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Review: ‘The Wolf of Wall Street’

January 1, 2014 in Economics

By Mises Updates

Wall_Street_&_Broadway

by Jacob Huebert

Murray Rothbard, the great libertarian theorist and economist, hated Goodfellas. He especially hated the depiction of gangsters as “psychotic punks” whose violence was “random, gratuitous, pointless.”

He preferred the Godfather films, where the gangsters never engaged in violence “for the Hell of it, or for random kicks,” but only used it to enforce contracts the government police and courts wouldn’t uphold.

For Rothbard, Goodfellas’ unflattering portrait of gangsters was practically a smear on libertarianism itself. According to him, “[o]rganized crime is essentially anarcho-capitalist, a productive industry struggling to govern itself,” which provides consumers with products — such as gambling, drugs, prostitution, imports — that the government has arbitrarily and unjustly made illegal. So he was offended by Goodfellas, where the “organized” criminals are little different from “street” criminals and are defeated by the cops in the end.

Some libertarians may dislike Goodfellas director Martin Scorsese’s latest, The Wolf of Wall Street, for similar reasons.

This film tells the story of a stockbroker, Jordan Belfort (Leonard DiCaprio), who cares about nothing but money and gratifying himself. His startup Long Island brokerage takes off when he and his cohorts start pushing penny stocks on working-class investors by cold-calling them and convincing them they can get rich quick by investing in purportedly great companies that are actually terrible. Belfort makes even more money by using third parties to invest in some of the companies whose stock he pushes and stashes the profits in a Swiss bank account.

Meanwhile, Belfort and his colleagues’ lust for money leads quickly to Caligula-style decadence, with non-stop sex-and-drug parties in and out of the office, which the movie dwells on at length.

Just as Goodfellas never acknowledged the valuable services Rothbard believed the Mafia historically performed, The Wolf of Wall Street never acknowledges the essential service that stockbrokers provide in a market economy. A character played by Matthew McConaughey — who, like Alec Baldwin in Glengarry Glen Ross, appears just once early on to deliver a memorable greed-stoking speech — claims that stockbrokers don’t “create” anything but just pointlessly move money around while taking a cut for themselves.

At that point, some libertarians may be tempted to walk out, assuming that the rest of the movie will be an attack on capitalism. But walking out for that reason would be a mistake, and criticizing the movie for that character’s statements would be misguided, just as Rothbard’s criticism of Goodfellaswas misguided.

Rothbard failed to mention that Goodfellas, unlike The Godfather, …read more

Source: MISES INSTITUTE

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Mises on Economics, Education, and The Experts

January 1, 2014 in Economics

By Mises Updates

Dunce_cap_from_LOC_3c04163u

[To complement Robert Murphy's post today on economics and education:]

From Human Action XXXVIII: 

by Ludwig von Mises

In countries which are not harassed by struggles between various linguistic groups public education can work if it is limited to reading, writing, and arithmetic. With bright children it is even possible to add elementary notions of geometry, the natural sciences, and the valid laws of the country. But as soon as one wants to go farther, serious difficulties appear. Teaching at the elementary level necessarily turns into indoctrination. It is not feasible to represent to adolescents all the aspects of a problem and to let them choose between dissenting views. It is no less impossible to find teachers who could hand down opinions of which they themselves disapprove in such a way as to satisfy those who hold these opinions. The party that operates the schools is in a position to propagandize its tenets and to disparage those of other parties.

In the field of religious education the nineteenth-century liberals solved this problem by the separation of state and church. In liberal countries religion is no longer taught in public schools. But the parents are free to send their children into denominational schools supported by religious communities.

However, the problem does not refer only to the teaching of religion and of certain theories of the natural sciences at variance with the Bible. It concerns even more the teaching of history from the impact of nationalism and chauvinism. But few people realize that the problem of impartiality and objectivity is no less present in dealing with the domestic aspects of history. The teacher’s or the textbook author’s own social philosophy colors the narrative. The more the treatment must be simplified and condensed in order to be comprehensible [p. 877] to the immature minds of children and adolescents, the worse are the effects.

As the Marxians and the interventionists see it, the teaching of history in the schools is tainted by the endorsement of the ideas of classical liberalism. They want to substitute their own interpretation of history for the “bourgeois” interpretation. In Marxian opinion the English Revolution of 1688, the American Revolution, the great French Revolution, and the nineteenth-century revolutionary movements in continental Europe were bourgeois movements. They resulted in the defeat of feudalism and in the establishment of bourgeois supremacy. The proletarian masses were not emancipated; they merely passed from the class rule of …read more

Source: MISES INSTITUTE

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Obama’s 2014 War on the Poor

January 1, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

To put it in today’s standard D.C. terms, Democrats sure must hate poor people.

That’s silly, of course. But there’s no doubt that Democrats are preparing to push policies that are likely to hurt struggling low- and middle-income Americans.

Democrats are preparing to push policies that are likely to hurt struggling low- and middle-income Americans.”

Both the Obama administration and the Democratic leadership in Congress have announced that their top priority when Congress returns later this month will be extending unemployment benefits and raising the minimum wage. Both policies are likely to leave more Americans jobless — especially low-income workers with few skills, the very people Democrats claim they want to help most.

Take the extension of unemployment insurance. Labor economists may disagree on the extent to which unemployment benefits increase or extend spells of unemployment, but the fact that they increase the duration of unemployment and/or unemployment levels is not especially controversial. As Martin Feldstein and Daniel Altman have pointed out, “the most obvious and most thoroughly researched effect of the existing UI systems on unemployment is the increase in the duration of the unemployment spells.”

In fact, even Paul Krugman, in the days when he was an actual economist rather than a partisan polemicist, wrote in his economics textbook:

Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect…. In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries.

President Obama’s former Treasury secretary Larry Summers estimated in The Concise Encyclopedia of Economics that “the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months.”

It’s not hard to understand why. Incentives matter. Workers are less likely to look for work or accept less than ideal jobs as long as they are protected from the full consequences of being unemployed. That is not to say that anyone is getting rich off unemployment or that unemployed people are lazy. It’s just simple human nature that people are a little less motivated as long as there is a check coming in. Indeed, research …read more

Source: OP-EDS

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To Understand Public Policy, First Understand Markets

January 1, 2014 in Economics

By Mises Updates

Two young boys at lemonade stand

Writes Robert Murphy in today’s Mises Daily:

Indeed, just about all of the “public issues” of today are crucially dependent on an understanding of sound economics, including ObamaCare, Bitcoin, quantitative easing, the trillion-dollar platinum coin, so-called “green” energy initiatives, and the “sequester.” To understand whether government intervention in a particular sector will bring desirable effects, the first task is to learn how the market economy works.

In this respect, I am pleased to announce that on January 9, we will begin a six-week Mises Academy course that offers an introduction to the Austrian understanding of the free market, unhampered by government regulations and taxes.

…read more

Source: MISES INSTITUTE

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Are Heroes of the Constitution Bringing It Back?

January 1, 2014 in Economics

By Nat Hentoff

Nat Hentoff

On Dec. 16, a federal judge’s ruling may have marked a historic turning point in the civil war between President Barack Obama and those Americans intent on preventing the executive branch from being the sole rule of law while We The People are no longer a self-governing republic.

The next day, the lead editorial in The New York Times concerning Klayman v. Obama cited Judge Richard Leon’s ruling in favor of plaintiffs that included conservative legal activist Larry Klayman. Judge Leon, who sits on the bench of the Federal District Court for the District of Columbia, argued that the National Security Agency’s continuous collection of all our phone records “ ‘almost certainly’ violates the Fourth Amendment’s prohibition against unreasonable searches” (“A Powerful Rebuke of Mass Surveillance,” The New York Times, Dec. 17).

Who nominated this patriotic judge to the influential court?

It was George W. Bush, back in 2001. But Bush, along with Vice President Dick Cheney, began to toss aside the Constitution’s mandatory separation of powers after Sept. 11.

Judge Leon, while sometimes leaning conservative, can also be an insistent libertarian. For example, consider this illustration from November 2008, covered by The Wall Street Journal:

The judge “ordered the release of five men U.S. forces took from Bosnia to Guantanamo Bay in 2002, ruling that the Bush administration relied on insufficient evidence to imprison them indefinitely as ‘enemy combatants’ ” (“Judge Orders 5 Gitmo Inmates Released,” Jess Bravin, The Wall Street Journal, Nov. 21, 2008).

That may have made Dick Cheney growl.

And in his recent NSA decision, Judge Leon alerted future U.S. historians and students to this: The Bush and Obama administrations, along with compliant Congresses, had not been able to show a “single instance in which analysis of the NSA’s bulk metadata collection actually stopped an imminent attack, or otherwise aided the government in achieving any objective that was time-sensitive in nature.”

Meanwhile, all of us lost our Fourth Amendment rights to personal privacy.

“The judge,” according to The New York Times, “wrote that James Madison ‘would be aghast’ at the degree of privacy invasion the data sweep represents.”

That’s a quotation I treasure.

It should be noted that Judge Leon’s decision is not final; it will no doubt be appealed all the way up to the Supreme Court. And I’m skeptical that a John Roberts-led court would forthrightly embrace the Constitution, even though The New York Times cheered in its editorial that Judge Leon’s ruling “is an enormous …read more

Source: OP-EDS