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Conservatism: fear writ large

I've had this idea in my mind for a couple weeks now, and now after spending several days with a very conservative family member, I'm convinced: the driving force behind American conservative foreign (and occasionally domestic) policy is the overwhelming fear that America is actually very weak.

A bunch of guys hiding in caves are really such a threat to America that the US military has to have a presence in the majority of countries, or we might be toppled. The "Ground Zero mosque" has to be defeated because if "the Muslims" get this foothold, they really might introduce Sharia law into America. This is not a joke.

To them, anyway.

The First Rule of Libertarianism is: You Must Not Question Libertarianism

Speaking of political tribalism, Bob Murphy's previous co-blogger, Gene Callahan, finds this revolting excerpt from Hans-Hermann Hoppe's Democracy: The God That Failed, via Daniel McCarthy:

As soon as mature members of society habitually express acceptance or even advocate egalitarian sentiments, whether in the form of democracy (majority rule) or of communism, it becomes essential that other members, and in particular the natural social elites, be prepared to act decisively and, in the case of continued nonconformity, exclude and ultimately expel these members from society. In a covenant concluded among proprietor and community tenants for the purpose of protecting their private property, no such thing as a right to free (unlimited) speech exists, not even to unlimited speech on one’s own tenant-property. One may say innumerable things and promote almost any idea under the sun, but naturally no one is permitted to advocate ideas contrary to the very purpose of the covenant of preserving and protecting private property, such as democracy and communism. There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and expelled from society.

So I decided to check to see if this was taken out of context, or preceded by any qualifiers indicating Hoppe was merely stating the fact that such a society could exist and still be described in some way as libertarian, rather than the much more troublesome interpretation that this is the kind of libertarian society Hoppe personally advocates. And what I found was even more astonishing: This is not only the view Hoppe personally advocates, but the view he believes is "obvious" all libertarians must share:

It should be obvious then that and why libertarians must be moral and cultural conservatives of the most uncompromising kind. The current state of moral degeneration, social disintegration and cultural rot is precisely the result of too much--and above all erroneous and misconceived--tolerance. Rather than having all habitual democrats, communists, and alternative lifestylists [read: gay - Micha] quickly isolated, excluded and expelled from civilization in accordance with the principles of the covenant, they were tolerated by society.

I invite any additional context that would show this interpretation to be mistaken.

Mosquare Tactics

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Daily Show Full Episodes Political Humor Tea Party
The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Extremist Makeover - Homeland Edition
Daily Show Full Episodes Political Humor Tea Party

On the second video, Catholic, Pacifist, Anarcho-Capitalist, Austrian Economist with a Ph.D. in Economics from NYU, and all around Cool Dude Bob Murphy writes, in a post titled, "The Mosque Controversy: I Am in Awe of Jon Stewart,"

Wow, look at what Jon Stewart and his writers did with this piece. Besides blowing up Fox News (and oh man the first clip is embarrassing), he actually admits his own participation in political tribalism in the past. Then he closes with an actually moving homage to Charlton Heston…and then a joke. Perfect.

Geithner's Chutzpah

Treasury Secretary Tim Gheitner believes that extending the Bush tax cuts would be a "$700 billion mistake". Mr. Gheithner supports raising taxes in middle of a recession because "future growth depends on confidence in Americans in bringing [the deficit] down".

I have to chuckle at the boldness of Geithner's argument. It is a mirror image of the case brought by the right wing against the stimulus bill, when tea parties, some republican politicians, and free market economists argued that heaping on new spending to America's massive deficit would shake investor confidence and harm future growth, thereby undermining the already oversold stimulative affects of the bill. Left wing bloggers condescendingly mocked the "tea baggers" and their quaint concerns about deficits at the time. And now one of theirs trots out the same argument.

Coincidentally, the stimulus bill has about the same price tag as the tax cuts, weighing in at a bit under $900 billion. What is going on here is really an ideological battle between two factions. Both sides are concerned about the size of government debt but are willing to tack on about $800 billion to the bill. One side believes that resources are more efficiently used by the private market, and one believes that federal government projects are a better use of those resources.

Liber(al)tarian Labor Myths

Open border libertarians like to pretend that the supply of immigrant laborers has no effect on the welfare of existing United States workers. But this is not the case.

Broadly speaking, the welfare of an average Joe who trades his labor for a living depends on two factors. The first is labor productivity which determines how much employers are willing to bid for workers. The second is the supply of labor of similar quality. Increasing the supply of labor with a particular skill set will bid down the wages of workers with substitutable skills.

If we were to follow proposed libertarian policy to throw open the borders and offer amnesty to illegal immigrants, then broad swaths of the lower-middle class dependent on low-skilled jobs will see their incomes decline. At the same time libertarians also propose to cut down government transfer payments, sharpening the blow. And we wonder why we have a hard time proselytizing such an attractive policy package! I doubt the most impassioned and rigorous moral arguments from first principles will ever convince vast hordes of the lower-middle class to support policies against their economic interest.

There is no a priori reason to think that labor markets are immune to economic incentives. Since I have been engrossed by the excellent History of Rome podcast, let's take an example from Roman history. The Republican period of Rome was marked by the era of the freeholding citizen farmer. Most Romans had their own land and lived a good life. But by the time the empire got settled in around 100 A.D., population growth and an influx of slave laborers from the wars of empire had decimated the labor market. Less than 10% of the free citizens of the city of Rome were able to survive without some form of handout, either public welfare or private charity. The average citizen was a squalid beggar and the Gini coefficient approached 1.

So yes, bad things can happen. Conditions can get worse. And bad conditions can last a long time.

The modern world is a very different place than ancient Rome. Capital accumulation and technological progress are much faster and these two forces drive labor productivity ever upwards. Also, globalization of the economy has made capital more mobile. This means the declining wages suffered by workers in a particular country because of an increase in the labor supply will be mitigated by capital moving to take advantage of the lower wages which in turn bids wages back up.

But we are foolish if we believe the price of labor is immune to supply and demand. Open border libertarians preach policies that will worsen the lives of large numbers of people that aren't well off to begin with. In any political system, but especially democracy, large groups command power, and the 74% of poll respondents that support Arizona's aggressive approach to stemming the flow of illegal immigration command a lot of power. This is why neither party is particularly friendly to immigration right now including, unfortunately, the highly-skilled immigration which is most likely to create and attract international capital investment.

The Bad Taste of Collective Guilt

If Nazi sympathizers and members of the Ku Klux Klan are guilty of anything, they are at the very least guilty of bad taste.

Many Americans apparently believe that building a mosque at Ground 2.0 would be in poor taste. This belief is itself in poor taste. To disapprove of Muslims building a mosque within an arbitrary, undefined distance from Ground Zero, simply on the grounds that they are Muslim, entails the implicit assumption that all Muslims should feel personally guilty and responsible for all of the actions of all other Muslims, even Muslims they may strongly disagree with. The bad taste here is the concept of collective guilt, a concept at the very core of intolerance and bigotry.

Much Christian anti-Semitism over the last two millennia arose from the belief that Jews killed Christ, or were at the very least indirectly responsible for his death at the hands of the Romans. Many Orthodox Jews believe this, as do some branches of Christianity, including Mel Gibson's denomination, for which his film The Passion of the Christ was wrongfully criticized as anti-Semitic.

It is not anti-Semitic to believe that Jews killed Christ. To the extent that I believe that Jesus Christ existed, I believe that Jewish people killed him, either directly or indirectly. It is, however, anti-Semitic to hold Jews collectively responsible for his death, just as it is intolerant and bigoted for Jews to hold Germans collectively responsible for the Holocaust. Not all Jews killed Christ. I certainly didn't, if only for lack of opportunity. Not all Germans are responsible for the Holocaust, and certainly no German born after the Holocaust happened could be held responsible for a crime committed prior to that same German's birth. So too, not all Muslims flew airliners into the World Trade Center, nor do all Muslims support the flying of airliners into buildings.

And it is in bad taste to claim otherwise.

I have no problem concluding that this means 70% of Americans and 63% of New Yorkers are intolerant bigots. So they are. Intolerance and bigotry are common intellectual and moral mistakes. The concept of collective guilt - though riddled with bigotry, intolerance, and incoherence - satisfies a natural human impulse, for we evolved as tribal creatures, and treating people as individuals worthy of respect in their own right and not merely as members of collectives - the outgroup, the other - is counterintuitive.

Can you think of any other time in history when 70% or more of Americans were intolerant bigots? I sure can. Is there any good reason to think that this collectivist impulse was just a passing phase in human history? Or is it more likely that we still have many of the same impulses our human ancestors had before us, including the intellectual ease with which we (including myself) fall into us-versus-them tribal thinking?

This is not an issue of free speech. Intolerant bigots have the right to protest the building of a mosque anywhere they like, just as intolerant bigots have the right to declare - seemingly at random - that God Hates Fags, just as intolerant bigots have the right dress up in Nazi regalia and march through Skokie, Illinois, a largely Jewish community with many Holocaust survivors. But all of these activities are in bad taste.

Kidnapped Mexican mayor found dead

The only silver lining I can see to story after story after story like this is that the answer is clear as day, and sooner rather than later they'll embrace it.

Short, with leverage

As of this past Friday, my trading account is now 55% invested in BGZ--the triple leveraged inverse ETF.

You'll know how much of a fool I am in a few months.

Interest in a gold economy, part deux

I came across this thought experiment on another website. I don't know the answer for certain, but it helped clarify a few things in my mind.

The key difference between our world and the hypothetical fixed-gold reserve world is that in the latter, money keeps getting more valuable. If I loaned out a one ounce gold coin, when that coin was returned to me, it would be worth more. There's a built-in "interest".

One might argue that because of this, there would be no nominal interest in such an economy: loan some money, and when you get it back, you receive more value. However, if that was the case, then nobody would loan anybody any money. That same interest could be earned by burying the gold in your back yard and digging it up later.

For loans to exist, there would be have to be some additional nominal interest on top of the "built-in interest". Because of the "built-in interest", the nominal rates would probably be lower than in our world, though actual interest rates ("built-in" + nominal) would probably be similar.


We can make a general statement that the rate at which money becomes more valuable in such an economy is the rate of growth of that economy. As goods and services become more plentiful, yet the amount of money stays constant, money becomes more valuable. The rate of growth of the value of money would have to be close to the rate of growth of the economy.

So why would anybody loan out any money in such an economy? He would have to believe that the debtor has the means to outperform the general economy. That's the only way the creditor could be paid back a greater return than he could get by burying the gold in his back yard.