Waiting in Line for Waiting for Superman

While putting up my posters for events sponsored by the Center for Ethics in Public Life, I saw a poster advertising a showing of the new documentary Waiting for Superman, directed by Davis Guggenheim.  I had just heard of the movie from a classmate in Political Theory, and luckily enough, this poster was advertising a free voucher to see the movie at the Michigan Theater on Wednesday (tonight). So I grabbed a voucher, went to the movie (alone), and just got back.

First things first, the movie made me cry. I rarely cry, so that's something. So it was definitely emotionally moving, and no wonder given the focus put on taping the experiences of several elementary or middle school age children, Anthony, Daisy, Alexander, Bianca and a high school girl whose name I don't recall.

Second of all, the verdict of the documentary was BAD TEACHERS. Teachers that aren't trying their hardest to help their pupils, teachers that lean on union contracts, teachers that are in it for the money, that are tenured, that would prefer not to risk merit-pay reform. The parts of the film that struck me the most were these:

A Story of Disillusionment

"...2 SIDES OF THE SAME COIN" - Anarchist Street Art in Grand Rapids

Somebody named Chris Wilson changed his political views over the course of reading and life experience. I think his story deserves to be repeated here.

He began as a "rather muddled left-wing sympathizer". Dissuaded from such sympathies by Ayn Rand, then von Mises, Hayek, Nozick, and David Friedman, Wilson spent three years as an anarcho-capitalist during which time he "developed and/or adopted every possible philosophical and economic justification that can be conceived of for its defense". But before graduating with his degree in philosophy, he ceased to regard land ownership as a defensible private property right and adopted "Georgist land-socialist views" within his argument for a capitalist system of production.

Wilson found himself further at odds with the traditional libertarian stance when it came to "their lack of focus upon the injustices perpetrated by corporations". As an anarcho-capitalist, he first held that these injustices could disappear with the elimination of corporate privilege, that inevitable component of republican government. He disdained of "corporate charters, subsidies, intellectual property, regulatory privileges, (and) land grants", as well as the libertarian praise lavished upon the virtuous corporation.

The Chomsky-Foucault Debate

The video shows only twelve minutes of the debate, and what it does show is edited. I included quotes from the full text transcript that corresponds to the section of the debate shown in the video, but only the parts I thought important enough to record. The indented paragraphs are my comments. I am so on Chomsky's side in this one.

Chomsky: "Let me begin by referring to something that we have already discussed, that is, if it is correct, as I believe it is, that a fundamental element of human nature is the need for creative work, for creative inquiry, for free creation without the arbitrary limiting effect of coercive institutions, then, of course, it will follow that a decent society should maximise the possibilities for this fundamental human characteristic to be realised. That means trying to overcome the elements of repression and oppression and destruction and coercion that exist in any existing society, ours for example, as a historical residue.

   Now any form of coercion or repression, any form of autocratic control of some domain of existence, let's say, private ownership of capital or state control of some aspects of human life, any such autocratic restriction on some area of human endeavour, can be justified, if at all, only in terms of the need for subsistence, or the need for survival, or the need for defence against some horrible fate or something of that sort. It cannot be justified intrinsically. Rather it must be overcome and eliminated."

"Neither Healthy, Caring, Nor a System": Concerning the American Health-Care System

The story of government-involvement in health-care in the United States is a long and complicated one. So much so, that I was too daunted to even attempt to understand it while at college last year when all the reform madness was happening. Just take a look at the Wikipedia page “Health care in the United States” and you will know what I mean. The scroll-bar is perhaps two or three millimeters long, as it is on each of the “See Also” pages (See also: Health care reform in the United States, Health care reform debate in the United States, Patient Protection and Affordable Care Act, and Health Care and Education Reconciliation Act of 2010).

Even if I read each of these entries all the way through, I would have a lot of reading ahead of me yet. I would want to understand the effectiveness and strategy of our system as compared to health-care systems in other countries of the developed world. And I would want to learn of our health-care past and future possibilities.

Ignorant Banana Love

Over the past two years, my appreciation for bananas grew and grew. Not only are they healthy, but bananas are incredibly cheap, available year-round, easily transportable, non-messy, and quiet enough for a library snack. And, if they get too ripe, one can easily peel them and store them in the freezer for future banana bread, muffins, pancakes, or smoothies.

But, In the past few weeks, I have learned of the dark side of the banana industry and vow to never buy a conventionally grown banana again. Nearly every stage in the cultivation and distribution of conventional bananas is irresponsible and unethical:

• In Central and South America, banana companies acquire and protect their land only with large thanks to corporate partnership with federal governments (Banana Republic).
  
• When people think of bananas, they think of one single species, the Cavendish, that has been cultivated to "perfection". This species specialization is economically efficient for the short-term, but the genetic uniformity means that if a single plant contracts disease, then famine follows.
• The danger of disease sweeping through banana populations means that banana factories justify high amounts of pesticide. Not only do these chemicals harm ecosystems, but also surrounding residents and especially workers. We’re talking worker sterility and fingernails falling off.
• Banana corporations tend to treat their workers with minimal respect, particularly the company Noboa, or Bonita, in Ecuador. Workers are seldom able to find better employment, organize, or receive benefits. Again, corporate partnership with government doesn’t help matters.

Cross Examining American Ideology with Howard Zinn

This is a record of the sections I have bracketed, and the comments I have written in the margins, of my library copy of Zinn's Declaration of Independence. I have to return it to the Grand Rapids library tomorrow so this was my last chance to preserve my thoughts and the best quotes! I may expand on comments later.

"It appears to me more proper to go to the truth of the matter than to its imagination... for how we live is so far removed from how we ought to live, that he who abandons what is done for what ought to be done, will rather learn to bring about his own ruin than his preservation." -Machiavelli (10)

"Japan was ready to end the war, so long as it was not unconditional surrender." (24)

"For this end, the means were among the most awful yet devised by human beings - burning people alive, maiming them horribly, and leaving them with radiation sickness, which would kill them slowly and with great pain." (26)

"I have never been persuaded that such violence, whether of an angry black man or a hate-filled trooper or of a dutiful Air Force officer, was the result of some natural instinct." (33)

"By far the most important characteristic of human beings is that we have and exercise moral judgement and are not at the mercy of our hormones and genes" -PW Medawar (36)

Krista Tippett: Effective Compassion through Faith

Krista Tippett is the host of the radio program Speaking of Faith, broadcast weekly on NPR since 2003. In her conversations with people of all faiths and occupations, Christian and Hindu, novelist and physicist, Tippett aims to better understand the way that belief and spirituality affect our society, worldview, and personal well-being.

In the two books she has published in the last few years, certain themes stand out that define her own view of religion and its place in human life. In particular, Tippett understands that the positive impact that spiritual traditions have on the world rests firmly on their ability to transform the heart and the way we live in relation to one another:

The context of most religious virtue is relationship--practical love in families and communities... These qualities of religion should enlarge, not narrow, our public conversation about all of the important issues before us. They should reframe it.

Throughout her two books, Speaking of Faith and Einstein's God, Tippett discusses faith from a perspective shared by the Acton Institute: Human suffering cannot be eliminated through government programs or by reforming political or economic structure. But our spiritual traditions can address complex problems on their deepest level. The religious sensibility inspires virtue, and, even in the midst of great suffering, it can instill hope through an insistence on human dignity and potential.

What about the Poor?

Through this entry in Acton's PowerBlog, I found this entry in Craig Carter's The Politics of the Cross Resurrected blog, which is a response to this entry in Jim Wallis' God's Politics blog. Isn't that beautiful?

The most interesting/debatable part of Wallis' and Carter's disagreements is the issue of whether, if we got rid of Gov.'s redistributive tax policies, private charity would be enough:

Wallis: To anticipate the Libertarian response, let me just say that private charity is simply not enough to satisfy the demands of either fairness or justice, let alone compassion.

Carter: Private charity is the foundation of the Western world and more effective, far less corrupt and much more compassionate than government welfare checks.

Carter goes on to say that private charity "clearly can" "deal with absolute poverty".

Now my question is, what if it can't?, or, what if it doesn't?

Anchored in Reason

..is the title of this blog I recently discovered through what was basically the best task ever: to rank a top 20 list of blogs from a given list of 60 personal websites of applicants to Acton's summer university.

This one stood out because of its classy design and because its author is an eloquent college student with interesting opinions. It's the kind of blog with an entry about the iPad as well as an entry explaining a logical argument for the existence of God.

He also wrote an article on education with this infuriating line: However, under no circumstances should everyone in a society be educated. Knowledge is very easily misused by those of ill will or misunderstood with dire consequences by those incapable of fully grasping advanced concepts.

So, I commented on that, and he replied, and I replied again.

A.B.C.T. not as easy as 123: Investigating the Legitimacy of the Austrian Business Cycle Theory

In the last Macroeconomics lecture that I attended, Professor Stevenson (a great guy), tried to provide us with a perspective on the many theories of why the economic business cycle, or the boom-bust cycle, occurs. He discussed Keynes' "animal spirits" explanation, the classical 'change in factors of production' explanation, the political business cycle explanation, and finally the idea that its the fault of banks' ability to extend credit. The last one came awfully close to the reasoning behind the Austrian Theory of the Business Cycle, but of course I have not heard any of the words Austrian, Mises, or Hayek in this class all semester.

That lecture made me wonder if I fully understood the ATBC, so shortly afterward I looked it up on Wikipedia. Once again, it did not fail me, and the article there did make me realize that I owe their explanation of things a more through investigation.

Bill Moyers and Oprah Winfrey

Last Thursday in Spanish class, we watched Bill Moyers' documentary "Buying the War", which aired in April 2007 and told the story of "how the media bought what the White House was selling". This documentary was well-done and made it crystal clear that the Bush administration was wrongfully manipulating the American people to support a war on terror against Iraq in the years following the 9/11 attacks. The segment concerning Cheney's media strategy was particularly infuriating. Here's that complete section - it sends chills down my spine.

PRESIDENT BUSH (Discussion with Congressional Leaders, 9/26/02): The Iraqi regime possesses biological and chemical weapons.

DONALD RUMSFELD (DOD Press Briefing 9/26/02): We do have solid evidence of the presence in Iraq of Al Qaeda members.

PRESIDENT BUSH: The regime has long standing and continuing ties to terrorist organizations.

BOB SIMON: Just repeat it and repeat it and repeat it. Repeat Al Qaeda, Iraq. Al Qaeda, Iraq. Al Qaeda, Iraq. Just keep it going. Keep that drum beat going. And it was effective because long after it was well established that there was no link between Al Qaeda and the government of Iraq and the Saddam regime, the polls showed that an overwhelming majority of Americans believed that Al Qaeda… that Iraq was responsible for September 11th.

JONATHAN LANDAY: Most people actually believed and accepted that Saddam Hussein had weapons of mass destruction. I have to admit that until we really started burrowing into the story, that I believed it, too.

Is this something that they could go along with...

BILL MOYERS: LANDAY FOUND PLENTY OF EVIDENCE TO CONTRADICT THE OFFICIAL PROPAGANDA, AND THE FACTS QUICKLY CHANGED HIS MIND.

JONATHAN LANDAY: I simply spent basically a month familiarizing myself, with what Saddam's weapons of mass destruction programs had been and what had happened to them. And, there was tons of material available on that from the UN weapons inspectors. I mean, they got into virtually everything, and their reports were online.

If you go down here the Iraq Nuclear Verification Office, they put up regular, here you go, key findings, what they found out about Iraq's nuclear weapons programs. It's all here in the open for anybody who wants to read it.

BILL MOYERS: INTERNATIONAL INSPECTORS HAD GONE INTO IRAQ AFTER THE FIRST GULF WAR TO SEARCH FOR AND TO DESTROY SADDAM HUSSEIN'S WEAPONS SYSTEMS. LATE IN 1998, THE INSPECTIONS CAME TO AN ABRUPT HALT AFTER THE IRAQI GOVERNMENT REFUSED TO COOPERATE. BUT, THAT HARDLY MEANT NO ONE WAS WATCHING.

JONATHAN LANDAY: During the period of time between when the inspectors left Iraq, which was in 1998 - the end of 1998 and then, the United States had covered the place with spy satellites, and U2 over flights, and, you know, other intelligence services had their eyeballs on this place.

DICK CHENEY: (Speech to the VFW 8/26/02) There is a great danger that...

BILL MOYERS: THAT'S WHY LANDAY WAS SURPRISED BY WHAT VICE PRESIDENT CHENEY TOLD A GROUP OF VETERANS IN LATE AUGUST 2002.

DICK CHENEY: (Speech to the VFW 8/26/02) Many of us are convinced that Saddam Hussein will acquire nuclear weapons fairly soon.

JONATHAN LANDAY: I looked at that and I said, "What is he talking about?" Because, to develop a nuclear weapon you need specific infrastructure and in particular the way the Iraqi's were trying to produce a nuclear weapon was through enrichment of uranium.

Now, you need tens of thousands of machines called centrifuges to produce highly enriched uranium for a nuclear weapon. You've gotta house those in a fairly big place, and you've gotta provide a huge amount of power to this facility. Could he really have done it with all of these eyes on his country?

DICK CHENEY: (Speech to the VFW 8/26/02) But we now know that Saddam has resumed his efforts to acquire nuclear weapons.

JONATHAN LANDAY: So, when Cheney said that, I got on the phone to people, and one person said to me - somebody who watched proliferation as their job - said, "The Vice President is lying."

BILL MOYERS: ON THE BASIS OF HIS INTELLIGENCE SOURCES LANDAY WROTE THERE WAS LITTLE EVIDENCE TO BACK UP THE VICE PRESIDENT'S CLAIMS.

BILL MOYERS: BUT THE STORY LANDAY WROTE DIDN'T RUN IN NEW YORK OR WASHINGTON - KNIGHT RIDDER, REMEMBER, HAS NO OUTLET IN EITHER CITY. SO IT COULDN'T COMPETE WITH A BLOCKBUSTER THAT APPEARED TWO DAYS LATER ON THE FRONT PAGE OF THE NATION'S PAPER OF RECORD, WITH A FAMILIAR BY-LINE.... QUOTING ANONYMOUS ADMINISTRATION OFFICIALS, THE TIMES REPORTED THAT SADDAM HUSSEIN HAD LAUNCHED A WORLDWIDE HUNT FOR MATERIALS TO MAKE AN ATOMIC BOMB USING SPECIALLY DESIGNED ALUMINIMUM TUBES.

AND THERE ON MEET THE PRESS THAT SAME MORNING WAS VICE PRESIDENT CHENEY.

DICK CHENEY (MEET THE PRESS NBC 9/8/02): … Tubes. There's a story in the NEW YORK TIMES this morning, this is-- and I want to attribute this to the TIMES. I don't want to talk about obviously specific intelligence sources, but--

JONATHAN LANDAY: Now, ordinarily information like the aluminum tubes wouldn't appear. It was top secret intelligence, and the Vice President and the National Security Advisor would not be allowed to talk about this on the Sunday talk shows. But, it appeared that morning in the NEW YORK TIMES and, therefore, they were able to talk about it.

DICK CHENEY (MEET THE PRESS NBC 9/8/02): It's now public that, in fact, he has been seeking to acquire and we have been able to intercept to prevent him from acquiring through this particular channel the kinds of tubes that are necessary to build a centrifuge and the centrifuge is required to take low-grade uranium and enhance it into highly-enriched uranium which is what you have to have in order to build a bomb."

BILL MOYERS: Did you see that performance?

BOB SIMON: I did.

BILL MOYERS: What did you think?

BOB SIMON: I thought it was remarkable.

BILL MOYERS: Why?

BOB SIMON: Remarkable. You leak a story, and then you quote the story. I mean, that's a remarkable thing to do.

At another point in the documentary, Moyers portrays my hero Oprah Winfrey as a part of the propaganda machine promoting the idea that the US should go to Iraq not only to fight the "terrorists" there but also to liberate the Iraqi people from Saddam Hussein:

BILL MOYERS: EVEN OPRAH GOT IN ON THE ACT, FEATURING IN OCTOBER 2002 NEW YORK TIMES REPORTER JUDITH MILLER.

JUDITH MILLER: (OPRAH 10/9/02) The US intelligence community believes that Saddam Hussein has deadly stocks of anthrax, of botulinum toxin, which is one of the most virulent poisons known to man.

BILL MOYERS: LIBERAL HAWK KENNETH POLLAK.

KENNETH POLLAK: And what we know for a fact from a number of defectors who've come out of Iraq over the years is that Saddam Hussein is absolutely determined to acquire nuclear weapons and is building them as fast as he can.

BILL MOYERS: AND THE RIGHT HAND MAN TO AHMED CHALABI.

OPRAH: And so do the Iraqi people want the American people to liberate them?

QUANBAR: Absolutely. In 1991 the Iraqi people were....

WOMAN: I hope it doesn't offend you...

BILL MOYERS: WHEN ONE GUEST DARED TO EXPRESS DOUBT OPRAH WOULD HAVE NONE OF IT

WOMAN: I just don't know what to believe with the media and..

OPRAH: Oh, we're not trying to propaganda-- show you propaganda. ..We're just showing you what is.

WOMAN: I understand that, I understand that.

OPRAH: OK, but Ok. You have a right to your opinion.

When I saw that, I was crestfallen and disappointed in Oprah, but willing to accept that Moyers had accurately assessed her contribution to the propaganda and that her actions during that show do not discredit her character and accomplishments - we all have faults, as I told Seth at the end of class.

However, in this case, Moyers got it wrong. As the intelligent readers of the website Women in Media and News opened my eyes to through their comments to the article posted there ( "Bill Moyers rocks but..."), Oprah was actually one of the few journalists to courageously present the argument against the Iraq War. In fact, she did a whole "Anti-war series", as Wikipedia dutifully and faithfully explains.

Here is one eloquent comment on WIMN that comes to Oprah's defense:

Lex, May 2007:

If you read Michael Moore’s book he claims that Oprah was the ONLY mainstream media voice who had strong antiwar shows prior to the war including having Michael Moore himself on her show the day before the war. Moyer just showed one clip from one show to make it look like Oprah was buying into the propaganda but ignores the half dozen other shows she did leading up to the war which were strongly antiwar. That woman in Oprah’s audience really woke Oprah up, and Oprah got her act together quite nicely following that show.

For proof that Oprah did actually try to widen Americans' perspective on the Iraq War, watch this YouTube video, "Oprah tries to stop America from going to war with Iraq".

Oprah is not perfect, but she does have the integrity, humility, and courage to try to broadcast the full picture to her audience. Thank you, Oprah, and thank you Bill Moyers for making the documentary that needed to be made. However, in all honesty, Wikipedia is the best source I know of that can be relied upon to communicate the full story. I love it.

Paul Krugman and Robin Wells' Approval of Money Manipulation

I am angry at my Macroeconomics textbook (Paul Krugman and Robin Wells, Second Edition).

In the Chapter 15 Appendix, "Reconciling the Two Models of the Interest Rate", the authors discuss how to reconcile the supposedly GDP-enhancing effects of lowering the interest rate in the money market (by way of increasing the money supply) with the "savings-investment spending identity" and the market for loanable funds as explained in previous chapters. Basically, they argue that when people can more easily get their hands on cash, they will both produce more and save more. They must try to give reasons for such an effect because of the savings-investment spending identity, which states that all investment spending in the economy must be backed up by an equal amount of savings.

Krugman and Wells' argument here is this: The Fed increases the money supply. The price of money, which is the interest rate, falls. Cheap loans lead to greater investment in capital. More is produced, which increases the Gross Domestic Product. An increase in GDP means an increase in household income means an increase in savings, and - voila - those are the savings that back up the original increase in investment.

Krugman and Wells argue that the amount of savings at the end of that chain effect will exactly equal the amount of original investment:

...when a fall in the interest rate leads to higher investment spending, the resulting increase in real GDP generates exactly enough additional savings to match the rise in investment spending.

But that is only in a perfect world. The book tells a story of investment leading to savings, but logically, savings comes before investment. The funds that are saved are the funds that are invested and the presence of savings is what determines whether or not it makes sense to invest. If there aren't a lot of saved-up funds, there is a reason for that. When your uncle goes broke, the next thing for him to do isn't to invest in the stock market, it's to get a stable job and start saving! Busts are what happen when we realize that we invested much more recklessly than our savings could ever have justified. Unfortunately when the Federal Reserve increases the money supply, the resulting decrease in the interest rate happens because the increase in inherently worthless cash actually succeeds in mimicking an increase in truly saved-up funds.

Increasing the money supply to lower the interest rate is a tricky way of installing a price ceiling in the money market. Instead of making a law that orange juice can't cost more than a dollar a glass, the government dilutes the orange juice with water up to the point that the price falls to one dollar a glass due to the perceived abundance. Of course the interest rate will fall if people perceive an abundance of savings at hand ready to be invested. The resulting increase in quantity demanded leads to a shortage of true funds. Price ceilings lead to shortages. And they also lead to inefficient allocation. In other words, early-bird shoppers who don't even like orange juice all that much end up buying it simply because it is too hot a deal to pass up, leaving less for those who value it highly.

The authors admit, at the end of the section, "our story about how a fall in the interest rate leads to a rise in aggregate output, which leads to a rise in savings, applies only to the short run" (the short run means the time before people catch on to the lie). However, he maintains that the short run effects are worth it. He justifies the action because the early-bird grocery shoppers, feeling like they got such a great deal, end up spending more on other items as a result. What he ignores is that the increased spending is a direct result of consumers being tricked into acting against their better judgment. And when individuals spend and invest against their better judgment, there is actually a painful long-term effect: the economic bubble and its inevitable burst.

Thomas E. Woods has written a clear, concise article explaining the immorality and inefficiency of expansionary monetary policy titled "Money and Morality: The Christian Moral Tradition and the Best Monetary Regime".

Visit Krugman's blog: "The Conscience of a Liberal"

Renewed Consideration of Rawlsian Theory

While researching for my Spanish paper on Religion and Terrorism, I realized that Rawls is wiser than Younkins gave him credit for. His goal was never to come up with the best comprehensive moral doctrine, it was just to come up with a way to justly reconcile the fact that Americans do not and will never share the same doctrine.

So check it - After searching "John Rawls" into Mises.org, I came upon an article written by David Gordon that grants him much more respect than Younkins ever did, even calling him "ingenious" at one point. Of course, the libertarian author found away to say that Rawls is wrong and that his theory fails, but only by focusing back on his "difference principle" which all libertarians would agree is unjust.

Here are the most reasonable, respectful blurbs:

"Is it not the case that, in a constitutional democracy like the United States, large numbers of people find themselves at odds on key issues? Some people, for example, support laissez-faire capitalism; others foolishly support socialist nostrums. (Of course, Rawls would not put it quite like that.) Should society allow abortion? What role, if any, should government play in education?

These political disputes, and others like them, do not arise from nothing. As Rawls rightly notes, people hold various "comprehensive moral doctrines" from which their opinion on particular issues follow: "The elements of such a conception [of the good] are normally set within, and interpreted by, certain comprehensive religious, philosophical, or moral doctrines in the light of which the various ends and aims are ordered and understood" (p. 19).

Rawls’s starting point cannot be gainsaid; people in societies like the United States do indeed differ fundamentally on basic issues. Unless everyone by some miracle converts to the same doctrine—of course the true doctrine that we now hold—must we not learn to live with inevitable conflict? Rawls does not think so.

Rawls’s answer takes us to the heart of his new approach. Each person will ask, from within his own comprehensive doctrine, what he is to do when others in society radically disagree. Those who do so will find resources in their own fundamental beliefs to support public reason. Each system, that is to say, will perform an act of self-abnegation: it will deduce from its own tenets that its distinctive doctrines must be placed to one side, when diverse positions show themselves present. In brief, an "overlapping consensus" of various comprehensive doctrines supports public reason.

One point more, and we will grasp the essence of what Rawls has in mind. Public reason, as he conceives it, does not consist of innocuous generalities, so bland that all comprehensive views can accept them. In his opinion, resort to public reason generates universal agreement on the proper basic structure of society."

So basically, if you think your comprehensive doctrine is the best or even the absolute truth, then most likely you would concede that it never condones war. Therefore, you should be able to use it to reach compromises with others who do not share your doctrine. In other words, if your comprehensive doctrine is "all that", then it shouldn't lead you to commit actions that could reasonably be considered radically unjust.

Bottom line: Reasonable compromise must be an inherent value in any comprehensive doctrine that claims to promote justice for all!

Younkins' response to Rawlsian Justice

According to Bill Clinton in 1999, he is "perhaps the greatest political philosopher of the 20th century". According to Wikipedia, he is one of the most frequently cited contemporary philosophers in American courtrooms. According to Edward Younkins, author of Capitalism and Commerce: conceptual foundations of free enterprise, his theory of distributive justice amounts to a rebellion against nature and the diversity of human talent. There is no doubt that if one seeks to understand or explain the difference between social justice and true justice, knowledge of justice according to John Rawls is indispensible.

Rawls' theory of justice arises not from a belief in natural law, God, or moral absolutes of any kind, but rather from consideration of a hypothetical scenario - a thought experiment. What if there existed a "veil of ignorance" such that each individual had no idea of which gifts nature, fate, DNA, or luck would grant to him? What if each was forced to consider, for example, being born to a single mother living in poverty? What effect might this ignorance have on the laws or government programs this individual favored? According to Rawls, if each individual sincerely performed such a thought experiment, all would be able to agree upon the ideal system of justice in society, namely one in which the just law is simply one that is beneficial to the disadvantaged.

Continuing with this line of thinking, Rawls is able to justify coercive governmental policy that redistributes wealth on the basis that, to the extent that such policy benefits the disadvantaged, all individuals should agree on its fairness behind the veil of ignorance. It follows, then, that society should agree upon having extensive social welfare programs, a harsh inheritance tax, and redistributive taxation nearly to the point at which the economic pie ceases to grow at all.

Younkins refutes Rawlsian justice at its core. He states that for an individual behind the veil of ignorance, a redistributive taxation system may be a prudent choice, but it is certainly not a just one. True justice, he explains, "is attained when people’s lives and property are secure and they are free to own property, order its direction, determine the purpose to which their bodies are put, engage in consensual transactions and relationships with others, and freely pursue their conception of happiness."

Rawls' system, in effect, throws all supposedly undeserved talents, possessions, skills, and energies of individuals into a common pool so that they can be unnaturally divvied up as fairly as possible. This, as Younkins puts it, adds up to a rebellion against nature and reality: "A natural fact, such as the existence of one’s talents, is neither just nor unjust—it just is." Those 'favored by nature' should not be made to pay for what is not of their own making. No, the only just form of redistribution is the gift given freely or charitable act done voluntarily by one for another, which is after all a common sight to see in a society built upon freedom, virtue, and true justice.

Flavors of Freedom

Watching a short documentary in Spanish class, the following words painted onto a road sign in southern Mexico caught my attention: "Está usted en territoria Zapatista en rebeldia. Aquí, manda el pueblo y el gobierno obedece" (You are in Zapatista rebel territory. Here, the people command and the government obeys). After several weeks of studying nothing but Maoist or Marxist-Leninist revolutionary movements in Latin America, here was finally a slogan with reason behind it, in line with libertarian thought. Power corrupts. The enemy of liberty is government, and therefore it is vital for a free people to keep a handle on their government, not the other way around.

The Zapatistas, who have controlled autonomous indigenous communities in Chiappas since the mid 1990s, do hold such elements of the freedom philosophy. But at the same time, they are resolutely anti-capitalist. How is it possible to be both libertarian and anti-capitalist? Answer: be a Libertarian-Socialist (aka: Left-Libertarian, Anarcho-collectivist, Social Anarchist, Council Communist, or Autonomist). The two camps - Libertarian Capitalists and Libertarian Socialists - basically differ in their conceptions of the relationship between private property and freedom. LS's believe that capitalist property rights lead to unequal holdings of capital, which then lead to inequality of economic status and bargaining power, adding up to the obstruction of freedom, especially for the working class. LC's, on the other hand, believe that the right to private property, the right to do what one will with what one has obtained through the fruits of one's own labor, is the most basic of natural rights and absolutely necessary for the function of a free market economy. LS's hold that degree of freedom can be measured by the equality of bargaining power, while LC's argue that freedom exists wherever individuals are at liberty to bargain with whomever they would.

"The Brokers with Hands on Their Faces Blog"

The authors of my Macroeconomics textbook (Paul Krugman and Robin Wells 2009) could not resist including two fall 2008 photographs of stockbrokers with their hands on their faces on page 278. Remember how fascinating it was to watch all those stressed and depressed stockbrokers on TV during the fall of 2008? I hate to say it, but it actually feels good to see that other people also feel the kind of stress that causes you to just grab your head so that it does not explode from the explosion of worrisome thoughts that are overtaking your mind!

So anyway, I searched "faces of stockbrokers 2008" in Google and discovered this blog aptly named "The Brokers with Hands on Their Faces Blog" that consists simply of photographs of poor distressed stockbrokers. Enjoy deriving pleasure from the pain of others!

Comments on Anything That's Peaceful (continued)

I'm limiting myself to a half an hour, actually twenty nine minutes, to write down comments slash highlights from the remaining seventeen chapters of Leonard E. Reads book, Anything That's Peaceful, so let's not hold this to high standards, but here we go:

In Chapter 2, Read explains how our country was founded on the principles of liberty, but since has strayed and morphed closer and closer to socialism. The "rock on which the American miracle was founded" was articulated in the Declaration of Independence: "all men... are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty and the pursuit of Happiness." The essential aspect of this idea is that the state is not the endower of man's rights; the state is not sovereign (God is). Government cannot decide that all its citizens should have the right to security, welfare, and prosperity, and then take from some citizens and give to others in order to enforce those rights. No, instead of turning to government, American citizens turn "where they should - to themselves" or to their neighbor through community.

But since the beginning of our country, specifically since the New Deal, government has grown and grown, used inflationary tactics to fund more and more welfare warfare spending, intervened in the private sphere, and in general limited the creative freedoms of Americans.

In Chapter 3, Read begins with the premise that aggressive acts of force, as opposed to defensive acts of force, are inherently, morally wrong and unjustifiable. He then explains how we have gotten to the point at which we take it for granted that the government commits aggressive acts of force all the time, violence that is written into our laws. Any law is aggressively violent, and therefore immoral, if it "takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime".

If we believe that our rights are endowed by the Creator, not by the state, than all state-enforced aggressive coercion is unacceptable and unnatural. Read finishes the chapter with the following blunt truth that strikes the matter to the core: "Man is free to torture himself until he sees that his methods are not those of his Maker" (Gerald Heard).

Finishing these comments within a half-hour was clearly a fail, so again, To be Continued...

"All of this, I concede, is an affront to the mores. So be it!": comments on Leonard Read's, Anything That's Peaceful

I was given this book back in November by one of the leaders of College Libertarians. Why? Because I won a raffle! Yeah, it was one of those rare instances (how rare are they really?) when the universe aligns in my favor. So I was given this book a while back, but only got to reading it after returning from winter break. I finished it around the middle of January, and now I'm finally getting around to writing out my comments on it. First comment: It was a clear and concise representation of the libertarian philosophy of the author - very much worth the time to read!

Read's thesis: "Let anyone do anything he pleases, so long as it is peaceful; the role of the government, then, is to keep the peace."

In Chapter 1, "A Break with Prevailing Faith", Read discusses the maxim that "Truth will out!". He says that the only way to "give truth a hand" is to assist seekers in finding it for themselves. There are no shortcuts. Since truth has no real meaning apart from "our individual perceptions of it", it is imperative that "many individuals do their utmost in searching for it and reporting whatever their search reveals". This commitment to truth he calls also a commitment to one's "own conscience". To ignore or to fear truth is to compromise one's integrity.

Later in the chapter, Read expands on this commitment to conscience, listing its corresponding virtues: Integrity, which means only holding positions one believes to be right; Intelligence, which means consistently, everlastingly, seeking for the right; Humility, which means understanding one's place as a human among many with the "inability to run the lives of others"; and Justice, which means never doing to others what one would not have done to oneself.

To conclude the chapter, Read (nobly, I think) concedes that he is reasoning from three premises: 1. "The primacy and supremacy of an Infinite Consciousness" (God) 2. "The expansibility of individual consciousness, this being demonstrably possible" (Progress) 3. "The immortality of the individual spirit or consciousness, our earthly moments being not all there is to it" (Heaven). From these three premises, he has concluded that man's earthly purpose is this:

To expand one's own consciousness into as near a harmony with Infinite Consciousness as is within the power of each, or, in more lay terms, to see how nearly one can come to a realization of those creative potentialities peculiar to one's own person, each of us being different in this respect.

To be continued...

"And no one came to say that your life belongs to you, and the good is to live it."

Disclaimer:

I don't really know what the heck I'm talking about (Okay, Miriam?).

Introduction:

I have been reading a lot lately concerning the moralities of Christianity, Libertarian capitalism, and most recently Objectivism. These three philosophies stand on the common premise that man, as a rational being, is deserving and entitled to life and liberty while never justified in initiating force. However, there are also contradictions between them. Since I agree with Ayn Rand that "No concept man forms is valid unless he integrates it without contradiction into the total sum of his knowledge", I believe that I owe it to myself to try to sort out those contradictions. I've decided that writing this post is the best way to do that.

The Relationship between Faith & Reason

To start off, why do all of the following quotes make sense to me?

I used to ask how on earth [faith] can be a virtue—what is there moral or immoral about believing or not believing a set of statements? ...a sane man accepts or rejects any statement, not because he wants or does not want to, but because the evidence seems to him good or bad. If he were mistaken about the goodness or badness of the evidence that would not mean he was a bad man, but only that he was not very clever. And if he thought the evidence bad but tried to force himself to believe in spite of it, that would be merely stupid.

Well, I think I still take that view. But what I did not see then—and a good many people do not see still—was this. I was assuming that if the human mind once accepts a thing as true it will automatically go on regarding it as true, until some real reason for reconsidering it turns up. In fact, I was assuming that the human mind is completely ruled by reason. But that is not so. For example, my reason is perfectly convinced by good evidence that anaesthetics do not smother me... But that does not alter the fact that when they have me down on the table ...I start thinking I am going to choke, and I am afraid they will start cutting me up before I am properly under. In other words, I lose my faith in anaesthetics. It is not reason that is taking away my faith: on the contrary, my faith is based on reason. It is my imagination and emotions. The battle is between faith and reason on one side and emotion and imagination on the other.

...I am not asking anyone to accept Christianity if his best reasoning tells him that the weight of the evidence is against it. That is not the point at which Faith comes in. But supposing a man’s reason once decides that the weight of the evidence is for it. I can tell that man what is going to happen to him in the next few weeks. There will come a moment ...at which it would be very convenient if Christianity were not true. And once again his wishes and desires will carry out a blitz. I am not talking of moments at which any real new reasons against Christianity turn up. Those have to be faced and that is a different matter. I am talking about moments where a mere mood rises up against it.

Now Faith, in the sense in which I am here using the word, is the art of holding on to things your reason ’has once accepted, in spite of your changing moods. For moods will change, whatever view your reason takes. I know that by experience. Now that I am a Christian I do have moods in which the whole thing looks very improbable: but when I was an atheist I had moods in which Christianity looked terribly probable. This rebellion of your moods against your real self is going to come anyway. That is why Faith is such a necessary virtue: unless you teach your moods “where they get off,” you can never be either a sound Christian or even a sound atheist, but just a creature dithering to and fro, with its beliefs really dependent on the weather and the state of its digestion. Consequently one must train the habit of Faith.

-CS Lewis, Mere Christianity

Rationality is the recognition of the fact that existence exists, that nothing can alter the truth and nothing can take precedence over that act of perceiving it, which is thinking - that the mind is one's only judge of values and one's only guide of action - that reason is an absolute that permits no compromise - that a concession to the irrational invalidates one's consciousness and turns it from the task of perceiving to the task of faking reality - that the alleged short-cut to knowledge, which is faith, is only a short-circuit destroying the mind - that the acceptance of a mystical invention is a wish for annihilation of existence and, properly, annihilates one's consciousness.

-Ayn Rand, Atlas Shrugged

Sometimes described as "the science of faith," theology consists of formal reasoning about God. The emphasis is on discovering God's nature, intentions, and demands, and on understanding how these define the relationship between human beings and God. The gods of polytheism cannot sustain theology because they are far too inconsequential. Theology necessitates an image of God as a conscious, rational, supernatural being of unlimited power and scope who cares about humans and imposes moral codes and responsibilities upon them, thereby generating serious intellectual questions such as: Why does God allow us to sin? Does the Sixth Commandment prohibit war? When does an infant acquire a soul?

...The East lacks theologians because those who might otherwise take up such an intellectual pursuit reject its first premise: the existence of a conscious, all-powerful God.

...Leading Christian theologians such as Augustine and Aquinas were not what today might be called strict constructionists. Rather, they celebrated reason as the means to gain greater insight into divine intentions. As Quintus Tertullian instructed in the second century: "Reason is a thing of God, inasmuch as there is nothing which God the Maker of all has not provided, disposed, ordained by reason--nothing which He has not willed should be handled and understood by reason." In the same spirit, Clement of Alexandria warned in the third century: "Do not think that we say that these things are only to be received by faith, but also that they are to be asserted by reason. For indeed it is not safe to commit these things to bare faith without reason, since assuredly truth cannot be without reason."

Hence, Augustine merely expressed the prevailing wisdom when he held that reason was indispensable to faith: "Heaven forbid that God should hate in us that by which he made us superior to the animals! Heaven forbid that we should believe in such a way as not to accept or seek reasons, since we could not even believe if we did not possess rational souls." Augustine acknowledged that "faith must precede reason and purify the heart and make it fit to receive and endure the great light of reason." Then he added that although it is necessary "for faith to precede reason in certain matters of great moment that cannot yet be grasped, surely the very small portion of reason that persuades us of this must precede faith." Scholastic theologians placed far greater faith in reason than most philosophers are willing to do today.

-Rodney Stark, The Victory of Reason: How Christianity led to freedom, capitalism, and western success

Each of those three selections make utter sense to me, therefore they must not be contradictory. They only appeared contradictory because Rand uses a different definition of faith than does CS Lewis. What Rand describes as faith is the act of accepting a piece of information as truth without bothering or caring enough to think it through. CS Lewis does not call such an act faith; he calls it imagination and stupidity. The virtue of faith to CS Lewis is basically the same as Rand's virtue of rationality. It means holding true to what you concluded by reason. By the virtues of faith and rationality, there is no compromising the truth as perceived by the mind. In this, as Stark makes clear in the third selection above, Clement of Alexandria and Augustine also agreed.

Where Rand disagrees with the Christians, then, isn't on how one should come upon truth. They all agree on the supremacy of reason. Where I believe they disagree is on the very first premise of Christianity that Stark refers to: "the existence of a conscious, all-powerful God." Rand sees no evidence for the existence of such a God, while CS Lewis, Clement of Alexandria, Augustine, Aquinas, and all the rest, do. The question is, what is that evidence that they see?

I think a general answer is that they see Creation, and it logically follows that there must be a Creator, a first cause. Next, if they look at this Creation in its entirety and determine that it is inherently Good(whatever that means), comparing that conclusion with the fact that we ourselves create good things on purpose, then it logically follows that this Goodness that is Creation was Intended by something, on purpose. And then, there you have it: the existence of something powerful, purposeful, conscious, full of goodwill - God.

Clearly, Rand doesn't agree with that line of reasoning. The evidence isn't convincing enough for her. She doesn't perceive God, so therefore God doesn't exist. The laws, she says, are derived from the nature of existence; there can be no existence derived from the nature of the laws. She says that life is good, that the good morality consists of those virtues that man reasons are necessary for obtaining what is valuable, which is life itself. Most essentially, then, she equates life with goodness: "your life belongs to you, and the good is to live it."

Can there be moral action that exists outside of action intended to validate one's own existence? It seems that her answer would be no, which is why her philosophy falls apart for me when it comes to love. Her definition of goodness doesn't explain why it would be good to have a child. Why bring into existence another life when the highest goodness comes from living your own? If goodness is living one's own life, then there is no reason to do anything purely for goodness' sake if it lies outside the boundaries of one's experience. But it seems to me that we do things all the time purely for goodness' sake. And so does God.

I believe God called us into being for the sake of the propagation of goodness itself. He gave us the gift of reason so that we are able to recognize goodness for ourselves, and so that, in choosing to do what is good, we can share in the joy of building the Kingdom of Heaven on Earth.

To be continued...

Hayek vs. Keynes Rap Battle

A while ago, when searching the web for information on a debate between the economists John Maynard Keynes and Friedrich von Hayek, I came upon a transcript of a PBS interview concerning some sort of hip-hop video that had been produced featuring a rap battle between Keynes and Hayek. I read the transcript, it wasn't what I was looking for, so I continued searching the web and didn't end up watching said video.

However, it seems that I was meant to watch it, because tonight when I went to mises.org the first link was to an article written by the editor of that site, Jeffrey A. Tucker, describing why the rap-video is worth watching( "The Brilliance of that Hayek vs. Keynes Rap").

Sure enough, it is much better than the original PBS article makes it seem. I mean, it lays out the gist of Keynesian economics as well as the theory of the Austrian business cycle in fair, rap-battle format! Here are some tid-bits about it:

-It compares Keynes' strategy to binge-drinking, with the Fed as bartender.
-It implies that the quick-fix remedies of government spending have taken the place of individual accountability and character (The Hayek rapper finds Keynes' General Theory by his hotel bed in place of the Gideon Bible).
-In the refrain, Keynes declares, "I want to steer markets!" and Hayek cuts in, "I want them set free!", while making emphatic hand motions in true gangster-style.

And now, you must watch it.

"The Sound of Liberation: what music tells us about freedom"

This past January, the Veritas Forum at the University of Michigan and the Center for Faith and Scholarship co-sponsored the British Professor of Theology and classical musician Jeremy Begbie to give a free lecture in Rackham Auditorium on the University of Michigan's Ann Arbor campus. The subject was what music and Christian theology can, when considered together, teach us about freedom.

The basic thesis that Begbie arrived at is this: God created us to abide by certain moral laws so that through their structure we might freely flourish, much as individual notes harmonize and build upon one another when combined within a key signature. Allowing God into one's life is no more a threat to man's freedom and thriving than adding a sense of rhythm is to the possibilities of a song. As for political philosophy, Begbie is in agreement with limited-government advocates in his belief that man is at his best when laws exist only to outlaw destructive action, just as music is at its best when dissonant notes are barred from the key signature, allowing melody to flow freely.

Although Begbie's conclusions seem to fall in line with Libertarian thought, he actually called this philosophy a "sham" at one point in the lecture. He argued that Libertarians are so fixated on individual liberty that they ignore the possibility that we can help one another. As he put it, "notes don't just allow each other... [they] help each other". Begbie lamented that these thinkers do not recognize that through liberty we are "freed by the other and for the other" or, as he put it at another point, "freed from being unable to hug one another".

My own comment on Begbie's appraisal of Libertarianism is that individual liberty in a free-market system is exactly what allows for moral action. Christian free market thinkers advocate charity and community service with the mindset that forced charity, through tax-funded government programs, is not true charity. It is voluntary giving that holds moral value. I call myself Libertarian and I love the way Begbie described freedom as a social principle. It is important to recognize that by becoming more free, we need not become more selfish and individualistic. I would argue that in his lecture, Begbie confused Libertariansm with the anti-altruistic philosophy of Objectivism.

Toward the end of his lecture, Begbie emphasized that freedom and limits go together in terms of both human action and musical performance. Freedom for all can only survive within the framework of moral law. And, as Begbie demonstrated for the audience on a Steinway grand, the most beautiful and creative improvisations arise from uninhibited variations on a given musical theme.

JB Video

Self-Reliance: Quotes concerning the philosophy of Emerson and (maybe) Oprah

One of my new favorite websites is InCharacter.org, the site of a magazine by the same name plus the subtitle, "a journal of everyday virtues". I discerned from the Past Issues page that it got started in Fall 2004, and by briefly scanning the dates of other issues, one might believe that it comes out three times a year, winter, spring, and fall. But, no. It appears that some falls winters and springs don't matter enough to merit their own issue, so it comes out sporadically every several months and is dated simply by whatever season it happens to be published in.

The content of this magazine is amazing. Each issue has a theme, much like O, the Oprah Magazine, except that all the themes are virtues. Here's a complete list: Thrift, Purpose, Creativity, Loyalty, Modesty, Generosity, Justice, Self-Reliance, Honesty, Compassion, Forgiveness, Courage, Grit, and then the most current issue (Fall 2009) has the theme of Wisdom. The articles are well-written, extremely interesting, and the site is designed beautifully.

On to the Self-Reliance Quotes!

"Degrees of ability vary, but the basic principle remains the same: the degree of a man’s independence, initiative and personal love for his work determines his talent as a worker and his worth as a man. Independence is the only gauge of human virtue and value. What a man is and makes of himself; not what he has or hasn’t done for others. There is no substitute for personal dignity. There is no standard of personal dignity except independence."

—Ayn Rand, The Fountainhead

"People, people who need people are the luckiest people in the world."

—Barbra Streisand, “People” (written by Bob Merrill)

"It takes a time like this for you to find out how sore your heart has been, and moreover, all the while you thought you were going around idle terribly hard work was taking place. Hard, hard work, excavation and digging, mining, moling through tunnels, heaving, pushing, moving rock, working, working, working, working, working, panting, hauling, hoisting. And none of this work is seen from the outside. It’s internally done. It happens because you are powerless and unable to get anywhere, to obtain justice or have requital, and therefore in yourself you labor, you wage and combat, settle scores, remember insults, fight, reply, deny, blab, denounce, triumph, outwit, overcome, vindicate, cry, persist, absolve, die and rise again. All by yourself! Where is everybody? Inside your breast and skin, the entire cast."

—Saul Bellow, The Adventures of Augie March

"The proverb warns that “you should not bite the hand that feeds you.” But maybe you should, if it prevents you from feeding yourself."

—Thomas Szasz

"There is a time in every man’s education when he arrives at the conviction that envy is ignorance; that imitation is suicide; that he must take himself for better, for worse, as his portion; that though the wide universe is full of good, no kernel of nourishing corn can come to him but through his toil bestowed on that plot of ground which is given to him to till. The power which resides in him is new in nature, and none but he knows what that is which he can do, nor does he know until he has tried....

Live no longer to the expectation of these deceived and deceiving people with whom we converse. Say to them, O father, O mother, O wife, O brother, O friend, I have lived with you after appearances hitherto. Henceforward I am the truth’s. Be it known unto you that henceforward I obey no law less than the eternal law. I will have no covenants but proximities. I shall endeavour to nourish my parents, to support my family, to be the chaste husband of one wife — but these relations I must fill after a new and unprecedented way. I appeal from your customs. I must be myself. I cannot break myself any longer for you, or you. If you can love me for what I am, we shall be the happier. If you cannot, I will still seek to deserve that you should. I will not hide my tastes or aversions. I will so trust that what is deep is holy, that I will do strongly before the sun and moon whatever only rejoices me, and the heart appoints. If you are noble, I will love you; if you are not, I will not hurt you and myself by hypocritical attentions. If you are true, but not in the same truth with me, cleave to your companions; I will seek my own. I do this not selfishly, but humbly and truly. It is alike your interest, and mine, and all men’s, however long we have dwelt in lies, to live in truth. Does this sound harsh to-day? You will soon love what is dictated by your nature as well as mine, and, if we follow the truth, it will bring us out safe at last....

Insist on yourself; never imitate. Your own gift you can present every moment with the cumulative force of a whole life’s cultivation; but of the adopted talent of another, you have only an extemporaneous, half possession. That which each can do best, none but his Maker can teach him. No man yet knows what it is, nor can, till that person has exhibited it. Where is the master who could have taught Shakespeare? Where is the master who could have instructed Franklin, or Washington, or Bacon, or Newton? Every great man is a unique. The Scipionism of Scipio is precisely that part he could not borrow. Shakespeare will never be made by the study of Shakespeare. Do that which is assigned you, and you cannot hope too much or dare too much. There is at this moment for you an utterance brave and grand as that of the colossal chisel of Phidias, or trowel of the Egyptians, or the pen of Moses, or Dante, but different from all these."

—Ralph Waldo Emerson, “Self-Reliance”

"The fact is that liberty, in any true sense, is a concept that lies quite beyond the reach of the inferior man’s mind. And no wonder, for genuine liberty demands of its votaries a quality he lacks completely, and that is courage. The man who loves it must be willing to fight for it; blood, said Jefferson, is its natural manure. Liberty means self-reliance, it means resolution, it means the capacity for doing without ... the average man doesn’t want to be free. He wants to be safe."

—H.L. Mencken

"If there is no wind, row. "

—Latin proverb

"There is an inverse relationship between reliance on the state and self-reliance."

— William F. Buckley Jr.

"I learned this, at least, by my experiment; that if one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours."

—Henry David Thoreau

"The shoes on my feet
I’ve bought it
The clothes I’m wearing
I’ve bought it
The rock I’m rockin’
I’ve bought it
’Cause I depend on me"

—Destiny’s Child, “Independent Women”

"What is the best thing for a stream? It is to keep moving. If it stops, it stagnates. So the best thing for a man is that which keeps the currents going — the physical, the moral, and the intellectual currents. Hence the secret of happiness is — something to do; some congenial work. Take away the occupation of all men, and what a wretched world it would be! Few persons realize how much of their happiness is dependent upon their work, upon the fact that they are kept busy and not left to feed upon themselves. Happiness comes most to persons who seek her least, and think least about it. It is not an object to be sought; it is a state to be induced. It must follow and not lead. It must overtake you, and not you overtake it. How important is health to happiness, yet the best promoter of health is something to do. Blessed is the man who has some congenial work, some occupation in which he can put his heart, and which affords a complete outlet to all the forces there are in him."

—John Burroughs

"We either make ourselves miserable, or we make ourselves strong. The amount of work is the same."

—Carlos Castañeda

"The Buck Stops... in China." : Investigating China's confusing monetary policy

What is up with China's currency and monetary policy, and what's the deal with their stockpile of American assets?

Here's an explanation of why I have recently become so determined to understand this. On Tuesday morning at the Circ. Desk, Sandy came up to me, cited how I intend to major in economics, and asked me some questions about China's possession of American assets - why they have them, what they might do with them, what the effect of the current recession has been on their value, etc:

Sandy: "... so I'm only asking this because I figure you're interested in this stuff. But I read this article in The Economist, "The Danger of the Bounce", .... do you know why China ...?"

Martha: "Yeah, um... hmm. I don't know much about that. I guess they wouldn't want to convert all their assets to their own currency..."

Sandy: "Yeah, because they don't want it to depreciate... inflation..."

Martha:"But I do remember learning about how China wanted to keep its currency worth little compared to the dollar so that their goods would be cheap for American buyers... So, yeah, I don't really know about that..."

Meanwhile, Julie, a senior economics major was sitting next to me.

Julie: "...it wouldn't really matter. They could always exchange the assets back to their own currency..." Later, in response to my vague memory of China wanting its currency worth little: "I don't understand why they would do that... it would hurt their people to make their money worth less than would it should be..."

So, after that conversation revealed my ignorance on the issue, I decided that I would figure out what the heck China was up to even if it meant applying structured procrastination at 1:02 AM.

Here is a summary of my path to a limited understanding:

After Wikipedia strangely failed in giving me an elementary understanding of the situation, I searched Google, and found this discussion titled "Can you explain the dispute over Chinese currency valuation?" In it, one response cited a paragraph from a May 2007 Fortune Magazine article, "China's $1.2 Trillion Cash Hoard" (a great title):

Beijing's burgeoning foreign-cash pile is a consequence of its effort to boost exports by fixing the value of its currency, the yuan, to the U.S. dollar. To keep the yuan from appreciating too quickly, the central bank buys up dollars brought to China by foreign investors and Chinese exporters. Then the bank issues bonds to mop up the yuan it has paid for those dollars, thus warding off inflation.

The guy who posted that followed it with refreshing honesty: "Hopefully Fortune isn't just making it up because I sure wouldn't know the difference." Haha, I feel you, Stuart S.

So the paragraph confirms my previous understanding that China tries to keep its currency somehow 'undervalued' so that its goods are cheaper for other countries, especially the US, to import. Chinese leaders want to keep their exporters ultra-competitive in the world market, because: 1. It grows the infrastructure of China's economy, and there is a lot of room for it to grow; 2. China has a huge population willing to work for long hours in factories. The export industry ensures their easy employment; and 3. They know that we Americans have a lot of wealth that we are willing to expend for cheap goods.

Now the question is: how does pegging the yuan to the dollar magically make their goods cheaper to us? If there are 6 yuan to the dollar, and a camera costs $100 in the US, wouldn't the same camera cost 600 yuan in China, and therefore cost the same $100 for us to purchase there (after we exchange our $100 to 600 yuan)?

As it turns out, the answer to that is 'No.' And this is where Wikipedia did help me out, by referencing Purchasing Power Parity in the article on renminbi. Wikipedia defines PPP as a tool for comparing between countries "the amount of a certain basket of basic goods that can be bought in the given country with the money it produces" (The Economist got witty with PPP in 1998, comparing the relative prices of Big Macs in different countries: "Big MacCurrencies").

Good old Wikipedia even uses the Chinese economy as an example. Apparently, in 2003, the basic good that cost $1 in the US cost 1.8 yuan in China, so the PPP of China to the US was 1.8. However, at the same time, due largely to China's pegging strategy, $1 was trading in the money market for 7.6 yuan. So, the yuan being worth less on the world market didn't mean that it was worth that much less in its own markets, which explains China's incentive to peg their currency at 7-8 yuan to the dollar, and answers Julie's concern over why Chinese leaders would hurt their own people by devaluing their currency.

Because of the way international commerce works PPP doesn't automatically adjust itself to exchange rate (on this note, Wikipedia mentions the "law of one price", its rejection by econometric analysis, and something called the "Balassa-Samuelson effect theory"). Although the US is getting an amazing deal when it purchases goods from China at 'artificially low' rates, it doesn't necessarily mean that the Chinese are getting a bad deal. As the paragraph from Fortune states, the Chinese "bank buys up [the] dollars brought to China by foreign investors and exporters", thus returning payment and wages to Chinese workers in yuan, which they will sensibly use to buy in their domestic market, assisting the Chinese economy even further.

With the export market and domestic demand booming, the only problem Chinese leaders have left to worry about is inflation, which, again according to Fortune, is a problem monetary authorities solve by selling bonds to "mop up the yuan".

Now what on earth is happening with China's stockpile of American assets, or as the 2007 Fortune article put it, with their "trillion dollar cash hoard"? Well according to another brilliant article I just found from the Jan/Feb 2008 issue of The Atlantic, "The $1.4 Trillion Question", written by James Fallows, China's cash hoard, represents, in effect, the savings of the Chinese taken by their government and invested in the United States:

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China...

Any economist will say that Americans have been living better than they should—which is by definition the case when a nation’s total consumption is greater than its total production, as America’s now is. Economists will also point out that, despite the glitter of China’s big cities and the rise of its billionaire class, China’s people have been living far worse than they could. That’s what it means when a nation consumes only half of what it produces, as China does.

How exactly has Chinese government "held down the living standards for their own people"? Fallows explains that too. When Chinese producers trade goods for dollars, they bring those dollars to a Chinese bank, which, under China's "surrender requirements", surrenders the valuable dollars to China's central bank, which then cranks out renminbi at the 'official exchange rate'. In other words, China's government takes the hard-earned dollars that are guaranteed value in the international market, and gives back to its people a currency whose value they have complete and utter control over. The result, as Fallows states, is "to keep the buying power earned through China’s exports out of the hands of Chinese consumers as a whole".

China has traditionally invested most of its dollar hoard in US Treasury bills, which are known for their "boring safety", earning a guaranteed but very low rate of interest which has barely kept up with the devaluation of the dollar against the renminbi in recent years. That's why, with the value of the dollar continuing to drop, China fears that its hoard is losing too much value and America fears that its biggest investor may drop the ball.

These days, although the Chinese are certainly looking for more profitable areas to invest their dollars, even researching how major American university manage their endowments, they have every incentive to hold onto the ball as tightly as possible while they move around the court. If they made any move that signaled a loss of faith in the value of the dollar, the world would notice: "Their years of national savings are held in the same dollars that would be ruined; in a panic, they’d get only a small share out before the value fell. Besides, their factories depend on customers with dollars to spend." This is a great example of how market incentives naturally encourage actions that benefit everyone. China truly is invested in American interests, so we need not worry all that much.

Intellectual Property Laws

Lawrence Lessig's Remix for the Hybrid Economy

Reflecting for a moment over whether or not I may end up breaking copyright laws by posting or scanning different articles or sections from books into here, I remembered an interview I heard on NPR once. There was a guy being interviewed who believed that intellectual property laws are generally silly and inhibit education and the spread of ideas. This sort of connects to the below discussion about the economics of ideas and "crowding in" versus "crowding out". The idea is that in the long run, the free sharing/stealing of ideas will lead to greater innovation/invention than the short term appeal of being able to charge people to share your idea with others.

I suppose it all depends on what one values. If the originator of an idea values its promulgation then he will make his "property" free to share. If he instead values his own college education, he will want to use his idea as a good to be sold in exchange for money which he can use for a purpose altogether unrelated to his idea.

Anyway, turns out the guy I remember being interviewed was Lawrence Lessig, the founder of the website Creative Commons, which I just learned about last semester through my class in Library Research.

Here is a really good excerpt from the interview, in which Lessig discusses how decisions on copyright law are made from a corrupt standpoint, without reasonable economic consideration:

[Prof. LESSIG:] ...I got into this battle when the issue was a statute passed 10 years ago called the Sonny Bono Copyright Term Extension Act, which extended the term for existing copyrights by 20 years. This was the 11th time Congress extended the term of existing copyrights in the last 40 years. And I looked at that and I said, wait a minute. The copyright clause in our Constitution gives Congress the power to create copyrights for a quote "limited time." And if you can extend the time every time it expires, that makes a joke of the concept of a limited time, and more importantly, it makes no sense from the perspective of copyright, which is to create an incentive for people to make something new.

Now what we know about incentives is that they're prospective. No matter what we do, George Gershwin will not produce anything more. So it can't possibly make sense to extend the term of copyright for George Gershwin or for Robert Frost or for the Walt Disney Corporation. It might make sense to make them longer going forward, although I don't think that makes sense either, but it certainly can't make sense to make them go longer backwards. Now...

GROSS: Wait. Can I stop here for a second? But their families, their estates will lose royalty money once the copyright ends.

Prof. LESSIG: Oh, of course. I'm not saying that it doesn't make economic sense to particular people to have a longer monopoly granted by the government, of course. But the question is whether the copyright is creating an incentive to produce something new. That's what copyright is about. It's about a monopoly granted by the government in exchange for the incentive to create something. So once it's already...

GROSS: I thought it was just about giving money to the people who made the work. I never saw it the way you were describing. I didn't know that.

Prof. LESSIG: Yeah. The framing idea behind copyright, and it was strongly resisted by, for example, Jefferson, who was very skeptical of the idea of these monopolies being granted by the government. But when Jefferson and Madison had a long exchange in letters about this, Jefferson accepted Madison's characterization, and Madison's characterization was we need to grant these monopolies to create incentives for people to produce these inventions. That was his real focus but also the same justification applies to copyright.

So we create the incentive, and once we create the incentive, people produce work, and once they produce work, they ought to be compensated for it. But once the work is created, it can't make any sense to extend the term if what you're trying to do is create an incentive as opposed to just pay off rich contributors who have made lots of very prominent contributions to your campaign, and that's the point. What was clear in this battle was that it wasn't that there was good reason on both sides. Indeed, when we took this case to the Supreme Court, there was a brief filed by a bunch of economists, including five Nobel Prize-winning economists, including Milton Friedman, Ronald Coase, James Buchanan, a bunch of conservative economists. And Milton Friedman said he wouldn't sign the brief unless the word "no-brainer" was in the brief somewhere, so clear was it to him that there could be no public benefit from extending the term of an existing copyright that he wanted that point made as plainly as possible to the court.

Well, then, why is Congress doing it? Congress is doing it because of the enormous political influence that money in this system has. And what I recognized a little bit more slowly than it should have taken, but what I recognized about a year ago was that obviously, this was not the only area of public policy where money was having that distorting influence. It hit me when I was, you know, paying attention to Al Gore's film and Al Gore's speeches about global warming, and it struck that if it's not just some esoteric area of public policy like copyright where the affect of money was distorting the outcome, but the most important public policy question we're facing, questions of global warming where money was distorting the public policy response to this problem, then it was time to focus on what is the underlying first problem here, which is the problem of money and its influence on how politics gets done.

And so that's the focus that I shifted to but certainly it was recognizing that in the context of copyright that got me onto this problem.

"Give Me Your Scientists"

http://casi.ssc.upenn.edu/system/files/Give%2Bme%2Byour%2Bscientists_Economist_5March2009.pdf

Here is a link to an article from a March 2009 article from the Economist that is featured in my Microeconomics textbook under the heading: "Do Immigrants Displace or Complement Domestic Workers?"

The main point of the article is that the answer to that question is the latter. Innovative immigrants should be welcomed whole-heartedly into American society and institutions. They help us. As the author of the article wisely states, "Economists think of knowledge, unlike physical goods, as 'non-rival':use by one person does not necessarily preclude use by others". Instead of "crowding out" innovative Americans, bright immigrants "crowd in" native innovation because "ideas feed off each other".

This article hearkens back to the very first section of Chapter 1 in the textbook, where the H-1B visa is also discussed. ("US law restricts the number of foreign 'specialty workers' who may enter the United States under the H-1B visa program to just 65,000 per year".) Economists know that this law is a bad idea. So does Bill Gates. The textbook cites him complaining that the H-1B visa results in a "critical shortage of scientific talent" for American companies. Gates also noted when he testified before Congress in 2008 that our universities draw the brightest students from around the world, but then they are "not allowed to stay and work in the country... we're turning them away".

Sources in addition to the linked article include:
-My Econ 101 testbook, Microeconomics: Third Edition written by R. Glenn Hubbard and Anthony Patrick O'Brien.
-"Turning Away Talent," Wall Street Journal, March 10, 2008
-"Anger Grows in India over US Visa Rules", BusinessWeek, February 24, 2009
-"Gates Repeats Request for More H-1B Visas," InfoWorld, March 12, 2008

See for statistics and graphs concerning foreign-born scientists: National Science Foundation, Division of Science Resources Statistics, Science and Engineering Indicators: 2008, NSF 08-01 (Arlington, VA, February 2009).