Not long ago, policymakers like Rep. Alexandria Ocasio-Cortez were enamored of something called  Modern Monetary Theory (MMT). This theory starts with a banal observation — that a government that issues the currency its debts are denominated in need never (technically) go bankrupt — and, on that basis, argues that we don’t need to worry about the budget deficit. As a leading MMTer, economist Stephanie Kelton, argued in her 2020 book The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy: Uncle Sam has something the rest of us don’t—the power to issue the US dollar. Uncle Sam doesn’t need to come up with dollars before he can spend. The rest of us do. Uncle Sam can’t face mounting bills he can’t afford to pay. The rest of us might. Uncle Sam will never go broke. MMT appealed to many, like AOC, because it seemed to offer the Philosopher’s Stone of economics, the fabled free lunch. But it didn’t. As Kelton wrote: Just because there are no financial constraints on the federal budget doesn’t mean there aren’t real limits to what the government can (and should) do. Every economy has its own internal speed limit, regulated by the availability of our real productive resources— the state of technology and the quantity and quality of its land, workers, factories, machine, and other materials. If the government tries to spend too much into an economy that’s already running at full speed, inflation will accelerate. There are limits. [Emphasis added] Policymakers, then, ought not be looking at the deficit when setting fiscal policy, but at the overall economy – “…the government’s budget isn’t supposed to balance. Our economy is,” Kelton wrote – and to find balance or imbalance in the economy we had to look at the rate of inflation. Kelton explained that: A deficit is only evidence of overspending if it sparks inflation. … Finally, the federal government has historically almost always kept its deficit too small. Yes, too small! Evidence of a deficit that is too small is unemployment. Of course, MMT recognizes that deficits can also be too big. But Senator Enzi had it all wrong. A fiscal deficit isn’t evidence of overspending. For evidence of overspending, we must think of inflation. But we didn’t need to worry about this. This was, MMTers told us, “the prevailing era of too-low inflation”. That era is now over. Briefly put, when COVID-19 hit, the federal government borrowed big and the Federal Reserve printed big, using the new money to buy government debt and keep the government’s borrowing costs down. This money was spent into an economy whose capacity to produce the goods and services to spend it on was constrained by shutdowns and other anti-COVID-19 measures. We hit those limits. Given MMTers had recognized inflation as a problem to be remedied, what did they suggest as the remedy? What would MMTers have been doing these last couple of years if they had been in charge? Because they thought that we were in an “era of too-low inflation”, MMTers like Kelton spent much more time telling us about all the spending they would do than about how they would deal with the inflation that might arise as a result. But they weren’t silent on the matter. Kelton draws on the work of economist Abba P. Lerner: To maintain full employment and keep inflation low, Lerner wanted the government to keep constant watch on the economy. If something happened to move the economy out of balance, Lerner wanted to the government to respond with a fiscal adjustment, either changing taxes or altering government spending. … If inflation began to creep up, Lerner believed that Congress could respond by raising taxes or cutting back its own expenditures. In other words, MMTers would fight inflation with fiscal austerity and, presumably, they would deal with high inflation such as we have had recently with particularly strict fiscal austerity. The Federal budget could certainly use a bit of austerity, but it isn’t clear that it would do very much to fight inflation: how would you get measures like that through Congress? How would fiscal measures fix a monetary problem? Governments in the 1960s and 1970s, when Lerner’s influence was at its peak, did, in fact, use taxes as a tool to fight inflation and with little success because they kept on printing money. Either way, the free lunch that attracted so many to MMT was never really there. MMTers, in fairness to them, never entirely pretended that it was. One wonders whether AOC still supports MMT now that it dictates fiscal austerity?   John Phelan is an Economist at Center of the American Experiment. (0 COMMENTS)

In the future, only two types of people may be able to teach at our major universities—leftists and liars. That’s because it is increasingly necessary to publicly adhere to extreme left wing views in order to be hired to teach at the university level. Here’s The Economist: Davidson College, in North Carolina, asked prospective computer-science staff to write about their “potential to contribute to our commitment to equity and anti-racism”—a cause fervently embraced by the left and despised by the right. Berkeley has distributed guidance on how search committees ought to evaluate diversity statements. They say that any candidate who does not discuss gender or race must be awarded low marks. The same goes for any earnest classical liberal who “explicitly states the intention to ignore the varying backgrounds of their students and ‘treat everyone the same’.” I spent decades teaching economics at the university level.  But given my view that everyone should be treated equally, I’d have no chance at being hired today in many universities (not all.) Of course this sort of thing often occurred in places such as the Soviet Union and the Peoples Republic of China: “People are unwilling to push back because they are afraid to lose their funding, and no one wants to become a martyr for defending reason,” says Anna Krylov, a professor of chemistry at the University of Southern California. Professor Krylov studied in the former Soviet Union and sees parallels that are “a little too close”. Rather than Marxism-Leninism, “you really have to pledge your commitment to critical social justice.” People often ask me why I object to woke ideology.  The fact that they ask this question makes me suspect that they haven’t kept up with what’s going on in our universities. (1 COMMENTS)

I got my first job paying hourly wages at age sixteen at a summer resort near my parents’ cottage in Canada. Although you might think that mopping floors doesn’t teach much skill—and you would be right—showing up on time was an important skill. That wasn’t important for the mopping job because it began at 11 a.m., an easy target even for a late-sleeping teenager to hit. But later in the summer the chef at the resort, who saw me faithfully mopping and never slacking, hired me to work in the kitchen as the dishwasher. That job started at 8 a.m. and hitting that target was a challenge. I still remember my conversation with the chef after I had shown up at 8:15 a.m. each day for the first three days. Chef: You need to use an alarm clock. David: I do use an alarm clock. Chef: What time do you set it for? David: 7:30 a.m. Chef: Then why don’t you make it on time? David: When the alarm goes off, I turn it off and then go back to sleep. Chef: That’s your mistake. You need to get up. If you aren’t on time tomorrow, don’t show up because you’re fired. Any guesses whether I was ever late again? This is from David R. Henderson, “Letting Teenagers Work” Defining Ideas, April 20, 2023. In it, as you might guess, I make case for relaxing restrictions on work by teenagers, as is being done in Arkansas, New Jersey, and a few other states. Another excerpt: When my daughter was in third grade, I decided to coach a girls’ basketball team that she was on. Even when she got to middle school and played on her school’s team, I kept coaching other girls because I enjoyed it so much. But it did have its challenges. I remember one girl in particular who didn’t pay attention during timeouts to the plays I was trying to set up. She also didn’t seem to have much skill at dealing with people. She was, in short, high maintenance. Fast forward about four or five years. One day I was checking out at the local Safeway and I noticed the checkout girl, who looked to be about age seventeen, being very pleasant and responsive. Something about her seemed familiar. Then I realized that it was that same girl. Her attitude was almost unrecognizable. Being in a job had taught her some very important skills: good attitude to customers and overall friendliness. You could say that having a job taught her to be more virtuous. I end by quoting Emma Camp of Reason: The aforementioned Emma Camp said it best and so I won’t try to say it better. She wrote, “We need to stop treating teenagers as inherently fragile, or they’ll become that way. Real-world exposure to the challenge of getting paid to do things that other people value will benefit them for the rest of their lives.” Read the whole thing. (0 COMMENTS)

The opening metaphor between books in Learnerville and drugs in our own society is more than skin deep. We can easily tweak the conditions of Learnerville to mimic different regime types. First, there’s full prohibition and criminalization as described previously. Second, decriminalization would sustain the locked building of books but eliminate the proactive efforts to arrest and punish book users. Third, a medicalization regime would effectively turn the locked building into a heavily regulated and controlled library, wherein only verified individuals had controlled access. Carl Hart’s proposals should not be misconstrued as full-scale legalization. His policy pragmatism proceeds from the here and now. No one is trying to buy fentanyl, but the incentives of the black market are making it available, nonetheless. Still, the problem with fentanyl does not stem from its chemical properties but rather the conditions of ignorance surrounding it. Buyers don’t know that the drugs they are buying have fentanyl in them. If buyers did know, they’d still lack the experience and functional strategies to properly dilute it. Hart frames his reform proposals in terms of providing legal and predictable access for those substances that people actually want, alongside affordable resources for assuring and promoting safety, such as clean needle exchange programs and drug testing services. In principle I applaud Carl’s inferences and efforts to promote these non-criminalized methods for assuring health and safety. I do harbor some unresolved questions about decriminalization, legalization, and medicalization. First, why should sober citizens support these proposals when drug users seem so entwined with the patterns of crime and homelessness that devalue and threaten safety in urban spaces? Furthermore, why should drug users trust government organizations and institutions suddenly pivoting towards decriminalization and medicalization given the historic track record of over-criminalization, militarized policing, and mass incarceration? At heart, the problem with how society perceives and reacts to the challenges of drug use and abuse stem from deeply engrained cultural attitudes about intoxication and criminality. I don’t possess definitive proof or evidence of the potentials for my proposed drug regime alternative, but it does seem, at least to me, to be a natural extension of a consistently classical liberal vision of personal responsibility and the limits of the criminal law. We often underestimate the benefits of freedom, because many of the tangible expressions of created value have yet to be discovered. Liberalism errs on the side of freedom in the face of risk. To progress beyond the status quo cultural animosities surrounding drugs, I propose the need for some form of market-based regime. The books of Learnerville should be bought and sold in a marketplace, where businesses compete to drive down costs and increase product and service qualities. Businesses are governed by law, industrial standards, and contractual liability. The varied tastes, preferences and needs of consumers are met with a diverse variety of books and complementary services. Over time, successful companies and brands earn trust and society learns new and preferable ways to interact with what’s for sale. We don’t have the same socio-cultural hang ups surrounding alcohol, caffeine, or nicotine and we are thankfully moving fast in a similar direction with cannabinoids. Carl Hart is not a radical free market economist, so it’s no surprise that he doesn’t emphasize the potentials of open commerce. All goods and services, including drugs, when they are made, sold, bought and consumed, are forms of distilled knowledge. Market behaviors communicate the relative evaluations of the real people involved in their transactions. Our individual pursuits of happiness depend upon knowledge, and knowledge depends upon free communication, and free processes of trade and exchange are the ultimate sources of knowledge transmission in a complex and diverse society. We need more than to just decriminalize drugs. We need a market context so that responsible adults, entrusted with the opportunity to buy and consume potentially dangerous goods and services, may learn the most effective and welfare enhancing patterns of use and consumption. We need a market for drugs.   Daniel J. D’Amico is the Director of the Stephenson Institute for Classical Liberalism and an Affiliated Associate Professor of economics at Wabash College. (0 COMMENTS)

Migrants prepared for the Darién crossing in Necoclí, shopping for tents, flashlights and water-purification pills. The passage through the Darién requires hiking along muddy paths in dense, roadless jungle for a couple of days or more, with little access to fresh water or defense against mosquitoes. The cost of a trek like the one Mr. Huang was attempting ranges from $7,000 to $10,000 to pay for smugglers, transportation and lodging, Chinese migrants say. The going rate for more direct or safer smuggling routes, such as air passage to Mexico where snakehead “agents” bribe customs officials to let Chinese in with forged travel documents, is $60,000 or more, the migrants say. This is from Wenxin Fan and Shen Lu, “Fleeing China, Many Take Dangerous Route to U.S.,” Wall Street Journal, April 16 (April 17 print edition.) The news item is a page 1 story and it’s good old-fashioned WSJ reporting. I would love to quote almost every paragraph. These Chinese people are seeking asylum in the United States, and a large percent of them get it, but to get to the southern border, they need to take huge risks. The biggest challenge is crossing the Darien Gap. Imagine how much better things would be, for them and for us U.S. taxpayers, if the U.S. government made it easy for Chinese people to come here and claim asylum and in return charged, say, $30,000 to go towards reducting the federal deficit. There would be tens of thousands of takers, fewer lives lost, and productive people coming due to the selection bias of paying $30,000. Do they come here to work? I would bet almost all of them do, given the age at which they come. But they are also seeking liberty. Remember when many Americans welcomed people who fled from authoritarian and totalitarian governments? (0 COMMENTS)

1. Well run tax havens. (UAE, Singapore, Switzerland) 2. Spacious and stable English speaking countries. (Australia, US, Canada, New Zealand) 3. Easy entry points to the EU. (Portugal, Greece) 4. The Jewish homeland. (Israel) Anything I missed? The Financial Times has an article on how three cities are booming in the post-Covid world: Millionaire populations dropped by 12 per cent last year in New York, 14 per cent in Hong Kong, and 15 per cent in Moscow. Dubai, Singapore and Miami are deliberately exploiting this migration by opening their doors to capitalists. These global cities rank among the most appealing to millionaire migrants — and make up the top three among luxury property markets where prices are expected to rise fastest this year. It’s not just the pull of these relatively low tax/regulation cities, it’s also the push of badly run cities elsewhere: Cracks in New York — high taxes, surging crime, simmering anti-capitalist hostility — are reflected in the flight to no taxes and a warm welcome in Miami. A similar effect is visible in Moscow, where a heavy-handed Kremlin and world reaction to the war in Ukraine are chasing rich Russians out. Instead they are opting for more hospitable options, including Dubai. Meanwhile, regulatory pressure from Beijing is driving tycoons to buy second homes in Singapore. Other places would also like to attract millionaires, but it’s easier said than done: Many other countries want to emulate Dubai’s success, including Zimbabwe, which hopes to remake Victoria Falls as a similar hub. Zimbabwe?  I’m not sure if corruption, crime and hyperinflation is the right combination to attract the global elite.   (0 COMMENTS)

While most people accept that business are in the business of pursuing profits, this pursuit nevertheless prompts many complaints, In two previous posts, I outlined ten objections to the profit motive, and I tried to counter each in turn. In this post, I offer ten more complaints that allegedly result from the pursuit of profits. See what you think of this next set, and let me know your thoughts in the comments!   21- Manipulation of financial markets Entrepreneurs have manipulated financial markets in the past and are likely to do so in the future. One of the more notorious examples was the Hunt brothers’ attempt to corner the silver market back in 1980. They lost over $4 billion in the attempt. On the other hand, the Federal Reserve Bank manipulates financial markets as part of its charter. Its easy money policies contributed to the inflation of the 1970s, the Dot Com bubble, the Housing Bubble, and the current wave of bank runs. While financial manipulation by an individual or a firm may cause serious problems, the impact of government manipulation is usually far more widespread and devastating.   22- Expansion of insider trading Making insider trading both legal and public would be a service to investors. Company officials buying or selling large amounts of their own stock would be a useful indicator of the company’s health. While insider trading is not inherently immoral, government officials trading stocks based on their knowledge of pending votes is immoral and all too frequent.   23- Controlling government policies Firms can’t control government policies without government acquiescence. That said, industry influence is unavoidable given government intervention in the marketplace. When an agency is created to regulate an industry, where can it go for industry expertise other than the industry itself? Who has more incentive to lobby the agency than industry leaders? When bureaucrats retire from the agency, where can they go for second careers other than the industry about which they’ve spent their professional lives learning?   24- Disregard of human rights Companies have been accused of human rights violations by building “sweatshop” factories in developing countries. In cases in which activists have succeeded in shutting down those factories, however, the laid-off workers have often had to resort to prostitution and drug trafficking to stay alive. Working conditions that Americans find unacceptable are often the best options that people in impoverished nations have. Taking away those options doesn’t make their lives better however good it makes activists feel.   25- Ignoring consumer needs Companies that ignore consumer needs don’t stay in business long. By contrast, governments routinely ignore consumer needs. Unlike private firms, they don’t have to cater to consumers to stay in business.   26- Incompetent distribution of funds Companies that incompetently distribute their funds don’t stay in business long. By contrast, governments are routinely profligate with taxpayer dollars.   27- Corrupt leadership As opposed to Obama, Trump, and Biden who routinely ignored their oaths to abide by the Constitution? The ESG (environmental, social, governance) movement’s whole aim is to corrupt corporate leadership, redirecting their efforts away from their fiduciary and contractual responsibilities and toward “social justice” issues that are not only ill-defined but beyond both their control and competence.   28- Lack of consumer choice What happened to Bernie Sanders’ complaint that consumers “don’t need 23 choices of deodorant”? Which is it, too much choice or too little?   29- Ignoring consumer safety Companies whose products hurt people are subject to fines, lawsuits, and bankruptcy. By contrast, government agencies that cause harm face no such penalties. For example, what recourse does a patient have when the FDA is slow to approve a life-saving drug that has been on the market in Europe for years? Perfection is not an option. People can be hurt by nearly any human activity. Ideally, the injured should be able to obtain restitution from those responsible. While our tort system does enable people to obtain compensation from private individuals and companies, the government often refuses to pay compensation for the damages that its actions cause.   30- Tampering with medical research results The Food and Drug Administration (FDA) requires drug companies to conduct clinical trials to show the effectiveness and safety of their own drugs. Yes, the FDA establishes strict guidelines for drug trials, reviews the reports, analyzes trial data, and can require additional studies. However, its requirement that companies test their own drugs creates an inherent conflict of interest. Moreover, if a drug does cause harm, the fact that it has been approved by the FDA can reduce the manufacturer’s liability. The problem is less with the profit motive than with the perverse incentives that FDA regulations have created.     Richard Fulmer worked as a mechanical engineer and a systems analyst in industry. He is now retired and does free-lance writing. He has published some fifty articles and book reviews in free market magazines and blogs. With Robert L. Bradley Jr., Richard wrote the book, Energy: The Master Resource. (0 COMMENTS)

It is often contended that the belief that a person is solely responsible for his own fate is held only by the successful. This in itself is not so unacceptable as its underlying suggestion, which is that people hold this belief because they have been successful. I, for one, am inclined to think that the connection is the other way round and that people often are successful because they hold this belief. Though a man’s conviction that all he achieves is due solely to his exertions, skill, and intelligence may be largely false, it is apt to have the most beneficial effects on his energy and circumspection. And if the smug price of the successful is often intolerable and offensive, the belief that success depends wholly on him is probably the pragmatically most effective incentive to successful action; whereas the more a man indulges in the propensity to blame others or circumstances for his failures, the more disgruntled and ineffective he tends to become. (pp. 82-83) This is from Friedrich Hayek, The Constitution of Liberty. I wish I had remembered this quote years ago when I discussed President Obama’s famous speech in which he said to successful businessmen, “You didn’t build that.” (0 COMMENTS)

As the newly appointed Director for the Stephenson Institute for Classical Liberalism at Wabash College, I recently had the honor and privilege of hosting a fascinating and passionate scholar-scientist, Carl Hart. Professor Hart participated in a series of scholarly events dedicated to the topic of his most recent book. He makes essentially the same argument as the parable of Learnerville. But Hart’s applied area of research is neither books, nor the prohibition thereof. Instead, Hart is deeply fascinated by and passionate about psychoactive substances – drugs. Hart’s latest, Drug Use for Grown Ups: Chasing Liberty in the Land of Fear, is a tour de force and a refreshing reminder of the core insight of the liberal tradition. The existence of risk is not a sufficient argument to suppress individual liberty. In so far as freedom is a pre-requisite for discovery and innovation, progress demands erring on the side of permission rather than prohibition. Hart has a long and established career as a laboratory pyschopharmacologist and a faculty member at Columbia University, during which he has published hundreds of peer-reviewed scientific papers. He argues clearly, boldly, and soulfully that there is something deeply illiberal about how our society thinks about and criminalizes drugs. The clear and consistent findings of a lifetime of academic research and the similar evidentiary findings across entire fields of related study unequivocally demonstrate that the overwhelming benefits of drugs exceed their costs, even supposedly “hard” drugs. Yes, Carl Hart is serious! The methods of Hart’s discipline are straightforward. He solicits participants, designs control parameters, administers substances, and then observes, records, measures, and compares the results. Intuitively but controversially, the primary reported and observed effects of drugs are positive. It’s not terribly complicated or mysterious, that drugs have real, measurable and predictable effects. Most abundantly they make people feel good. Combine the above with the fact that sensationalized negative outcomes like fits of rage or self-harm are basically non-existent across the laboratory results. Outside the lab, consequences like addiction and overdose are confined to a small minority of users typically plagued by confounding circumstances like mental health or socio-economic despair. Concerns about long run cognitive impairment are not confirmed by robust evidence. The average drug user is not a junky nor a degenerate, but rather a responsible professional citizen. Such findings persist even for supposedly hard drugs like heroin, methamphetamine and crack cocaine. As a trained economist myself, Hart’s appeal to costs and benefits warmed my heart. As a director of a newly launched center entrusted with the responsibility of curating intellectual discussions that centers on the topic of human freedom and individual liberty, Hart’s title peaked my interests. As an educator, I knew his frequent high-profile podcast appearances would titillate my students. It was a Sunday morning, he was due to arrive the next afternoon. I poured myself a coffee, assured my electronic cigarette was filled and charged, and put a record on the turntable. From my comfortable chair, I sipped my caffeine and puffed my nicotine and from the opening quote by Thomas Jefferson on the first page, I was hooked. “If people let government decide which foods they eat and medicines they take, their bodies will soon be in as sorry a state as are the souls of those who live under tyranny.” I read the book in its entirety that day, pausing unexpectedly to change records when Hart referenced Gil Scott Heron, Al Green and Billie Holiday in turn. I switched from sipping caffeine to a crafted Manhattan as the day turned into evening. His argument was straightforward, the writing was compassionate, and the story behind his life’s work and lived experiences was profoundly moving. I was impressed by his credentials and perseverance, but mostly I was excited to meet him because I knew we could be friends. Monday morning, I nervously picked up Professor Hart from our on-campus hotel. In the book he described meeting a man with a handlebar moustache, which for him invoked imagery of the Civil War – naturally discomforting to his inescapably black and dreadlocked identity. My first words to Hart, “I too sport a handlebar moustache, but I was going more for a Super Mario rather than Colonial Burnside vibe.” He laughed and tapped my shoulder affectionately, “man, you are a close reader.” I like to think we’ve been friends ever since. He sat in on my special topics course “The Political Economy of Crime and Punishment,” attended a small dinner with interested students, delivered a lunch time lecture the following day, and graciously dined with faculty and students at a closing reception. Our campus community pelted him with questions the entire time. Like his podcast appearances, the questions took a common form, one that Hart early admitted was starting to bore him. “People can’t get over the heroin thing,” he lamented. “They hear these horror stories from teachers, doctors, police, and the media, but they’ve never actually met a scientist in the field, nor looked at the data for themselves.” I told Hart, I was primarily interested in his perspective, because my class was trying to situate drug prohibitions within a broader framework of resolving the social challenges of crime and punishment; and we were further situating crime and punishment in a broader conversation still about the fundamental challenges of political economy. How can societies empower governments to protect and promote individual rights, while minimizing the potential tendencies for governments to jeopardize those same personal freedoms? I asked him if the cost benefit analysis in his argument, could also be applied consistently to other criminal prohibitions: sex work, digital piracy, and censorship come to mind. He seemed to let out a sigh of relief. “You get it man! All anyone wants to ask about is the drugs, but the book isn’t even about that… It’s about freedom.” We did talk about drugs… a lot. I asked Hart questions about hallucinogens and the newly popular micro dosing trend. I shared my general frustrations with our healthcare system. Early in my career, I thought a prescription for Adderall might help to boost productivity. Instead of being trusted as a responsible adult, I was made to endure a psychiatric evaluation and told I would not be given a script without abstaining from caffeine, nicotine, and alcohol for several months. Inversely, when I had a tooth extracted, I was given hefty doses of Vicodin. The drug caused serious digestive side effects, comparable in pain and discomfort to the original infection and post-surgery recovery. Yet, nary a verbal warning from doctor or pharmacist was provided. Carl, like me, is an unapologetic violator of oppressive criminal laws. Heroin and amphetamines are his preferred substances of choice. Across a long and challenging journey of life and career, confronting instances of racial prejudice, academic politics, and threats of political persecution abroad; drugs have served as effective navigational tools on Hart’s pursuit of happiness. Hart’s inferences for reform are bold, but also clear, honest, and supported by scientific evidence. The personal concerns one might have about the supposed risks and harms of drug use, are not a sufficient reason to limit the freedoms and liberties of drug users. Those who experiment with recreational drugs, more often than not, discover effective pharmacological means of feeling joy, alleviating pain, inspiring drive and motivation, or obtaining deep spiritual awakenings. I was curious what key advice his expertise may offer others in navigating our changing drug enforcement landscape. It doesn’t seem to be enough to do your research on the drugs, you need to also be a master manipulator to get doctors to provide what you want, and you need to also be a pseudo legal expert to avoid trouble. No wonder the prison system is so crowded with society’s most under educated and impoverished groups. “I’d tell others to be like you, with the Vicodin… if you think something might suit your needs try it, if it doesn’t… STOP.” Hart is an implicit Classical Liberal, in so far as he believes people possess a better working knowledge of their own interests than the government could hope to possess. Hart is an implicit Hayekian in so far as he recognizes that purchasing and consumption are essentially processes of experimentation and learning.   Daniel J. D’Amico is the Director of the Stephenson Institute for Classical Liberalism and an Affiliated Associate Professor of economics at Wabash College. (0 COMMENTS)

The decision of a Russian “court” to keep Wall Street Journal reporter Evan Gershkovich in jail suggests a few reflections. I put “court” in scare quotes for reasons to be explained below. Political economists are interested in such issues because they widely consider an impartial justice system as one of the essential institutions of a free and free-market society. The Wall Street Journal writes (“Russian Court Upholds WSJ Reporter Evan Gershkovich’s Detention,” April 18, 2022): The hearing was held behind closed doors, as is typical for most hearings connected with espionage charges. It is also exceedingly rare for defendants to win appeals or be acquitted in such cases in Russia, where espionage laws are increasingly wielded for political purposes, according to Western officials, activists and Russian lawyers. … Russia’s Federal Security Service, the successor to the KGB, said the journalist “acting on the instructions of the American side, collected information constituting a state secret about the activities of one of the enterprises of the Russian military-industrial complex.” That’s what journalists from free countries do, isn’t it, even without “instructions of the American side”? In my review of Volume 2 of Friedrich Hayek’s Law, Legislation, and Liberty, I emphasize why the Nobel economist considered a socialist (or fascist) judge as “a contradiction in terms” (see also his The Constitution of Liberty): Hayek wages a frontal attack against the doctrine of legal positivism, represented by Hans Kelsen, John Austin, and other legal theorists. The doctrine claims that law is simply what is decreed by the sovereign. As Thomas Hobbes put it, “no Law can be Unjust.” In the same vein, Soviet legal theorist Evgeny Pashukanis, wrote that under socialism laws are “converted into administration, all fixed rules into discretion and utility.” Not protected by law, Pashukanis was later eliminated by Stalin. Contrary to state decrees, Hayek argues, law can only be made of general rules that meet general agreement among the public. Quoting Hayek directly Volume 1 of the same work: [A judge’s] task is indeed one which has meaning only within a spontaneous and abstract order of actions such as the market produces. … A judge cannot be concerned with the needs of particular persons or groups, or with ‘reasons of state’ or ‘the will of government’, or with any particular purposes which an order of actions may be expected to serve. Within any organization in which the individual actions must be judged by their serviceability to the particular ends at which it aims, there is no room for the judge. In an order like that of socialism in which whatever rules may govern individual actions are not independent of particular results, such rules will not be ‘justiciable’ because they will require a balancing of the particular interests affected in the light of their importance. Socialism is indeed largely a revolt against the impartial justice which considers only the conformity of individual actions to end-independent rules and which is not concerned with the effects of their application in particular instances. Thus a socialist judge would really be a contradiction in terms. In my review, I wrote: I would add that this crucial point would also apply to a fascist judge, and Hayek would certainly agree. This is why Russian “courts” are courts in name only. They are instruments of government policy. For the same reason, what the apparatchiks call “law” is synonymous with government commands, it’s not law in the classical sense. When Vladimir Putin is said to be a “trained lawyer,” the second term also cries for scare quotes. When Putin said that he wanted a “dictatorship of the law,” he meant nothing more than a dictatorship of the dictator (and perhaps of the majority). In Russia, this is not new. Their plagiarism of Western law is a Potemkin village. Was Gershkovich a spy for the American government? I don’t know, but I know two reasons why it is very unlikely. First, the Wall Street Journal has a reputation and a brand-name value to maintain, which serving as a CIA cover would destroy. After all, the WSJ is not Fox News even if, alas, the two publications have shared a common ownership since late 2007. To sell information, as opposed to entertainment or confirmation bias, a financial newsaper needs to be, and perceived to be, independent. The second reason is that we cannot count on the unrestricted liars in the Russian government nor on their judicial minions to tell us anything useful about journalistic activities. It is true that, over the last 100 years or so in history of the “free world,” the law has not moved in the right direction, as Hayek detected long ago, even crying wolf too early in the opinions of some. Like virtually everything, the liberal rule of law is a matter of degree, at least up to a point. But there is no doubt that Western countries are still freer than Russia, which is why you read this blog. Like many economists who have studied the question (including James Buchanan and, yes, Anthony de Jasay too), we should continue to defend the endangered ideal of (classical) liberalism. (0 COMMENTS)