Who Belongs On Mount Rushmore?

David Henderson, of The Library Of Economics And Liberty, has made the unlikely claim that Warren Harding belongs on Mount Rushmore. 

In addition to letting Eugene Debs out of prison, Harding also was ahead of his time on racial issues.  Here's a quote from Henderson's post:

Instead of attempting to suppress the black vote, he was a Republican, who, in 1921, made a speech in Jefferson, Ala., supporting the right of black men to vote. 1921!

He said: "Let the black man vote when he is fit to vote; prohibit the white man voting when he is unfit to vote." A reporter said that while the white section of the audience remained silent, the black section cheered.

Hardly enough to justify reshaping a mountain, but a good deed nonetheless. 

Other people have made other suggestions....

There's Reagan, who as best I can tell, had the advantage of not being Jimmy Carter....

And, of course, the Obamessiah, who has had the advantage of being black.  (I hate to go down that road, but if that damn fool's name was Barry O'Brien, and he was a white guy from East Armpit, Illinois, with the same non-achievements, he would've never made it into the Illinois State Legislature.)

Don Boudreaux, of the Café Hayek site, has chimed in with his .02 cents. 

I'd remove from Mt. Rushmore all people who are most famous for holding political office - which is to say, I'd blast off all four of the currently sculpted faces. I'd replace them with images of the faces of John D. Rockefeller, Sr., Gustavus Swift, J.J. Hill (even though he was Canadian!), and either Gail Borden or Steve Jobs - people who really define, and who helped in notable and noticeable ways to sculpt, what is good about America. (If obliged to include a non-entrepreneur among the four, there's no question that the person whose visage I would choose is that wisest of all Americans, H.L. Mencken.)

If the suggestion is to ban politicians from being carved into mountainsides, I'll go with the following:

Sam Walton.  Walton brought more people out of bone-grinding poverty than anyone else in history.  He deserved a Nobel.  His company has provided millions of jobs to employees that you and I and Microsoft and Starbucks and Costco consider unemployable. 

Let's throw Norman Borlaug up there.  He came up with variations on wheat DNA that quadrupled yields.  He's called "the man who saved a billion lives", and because he did so without help from the Lefties, he's been widely criticized for doing so. 

David Koch.  Mostly to piss off the Statists, but also because he was an early, early advocate of ending the Nixon/Obama Drug War, legalizing Gay Marriage, ending the Fed, staying out of other people's wars, and lobbying for a smaller government.  Conde Nast has called him "one of the most generous, but low-key philanthropists in the USA".  Go here for a breakdown of just some of the money this man has given away.  (He's also given lots and lots of money to defeat the Obamacrats.  Unfortunately, all of it went to Republicans.)  The Libertarians ran him for V.P. in 1980. 

Milton Friedman.  He wrote Capitalism And Freedom, plus Free To Choose.  As a bonus, he and his wife Rose brought David Friedman into the world. 

I like those people.  Maybe one day they'll be carved into a mountainside and properly appreciated by a grateful nation. 

 

An explanation, an experiment, and a parable about Milton Friedman's Four Ways To Spend Money

Here's a chart showing Milton Friedman's famous Four Ways To Spend Money. 

Here's a 2004 interview with Friedman, in which he explains the famous Four Ways To Spend Money.  (All government spending is in that nasty bottom right quadrant, BTW.  Any project that is advertised in terms of number of "jobs created" is a waste.  I'm just sayin'....)

There are four ways to spend money. You can spend your own money on yourself. When you do that, why you really watch out for what you're doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well then, I'm not so careful about the content of the present, but I'm very careful about the cost. Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm going to have a good lunch! Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it costs, and I'm not concerned about what I get. And that's government. And that's close to 40 percent of our national income.

Here's something from MSN Money, posted about a month ago.  It's an experiment that confirms Friedman's hypothesis about the top right and bottom left quadrants of the chart.  If you're helping someone else spend their money, or they're helping you spend yours, more money will be spent, often on silliness....

You and your friends are eating out and you plan to divide the tab evenly. Now you're faced with a dilemma. Do you splurge at the expense of your friend's pocketbook, or do you eat light, knowing you're going to end up paying for your friend's lavish meal? 

This seemingly innocuous event has caused enough consternation that a group of three scientists actually performed field experiments to see how unscrupulous people really are. 

According to io9.com, the experiment went a little like this: A group of strangers gather to eat at a restaurant. The participants are each told how they will pay for their meal. Some will pay individually, some are told they will split the check, and the remaining people are told that the meal will be free. 

The diners then ordered their meals without anyone else seeing what they had chosen.

The results of the dining experience are described by io9.com:

To no one's surprise, the people who paid individually were the most frugal, the people getting the free lunch were most extravagant, and the people who split the bill were in the middle, and therefore slightly unscrupulous.

Some diners were then told that they would have to pay just one-sixth of the cost of their individual meal. There was no difference between what those diners ate compared to those who were told they had to split the bill evenly, according to io9.com.

But what happens when you're in a large group of anonymous people?  Here's something from the immortal Russ Roberts, writing waaaaay back in 1995.  This essay, called "If you're paying, I'll have Top Sirloin", has already made it into the Libertarian Literary Canon.  The entire parable is scraped and reposted here, just to make my point....

As Congress prepares to try to cut spending, I am reminded of an evening last fall at the St. Louis Repertory Theater, our local company. Before the curtain rose, the company's director appeared and encouraged us to vote against a ballot proposition to limit state taxes. He feared it would lead to reduced funding for the company.

I turned to the woman sitting next to me and asked her if she felt guilty knowing that her ticket was subsidized by some farmer in the "boot-heel" of Missouri. No, she answered, he's probably getting something, too. She seemed to be implying that somehow, it all evened out.

I left her alone, but I wanted to say, no it doesn't even out. If it "evened out" for everybody, then government spending would really be depressing: all that money shuffled around, all those people working at the IRS, all those marginal tax rates discouraging work effort just to get everybody to get the same deal.

Here in St. Louis we recently completed Metrolink, a light rail system. It cost $380 million to build. We locals contributed zero out of pocket. It was paid for by the rest of the country. Shouldn't we feel guilty making people in Kentucky, Mississippi and Maine pay for our trips to the hockey arena downtown? No, say the beneficiaries. After all, we paid for BART in San Francisco and MARTA in Atlanta and all the other extraordinarily expensive, underutilized public transportation systems whose benefits fall far short of their costs. It's only fair we get our turn at the trough.

This destructive justification reminds me of a very strange restaurant.

When you eat there, you usually spend about $6—you have a sandwich, some fries and a drink. Of course you'd also enjoy dessert and a second drink, but that costs an additional $4. The extra food isn't worth $4 to you, so you stick with the $6 meal.

Sometimes, you go to the same restaurant with three friends. The four of you are in the habit of splitting the check evenly. You realize after a while that the $4 drink and dessert will end up costing you only $1, because the total tab is split four ways. Should you order the drink and dessert? If you're a nice person, you might want to spare your friends from having to subsidize your extravagance.

Then it dawns on you that they may be ordering extras financed out of your pocket. But they're your friends. They wouldn't do that to you and you wouldn't do that to them. And if anyone tries it among the group, social pressure will keep things under control.

But now suppose the tab is split not at each table but across the 100 diners that evening across all the tables. Now adding the $4 drink and dessert costs only 4¢. Splurging is easy to justify now. In fact you won't just add a drink and dessert; you'll upgrade to the steak and add a bottle of wine. Suppose you and everyone else each orders $40 worth of food. The tab for the entire restaurant will be $4000. Divided by the 100 diners, your bill comes to $40. Here is the irony. Like my neighbor at the theater, you'll get your "fair share." The stranger at the restaurant a few tables over pays for your meal, but you also help subsidize his. It all "evens out."

But this outcome is a disaster. When you dine alone, you spend $6. The extra $34 of steak and other treats are not worth it. But in competition with the others, you've chosen a meal far out of your price range whose enjoyment falls far short of its cost.

Self-restraint goes unrewarded. If you go back to ordering your $6 meal in hopes of saving money, your tab will be close to $40 anyway unless the other 99 diners cut back also. The good citizen feels like a chump.

And so we read of the freshman Congressman who comes to Congress eager to cut pork out of the budget but in trouble back home because local projects will also come under the knife. Instead of being proud to lead the way, he is forced to fight for those projects to make sure his district gets its "fair share."

Matters get much worse when there are gluttons and drunkards at the restaurant mixing with dieters and teetotalers. The average tab might be $40, but some are eating $80 worth of food while others are stuck with a salad and an iced tea.

Those with modest appetites would like to flee the smorgasbord, but suppose it's the only restaurant in town and you are forced to eat there every night. Resentment and anger come naturally. And being the only restaurant in town, you can imagine the quality of the service.

Such a restaurant can be a happy place if the light eaters enjoy watching the gluttony of those who eat and drink with gusto. Many government programs generate a comparable wide range of support. But many do not. How many Americans other than farmers benefit from the farm subsidy programs? How many Americans other than train riders derive benefit from the Amtrak subsidy?

People who are overeating at the expense of others should be ashamed. That shame will return when others are forced to cut back too. This requires deep cuts and an end to the government smorgasbord where the few benefit at the expense of the many.

There you have it.  The original Milton Friedman theory, a real-life experiment, and a Russ Roberts parable, all illustrating why government spending is generally a disaster. 
If you want someone to do a better job of pulling all this together, go elsewhere.  This is the best I can do. 
Here are some more charts, extravagantly posted on my site for your benefit, because I downloaded them from elsewhere at no expense to myself (ahem). 

A quick prediction about the upcoming State Of The Union address

Tuesday, January 28th, The Idiot will give another State Of The Union address.  I can't decide if I'm going to drunkblog it or not. 

Most of what he's says will prove him guilty of this economic fallacy:

Hide and watch.  The man has never created a dime of wealth on his own, he's never grown anything, never created anything that he could trade for your money except a storybook of his own glorious life. 
As a lawyer and as a politician, Obama's career choices have been in fields that are about taking things by force - through the courts or at gunpoint. 

Wait and see, wait and see.  

On Open Borders

Here's an exchange with the late, great Milton Friedman about the idea of "open borders" - i.e. free immigration.

Q: Dr. Friedman should the U.S.A. open its borders to all immigrants? What is your opinion on that?

A: Unfortunately no. You cannot simultaneously have free immigration and a welfare state.

Q: Do you oppose a unilateral reduction of tariffs and if not how can you oppose open immigration until the welfare state is eliminated?

A: I am in favor of the unilateral reduction of tariffs, but the movement of goods is a substitute for the movement of people. As long as you have a welfare state, I do not believe you can have a unilateral open immigration. I would like to see a world in which you could have open immigration, but stop kidding yourselves. On the other hand, the welfare state does not prevent unilateral free trade. I believe that they are in different categories.

Maybe so, maybe so. 

Here's Robert Rector of the Heritage Institute, slamming the idea of open borders.

In a recent debate with Dan Griswold of the Cato Institute, I pointed out this paradox. Griswold replied that the key was to grant amnesty and open borders now and work on “building a wall around welfare” at some point in the future. The weakness of this response should concern all those interested in limiting the size of government.

While most open-border libertarians proclaim a desire to dismantle both borders and the welfare state, in practice what they offer is open borders today and a vague (and almost certainly illusory) promise to end the welfare state in the indefinite future. As Milton Friedman understood, open-border enthusiasts have the sequence wrong: Opening borders with the redistributionist state still intact will result in a larger and more confiscatory government. In response to libertarians who propose to open borders and dismantle the welfare state, practical conservatives should answer: “Go ahead. Dismantle the welfare state. As soon as you’ve got that finished, let us know, and then we’ll talk about open borders.”

Here's my take on it. 

As long as people are deprived of freedom of movement and freedom of association, as long as armed guards ask for your paperwork when you approach the borders of your cage, politicians and their ilk will own you. 

They can draft you, imprison you, tax you, and burden you with debt.  No one with the ability to move freely from place to place can be forced to serve a politician. 

Slaves in the southern U.S. were taught to respect the boundaries of their plantations.  We have all been taught to respect the lines of latitude and longitude near the place where our mothers went into labor. 

Politicians, like old-time slavemasters, love borders and boundaries. 

Screw them and the lines on their little maps. 

Who's to say that Libertarian politicians, over time, wouldn't become Statists?

I get variations on this all the time:  "Who's to say that your Libertarian candidates wouldn't start spending and regulating like Statists if they stayed in office long enough?"

My answer  "If you left mulitiple generations of them in office long enough, without changing any of the rules of the game, or changing the worldview of the electorate, they probably would become Statists."

People are people.  They don't become cherubs when they win the beauty contests that we call "elections".  I'm sure that Ron Paul could be swayed by flattery and donations.  Ditto for Gary Johnson.  Judge Jim Gray is one of the finest men I've ever met, but I bet if you agreed to fund one of his favorite causes, he'd be willing to consider using a few taxpayer dollars to build that new stadium, or blow up some brown people overseas, or throw some stimulus in the right direction. 

This is why it's so important to have a government that is as small as possible.  Government is force.  The power to take other people's stuff and redistribute it.  The power to throw your enemies into steel cages.   I honestly don't know anyone that I would trust with that power for a long period of time. 

Here's some vintage Milton Friedman:

The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or it they try, they will shortly be out of office.

I believe that Libertarian candidates are the most likely to do the right thing.  But it's even more important for you to be aware of the right thing - stopping redistribution, ending privacy violations, curbing the spending and ending the wars. 

In the meantime, we're getting the government (and the wars, and the debt, and the wealth transfers, and the black incarceration rate, and the taxes) that we deserve. 

But it creates jobs....

I got into an interesting conversation at the bar with an electrical contractor while I was celebrating my birthday last night.  (52nd birthday, BTW.) 

We were talking about building inspectors, corrupt building inspectors, and the people that most regulations are written to benefit.  (Hint:  It ain't you.)

The guy was obviously a skilled electrician.  Plenty smart.  But then he let loose with this statement:  At least all those rules and regulations create jobs and help the economy. 

I couldn't help myself.  Like I said, I was celebrating my birthday with plenty of Jim Beam and wasn't capable of self-censorship.  I remembered the Milton Friedman "spoons" story.

The story goes that Milton Friedman was once taken to see a massive government project somewhere in Asia. Thousands of workers using shovels were building a canal. Friedman was puzzled. Why weren’t there any excavators or any mechanized earth-moving equipment? A government official explained that using shovels created more jobs. Friedman’s response: “Then why not use spoons instead of shovels?”

So I said "If the goal is to create jobs and help the economy, why not use lanterns instead of electricity?"  I don't remember his response, if there was one. 

Here's something I found on the Forbes website while I was looking for the "spoons" story. 

Economies prosper when multitudes of ordinary people are motivated to make improvements. This is because information and insights needed to make an economy prosper are widely dispersed. There’s far more than could ever be centralized, validated and updated in a place like the federal government. The most reliable way to motivate people? Harness their self-interest: let them try making a profit by starting a business based on their information and insights. Government can best promote prosperity by, among other things, maintaining equal rights, low taxes, free trade, sound money, predictable laws and protection against force and fraud. Government should let consumers render their verdicts in open markets – no subsidies, special favors or bailouts.

Creating artificial hurdles, and then paying government bureaucrats to monitor the hurdles, does not help an economy.  It's all about production, baby !! 

I had to get that out of my system.  Have a good day, and be thankful for the electrical contractors who bring power to your laptop/phone/ipad/ipod/Blackberry reading device IN SPITE OF the electrical code, and not because of it. 

The IRS, The DOJ, The FDA, and Milton Friedman's Barking Cat

Why are people surprised that the IRS targeted groups that want a smaller IRS? 

Why do almost half of us think that Obama is lying when he says he didn't know that the IRS was targeting groups that want a smaller IRS? 

If you worked for the IRS, and had a great salary, would you want a larger IRS or a smaller IRS?  Would you use your power to intimidate people who wanted a smaller IRS?  Unless your name is Gandhi or Jesus, you would do exactly and precisely what the IRS did.  You would target your enemies. 

Almost half of Americans say President Barack Obama isn’t telling the truth when he says he didn’t know the Internal Revenue Service was giving extra scrutiny to the applications of small government groups seeking tax-exempt status.

.Forty-seven percent of Americans say they don’t believe Obama compared with 40 percent who say he is being truthful, according to a Bloomberg National Poll of 1,002 adults conducted May 31 through June 3.

More than half of political independents -- 53 percent -- say Obama’s explanation that he learned it from media reports is untrue, while 34 percent say they believe him.

Why is this even called a "scandal"?  It's.... what.... large.... powerful.... governments..... do. 

1) They protect themselves and their families. 
2) They protect their organization.
3) Then they look out for you. Maybe.  All other considerations are in a distant 3rd place. 

To expect an honest, selfless system of angelic revenue thieves is to demand what Milton Friedman called a "Barking Cat".  Friedman used the example of the FDA slowing down pharmaceutical advancement, but you can insert FBI, CIA, Tarrant Regional Water District, VA Hospital, or any other government organization that has the power to control others.

Friedman got a letter that began as follows: "In contrast to your opinion, I do not believe that the FDA should be abolished, but I do believe that its power should be" changed in (such and such a way)....

Friedman replied as follows: "What would you think of someone who said, " I would like to have a cat, provided it barked"? Yet your statement that you favor an FDA provided it behaves as you believe desirable is precisely equivalent. The biological laws that specify the characteristics of cats are no more rigid than the political laws that specify the behavior of governmental agencies once they are established. The way the FDA now behaves, and the adverse consequences are not an accident, not a result of some easily corrected human mistake, but a consequence of its constitution in precisely the same way that a meow is related to the constitution of a cat. As a natural scientist, you recognize that you cannot assign characteristics at will to chemical and biological entities, cannot demand that cats bark or water burn. Why do you suppose that the situation is different in the "social sciences?"

The error of supposing that the behavior of social organisms can be shaped at will is widespread. It is the fundamental error of most so-called reformers. It explains why they so often believe that the fault lies in the man, not the "system," that the way to solve problems is to "throw the rascals out" and put well-meaning people in charge. It explains why their reforms, when ostensibly achieved, so often go astray.

The harm done by the FDA does not result from defects in the men in charge-unless it be a defect to be human. Most are and have been able, devoted and public-spirited civil servants. What reformers so often fail to recognize is that social, political and economic pressures determine the behavior of the men supposedly in charge of a governmental agency to a far greater extent than they determine its behavior. No doubt there are exceptions, but they are exceedingly rare-about as rare as barking cats.

This is what Big Government organizations do.  They abuse their power.  They look out for themselves.  In economics, it's called "Public Choice".  I understand the theory better than I do the name. 

As James Buchanan artfully defined it, public choice is “politics without romance.” The wishful thinking it displaced presumes that participants in the political sphere aspire to promote the common good. In the conventional “public interest” view, public officials are portrayed as benevolent “public servants” who faithfully carry out the “will of the people.” In tending to the public’s business, voters, politicians, and policymakers are supposed somehow to rise above their own parochial concerns.

Public "servants" look out for themselves before they look out for you.  And cats don't bark. 
Well, Friedman acknowledged that some cats might rarely bark, but only when they think none of their co-workers are watching. 

The Most Persistent Economic Fallacy Of All Time

Here's the late, great Milton Friedman, explaining the difference between money and production, and then production vs spending.

Milton Friedman Was Wrong

Milton Friedman once divided all spending into four basic categories, claiming that government spending would always be inefficient because it all fit into his fourth category.

Here's his breakdown:

There are four ways to spend money. 

1. You can spend your own money on yourself. When you do that, why you really watch out for what you're doing, and you try to get the most for your money. 

2. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well then, I'm not so careful about the content of the present, but I'm very careful about the cost. 

3. Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm going to have a good lunch!
 
4. Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it costs, and I'm not concerned about what I get. And that's government. And that's close to 40 percent of our national income.

His point, of course, is well-taken, but incomplete.  Government spending isn't restricted to Category #4.  But I think the good Dr. Friedman should have anticipated the amount of government spending devoted to Category #3 (spending someone else's money on myself.) 

Consider this:

Poor oversight at the U.S. Department of Veterans Affairs allowed agency officials to waste as much as $762,000 at a pair of multimillion-dollar conferences that took place last year in Orlando, according to an investigative report released Monday.The report, released by the VA's independent watchdog, estimated that the agency spent about $6.1 million on the two conferences, including $762,000 that was identified as unauthorized or unnecessary. Among the wasteful expenses: $97,906 worth of promotional gifts for the federal workers attending the training sessions; $154,000 for contractor travel; $16,500 to produce daily "Happy Face" videos of those in attendance; and nearly $2,300 for beverages, such as soda and juice, consumed by conference officials and speakers.

And this one:

Where does a muffin cost more than $16?At a government conference, it turns out.They may run just over $2 at your average coffee shop, but the Justice Department paid seven to eight times as much at a gathering it held at the Capital Hilton in Washington. And on Tuesday, the muffins seemed well on their way to joining the Pentagon’s $600 toilet seat as symbols of wasteful spending.Justice Department auditors also criticized a $76-per-person lunch at a conference at a Hilton in San Francisco, featuring slow-cooked Berkshire pork carnitas, hearts-of-romaine salad — and coffee at $8.24 a cup.A report released Tuesday by the department’s acting inspector general,Cynthia A. Schnedar, is full of what she called “wasteful or extravagant spending” at 10 law enforcement conferences spanning the George W. Bush and Obama administrations. Descriptions of cookies and brownies costing the government nearly $10 each and beef Wellington hors d’oeuvres at $7.32 per serving struck a nerve in Washington, where austerity and belt-tightening are the watchwords at a time of economic hardship.

And there are the recent GSA scandals:

At least 77 General Services Administration employee conferences that totaled more than $6.7 million in costs are under review by the agency’s inspector general, the watchdog said at a hearing before a House panel Wednesday.


The conferences, which cost at least $10,000 each and were attended by 25 employees or more, were held between October 2010, when the agency held an $823,000 employee conference in Las Vegas, and April 2012, when that conference became public.

The conferences were the focus of a hearing before the House Transportation and Infrastructure Committee. GSA acts as the realtor and purchasing officer of the federal government.

The conferences ranged from a a five-day regional marketing managers meeting that cost $10,920, to the 2011 GSA Training Conference and Expo that cost $1.2 million.

According to GSA preliminary findings obtained by The Washington Post, the Federal Acquisition Service held 30 conferences costing more than $3.5 million, the Public Buildings Service held 38 conferences costing more than $2.5 million, the Office of Governmentwide Policy held one conference costing $136,495, the Office of the Chief Information held two conferences costing $177,960, the PBS and FAS held a single joint conference costing $112,131, the Chief People Officer held three conferences costing $60,588; and one for Intergovernmental Relations, costing $15,922.

While the list gave numbers of people who attended, it did not break down the number of employees.

Since the 77 conferences are currently under investigation, the agency’s inspector general could not give examples of which conferences had problems or red flags.

The committee also reviewed a one-day $270,000 awards ceremony in Arlington County for employees of the Federal Acquisition Service.

The one-day conference was held four weeks after the Las Vegas event with a more than $140,000 tab for coordination and logistical costs, $34,000 for the venue, $28,000 on picture frames and $20,579 for drum sticks, Brian Miller, GSA’s inspector general, testified.

So, yeah, Government spending my neighbor's money on me isn't very efficient. 
But I bet spending my neighbor's money on $20,579.00 worth of drumsticks is a lot more fun! 

If you've ever wondered how the Federal Poverty programs can spend over $61,000.00 per family in poverty and still have families in poverty?  Look no further.  Milton Friedman's category #3

3. Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm going to have a good lunch!

Where will you find enough angels? - Milton Friedman

I often find myself surfing the net, reading magazines, listening to the radio, and (when drunk) watching television, and wondering about people.
Yeah, people.
I wonder about all the people who think that our government should "do something".  Take charge.  Regulate.  Otherwise, the big corporations will have their way with us.  Businessmen are only in it for the money, you know....
There are actually people, living, breathing humans, people who can feed themselves with a knife and fork, yet believe that governments should own all of the oil companies.  They believe that our government should set all wages and set price margins.  It really is astounding.

Here's a crusty old exchange between Phil Donahue and Milton Friedman.  I've probably watched the YouTube a dozen times, but this guy blessed us with a transcript.

Enjoy.  And just for grins, I followed it with Wikipedia's links to every Federal-level political scandal going all the way back to the founding of the republic.  Politicians and bureaucrats don't become economic eunuchs when they go in and out Obama's door from business to government.  They're just like you and just like me - providing for themselves and their families first, and then their supporters.  Any other considerations are waaaaaay down the line.  

Phil Donahue: When you see around the globe, the mal-distribution of wealth, a desperate plight of millions of people in underdeveloped countries. When you see so few “haves” and so many “have-nots.” When you see the greed and the concentration of power. Did you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?

Milton Friedman: Well first of all tell me is there some society you know that doesn’t run on Greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course none of us are greedy, it’s only the other fellow who is greedy. The world runs on individuals pursuing their separate interests.

The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way.

In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about – the only cases in recorded history – are where they have had capitalism and largely free trade.

If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

Donahue: But it seems to reward not virtue as much as ability to manipulate the system…

Friedman: And what does reward virtue? You think the Communist commissar rewarded virtue? You think a Hitler rewarded virtue? You think – excuse me – if you’ll pardon me – do you think American Presidents reward virtue ?

Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout ?

Is it really true that political self-interest is nobler somehow than economic self-interest ? You know, I think you’re taking a lot of things for granted. Just tell me where in the world you find these angels who are going to organize society for us ? Well, I don’t even trust you to do that. 

1 Scope and organization of political scandals

2 Federal government scandals

• 2.1 2009– Obama Administration
  • 2.1.1 Executive Branch
  • 2.1.2 Legislative Branch
  • 2.1.3 Judicial Branch
• 2.2 2001–2009 George W. Bush Administration
  • 2.2.1 Executive Branch
  • 2.2.2 Legislative Branch
• 2.3 1993–2001 Bill Clinton Administration
  • 2.3.1 Executive Branch
  • 2.3.2 Legislative Branch
• 2.4 1989–1993 George H. W. Bush Administration
  • 2.4.1 Executive Branch
  • 2.4.2 Legislative Branch
  • 2.4.3 Judicial Branch
• 2.5 1981–1989 Ronald Reagan Administration
  • 2.5.1 Executive Branch
  • 2.5.2 Legislative Branch
  • 2.5.3 Judicial Branch
• 2.6 1977–1981 James E. Carter Administration
  • 2.6.1 Executive Branch
  • 2.6.2 Legislative branch
• 2.7 1974–1977 Gerald Ford Administration
  • 2.7.1 Executive Branch
  • 2.7.2 Legislative Branch
  • 2.7.3 Judicial Branch
• 2.8 1969–1974 Richard M. Nixon Administration
  • 2.8.1 Executive Branch
  • 2.8.2 Legislative Branch
  • 2.8.3 Judicial Branch
• 2.9 1963–1969 Lyndon B. Johnson Administration
  • 2.9.1 Executive Branch
  • 2.9.2 Legislative Branch
  • 2.9.3 Judicial Branch
• 2.10 1961–1963 John F. Kennedy Administration
  • 2.10.1 Legislative Branch
• 2.11 1953–1961 Dwight D. Eisenhower Administration
  • 2.11.1 Executive Branch
  • 2.11.2 Legislative Branch
• 2.12 1945–1953 Harry S. Truman Administration
  • 2.12.1 Executive Branch
  • 2.12.2 Legislative Branch
• 2.13 1933–1945 Franklin Delano Roosevelt Administration
  • 2.13.1 Legislative Branch
  • 2.13.2 Judicial Branch
• 2.14 1929–1933 Herbert Hoover Administration
  • 2.14.1 Legislative Branch
• 2.15 1923–1929 Calvin Coolidge Administration
• 2.16 1921–1923 Warren G. Harding Administration
  • 2.16.1 Executive Branch
  • 2.16.2 Legislative Branch
• 2.17 1913–1921 Woodrow Wilson Administration
  • 2.17.1 Executive Branch
• 2.18 1909–1913 William Howard Taft Administration
  • 2.18.1 Legislative Branch
  • 2.18.2 Judicial branch
• 2.19 1900–1909 Theodore Roosevelt Administration
  • 2.19.1 Legislative Branch
• 2.20 1878–1898
  • 2.20.1 Executive Branch
  • 2.20.2 Legislative Branch
• 2.21 1869–1877 Ulysses S. Grant Administration
  • 2.21.1 Executive branch
  • 2.21.2 Legislative branch
  • 2.21.3 Judicial branch
• 2.22 1865–1869 Andrew Johnson administration
  • 2.22.1 Executive branch
• 2.23 1861–1865 Abraham Lincoln administrations
  • 2.23.1 Executive branch
• 2.24 1857–1861 James Buchanan administration
  • 2.24.1 Legislative Branch
• 2.25 1849–1850 Zachary Taylor administration
  • 2.25.1 Executive Branch
• 2.26 1829–1836 Andrew Jackson administrations
  • 2.26.1 Executive Branch
• 2.27 1817–1824 James Monroe administrations
  • 2.27.1 Legislative Branch
• 2.28 1801–1808 Thomas Jefferson administrations
  • 2.28.1 Executive branch
  • 2.28.2 Judicial Branch
• 2.29 1797–1800 John Adams administration
  • 2.29.1 Executive Branch
• 2.30 1789–1796 George Washington administrations
  • 2.30.1 Legislative Branch
• 2.31 1777–1788
• 2.31.1 Executive Branch

On Milton Friedman's Barking Cat

Let's start off with some vintage Milton Friedman:

 In a recent column (Newsweek Jan 8, 1973), I pointed out that approval of drugs by the Food and Drug Administration delays and prevents the introduction of useful as well as harmful drugs. After giving reasons why the adverse effects could be expected to be far more serious than the beneficial effects, I summarized a fascinating study by Prof. Sam Peltzman, of UCLA of experience before and after 1962, when standards were stiffened. His study decisively confirmed the expectation that the bad effects would much outweigh the good.    The column evoked letters from a number of persons in pharmaceutical work offering tales of woe to confirm my allegation that the FDA was indeed "Frustrating Drug Advancement," as I titled the column. But most also said something like, "In contrast to your opinion, I do not believe that the FDA should be abolished, but I do believe that its power should be" changed in such and such a way - to quote from a typical letter.    I replied as follows: "What would you think of someone who said, " I would like to have a cat, provided it barked"? Yet your statement that you favor an FDA provided it behaves as you believe desirable is precisely equivalent. The biological laws that specify the characteristics of cats are no more rigid than the political laws that specify the behavior of governmental agencies once they are established. The way the FDA now behaves, and the adverse consequences are not an accident, not a result of some easily corrected human mistake, but a consequence of its constitution in precisely the same way that a meow is related to the constitution of a cat. As a natural scientist, you recognize that you cannot assign characteristics at will to chemical and biological entities, cannot demand that cats bark or water burn. Why do you suppose that the situation is different in the "social sciences?"

In other words, to wish for an efficient, non-corrupt, economical government service is to wish for a "barking cat".  

Now let's go to something more recent, from the UK's Mail Online.  Britain's dreaded National Health Service has killed something like 1,200 people through sheer godawful neglect, and the government flunkies have responded by (pick one) simply 1) firing those responsible 2) privatizing their system 3) vowing to keep government out of citizens' lives, or 4) paying whistleblowers to shut the hell up.  

Hit the link.  Check out the comments.  A good number of the Brits are saying sensible things, but far too many are wishing for a barking cat.  And there's no such thing as a barking cat, no matter how you design it, or what was intended.  Sad.

If these idiots spent the money on 750 nurses, they probably won't need to gag any one !

The original principle was beyond reproach but sadly I believe it has lost it's way, been allowed to get too big, and 'governed/controlled' by self serving idiotsIf the government was serious about tackling this abuse of power, they would declare all these gagging clauses null and void. Also they would take steps to ensure that the authoritarian, bullying managers who are responsible for this state of affairs, are sacked.

Revelation after revelation but what will be done ? NOTHING ! What will change ? NOTHING ! It never does. This would be bad enough if it was confined to the NHS but it isn't ! Every public sector departments are riddled with overpaid, 3rd rate middleweight, incompetent managers who are never held responsible for their failures as they would be in the private sector. They demand to be paid the going rate for a first class manager but none would last 5 minutes in the real world. There needs to be a complete pay and conditions restructuring from the top down in all departments not just the NHS. Without this things will only get worse !

Being open and honest and fully accountable about problems and accepting and recognising there is a problem is the first step to resolving the problem. Preventing legitimate organisational operational concerns and problems being discussed, resolved and publicly available lead to the same problems being repeated and cause serious problems for patient's blighted by hospital blunders and mistakes. Only by learning from previous mistakes and taking real decisive action to prevent repeating mistakes with a genuine will, can the preventable suffering of future patients be avoided. It does not take a consultant to work this out do why does continue to be the case inquiry after inquiry for decades? The culture of secrecy surrounding mistakes needs to stop now and the superiority culture of the medical hierarchy that say they are always right must end.

Sorry boys.  You can fire all the government managers, you can re-structure your government programs, and you can rant and moan and express your outrage in the comment fields of your newspapers all you want.   

You can't make a barking cat.  

Happy Birthday, Milton Friedman !!!

From The Wall Street Journal:

It's a tragedy that Milton Friedman—born 100 years ago on July 31—did not live long enough to combat the big-government ideas that have formed the core of Obamanomics. It's perhaps more tragic that our current president, who attended the University of Chicago where Friedman taught for decades, never fell under the influence of the world's greatest champion of the free market. Imagine how much better things would have turned out, for Mr. Obama and the country.

Friedman was a constant presence on these pages until his death in 2006 at age 94. If he could, he would surely be skewering today's $5 trillion expansion of spending and debt to create growth—and exposing the confederacy of economic dunces urging more of it.

In the 1960s, Friedman famously explained that "there's no such thing as a free lunch." If the government spends a dollar, that dollar has to come from producers and workers in the private economy. There is no magical "multiplier effect" by taking from productive Peter and giving to unproductive Paul. As obvious as that insight seems, it keeps being put to the test. Obamanomics may be the most expensive failed experiment in free-lunch economics in American history.

Equally illogical is the superstition that government can create prosperity by having Federal Reserve Chairman Ben Bernanke print more dollars. In the very short term, Friedman proved, excess money fools people with an illusion of prosperity. But the market quickly catches on, and there is no boost in output, just higher prices.

Next to Ronald Reagan, in the second half of the 20th century there was no more influential voice for economic freedom world-wide than Milton Friedman. Small in stature but a giant intellect, he was the economist who saved capitalism by dismembering the ideas of central planning when most of academia was mesmerized by the creed of government as savior.

Some words to remember from the middle of the article, on school choice, and why raising taxes on anybody is a bad idea:

The issue he devoted most of his later years to was school choice for all parents, and his Friedman Foundation for Educational Choice is dedicated to that cause. He used to lament that "we allow the market, consumer choice and competition to work in nearly every industry except for the one that may matter most: education."


As for congressional Republicans who are at risk of getting suckered into a tax-hike budget deal, they may want to remember another Milton Friedman adage: "Higher taxes never reduce the deficit. Governments spend whatever they take in and then whatever they can get away with."

Go here to read the whole thing.  Here are the closing paragraphs: 

In a recent tribute to Friedman in the Journal of Economic Literature, Harvard's Andrei Shleifer describes 1980-2005 as "The Age of Milton Friedman," an era that "witnessed remarkable progress of mankind. As the world embraced free-market policies, living standards rose sharply while life expectancy, educational attainment, and democracy improved and absolute poverty declined."

Here's an idiotic stencil from the "Occupy Wall Street Folks" who don't quite understand that increased trade and freedom are good things:

Well over 200 million were liberated from poverty thanks to the rediscovery of the free market. And now as the world teeters close to another recession, leaders need to urgently rediscover Friedman's ideas.

I remember asking Milton, a year or so before his death, during one of our semiannual dinners in downtown San Francisco: What can we do to make America more prosperous? "Three things," he replied instantly. "Promote free trade, school choice for all children, and cut government spending."

How much should we cut? "As much as possible."

One other thing...Friedman was much criticized for advising some of the regime of Pinochet in Chile.  Protesters met him at the airport, etc.  (No one said anything about him advising China's murderous commie regime, since the Communists were thought to have pure intentions.) 

I'm sending shipments to Chile and China in the next few weeks.  Since Friedman's consultations, these nations have gone from 3rd World Shitholes to prosperous places to live.  They can afford to purchase fruitstands made in the USA.  Chile now afford to purchase entire grocery stores worth of USA-manufactured displays. 

North Korea and Cuba are not yet customers.  Come back, Milton!  We need you !!!

The Libertarian Night Before Christmas

I found this on Libertarian Reddit.  (I'm finding LOTS of stuff this morning, waiting on the family to wake up!)
Ten years ago, I wouldn't have understood half of it.  It's funny what blind panic and fear for your country will make you learn ! 
Once again, Merry Christmas !!!

Twas the night before Christmas, and all over the net

Libertarian infighting, as good as it gets.

The young cats and rookies, the intellectual debtors

watch left and right scrum over racist news letters.


Should anarchists vote? Or is it a crock?

'Wendy's a statist!' Exclaimed Walter Block.

Anarchists, minarchists, a matter of degrees?

You min-mins are fascists! Awaiting kings decrees!


Atheist, Christian, Muslim or Jew

We don't fight over faith, like statists do.

We prefer to fight over who should be ruling.

And private vs public vs un-or-homeschooling.


Taxation is theft, and all war is murder.

Further consensus? Good luck, cat herder.

Even semantics are points for a schism,

Call it free-markets, or capitalism?


Austria or Chicago? Friedman or Mises?

Is Peikoff the pope, if Ayn Rand is Jesus?

Konkin or Rothbard? What's on your shelves?

Ah hell, what's the difference, Ron Paul twenty-twelve!


So on Hayek and Murray, on Ron and on Ayn.

On Ludwig and Milton! on Bastiat and Heinlein.

Let's call a truce, friends, for just this one night.

Then on the 26th... libertarians.... FIGHT!

The Rand Album Cover came from here. 

On the joy of spending other people's money on people that you really like

If an entrepreneur is about to start a new business, he investigates every possible thing that can go wrong. 
If an investor is about to throw some money into a new enterprise, he investigates every possible thing that can go wrong. 
After all, these two hypothetical guys have something at stake: their money or their reputations. 

Would you invest in an entrepreneur's project if he had nothing at all at stake in the business?  If he didn't have any of his own money in the project? 

Here's Barack Obama at a plant/factory called Solyndra back in May of last year.  He's making a victory lap in front of the Solyndra employees, having succesfully shat $530,000,000.00 of taxpayer money into the business.  We'll never know why.  He didn't put any of his and Michelle's money into the place, as far as we know. 

There was apparently nothing special about Solyndra.  They were a good candidate for the Green Jobs scam of the last two years.  Their primary business was solar panels, but it could just as well have been Bottled Fairy Farts.  It was politically expedient for Obama to squat over Solyndra and bury the company with unearned dollars. 

Here's the great Milton Friedman on the 4 types of spending:

There are four ways in which you can spend money.

1)  You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.

2) Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. 3) Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!

4) Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.

So what's the big deal?  Obama took a massive stimulus dump over a solar panel factory.  Jobs were "created".  Here's NBC:

President Obama faces political catastrophe in the form of Solyndra -- a San Francisco Bay area solar company that he touted as a gleaming example of green technology. It has announced it will declare Chapter 11 bankruptcy. More than 1,100 people will lose their jobs.


During a visit to the Fremont facility in spring of 2010, the President said the factory "is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. "


It's not his statements the administration will regret; it's the loan guarantees. The President was celebrating $535 million in federal promises from the Department of Energy to the solar startup. The administration didn't do its due diligence, says the Government Accountability Office. "There's a consequence if you don't follow a rigorous process that's transparent," Franklin Rusco of GAO told the website iWatch News.


The President touted the federally back money as a way to create jobs. The President's opponents immediately jumped on the deal as Solyndra made its first layoffs.


Republican Congressman Cliff Stearns of Florida warned, "I am concerned that the DOE is providing loans and loan guarantees to firms that aren't capable of competing in the global market, even with government subsidies."

Another critic, Fred Upton of Michigan: "The unfortunate reality is that loan guarantee highlights many of the systemic flaws associated with the stimulus in the mad dash to spend hundreds of billions of dollars."

My Christmas gift to you....3 letters by Don Boudreaux

Don Boudreaux of the Cafe Hayek blog has been typing a lot.  Think of this collection as my Christmas gift to you.    Sorry it is late. 

Here's a letter he wrote to The Boston Globe on your "right" to the services of doctors and nurses and pharmaceutical companies and hospitals....

Ronald Pies, MD, asserts that every individual has a “right” to “basic health care” – meaning, a right to receive such care without paying for it (Letters, Dec. 26).
The rights that Americans wisely cherish as being essential for a free society require only the refraining from action. Your right to speak freely requires me simply not to stop you from speaking; it does not require me to supply your megaphone.
Not so with a “right” to “basic health care.” Elevating free access to a scarce good into a “right” imposes on strangers all manner of ill-defined positive obligations – obligations that necessarily violate other, proper rights. For example, perhaps my “right” to basic health care means that I can force Dr. Pies away from his worship service in order that he attend (free of charge!) to my ruptured spleen. Or perhaps it means that I have the “right” to pay for my health care by confiscating part of his income. If so, how much of his income does my “right” entitle me to confiscate? Who knows?
And if Dr. Pies is planning to retire, do I have the “right” to force him to continue to work so that the supply of basic health care doesn’t shrink? If Dr. Pies should die, am I entitled – again, to keep the supply of basic health care from shrinking – to force his children to study and practice medicine?
Does my right to basic health care imply that I can force my neighbor to pay for my cross-country skiing vacation on grounds that keeping fit is part of basic health care?
Talking about “rights” to scarce goods and services sounds right only to persons who are economically illiterate, politically naive, and suffering the juvenile delusion that reality is optional.
Sincerely,

Donald J. Boudreaux

Here's one written to the L.A. Times, on jury nullification in relation to the marijuana wars:

Reporting on the increasing number of jurors who refuse to return guilty verdicts against defendants charged with possessing marijuana, you quote a government prosecutor who tells jurors “We’re not here to debate the laws. We’re here to decide whether or not somebody broke the law” (“Juries are giving pot defendants a pass,” Dec. 25).
This prosecutor is mistaken to assume that the law is simply that which the state declares it to be. A great advantage of trial by jury – an advantage applauded by the likes of John Adams, Thomas Jefferson, and James Madison – is to enable the community’s evolved sense of law and justice to moderate, or even to nullify, government’s criminal statutes. As Edward Gibbon observed, “Whenever the offense inspires less horror than the punishment, the rigor of penal law is obliged to give way to the common feelings of mankind.”
Fortunately, more and more people understand that punishing a peaceful person simply for smoking pot is horrible.
Sincerely,

Donald J. Boudreaux

And finally, here's an open letter/bitchslap to the president of the Sodexo Foundation:

Mr. Stephen J. Brady, President
Sodexo Foundation
Gaithersburg, MD

Dear Mr. Brady: 

Your foundation’s website says that “Forty-nine million people in the United States are at risk of hunger.” While this statement’s meaning is vague, I assume that you intend to suggest that 49 million people in America are so poor that they are at serious risk of suffering malnutrition.
Yet today’s New York Times reports on a recent poll by the Pew Research Center that finds that the number of Americans who consider themselves to be middle-class is nine in ten (“So You Think You’re Middle Class?” Dec. 23). That’s 277 million (out of a total of 308 million) Americans who don’t think of themselves as being poor. Even if we assume that every one of the 31 million other Americans thinks of himself or herself as being, not rich, but poor – and even if we further assume that every last one of those 31 million people is “at risk of hunger” – your figure of 49 million ‘at-risk-of-hunger’ Americans seems impossible to square with the Pew survey results.
Are there really 18 million people in America who are so unaware of their own circumstances that, even though you classify them as being “at risk of hunger,” they classify themselves, not as poor, but as middle-class? Seems dubious, to say the least.
While I applaud your efforts to extend a helping hand to needy Americans, you should do so honestly. In fact, hunger is not a problem in America – not for 49 million people; not even for 31 million people. In fact, no modern American this side of mental insanity or criminal captivity comes close to starving to death.
Our society’s elimination of one of history’s most consistent killers – starvation and malnutrition from too little food – is complete. This victory should be celebrated rather than obscured by claims, such as that which adorns your website, that are somewhere between inexcusably obscure and blatantly false.

Sincerely,

Donald J. Boudreaux

Why does Dr. Boudreaux go to the trouble of writing all of these letters?  Why should he bother?  He has tenure.  He's got it made.  
He probably does it because he knows that we have a great system, and he doesn't want Messiahs, Nannies, Busybodies, Saviors, Prohibitionists and other pests to start jacking around with it.
He knows the cause of health, wealth, and having time to enjoy them.    
Is Free Market Capitalism perfect?  No. 
But Utopia is not an option.  Never has been, never will be.   

Teachers and writers like Don Boudreaux, Thomas Sowell, Milton Friedman and F.A. Hayek have done more for the good of humanity than all the government programs that have ever burdened the world.