The key to prosperous societies is the institution of an arrangement whereby members who engage in self-interested behavior often, perhaps even unwittingly, end up advancing the welfare of the rest of the members as well. Often, this happens through mutually advantageous exchange in the marketplace, but this concept can be extended to areas of life where most of us don’t ordinarily think of self-interest as the driving force of action. Take academia, for example. In the United States, there are legions of public and private universities tasked with the mission of driving knowledge forward and advancing human progress. They are often thought of as benevolent institutions. Professors are employed by these institutions to engage in path-breaking research and to train students in the methods of their respective fields. What motivates them to do so? Suffice it to say that University professors generally don’t come cheap. Salaries of professors at public universities are a matter of public record and can be checked by anyone. For the 2019-2020 academic year, the American Association of University Professors reported that the average salary for a full professor at doctoral institutions was over $160,000 (the number is about $145,000 for public institutions only). So, University professors get paid for their efforts. So what? Does this mean that they never have good intentions? Certainly not. However, University professors do pursue prestige, professional advancement, and, yes, pecuniary gain in addition to their desire to advance knowledge and mold young minds. The point is that the institutional arrangement provided by the university setting allows largely self-interested actors, professors, to engage in self-serving behavior that simultaneously advances the interest of the public at large. To drive this point further, let’s look at a historical example: Isaac Newton’s invention of “the calculus.” Although it may be the bane of many a math student’s existence, the calculus has been used in an incalculable number of scientific advancements and innovations that have advanced human progress. What motivated Newton to make such advancements in pure theory? The calculus did not help anyone immediately, other than Newton himself. No one in England ate better the day after the apple fell on Newton’s head. Furthermore, another theorist, Leibniz, discovered the same principles of the calculus at about the same time as Newton. Newton suspected Leibniz of stealing his ideas, but history casts doubt on this accusation. Newton fought bitterly to maintain that he was the sole inventor of the calculus. Why? If he were committed only to making advancements in scientific thought for its own sake, we wouldn’t expect him to care so much about who got credit (Leibniz, incidentally, was more generous in apportioning credit). Evidently, Newton was also driven by self-interest. The rewards that he reaped from his innovations in theory included such things as holding the Lucasian Chair of Mathematics at Cambridge and his appointment as Master of the Royal Mint. The rewards that we pursue for ourselves need not be in monetary terms only. Years and years after the calculus was invented, NASA scientists (and teams hired by private billionaires) are using the theories to send rockets into outer space. The calculus has been used in innumerable projects and innovations that advance the general welfare. Its inventor did not necessarily intend for any of those specific projects to happen. The creation of the calculus was the product of intellectual curiosity and self-interested behavior under institutions that allowed its creator to reap substantial rewards for its creation. Does this mean there is no room for intentionally “doing good”? No, we intentionally attempt to do good for others all the time, and that’s great. Mothers and fathers intentionally keep the best interest of their children at heart not for monetary gain, but out of love. Of course, it is possible to conceive of this behavior as self-interested as well. (As George Mason University economist Walter Williams used to demonstrate in his undergraduate class, love occurs between two persons when the self-satisfaction and happiness of one is a function of the welfare and satisfaction of the other.) We live in large societies where most people around us are strangers, and we don’t assume that all of them are benevolent individuals who care for us. Those societies that have made the greatest gains in human welfare are those with institutions that permit self-interested individuals to pursue their own ends through specialization in a manner that increases the welfare of others around them either simultaneously or, in the case of Newton and Leibniz, through time.   Giorgio Castiglia is the Program Manager for the Project on Competition at the Mercatus Center, and a PhD student in economics at George Mason University. (0 COMMENTS)

When I was a kid growing up in Boissevain, Manitoba, my mother would occasionally send me to the bakery to get bread. I was about 5 at the time but able to read. The baker had various slogans on the wall behind him. I’ll never forget one of them, and from an early age I made it a maxim that I would live by. (It seems that the only times I remember breaking it were against my brother.) The maxim was, “He who seeks revenge digs two graves.” He attributed it to Confucius. At age 5, I understood. I thought of that when reading Don Boudreaux’s latest article for the American Institute for Economic Research. It’s titled “No COVID Tribunals.” I recommend reading the whole thing. Notice that Don is not saying we should do nothing to hold people to account. He writes: Nor do I oppose formal hearings that aim to expose the truth about the COVID-era actions of government officials. While I worry that such hearings will, like COVID policies themselves, be infected with excessive politics and misunderstanding of science, as long as such hearings threaten no formal punishments or sanctions on officials found to have acted wrongly, the likelihood that such hearings will unearth and publicize important truths is high enough to warrant their occurrence. I think that’s right. By the way, as a result of choosing early in life not to be a vengeful person, I think I’m also a happier person. There are multiple ways to dig my own grave. There’s the literal way, of course. But another way is to obsess: “I’m going to get that so and so.” And that takes away from enjoying life and achieving. Between 1978 and 1983, I went to 4 weekend long intensives given by the late psychologist Nathaniel Branden. I learned a lot. I probably learned the most from the first one, in Manhattan in early 1978. A lot of what we were dealing with was the ways we had been shaped, or misshaped, by our parents and teachers. Somehow in the discussion, the issue of “getting back at” parents or teachers or whoever came up. Branden said that there’s a Spanish saying that translates, “Living well is the best revenge.” That became part of my philosophy of life also. In fact, I used that in a graduation talk I gave in 1981 at the Carman high school from which I had graduated in 1967.         (0 COMMENTS)

Yesterday, the Wall Street Journal published excerpts of the forthcoming memoirs of Mike Pence. We may suspect that the former vice-president has yielded to the human temptation of making oneself look more endearing rather than less. But even accounting for this, the comparative portrait that emerges of Donald Trump is not exactly flattering. Pence was the former president’s loyal servant during four years. He stopped serving when he would have had to violate the Constitution by refusing to certify the results of the 2020 elections. Among the many notable excerpts: I told [the President], as I had many times, that I didn’t believe I possessed that power under the Constitution. “You’re too honest,” he chided. “Hundreds of thousands are gonna hate your guts. . . . People are gonna think you’re stupid.” The difficulty of reconstituting a verbal exchange being granted, this reflection of Mr. Trump’s image on the still water of the swamp looks as good as a high-resolution photograph. Trump has never been known to take honesty as a virtue. Perhaps he simply does not realize that there exists an external reality distinct from his wishes and words, but I will ignore this possibility as a separate hypothesis. The picture painted by Mr. Pence in the WSJ excerpts is consistent with what other high-level collaborators of Trump described in their own recollections. One may think that a ruler’s dishonesty is not catastrophic in a constitutional—that is, limited—government, because the system is supposed to be foolproof against that. David Hume represented the (classical) liberal tradition well when he wrote (“On the Independency of Parliament,” in Essays: Moral, Political, and Literary, Revised Edition [Liberty Fund, 1994]): Political writers have established it as a maxim, that, in contriving any system of government, and fixing the several checks and controuls of the constitution, every man ought to be supposed a knave, and to have no other end, in all his actions, than private interest. … Without this, say they, we shall in vain boast of the advantages of any constitution, and shall find, in the end, that we have no security for our liberties or possessions, except the good-will of our rulers; that is, we shall have no security at all. There are many flaws in the hope that a knave can do no bad at the helm of the state as we know it. The first problem is that contemporary democratic governments have acquired irresistible powers to intervene in most areas of life. As Montesquieu would have said, our governments represent the power of the people, not the liberty of the people. A second problem is that current public opinion does not effectively buttress the values necessary to maintain a free society, a drift that haunted James Buchanan. Economists generally expect politicians to be self-interested like the rest of us. Politicians are not angels. They probably lie more than ordinary individuals because the cost of lying is lower when you promise to rationally ignorant voters intricate bundles of complex measures with long-term consequences that are impossible to know. Voters are rationally ignorent in the sense that they have no incentives to get information as their individual votes will not count anyway. But dishonesty and certainly ingrained dishonesty—the habit of cheating in all ways possible to promote one’s self-interest—are something else than mere self-interest within ordinary and perhaps loose moral rules. It may be a matter of degree, but at the top of the political pyramid, especially in a regime of imperial presidency, ingrained dishonesty is likely to be corrosive and dangerous for liberty. (0 COMMENTS)

Many people worry about large corporations holding too much power. There’s a sense in which I can share this concern. Regulatory capture by large corporations is a real thing, and its effects are undesirable. In a similar vein, when Pfizer worked in league with the government of New London to use the power of eminent domain to seize people’s homes, that definitely gives me the feeling that Pfizer and other similarly large companies can now wield real power over me in a way they wouldn’t without the benefit of the state. By itself, Pfizer would not be able to force anyone out of their home against their will. For that, they need the government. To me, the best way to solve this problem is to have a government with economic power too limited to be worth coopting. But sometimes people talk as though companies have “power” simply by being successful as such. Wal-Mart, for instance, is frequently accused of being too powerful because it successfully outperforms so many of its competitors in the marketplace. But is this “power” in any sense worth worrying about? I almost never shop at Wal-Mart, and I don’t have any plans to start. And there isn’t a thing Wal-Mart can do to cause me to behave otherwise. They currently have a location less than two miles from where I live, and yet, nothing they do can compel me to spend a single cent there if I don’t want to. In response to this, I’ve often heard something like the following: Sure, right now there’s nothing Wal-Mart can do to force you to shop there. But you’re only looking at the short term. Without the government to keep Wal-Mart in check, eventually they would drive every other option out of town. Before long, Wal-Mart would become a monopoly and be your only option, and at that point you’ll be powerless to turn them down. There’s a lot wrong with this story. For example, it fails to account for the fact that the vast majority of what Wal-Mart sells can be classified as inferior goods. In economist-speak, an inferior good is something you buy less of as your income increases. (In contrast, a normal good is consumed more as income increases.) When my income was much lower, I frequently shopped at Wal-Mart because the groceries there, while not high quality, were inexpensive. As my income increased, the quantity of low quality groceries I bought from Wal-Mart decreased, and the quantity of more expensive but higher quality groceries I bought increased. Wal-Mart is much less competitive against normal goods, which is why Wal-Mart can exist in close proximity to a Trader Joe’s or a Whole Foods. This is just one reason why true monopolies, when they exist, almost always required the use of government to develop and maintain, whether through artificial barriers to entry or other state means. But let’s ignore that. Let’s suppose that the worst case scenario described above was to actually come true, and Wal-Mart became the only game in town. In that case, the situation would be comparable to the normal state of affairs when dealing with government. Where I live, there is, and can only ever be, one city council. If Wal-Mart became the only store available in city limits, then this worst scenario would be on par with the normal situation one faces when dealing with city hall. And even then the situations aren’t really symmetric. While I can simply drive to the next town to do my shopping anytime I wish, I can’t live under the laws of the next town without actually moving there. Driving to the next town over to do my shopping is at worst a minor hassle, whereas moving to a new location, even just to the next town, involves a major cost in time, effort, and expense. One might suggest there is an equivalence in that while Wal-Mart faces the discipline of the market, city hall faces the discipline of democratic elections. Unfortunately, in the real world, democratic elections influence government activity far less than people suppose. I don’t worry too much about the power of private companies, at least when they aren’t working in league with state power. But in a way, those who express this concern are, without realizing it, offering a subtle tribute to markets. They implicitly acknowledge that the worst possible outcome of market activity would be only as bad as the ordinary, run of the mill situation with government activity. That’s a risk I can live with.   Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.  (0 COMMENTS)

This last Wednesday I was scheduled to attend a talk in San Jose by Bryan Cutsinger, a very sharp young monetary economist from Angelo State University in Texas. But on Monday, the organizer learned that Bryan was sick and couldn’t make it. He contacted Jeff Hummel and me and asked if we could fill in. We said yes and Jeff and I organized a talk over the phone on Tuesday, with me leading in on the basics of inflation and then asking Jeff a series of questions that dug deeper and deeper into Federal Reserve monetary policy. I called it “The Hummel/Henderson Road Show on Inflation.” Jeff called it “The Ever Expanding Role of the Fed and What It Portends for the Future.” It went well. One of the items I read to prepare was an excellent piece in Forbes by Norbert Michel of the Cato Institute. He pointed out that inflation month by month has fallen. So I went to the Bureau of Labor Statistics and, sure enough, found the graph above. I presented it and said words to the effect, “Although I can’t predict inflation, I won’t be surprised if when the data come out tomorrow [that’s Thursday, November 10], they will show a monthly increase in the CPI that’s about 0.4 percent or less.” Guess what. The data came out yesterday, Thursday, and the increase was 0.4 percent. That means that the CPI (not seasonally adjusted) rose from 296.311 in June to 298.012 in October. That’s an increase of 0.574 percent. On an annual basis, the inflation rate is 3 times that, which is 1.72 percent. So the Fed has achieved its inflation target. The seasonally adjusted CPI rose over those 4 months at an annualized rate of 2.80 percent, which means that the Fed has almost achieved its goal. (0 COMMENTS)

The Economist has a new article discussing how interest rate hikes have failed to slow inflation in many countries.  The title made me smile: Even super-tight policy is not bringing down inflation They focus on Chile: It feels a little unfair. In July 2021, as rate-setters in America and Europe dismissed the risk of entrenched inflation, the Central Bank of Chile got its act together. Worried that inflation would rise and stay high, its policymakers voted to lift rates from 0.5% to 0.75%. The bank has since raised rates again and again, outpacing investors’ expectations and taking the policy rate all the way up to 11.25%. Perhaps no other central bank has pursued price stability with such dedication. Has the star pupil been rewarded? Hardly. In September Chile’s prices rose by 14% year on year.   And it’s not just Chile: The Economist has gathered data on Chile and seven other countries in which the central bank started a tightening cycle at least a year ago, and did so after having slashed interest rates to an all-time low early in the covid-19 pandemic (see chart ). The group includes Brazil, Hungary, New Zealand, Norway, South Korea, Peru and Poland. . . . Call the unlikely gang “Hikelandia”. In September core inflation in Hikelandia hit 9.5%, year on year, up 3.5 percentage points from March. Worse still, the gap between global core inflation and Hikelandia’s reading seems to be widening, not shrinking. And it’s not just energy costs: Dig into the national statistics of Hikelandia, and the trends become even more concerning. Chile’s wage growth continues to accelerate. In September South Korea’s inflation rate in the labour-intensive service sector was 4.2% year on year, its highest since the early 2000s. In the past six months Hungary’s service-sector inflation has climbed from 7.2% to 11.5%. Across the club, inflation is becoming more dispersed, affecting a wider range of goods and services. In September the price of 89% of the components in Norway’s inflation basket rose by more than 2% year on year, up from 53% six months before. In research on Poland, published in late September, economists at Goldman Sachs found evidence that “underlying inflation momentum has picked up again”. The Economist seems to assume that the higher the interest rate, the tighter the money.  I’m not sure why they didn’t mention Argentina in their article, where interest rates and inflation have recently risen to roughly 70%.  At no point in the article does the Economist question the assumption that higher interest rates represent tighter money.  It seems to be accepted as a matter of faith.  Unfortunately, the Economist is now in the mainstream.  Twenty years ago, it was conventional wisdom among economists that interest rates don’t measure the stance of monetary policy.  But that is no longer the case. Historians of science note that when models are flawed, empirical anomalies begin to pile up.  Eventually, this leads to a paradigm shift and a new and improved model takes over.  In this case, we merely need to return to the mainstream monetary model of 2002, where low interest rates did not represent easy money and where monetary policy remained “highly effective” at zero interest rates. Some might argue that these anomalies point to the need to replace the flawed Keynesian model with a NeoFisherian model, where higher rates represent easier money.  But that merely replaces one form of “reasoning from a price change” with another.  The point is not to reason from a price change, but to look at the factors that are causing interest rates to change. Back in 2007, the Fed did not pay interest on reserves.  Instead it used the injection and removal of base money as a tool to target interest rates.  In late 2007 and early 2008, they reduced their target interest rate from 5.25% to 2.0%.  Was that easier money?  No, because they did not take any expansionary policy steps to generate the lower rates, they merely followed the market lower.  Indeed the growth rate of the monetary base actually slowed sharply.  (Just to be clear, the base is also not a good policy indicator, due to shifts in base money demand.)  The Fed’s policy was contractionary, and the effect was much slower NGDP growth.  I suspect that if you looked at old copies of the Economist, you’d find they reported that the Fed was easing monetary policy during this period. Commenters keep asking me, “What should the Fed have done differently with interest rates?”  That question drives me crazy, as it plays into the myth that interest rates are monetary policy.  I have no idea whether interest should have been higher or lower in 2022 (or whether the monetary base should have been bigger or smaller), but I am confident that monetary policy should have been much tighter. If you insist on the language of interest rates, I will say that rates needed to be higher relative to the natural rate of interest.  But that’s not very informative, as a much tighter monetary policy would have produced a much lower natural rate of interest.  Thus, I have no idea whether interest rates should have been higher or lower in absolute terms.  In those Hikelandia countries, it’s pretty clear that the natural rate of interest has been rising sharply.  That’s why what looks to the Economist like a tight money policy, has not been tight at all. The world is divided up into three camps: 1. Doves who believe the Fed has tightened too much. 2.  Hawks who believe the Fed has not tightened enough. 3.  And a tiny group of heterodox economists who don’t believe that rising rates represent tighter monetary policy. All of the media is in one of the first two groups. I’m in the third group.  If the anomalies keep mounting, they we should start gaining adherents.  But just as with the liquidity trap myth, there is a danger that the anomalies lead to an even worse theory: Perhaps inflation is simply harder to stop than anyone could have predicted a year ago. A report published in the summer by the Bank for International Settlements, a club for central banks, hinted at this possibility. In a “low-inflation regime”, the norm before the pandemic, no one paid much attention to prices, ensuring they did not rise quickly. But in a “high-inflation regime”, such as in the 1970s, households and firms start to track inflation closely, leading in time to “behavioural changes that could entrench it”. If the world has shifted from one norm to another, then different tools may be needed to cool prices.  If you sharply slow NGDP growth, then inflation will fall—regardless of “household expectations”. Whenever the economy begins reacting to monetary policy in a way that is inconsistent with mainstream theory, people start questioning the effectiveness of monetary policy.  In the early 2010s, many pundits insisted that monetary policy was ineffective because the economy was weak at a time of low interest rates. Sigh . . .      (0 COMMENTS)

The Fine Details of Economic Growth A few days ago I posted about Peter Thiel’s off-base criticism of the Boskin Commission’s proposed adjustment of the Consumer Price Index for new products and quality improvements. I didn’t address his point that we aren’t seeing the major technological changes that he, as a young man, had hoped to see. I think he misses the small picture. By that, I mean that he misses the thousands and thousands of ways that our lives get better due to new products that are slightly better than old products. Donald Boudreaux has a metaphor for this: the prosperity pool. In an article titled “The Prosperity Pool,” Econlib, April 4, 2016, Don wrote: These [Pool] Noodles are an ideal symbol for an amazing and wonderful—but often ignored—feature of a modern, prosperous market economy. That feature is that such an economy is largely the result of many small innovations, each of which is not very significant but the massive accumulation of which produces our unprecedented modern prosperity. Another excerpt: Look closely around your home. There, you will find rolls of disposable paper towels that make cleaning your kitchen much easier. Those rolls of towels were not invented until 1931. Moreover, unlike Arthur Scott’s original paper towels,3 today’s towels are two- and sometimes three-ply, and they are textured and embossed—all to increase their strength and absorbency. How much poorer would you be if your paper towels were flat and one-ply? Indeed, how much poorer would you be if no one had ever invented disposable paper towels to begin with? Somewhat, but not much. Continue looking around your home. That can of soup in your pantry can be easily opened by a simple pull on the pull-tab that is now a common feature on canned goods. (When I was young, opening cans always required a can opener.) And the contents of that can are ready to eat, unlike a few decades ago when, to produce edible soup from a can, the consumer had to add water. Of course, these days, you can heat your soup in a microwave oven in a fraction of the time required to heat it using a burner on your stove. Don’s article is well worth reading or re-reading.   (0 COMMENTS)

In a recent podcast, David Beckworth asked Bill Nelson about the difficulties involved in shrinking the Fed’s balance sheet. In recent years, bank examiners have begun pressuring banks to hold high levels of reserves.  Nelson suggested that the Fed needs to educate bank examiners on the fact that bloated reserves are not necessary in order to insure adequate liquidity: Beckworth:  Maybe just off the bat, how are examiners getting in the way of monetary policy? Nelson: Even before doing that, I do want to make it clear that everyone here is operating with good intent. I don’t want to cast bank examiners as somehow, deliberately, as obstructionist. It’s just a matter of entrenched practices and experience that ends up having that effect. . . . Nelson: I think there’s a few things that need to be done that could really help a lot. One is just public communication by the leadership of the Federal Reserve that borrowing is normal. Borrowing is a business decision on the part of banks. That’s especially true for the standing repo facility that they’ve just created, that they intend to look differently than the discount window and be perceived as a normal business decision. Leadership of the Fed needs to explain that to the public and they need to explain it to Congress, and they need to explain it to their supervisors. This problem has been going on for years.  So why hasn’t the Fed already told bank supervisors to clean up their act?  There is no good reason to require banks to hold large quantities of reserves—they serve no useful purpose and make monetary policy more difficult. It seems to me that this is just one example of a much broader problem, one part of a bureaucracy sabotaging another.  For instance, in China the government just announced an initiative to encourage more births.  At the same time, the Chinese bureaucracy does not allow Chinese couples to have more than three children.  One part of the Chinese bureaucracy is sabotaging another. In New York City, the government banned the construction of new single room occupancy apartment buildings, even as their housing bureaucracy desperately tried to create housing for the homeless. Bureaucrats at the EPA try to encourage the switch to cleaner forms of energy, even as the requirement for environmental impact statements makes it difficult to build new clean energy infrastructure. Indeed the regulations on drilling for clean energy such as geothermal are actually stricter than for dirtier types of energy such as petroleum. Progressives often focus on what the government should be doing to advance their goals.  They focus far too little on what government is already doing to stymie their objectives.     (0 COMMENTS)

The Miller’s Organic Farm Case: Part 2 [Editor’s Note: Read Part 1 here.]   The laissez faire position on government regulation is that by overriding the judgment of individuals about production, trade, purchases, professional practice—virtually any and every facet of economic life—regulation violates the right to liberty and property. Because the individual’s judgments, choices, and actions—and the value he obtains thereby–equate with the process of living, regulation in the end violates our right to life. Regulation substitutes the judgment of government, imposed by threat of fines and imprisonment, for that of individuals. It overrides the judgment of those directly involved in and responsible for every phase of economic life (and many other areas, of course), substituting government bureaucracy. Translated into practice that means curtailment of invention, imagination, experimentation, innovation, initiative, and value preferences. Most regulation is imposed on the grounds of protecting us. But the most powerful incentive for business to offer consumers safety, quality, convenience, fair treatment, and honesty is the profit motive—as all of us know when we must sell what produce or buy what we need. Among the worst effects of regulation, as Alan Greenspan argued in “The Assault on Integrity,” is that it pretends to guarantee all those things—ensuring us government is taking care of us–and so lessens the competitive edge that companies can achieve by earning a reputation for safety, quality, cleanliness, integrity, and much more. Consumers come to assume all companies provide those protections only because regulations require it. Consequently, companies have an economic incentive to do no more than comply with the minimum requirements of regulations. This regulation tends to achieve the lowest common denominator: uniform compliance with regulations. What good will this argument do Amos Miller? It is an argument in principle against regulation. If Miller’s case involved “fringe regulations”—the latest bright idea for extending government control—those regulations might be rolled back. Unfortunately, regulations had their birth in America in the realm of food safety and purity. Amos Miller’s concept of how to produce the highest quality food flies in the face of the entire regime of regulation. He cannot be treated as an exception because he is stands against regulation in principle. An August 11, 2022, report said federal attorneys want Amos Miller jailed for failing to pay $105,065 in fines and court costs… “The United States submits that Mr. Miller’s continuing recalcitrance and flouting of the court’s orders requires…him to be incarcerated…” And so, to return to the beginning of this article: What is the point of describing a problem that cannot be remedied? The only answer I see is that the case of Amos Miller drives us back to consideration of the fundamental clash of liberty with regulation–a clash in principle. And back to what is at stake for human productivity. William L. Anderson, writing for the Mises Institute, traces the origins and growth of regulation, especially during the Progressive Era in the United States, and rightly concludes: This…out-of-control system cannot be ‘fixed’ by politicians. Furthermore, no US president is going to voluntarily surrender his powers… Yet, the modern regulatory apparatus is as much a threat to the freedom and well-being of us all as was the destructive system of rules imposed by [French comptroller, 1665-1683, Jean-Baptiste] Colbert upon the hapless French populace. It is not becoming a law unto itself; it already has reached that stage. The only thing that can be done to end this reign of terror by bureaucrats is to abolish the entire US regulatory system and return to the common law system that served this country so well for so long. Yes, there is an alternative to regulation, one completely consistent with freedom. Any business can be sued for harm caused by its products, services, financial dealings, fraudulent claims, and misrepresentations—to take but a few examples. (Necessary note: Today, traditional liability law has been captured and corrupted by lawyers chasing huge “contingency fees,” often 30 or 40 percent of a settlement, which they collect if they win a case. That does not negate liability law; it is an abuse, a separate problem with separate solutions for another discussion.) Common law in fields such as liability and negligence operates on the same principle as criminal law. A person is free to act without intervention of the authorities until charged with a violation of the law—in other words, a violation of another’s rights. If the alleged violation involves (broadly speaking) some variant on fraud, the recourse is to civil law with due process and other protections. The fundamental distinction between regulation and remedy at common law is the crucial distinction between preventive law and remedial law. No evidence has been adduced and no one has charged that Amos Miller has harmed anyone—quite the contrary. But regulations have made him a criminal facing ruinous fines and jail.   Walter Donway is an author and writer with more than a dozen books available on Amazon and an editor of the e-zine Savvy Street. He was program officer or director at two leading New York City foundations in the healthcare field: The Commonwealth Fund and the Dana Foundation. He has published almost two dozen articles in the Blockchain Healthcare Review. (0 COMMENTS)

In “Land Speculators Made U.S.,” Overcoming Bias, November 5, 2022, blogger and George Mason University economist Robin Hanson writes: While a U.S. citizen for 63 years, I’d never before heard this story of U.S. origins, told well by Christopher Blattman is his new book Why We Fight (pp. 38-41). Seems the U.S. revolution was a textbook example of war due to elite interests diverging from those of most citizens. He then goes on to quote Blattman at length. Blattman is an economist, not a specialist in early American history. So I sent the link to Jeff Hummel who is an historian who has written extensively on early American history. I suspected, given what Jeff has written on the American Revolution, that he might have somewhat different views on how to think of George Washington. Indeed, Jeff’s long article that I had him write for Econlib lays out, among other things, the problem with the Blattman/Bryan Caplan view that the colonies could have achieved a freer society with having a bloody revolution. Here’s Jeff’s response to me. I’ve read Hanson’s post, which actually is a long quotation from Christopher Blattman’s Why We Fight: The Roots of War and the Paths to Peace. The book comes highly recommended by Tyler Cowen, and it may in some respects be an excellent book. But based on the Amazon description, the French and Indian War is only one concise example among many in the book, which range from Columbia to Liberia. Blattman therefore hardly qualifies as an expert on the French and Indian War or the American Revolution. About half of the quotation’s claims are correct, but they are overlaid with some gross simplifications and exaggerations. And the title that Robin gives the post, “Land Speculators Made the U.S.,” is especially exaggerated. Yes, western land speculation did play a noticeable role in both the French and Indian War and the American Revolution, but it was hardly the primary factor in the latter. And even in the case of the French and Indian War, expansion into western lands was being pushed as much by private British settlers and by the British government as by speculators organized in companies like the Ohio Company of Virginia. Indeed, Washington’s expedition that provoked the French and Indian War had more support from the British cabinet than from Virginia’s legislature, the House of Burgesses. The most definitive, fairly recent account of that war is Fred Anderson Crucible of War: The Seven Years’ War and the Fate of Empire in British North America, 1754-1766 (2001). Unfortunately, my copy is buried somewhere inaccessible, but I do have access as a reference to Anderson’s later The War that Made America, A Short History of the French and Indian War (2005). British and French dispute over territory in North America was hardly new. Before the French and Indian War broke out in 1754, the French and British had already fought in the colonies’ three other wars: King William’s War (known in Europe as the War of the League Augsburg), 1688-1697; Queen Anne’s War (War of the Spanish Succession), 1701-1713; and King George’s War (War of the Austrian Succession), 1740-1748. The last of these ended only six years before the outbreak of the French and Indian War. Prior to the outbreak of the French and Indian War, the Forks of the Ohio was not firmly controlled by either power. One can even plausibly argue that the war was in part provoked by Canada’s new aggressive governor, Marquis Duquesne, who, despite the opposition of the Canadian settlers living in New France, initiated occupation of the region with new forts and drove the British Indian traders out. Before Washington undertook his military expedition, he earlier travelled to the region in late 1753, confirming the increased French military presence and unsuccessfully ordering the local French commander to leave. During Washington’s subsequent military foray into the region, who fired the first shot is still uncertain. The French claimed that Washington’s troops fired first, and used this claim as propaganda, whereas Washington claimed that the French fired first, something confirmed by other admittedly British observers. It is true that Washington’s overall report of the incident was misleading. But to state, as Blattman did, that Washington “lost control of his warriors” is to deny any thought-out, self-interested agency to the Indians themselves. Various tribes were disputing control over the area in a complex milieu of alliances, among each other or with either the British or French. The leader of Washington’s Indian contingent, Tanaghrisson, who started the massacre, was a representative of the imperialistic Iroquois Confederacy, which had also long claimed the area and demanded sovereignty over the local tribes. Although the Iroquois had previously been allied with the French, they very much objected to the French incursion into the region and were switching sides. Tanaghrisson clearly understood that murdering the wounded French commander would ensure a war between the British and the French, overcoming any reluctance on their part. (Not to get too pedantic, but Francis Jennings has written two excellent books on the tangled activities of the Indians during the period: The Ambiguous Iroquois Empire and Empire of Fortune: Crowns, Colonies, and Tribes in the Seven Years War in America.) Some of Blattman’s criticism of Washington’s character are justified and are hardly new; you can find similar criticisms of Washington in Rothbard’s Conceived in Liberty. But Blattman gives too much credit to Washington’s role generally. No single individual was absolutely decisive in the outbreak of either war. As for the American Revolution, it was not Washington who led Virginia down the road to independence, but individuals like Patrick Henry, who had enormous appeal among Virginia’s lower ranks. In fact, many of the Virginia elite were drawn into the fray quite reluctantly, with a few ending up as Loyalists. Finally, Bateman’s claim that “most Americans at the time opposed a revolutionary war” is misleading at best. Many quote a John Adams letter in which he allegedly stated the one-third of population supported the Revolution, one-third opposed it, and one third were neutral. But close examination shows that he was referring to the French Revolution. There were no modern opinion polls at the that time, but the best historical evidence finds that between 45 and 60 percent of the population supported the Revolution, and somewhere between 15 and 20 percent opposed it, with the remainder neutral. Of course, these proportions varied from region to region, and could vary over time. Historical events are complex and cannot always be reduced to simple stories. Jeff’s article on the American Revolution, “Benefits of the American Revolution: An Exploration of Positive Externalities,” covers some of this ground. After reading Jeff’s comment carefully, I went to the Amazon site for Blattman’s book and noticed something interesting that backs one of Jeff’s points: although many prestigious people said good things about the book, not a single one them of was or is an historian. (0 COMMENTS)