photons of light beamed at him: should so trivial a matter be treated as harm? The NAP, taken strictly, threatens to derail nearly all human activities. If Rothbard replies to this that pollution below a certain level does not count as harm, why does he get to decide the limits of harm?

I don’t think Rothbard made the absurd claim that the limits of harm were for him to decide. Rather, he recognized that setting the limits of harm is matter of convention, settled by the understanding that prevails in a society. Zwolinski here falls into a mistake that many libertarians make. They deny a role to convention in delimiting the boundaries for the application of a concept: unless “nature” settles the matter, use of a concept is an all-or-nothing affair. Zwolinski‘s objection about risk fails for the same reason. Why must a supporter of the NAP hold that either all risks of harm must be prohibited or …read more
Source: MISES INSTITUTE

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I’ll Bet You Didn’t Expect This

April 9, 2013 in Economics

By Joseph Salerno

In a recent review of David Stockman’s new book, The Great Deformation, Bloomberg columnist Clive Cook seeks to discredit Stockman by comparing him to Ron Paul. This is to be expected from a mainstream media pundit. What I did not expect and what set my heart aflutter was the following remark — more so because of its casual delivery:

The scope of the critique, while crazy, is undeniably impressive. It has a kind of logical integrity. Everything is worked out and all the connections explained. Stockman has been reading his economic history and his Austrian economics. Crucially, a lot of what he says really does make sense. In understanding the crash, for instance, the Austrian school’s emphasis on the role of the credit cycle looks right.

When a doctrine penetrates the thinking and writings of the intellectual class that communicates directly with the public — whom Hayek referred to as “second-handers in ideas” — it is well on its way to widespread public acceptance. With a new asset bubble already a-brewing with all its catastrophic aftereffects, the time draws near when mainline Austrian economics from Menger through Rothbard to current Mises Institute economists will triumph over current academic economics.

HT to Lew Rockwell.

…read more
Source: MISES INSTITUTE

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The Rothbard/Higgs/Vedder and Gallaway Thesis Part III

April 9, 2013 in Economics

By Joseph Salerno

In 2009 Lee Ohanian published the article, “What—or Who—Started the Great Depression,” in the prestigious Journal of Economic Theory (JET) in which he cited Murray Rothbard. For this article Ohanian spent four years poring over wage data and culling information from sources related to Hoover and his administration. Based on his research, Ohanian argued that Hoover’s policy of propping up wages and encouraging work sharing “was the single most important event in precipitating the Great Depression” and resulted in “a significant labor market distortion.” In a Mises Daily article in September 2009, I called attention to the importance of Ohanian’s article. Here is part of what I wrote:

Ohanian contends that Hoover’s policy of propping up wages and encouraging work sharing “was the single most important event in precipitating the Great Depression” and resulted in “a significant labor market distortion.”

Thus, “the recession was three times worse — at a minimum — than it otherwise would have been, because of Hoover.”

The main reason is that in September 1931 nominal wage rates were 92 percent of their level two years earlier. Since a significant price deflation had occurred during these two years, real wages rose by 10 percent during the same period, while gross domestic product (GDP) fell by 27 percent. By contrast, during 1920–1921 — a period that was accompanied by a severe deflation — “some manufacturing wages fell by 30 percent. GDP, meanwhile, only dropped by 4 percent.”

As Ohanian notes, “The Depression was the first time in the history of the US that wages did not fall during a period of significant deflation.” Ohanian estimates that the severe labor-market disequilibrium induced by Hoover’s policies accounted for 18 percent of the 27 percent decline in the nation’s GDP by the fourth quarter of 1931.

Regarding the now-conventional explanations of the Great Depression, such as widespread bank failures and the severe contraction of the money supply, Ohanian points out that these two events did not occur to a significant extent until mid-1931, which was two years after the implementation of Hoover’s industrial labor market policies.

Moreover, Ohanian argues,

any monetary explanation of the Depression requires a theory of very large and very protracted monetary nonneutrality. Such a theory has been elusive because the Depression is so much larger than any other downturn, and because explaining the persistence of such a large nonneutrality requires in turn a theory for why the …read more
Source: MISES INSTITUTE

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Hayek Lecture at Duke U

April 9, 2013 in Economics

By John P. Cochran

The HAYEK LECTURE SERIES at Duke University will feature the 2012 Manhattan Institute’s 2012 Hayek Prize winner John B. Taylor. The lecture titled “Why We Still Need To Read Hayek” will be delivered Wednesday, April 10, 2013 12:00 noon in the Breedlove Room‐Perkins Library.

Taylor delivered a similarly titled lecture last year at the Manhattan Institute available here:

http://www.manhattan-institute.org/html/hayek2012.htm

HT to Walter Grinder.

…read more
Source: MISES INSTITUTE

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America’s Great Depression Quote of the Week: Hallmark of an Inflationary Boom

April 9, 2013 in Economics

By John P. Cochran

The 1920s was a period when price stabilization proposals a la Irving Fisher were influential in policy and central banking circles. Hayek and Mises were major critics of this approach and emphasized that such an approach to policy would not stabilize economic activity, but would in fact generate boom-bust cycles in an economy where increases in productivity   should be working to lower costs and prices. The period now know as the “Great Moderation”, approximately 1981 -2001 was a period where inflation targeting, a modern variant of this approach to policy, greatly influenced monetary policy. While central bank policy during this period, judged by its criteria that a low rate of inflation was an acceptable target, appeared to be working just fine─inflation remained low, at least compared to the late 1960s and 1970s, and recessions were few and relatively mild─the period ended with back to back boom-bust which are best explained by Austrian Business Cycle Theory which clearly explains the causal process at work when central banks create credit (See “Natural Rates of Interest and Sustainable Growth” or “Hayek and the 21st Century Boom-Bust and Recession-Recovery”).

Rothbard very clearly lays out the argument in AGD (86):

Similarly, the designation of the 1920s as a period of inflationary boom may trouble those who think of inflation as a rise in prices. Prices generally remained stable and even fell slightly over

the period. But we must realize that two great forces were at work on prices during the 1920s—the monetary inflation which propelled prices upward and the increase in productivity which lowered costs and prices. In a purely free-market society, increasing productivity will increase the supply of goods and lower costs and prices, spreading the fruits of a higher standard of living to all consumers. But this tendency was offset by the monetary inflation which served to stabilize prices. Such stabilization was and is a goal desired by many, but it (a) prevented the fruits of a higher standard of living from being diffused as widely as it would have been in a free market; and (b) generated the boom and depression of the business cycle. For a hallmark of the inflationary boom is that prices are higher than they would have been in a free and unhampered market. Once again, statistics cannot discover the causal process at work [emphasis added].

…read more
Source: MISES INSTITUTE

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Man Trying to Improve Worker Safety at Fish Plant 'Intentionally' Allowed to Die on Conveyer Belt, Lawsuit Alleges

April 9, 2013 in Blogs

By Alex Kane, AlterNet



Did a fish processing plant intentionally leave a worker inside the conveyor that killed him? That’s what the mother of a man who tried to unionize the plant is alleging in federal court, according to a report in Courthouse News Service.

The mother, Cynthia Hebert, is suing Omega Protein, the processing plant, and ACE American Insurance Co. and ESIS Inc over the death of her son, Christopher Hebert. Hebert, 24, was killed by a machine at the Omega plant, a workplace in Mississippi that Hebert had said was unsafe. The family is seeking damages for wrongful death, among other charges.

The mother is claiming that the fish plant “engaged in intentional conduct designed to bring about injury, or death, to Christopher.” Omega Protein produces fish oil. The other companies being sued provide workers’ compensation to Omega Protein; the lawsuit says the companies failed to inspect the plant’s safety.

Hebert, who worked for Omega Protein for three years, died on April 9. He was directed to “weld the seams of a newly installed hopper that released fish products into a single screw conveyor at its base,” according to the Courthouse News Service. But the man assigned to be his spotter was not the same person who normally worked with Hebert. While working, the “the single screw conveyor was energized and operational,” and the safety person assigned to watch Hebert left. After the safety watchperson left, another worker was told to turn on the conveyor, which eventually killed Hebert. He was dragged into the machine feet-first and began screaming for help. He died of massive blood loss.

The family says this was intentional. “Omega Protein intentionally chose not to have lockout equipment and safety rules for the single screw conveyor which killed Christopher,” the lawsuit alleges.

Before the incident that killed him, Hebert tried to organize his workplace. He complained to his supervisors about the dangerous working conditions he was laboring under, but they paid no heed. When he tried to unionize the plant, he was met with “harsh resistance” from the plant’s ownership and was harassed.

<!– All spans have been put …read more
Source: ALTERNET

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A Primer for Understanding Obama's Budget

April 9, 2013 in Economics

By William Poole

William Poole

President Obama will release his overdue budget on Wednesday. It will doubtless project a reduction in the federal budget deficit—a projection that journalists, commentators and policy makers should ignore. To do otherwise is to be complicit in fraud. Strong statement? Not really.

For 50 years or so the federal government has deliberately and to an increasing extent misstated probable future budget deficits. Democrats and Republicans are guilty. The White House is guilty. And so is Congress. Private firms that deliberately misrepresent their financial statements in this fashion would be guilty of a crime.

The magnitude of the misrepresentation is breathtaking. For one example, the bitterly contested “fiscal cliff” legislation (the American Taxpayer Relief Act of 2012) raised the top income tax rate to 39.6%. However, the Congressional Budget Office’s latest (early February) deficit projection for 2013-22 is now $4.6 trillion higher than the baseline deficit it projected in mid-2012. After the tax increase, how can that be?

Easy. Congress requires the CBO to present its baseline budget projections on the basis of “current law.” Congress then manipulates current law to understate probable future outlays beyond the present year, and to overstate probable future revenues. These manipulations change CBO baseline budget projections based on current law. Voilà, actual deficits exceed projections, and the previous budget projections are rendered meaningless.

Congress and the White House routinely hide the impact on the deficit of their proposals and laws.”

Congress can misrepresent the effects of any given piece of legislation in complex ways. It does not do so by entering, say, $800 million when the correct number is $900 million. Instead, Congress enacts certain tax and spending measures as “temporary” when it has no intention of allowing the provision to lapse; or it assumes legislative provisions in current law that would cut spending will be made, when Congress knows they never will.

Fortunately, some years ago the CBO began to present “alternative scenario” budget projections, in which differences from current-law projections are explained in detail. In its early February update, one example is that the 25% cut in physician Medicare reimbursements scheduled for next Jan. 1 will not occur. That adjustment increases the projected deficit in 2023 by $16 billion, and cumulatively by $138 billion from 2014-23. Congress has overridden the scheduled cut in physician reimbursements every year since 2003, in a legislative provision known as the “doc fix.”

Another item in CBO’s February “alternative” budget …read more
Source: OP-EDS

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How Big Pharma Is Bringing Forced Drug Tests To a State Near You

April 9, 2013 in Blogs

By Nicole Flatow, Think Progress



 

 

In the Nation, Isabel Macdonald has an excellent long read on the history of U.S. drug testing, beginning with a government program to test returning Vietnam War veterans and the drug-testing provisions in President Ronald Reagan’s Drug Free Workplace Act as part of the misdirected War on Drugs. Even then, the medical community dismissed the Act’s provisions requiring all federal grantees to test employees as “chemical McCarthyism,” as well as unscientific and discriminatory, since it was more likely to capture days-old marijuana use than frequent consumption of cocaine or alcohol. But the movement nonetheless grew from an anti-drug campaign into an industry with its own trade association, after several moneyed interests like Hoffman-La Roche, the maker of Valium and sleeping pills, got into the business:

The company established one of the first major drug-testing labs in America and won an early urine-testing contract with the Pentagon, leading to $300 million in annual sales by 1987. The following year, Hoffmann-La Roche stepped up its sales efforts with the launch of a major PR and lobbying campaign to “mobilize corporate America to confront the illicit drug problem in their workplaces.” The drug manufacturer called its new campaign “Corporate Initiatives for a Drug-Free Workplace.”

Before long, with the help of a New Jersey–based lawyer named David Evans, Hoffmann-La Roche was organizing workshops around the country to convince employers to set up drug-testing programs. In an interview with The Nation, Evans likened his role to that of “a doctor coming in to talk about how to set up a medical device.” During that first campaign, 1,000 employers signed up.[…]

The drug-testing industry took aim at lawmakers as much as employers. Hoffmann-La Roche, for instance, worked “with federal and state government officials,” according to a press release issued by the PR company hired to market the campaign. Lerner told the press that the drug company also envisioned a “grassroots strategy” to prevent states from passing laws to decriminalize marijuana.

By 2006, 84 percent of American employers were reporting that they drug-tested their workers. Today, drug testing is a multi-billion-dollar-a-year industry. DATIA [Drug & Alcohol Testing Industry Association] represents more than 1,200 companies and employs a DC-based lobbying …read more
Source: ALTERNET

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Obama's Budget: More Taxes, More Spending

April 9, 2013 in Economics

President Obama officially released his overdue budget on Wednesday. And while it is not exactly the compromise the media has portrayed it to be, Cato scholar Michael D. Tanner acknowledges that the president’s budget is a serious proposal that takes some steps in the right direction. “Overall, this is not a budget designed to reduce spending or the size of government,” says Tanner. “But as they say, the longest journey starts with a single step.”

…read more
Source: CATO HEADLINES

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A Primer for Understanding Obama's Budget

April 9, 2013 in Economics

President Obama will release his overdue budget on Wednesday. It will doubtless project a reduction in the federal budget deficit—a projection that journalists, commentators and policy makers should ignore says Cato scholar William Poole. “U.S. fiscal policy is in a chaotic state,” argues Poole. “Policy decisions are wrapped around the convoluted budget accounting that Congress and the White House use to obfuscate, dissemble and hide what is really being done. That is a tragedy, and our democracy is worse for it.”

…read more
Source: CATO HEADLINES