Liberty Fund

Adam Smith, Scientist and Evolutionist

by Vernon L. Smith

Modelling Other-Regarding Behavior without Social Preferences

Apology for a Trainwreck, by Bryan Caplan

The ethnographies of Oscar Lewis paint a bleak picture of lower-class life.  The thousands of pages of published interviews in books like Five Families, The Children of Sanchez, Four Men, and La Vida show a relentless trainwreck of impulsive sex, unplanned pregnancy, child neglect, child abuse, drug addiction, drunkenness, degenerate gambling, intra-family violence, near-random violence, parasitism, and gross financial mismanagement.    The picture is so bleak that I struggle to believe Lewis’ subjects are representative of any human subculture.  But if his subjects are representative, it’s hard to imagine how a thoughtful person could look upon their “culture of poverty” with anything but horror.

Yet in the rare moments where Lewis stops letting his subjects speak for themselves, he is far from horrified.

Hell Is Truth Realized Too Late: Russia and the Legacy of World War I

Had the costs of war and revolution been understood, Russia might have avoided much of what it suffered over the 20th century.

Who’s Afraid of Budget Deficits?, by David Henderson

In a provocative article in Foreign Affairs titled “Who’s Afraid of Budget Deficits?” Jason Furman and Lawrence H. Summers argue that we should not worry much about the federal government’s large and growing budget deficits.  While they admit that politicians and policymakers “shouldn’t ignore fiscal constraints entirely,” they say that they “should focus on urgent social problems, not deficits.” And throughout the piece, they assume, for every single problem they address, that the solution is more spending. It’s not surprising that they don’t worry much about deficits.

Furman and Summers aren’t just rank and file economists. Furman, an economics professor at Harvard University’s Kennedy School, was the chairman of former President Barack Obama’s Council of Economic Advisers. Summers, who is president emeritus of Harvard, was the Treasury Secretary under former President Clinton and head of the National Economic Council under former President Obama. I know Summers from when we were both economists with President Reagan’s Council of Economic Advisers and I know Furman from his work. These are not, to put it mildly, dumb guys. And if you dismiss them as such, you make a big mistake. It’s important to look at their argument.

Lord Robbins the Lion

When Lord Lionel Robbins accepted to become the supervisor of my Ph.D. thesis I felt lucky, but did not know how lucky I was. I had been studying for a degree in Political Science at the London School of Economics. I wanted to go further and dig under politics to uncover the economic strands of the social fabric. When Karl Popper had suggested that I write on John Stuart Mill, I immediately agreed, for Mill was not only a political philosopher but also and fundamentally an economist. The School then saw I needed much help to tackle the economic side of my chosen topic. So, here I was, in some trepidation, in Robbins’s small room (Baron Robbins, of Clare Market in the City of Westminster, to give him his full title). At this our very first meeting my supervisor told me to start by reading Alfred Marshall‘s Principles and Joseph Schumpeter’s History of Economic Analysis, from beginning to end, a fortnight for each! Each took me a month and I only scratched the surface. I remember his remark when I expressed my despair at not having read all the books that were awaiting my study: “Pedro that is a feeling you will never get rid of in your life”.

This was characteristic of the great teacher that he was. He stretched you to the limit. He demanded analytical precision and at the same time broad historical perspective. Another trait was his exquisite but firm courtesy. When I produced a draft of my first chapter, which was on Mill’s methodology of the social sciences, he said: “Pedro, I found your paper very interesting. But why don’t you put it in an inaccessible cupboard?”

Did New York City Really Lose Out in Amazon Deal?

Perhaps we should be with the socialists on this one: NYC did not lose much in net by Amazon’s pullout.

Catherine Semcer on Poaching, Preserves, and African Wildlife

Catherine Semcer of the Property and Environment Research Center (PERC) talks with EconTalk host Russ Roberts about the role of incentives in preserving wildlife in Africa. The conversation discusses how allowing limited hunting of big game such as elephants and using revenue from hunting licenses to reward local communities for habitat stewardship has improved both habitat and wildlife populations while reducing poaching. Semcer draws on her experience as former Chief Operating Officer of Humanitarian Operations Protecting Elephants and also discusses recent efforts to re-locate lions in Mozambique.

Iran’s Revolution Reconsidered

Khomeini rejected democracy because of its “Western dimension.”

Thomas Jefferson in a letter to John Taylor condemns the system of banking as "a blot" on the constitution, as corrupt, and that long-term government debt was "swindling" future generations (1816)

Regressive effects of regulation

DIANA W. THOMAS PUBLIC CHOICE Abstract: Regulation of health and safety has placed an unacknowledged burden on low-income households and workers. Billions of dollars are spent every year on regulations that seek to reduce life-threatening risks that arise from auto travel, air travel, air and water pollution, food, drugs and construction; the list goes on. Today, […]

Government by Emergency: Are Two Generations of Crisis Enough?

The oldest emergency proclamation dates to the Carter Administration, which issued the declaration 40 years ago. Two generations of crisis are enough.

Thomas Clarkson on the "glorious" victory of the abolition of the slave trade in England (1808)

Adam Smith, “Of the Character of Virtue” (1759) (Adam Smith)

The Best of the OLL No. 39: Adam Smith, “Of the Character of Virtue” (1759) (Indianapolis: Liberty Fund, 2013).

It’s blackmail all the way down, by Scott Sumner

David Henderson recently raised doubts about whether blackmail should be illegal, and Robin Hanson advocated legalizing blackmail. David cited the argument that activities that are generally legal (such as gossip), should not become illegal merely because money changes hands. Robin cited the argument that blackmail is a way of enforcing society’s norms, and that the threat of blackmail might deter bad behavior. Tyler Cowen argued against legalizing blackmail, as did I.  One of Robin’s commenters pointed out that one of society’s norms is “blackmail is wrong.”

The following story is intended to be a humorous way of exposing the internal contradictions of blackmail:

Let’s suppose that after years of effort, Robin gets a conservative Virginia legislature to legalize blackmail.  Robin argues that this will help to enforce society’s norms against bad behavior.  One of Robin’s colleagues is a grouchy 75-year old man.  He overhears gossip that a female GMU student from a good family is engaging in prostitution on the side, to earn money for her living expenses. The old guy decides to try to enforce society’s norm against prostitution by blackmailing the young woman.

Paul Heyne and the Trouble with Economists

Economics is often a morality-free zone, and Paul Heyne shows why this is a mistake.

Born-Again Paganism: A Conversation with Steven Smith

Steven Smith talks with Richard Reinsch about his provocative thesis that a modern form of paganism is becoming public orthodoxy.

Obama and Trump: At What Point Has a President Forfeited the Public Trust?

Why impeachment has always been a tough call for the American people to make.

Creative Destruction

Joseph Schumpeter (1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (p. 83)

Although Schumpeter devoted a mere six-page chapter to “The Process of Creative Destruction,” in which he described capitalism as “the perennial gale of creative destruction,” it has become the centerpiece for modern thinking on how economies evolve.

Schumpeter and the economists who adopt his succinct summary of the free market’s ceaseless churning echo capitalism’s critics in acknowledging that lost jobs, ruined companies, and vanishing industries are inherent parts of the growth system. The saving grace comes from recognizing the good that comes from the turmoil. Over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.

Herein lies the paradox of progress.

New Playing Cards for the French Republic (1793-94)

The Spirit of Peace Motto: "Prosperity" [See larger image 600px]

The Spirit of Commerce Motto: "Wealth" [See larger image 600px]

The Tragedy of King Richard the Third (William Shakespeare)

The Complete Works of William Shakespeare (The Oxford Shakespeare), ed. with a glossary by W.J. Craig M.A. (Oxford University Press, 1916).

Twenty-Five Years of NAFTA

A much-maligned trade pact that needed to be updated, NAFTA now faces an uncertain future.

Percy Bysshe Shelley on the new Constitution of Naples which he hoped would be "as a mirror to make ... blind slaves see" (1820)

The Wealth of Nations: Book II, Chapter III

Of the Accumulation of Capital, or of Productive and Unproductive Labour

Leviathan (1909 ed) (Thomas Hobbes)

Hobbes’s Leviathan reprinted from the edition of 1651 with an Essay by the Late W.G. Pogson Smith (Oxford: Clarendon Press, 1909).

An Argument for a Marriage Tariff, by Pierre Lemieux

Find the error. A Wall Street Journal story (“As China Trade Talks Resume, Trump Pushes an Ambitious Agenda,” February 18, 2019) states matter-of-factly:

“As trade negotiations with China resume this week, the Trump administration is racing to strike a deal that will result in long-term reforms—and prove that tariffs are an effective battering ram to open markets around the world.”

Once you realize that tariffs hurt mostly consumers in the country whose imports they hit, the last part of the statement does not make much sense. There is no serious reason to protect “our national producers.” If trade tariffs, which amount to taking domestic consumers hostage in order to open foreign markets for domestic producers, are defensible, why not decree tariffs on other foreigners’ activities with domestic effects.

J.S. Mill spoke in Parliament in favour of granting women the right to vote, to have "a voice in determining who shall be their rulers" (1866)

The Campus Mob Comes for the Presumption of Innocence

It is not necessarily surprising that students fail to appreciate the hard-won freedoms on which the modern university and our civilization rest.

Matthew McCaffrey, “Frank Fetter and the Austrian Tradition in the United States” (January, 2019)

Matthew McCaffrey, assistant professor of enterprise at the University of Manchester, explores the economic and political work of the "forgotten giant" of economics, the Indiana-born Frank Fetter. At the height of his career in the early 20th century, Fetter was one of the most respected, cited, and debated economists in the United States. He taught for over 40 years at prestigious universities, including Stanford, Cornell, and Princeton, and his research appeared in practically every major publication in economics and political science. yet today he is virtually forgotten outside a small group of Austrian economists. In his opening essay, McCaffrey explores two aspects of his thought in particular: his contributions to theoretical economics and their relationship to Austrian ideas, and his political views as they relate to the philosophy of classical liberalism. He is joined in the discussion by Geoffrey M. Hodgson, Research Professor of Business Studies in the University of Hertfordshire, Peter Lewin is Clinical Professor in the Jindal School of Management, University of Texas, Dallas, and Joseph T. Salerno, professor of economics in the Finance and Graduate Economics Department in the Lubin School of Business of Pace University in New York.

See the Archive of "Liberty Matters".

Vindiciae Gallicae and Other Writings on the French Revolution (Sir James Mackintosh)

Vindiciae Gallicae was James Mackintosh’s first major publication, a contribution to the debate begun by Edmund Burke’s Reflections on the Revolution in France. The success of Mackintosh’s defense of the French Revolution propelled him into the heart of London Whig circles. The turn of events in France following the September 1792 Massacres caused Mackintosh, along with other moderate Whigs, to revise his opinions and to move closer to Burke’s position. A Discourse on the Law of Nature and Nations was the introduction to a popular course of public lectures at Lincoln’s Inn in 1799 and 1800. These lectures provided Mackintosh with an opportunity to complete the evolution of his political thought by expounding the principles of a Scottish version of the science of natural jurisprudence dealing with “the rights and duties of men and of states,” to announce his withdrawal of support for the French Revolution, and to criticize former allies on the radical wing of the reform movement. The Liberty Fund edition also includes Mackintosh’s Letter to William Pitt, an attack on the prime minister, Pitt the Younger, for going back on his own record as a parliamentary reformer; and On the State of France in 1815, his reflections on the nature and causes of the French Revolution.

A Corrupt Republic? Hamilton, Madison, and the Rise of Oligarchy

Jay Cost asks his readers to reconsider the ways that corruption all too easily flows from the federal government, in every era.

The Discourse of Voluntary Servitude (Etienne de la Boétie)

The Discourse of Voluntary Servitude, trans. Harry Kurz (Indianapolis: 1942).

Narrative Economics

ROBERT J. SHILLER THE AMERICAN ECONOMIC REVIEW, Volume 107, Number 4 Abstract: This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned toward narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply […]