Leading the Revival of Individualism & Self Reliance

Almost All Who Are Attracted To Politics As A Career Today Are Totalitarian-Minded Thugs.

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If the corona cold virus calamity teaches us anything it is that, with few exceptions, America’s political class is overwhelmingly dominated by fascists and totalitarians.  I speak of course of all the governors, mayors, and city and county council members who have taken it upon themselves to declare that their words are law, and to use the heavily-armed police forces at their disposal to enforce their “laws.” The Morticia Adams-ish governor of Michigan has become the face of today’s fascist totalitarian political class.

Real laws are passed by Congress and state legislatures and are signed by chief executives.  NONE of the “stay-at-home” orders are laws; they are the mere words of politicians and bureaucrats.  Nor are they based on “science.” In the true spirit of Abraham Lincoln, who arbitrarily redefined “treason” from its Article 3, Section 3 definition of “levying war upon” the free and independent states (which he was guilty of) to criticizing himself and his policies, the political class has not amended but simply redefined the Constitution to mean whatever words come out of either sides of their mouths.  This reminds your author of an old movie, “The Island of Doctor Moreau,” in which Burt Lancaster portrays a mad scientist who experiments on animals that he makes part human.  To control the beasts he tells them that he is their father and  and “The Sayer of the Law.”  Whatever he says is “the law” by virtue of his having said it.  America has become one big island of Dr. Moreaus hiding behind their titles of “governor” or “mayor.”

The Hamiltonian Constitution.

The Bill of Rights does not say that we have inalienable rights to freedom of speech, assembly, and religion “unless people get sick,” after all.  But, alas, the Constitution has essentially been a dead letter for generations.  Americans have long lived under the “Hamiltonian constitution,” which is whatever the politicians of the day say it is.   Jeffersonian “strict constructionism” was abandoned, essentially, at the end of the “Civil War.”

This fact is why almost all who are attracted to politics as a career today are totalitarian-minded thugs. They get into politics precisely because they want to wield this monopolistic, totalitarian power against their fellow citizens, whom they often despise and hate, publicly labeling them with such words as “deplorable” and much worse.  There are a few exceptions, of course, the most magnificent of which is former Congressman Ron Paul, but they are the exceptions that prove the rule.

I also speak of the entire U.S. Congress, the U.S. Department of Justice, and virtually the entire judicial system, every member of whom has remained as silent as a church mouse while the rule of law in America was swept away in a mere six weeks.  Think of this the next time a “conservative Republican” in Washington pretends to be devoted to the Constitution.

The American public lost control of the federal government when the rights of secession and nullification were abolished in 1865.  John C. Calhoun was right when he explained in his Disquisition on Government that a written constitution would never be enough to control and restrain legal plunder.  Some mechanism that could be utilized by the people of the free and independent states, organized in political communities, was necessary if the central government was to be the servant rather than the master of the people, he said.  Naturally, Calhoun is one of the most demonized political figures in American history by the American ruling class.

Then came the deification and glorification of the Lincoln dictatorship, which turned into the deification of the presidency in general and of all its “executive powers” (i.e., mostly unconstitutional, dictatorial powers to wage war, enslave citizens through conscription, and everything else).  Federalism was destroyed by the “Civil War,” after which the states became mere franchises or appendages of the central government in Washington.  The federal government was turned into one giant monopoly of the worst kind:  One from which there can be no escape once it acquired the powers of money printing and income taxation.

The Worst Elements Of Society Choose Politics As A Career.

The temptation to be one of the chosen few to yield such totalitarian powers is what causes the worst elements of society to pursue careers in politics, as F.A. Hayek explained in The Road to Serfdom.  Long gone are the days when public-spirited citizens would serve in Congress for a few years, their behavior constrained by “the chains of the Constitution,” as Jefferson once said, and then return to their private lives.

Your author used to have a quotation on his office door from Ringo Starr, of all people, that said:  “Everything government touches turns to crap.”  No truer words were ever spoken.  The inevitable failures of government (did the Centers for Disease Control succeed in controlling the coronavirus disease?) elicit a typical response from politicians:  ramp up their totalitarian dictates, as so many of today’s governors are doing at the moment, after the original dictates proved to be failures.  As Hayek wrote:  They “would soon have to choose between disregard of ordinary morals and failure.  It is for this reason that the unscrupulous and uninhibited are likely to be more successful in a society tending toward totalitarianism.”  That latter phrase is a perfect description of what America has become just in the last few months.  Hayek wrote this in his famous chapter 10, “Why the Worst Get on Top.”

We’re All In This Together.

“The worst” do not do it all alone.  They have help from a large segment of the population that assists them in making them their own de facto slaves.  This takes a large group, wrote Hayek, in order to present the appearance of legitimacy to the state’s totalitarian powers.  The perfect kind of large group, moreover, that is large enough to “impose their views on the values of life on all the rest” will be “those who form the ‘mass’ in the derogatory sense of the term, the least original and independent . . .”  Thus, the totalitarian fascist will be able to acquire the “support of all the docile and gullible, who have no strong convictions of their own but are prepared to accept a ready-made system of values if it is only drummed into their ears sufficiently and loudly and frequently” (i.e., “We’re all in this together.  We’re all in this together.  We’re all in this together.  We’re all in this together . . .”).  It will be “those whose vague and imperfectly formed ideas are easily swayed and whose passions and emotions are readily aroused who will swell the ranks of the totalitarian party,” wrote Hayek.

You see these people every day all over America:  The man driving alone in his car wearing a face mask.  The couple out walking on a windy day wearing face masks and scurrying off whenever they see another human being; those who answer opinion polls in the affirmative when asked if the lockdown should last “until a vaccine is available;” the people giving you dirty looks at the grocery store, or complaining to the manager, that you are closer to them than six feet.  Everyone who Judge Napolitano calls “the sheeple,” in other words.

Skillful Demagoguery.

The “skillful demagogue,” Hayek continued, understands that it is “easier for people to agree on a negative program – on the hatred of an enemy, on the envy of those better off [the essence of Marxism] – than on any positive task.”  In the Germany of Hayek’s youth “it was the Jew” who “had come to be regarded as the representative of capitalism . . . .  German anti-Semitism and anti-capitalism spring from the same root.

The U.S. government is constantly fabricating “another Hitler,” whether it is Manuel Noriega, Saddam Hussein, Gaddafi, the Sandinistas, Putin, and myriad others.  Even slicker, however, and a higher level of demagoguery altogether, is to define “the enemy” as something like “terror” or “the invisible enemy” of a virus that no one seems to understand.  Such things can be made to appear to be as common as the air that we breathe (literally, in the case of viruses), so that waging “war” against them, and the never-ending grabbing hold of more government power and the abolition of whatever is left of freedom, can go on forever.

The “docile and gullible” do not arise spontaneously as supporters of the fascist thugs who now rule over most of America.  They are cultivated by the political system.  The political ruling class of any country is always a tiny numerical minority that can be swept aside by the masses, who number in the millions.  Therefore, the state has an imperative to make at least a majority of “the masses” into docile and gullible serfs.  It does this by monopolizing all aspects of education.  As Murray Rothbard explained in his essay, “The Nature of the State”:  “Particularly important . . . is for the State to assume control over education, and thereby to mould the minds of its subjects.  In addition to influencing the universities through all manner of financial subventions, and through state-owned universities directly, the State controls education on the lower levels through the universal institutions of the public school, through certification requirements for private schools, and through compulsory attendance laws.  Add to this a virtually total control over radio and television – either through outright State ownership . . . or, as in the United States, by nationalization of the airwaves, and by the power of a federal commission to license the right of stations to use those frequencies and channels.”

No one is born with an affinity toward being a slave; they have to be conditioned into thinking that way by the state’s totalitarian control of all aspects of “education.”  In return for being an essential part of the state’s relentless propaganda apparatus, the state’s “ideological minions,” by which Rothbard meant primarily university professors, are rewarded with endowed chairs at prestigious universities, government grants, awards, notoriety, fame, and positions as exalted advisors to the government.

All of this is why all of the home schooling spawned by all of the unconstitutional lockdown/stay-at-home orders created a genuine sense of panic among the state’s ideological minions.  So much so that they trotted out Harvard University educational “researchers” to proclaim that one insidious and harmful effect of the lockdowns has been the increase in independent-minded educational instruction that is not so directly under control of them and the powers that be for whom they work.  Their biggest fear, in other words, is that a widespread realization that homeschooling works could be a Trojan horse, or the proverbial camel’s nose under the tent that could expose the truth that the emperor does not really have a fine set of clothes after all.

Thomas J. DiLorenzo is professor of economics at Loyola University Maryland and the author of The Real Lincoln; How Capitalism Saved America; Lincoln Unmasked; Hamilton’s Curse; Organized Crime: The Unvarnished Truth About Government; and most recently, The Problem With Socialism.

How Government Regulation And Failures Of Imagination Constrain The Advances That Innovation Can Bring Us.

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The Covid-19 pandemic reveals that far from living in an age of incessant technological change, we have been neglecting innovation in exactly the areas where we most need it. Faced with a 17th-century plague, we are left to fall back mainly on the 17th-century response of quarantine and closing the theaters.

Is Innovation Speeding Up or Slowing Down?

It is commonplace today to say that innovation is speeding up, but like much conventional wisdom, it is wrong. Some innovation is speeding up, certainly, but some is slowing down. Take speed itself. In my lifetime of more than sixty years, I have seen little or no improvement in the average speed of travel. Congestion on the roads and at airports has in many cases increased the scheduled travel time between two points. A modern airliner, with its high-bypass engines and less-swept wings, is designed to save fuel by going more slowly than a Boeing 707 did in the 1960s. The record for the fastest manned plane, 4,520 miles an hour, was set by the X-15 rocket plane in 1967 and remains unbroken. Boeing 747s are still flying half a century after they were launched. Concorde, the only supersonic passenger plane, is history.

Moreover, recent decades have seen innovation stalled or rejected in a number of technologies. Nuclear power has been unable to roll out plans for new reactor designs. Genetic modification of crops was effectively rejected by Europe. The flow of new pharmaceutical drugs has slowed to a trickle. Ride-sharing apps have been banned in many cities. As the investor Peter Thiel has pointed out, innovation is now largely a digital phenomenon, because bits are lightly regulated and atoms heavily regulated. On all sides we hear arguments that innovation threatens jobs, the environment, privacy and democracy.

Is the pace of innovation slowing down? What needs to be done to encourage innovators? Join the conversation below.
Of immediate relevance to the current emergency, the development of vaccines has languished in the 21st century as an orphan technology, insufficiently encouraged by governments and ignored by the private sector. New vaccines are rarely profitable. By the time a company develops one for a new epidemic, the worst may be over. Last year Wayne Koff, president of the Human Vaccines Project, warned that the world was poorly prepared for a pandemic because vaccine development “is an expensive, slow and laborious process, costing billions of dollars, taking decades, with less than a 10% rate of success.”

It is not just vaccines. Throughout the economy, with the exception of the digital industry, the West is experiencing an innovation famine. The Austrian economist Joseph Schumpeter’s “perennial gale of creative destruction” has been replaced by the gentle breezes of rent-seeking. Two recent books argue that big companies in cozy cahoots with big government increasingly shy away from change, sheltered against competition by regulation and intellectual property rights. In “The Captured Economy” (2017), Brink Lindsey and Steven M. Teles make the case that to the extent that incomes have been stagnating and opportunities for social mobility drying up, the cause is not too much innovation but too little. In “The Innovation Illusion” (2016), Fredrik Erixon and Bjorn Weigel argue that Western economies have “developed a near obsession with precautions that simply cannot be married to a culture of experimentation.”

Innovation Relies On Freedom.

Innovation relies upon freedom to experiment and try new things, which requires sensible regulation that is permissive, encouraging and quick to give decisions. By far the surest way to rediscover rapid economic growth when the pandemic is over will be to study the regulatory delays and hurdles that have now been hastily swept aside to help innovators in medical devices and therapies, and to see whether such reforms could be applied to other parts of the economy too.

There is nothing new about resistance to innovation. In 1662, William Petty, a pioneering economist, medical professor and land speculator, lamented that “the poor inventor runs the gauntloop of all petulant wits,” with everybody trying to stop him from succeeding. At the time, King Charles II, lobbied by the brewing industry, was trying to ban a novel drink called coffee because it caused fake news. “As for coffee, tea and chocolate,” the king pronounced, “I know no good they do; only the places where they are sold are convenient for persons to meet in, sit half day and discourse with all companies that come in of State matters, talking of news and broaching of lies.”

Hansom cab operators in London furiously denounced the introduction of the umbrella for offering shelter to rain-soaked pedestrians. Margarine was subjected to a decadeslong smear campaign from the dairy industry. Musicians’ unions delayed the playing of recorded music on the radio. The Horse Association of America for many years fought a rear-guard action against the tractor, and the natural-ice harvesting industry frightened people with scares about the safety of refrigerators. You may laugh, but the same happens today: Incumbent vested interests, overcautious regulators, opportunistic activists and rent-seeking patent holders combine to oppose or delay almost every innovation.

Surprisingly, there is no good evidence that patents are helpful, let alone necessary, in encouraging innovation. A 2002 study by Josh Lerner, an economist at Harvard Business School, looked at 177 cases of strengthened patent policy in 60 countries over more than a century, finding that “these policy changes did not spur innovation.” James Watt, Samuel Morse, Guglielmo Marconi, the Wright brothers and many others wasted the best years of their lives in court defending their intellectual property, when they might have been busy developing new devices.

The expiration of patents often results in a burst of innovation, as with 3-D printing, where the recent lapse of three key patents has resulted in notable improvements in quality and a drop in price. The historian Anton Howes, of the Royal Society of Arts in London, points out that the French government bought out Louis Daguerre’s patent for photography in 1839 and made the technology freely available, unleashing a burst of creative innovation. Dr. Howes argues, “As we look to fight coronavirus and any future pandemics, we should perhaps consider which patents—for antivirals, vaccines, ventilators and other hygienic equipment—might be bought out in order to remove…innovation bottlenecks.”

What Is Innovation?

What is innovation and how is it best encouraged? Policy makers tend to assume it is the result of clever people having clever thoughts in ivory towers. But science is just as often the fruit as the seed of technology, and invention is different from innovation. To illustrate the difference, Charles Townes, who won the Nobel Prize for the physics behind the laser in 1964, was fond of telling the story of a beaver and a rabbit looking up at the Hoover Dam. “No, I didn’t build it myself,” says the beaver. “But it’s based on an idea of mine.” Discoverers and inventors often feel they get too little credit or profit from a good idea, forgetting just how much effort was needed to turn that idea into a workable, affordable innovation that actually delivered benefits to people.

Thomas Edison understood better than anybody that trial and error is the key to turning an invention into a useful innovation. In developing the nickel-iron battery, his employees undertook 50,000 experiments. Developing a new technology, he famously said, is 1% inspiration and 99% perspiration. Jeff Bezos makes the same point: “Being wrong might hurt you a bit, but being slow will kill you. If you can increase the number of experiments you try from a hundred to a thousand, you dramatically increase the number of innovations you produce.” It turns out that continuous tinkering to develop and refine a better product is much more important than protecting what you’ve already created.

Far from sudden “eureka” moments, innovation is nearly always a gradual process that proceeds by incremental steps. It is a team sport: There is no individual who can be credited with inventing the computer or the internet. The introduction of short-strawed wheat that revolutionized Asian agriculture in the 1960s, resulting in the defeat of famine, was driven by Manzoor Bajwa in Pakistan and M.S. Swaminathan in India. But they got the idea from Norman Borlaug in Mexico, who got it from Burton Bayles, who got it from Orville Vogel, who got it from Cecil Salmon, who got it from Gonjirô Inazuka in Japan, who got it from…at this point the trail runs cold.

Once started, innovation is so inexorable it looks inevitable: 21 different people had the idea of the lightbulb independently. Many people besides the Google founders came up with search engines in the 1990s. Yet, paradoxically, innovation is impossible to predict. Almost nobody foresaw the usefulness and profitability of search engines. The first half of the 20th century brought dramatic changes in transport, the second half in communication. The switch was not the result of policy: Innovation cannot easily be forced.

We Need Incentives For Innovation, Not Regulation To Restrict It.

Given this unpredictability, politicians should rethink the incentives for innovation. One option is to expand the use of prizes, to replace reliance on grants, subsidies and patents. Britain’s famous Longitude Prize, offered in 1714 for accurately measuring longitude at sea, elicited a solution from an unexpected direction: accurate and robust clocks made by a humble clockmaker, John Harrison. Similar serendipity happens today. One study of the online problem-sharing forum known as Innocentive, where organizations can reward crowdsourced solutions to problems that baffle them, found that “the further the focal problem was from the solvers’ field of expertise, the more likely they were to solve it.” Teflon, Kevlar and the Post-it Note are all examples of useful things developed by people looking for something completely different.

The Nobel Prize-winning economist Michael Kremer came up with a concept called the Advance Market Commitment that would fine-tune prizes as incentives to innovate. In 2007, the Gates Foundation committed $1.5 billion to a prize fund to find a vaccine for Pneumococcus bacteria for use in developing countries, where no pharmaceutical company could make money from it. But rather than just winning a lump sum for meeting the goal, companies were assured that if they succeeded, they would win a contract that paid out for 10 years at a good price. The prize money effectively topped up the sum received by the pharmaceutical firm for every vaccine sold. The result of the auction was three good vaccines, costing $2 per dose, which have been given to 150 million children, saving 700,000 lives.

In June 1983, in the West African country of Burkina Faso, a group of French and Vietnamese scientists together with African colleagues began an experiment. They installed mosquito nets in 36 huts specially equipped with mosquito traps. Half the nets were treated with the insecticide permethrin and half had holes torn in them to simulate the wear and tear of everyday life. For five months, volunteers slept in the huts, while every mosquito that entered or tried to leave the huts was collected, dead or alive. The results showed that the presence of a permethrin-treated net, whether intact or torn, repelled mosquitoes, reducing the number entering the huts by about 70% and increasing the rate at which the insects left the hut from 25% to 97%.

This simple, careful experiment proved to be a breakthrough in the control of malaria in Africa. Supported by the Gates Foundation, impregnated bednets first started to be used on a wide scale in 2003, and that very year malaria mortality began to decline. According to a recent study in the journal Nature, insecticide-treated mosquito nets account for 70% of the six million lives saved world-wide from malaria in recent years, twice as high a percentage as antimalarial drugs and insecticide sprays put together. Globally, the death rate from malaria has halved since 2003.

Dealing with Covid-19 has forcibly reminded governments of the value of innovation. But if we are to get faster vaccines and treatments—and better still, more innovation across all fields in the future—then innovators need to be freed from the shackles that hold them back.

This wsj.com essay is adapted from Mr. Ridley’s new book, “How Innovation Works: And Why It Flourishes in Freedom,” which will be published on May 19 by Harper.

Breakthrough! Wisconsin Supreme Court Slams State Executive For Overstepping Constitutional Bounds. More please!

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Wisconsin’s Supreme Court decided by a 4-3 vote on Wednesday May 13, 2020 to strike down the state’s “Safer at Home” order, its COVID-19 economic lockdown in other words. It did so completely, immediately, and unequivocally. You can read the decision and all the concurrences and dissents here.
Many moving pieces regarding constitutional issues like separation of powers and delegation of legislative powers to officers of the executive branch suffuse the decision. The concurring justices, however, cut through all of that and kept their eyes on the key Constitutional issues, many of which have been discussed by our friends at AIER here and here.Below are key excerpts from the decision. “Palm” refers not to a part of a hand but to the surname of the Wisconsin official whose actions the court declared illegal. Although the decision directly frees only Wisconsin, the principles are broadly applicable to the national government and all US states. Yes, even California.While many states have already loosened their lockdowns enough to avoid a similar judicial smackdown, it is important to declare unconstitutional all measures that crossed the line from legitimate public health order (which again, may include quarantine [the sick], cordon sanitaire [infected districts], or protective sequestration [uninfected districts] depending on circumstances) into tyrannical power grab so, like the unconstitutional internment of Americans during World War II, it never happens again.

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We do not conclude that Palm was without any power to act in the face of this pandemic. However, Palm must follow the law that is applicable to state-wide emergencies. We further conclude that Palm’s order confining all people to their homes, forbidding travel and closing businesses exceeded the statutory authority of Wis. Stat. 252.02 upon which Palm claims to rely.

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Palm points to statutes that she asserts give her broad authority to impose regulation; but it does not follow she can impose regulation without going through a process to give people faith in the justness of the regulation. However, under Palm’s theory, she can ‘implement all emergency measures necessary to control communicable diseases,’ … even at the expense of fundamental liberties, without rulemaking. That interpretation is constitutionally suspect.

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Article I, Section 1 of the Wisconsin Constitution provides that ‘All people are born equally free and independent, and have certain inherent rights; among these are life, liberty and the pursuit of happiness; to secure these rights, governments are instituted, deriving their just powers from the consent of the governed.” [If this sounds familiar, see the Declaration of Independence.]

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At times, legislation is enacted that infringes on a person’s rights despite these front-end procedures [separation of powers; bicameralism], however, for that we have judicial review.

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When a grant of legislative power is made, there must be procedural safeguards to prevent the “arbitrary, unreasonable or oppressive conduct of the agency.”

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Palm cannot point to any procedural safeguards on the power she claims.

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[Palm’s argument about being able to fine and imprison those who break her order] is without legal foundation and ignores more than 50 years of Wisconsin law.

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Constitutional law has generally permitted the Governor to respond to emergencies without the need for legislative approval. … But the Governor’s emergency powers are premised on the inability to secure legislative approval given the nature of the emergency. … In the case of a pandemic, which lasts month after month, the Governor cannot rely on emergency powers indefinitely.

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Crimes created by the Legislature in statutes must have specificity in order to be enforceable. … Because Palm fails to understand the specificity necessary to a valid criminal statute, she also fails to understand that no less specificity is required of a rule to which criminal penalties are assigned.

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Order 28 exceeds the [statutory] authority to quarantine those infected or suspected of being infected. … This directive is not based on persons infected or suspected of being infected.

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She cites no authority for this vast seizure of power.

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As the United States Department of Justice has recently written in a COVID-19-related case raising constitutional issues, “There is no pandemic exclusion … to the fundamental liberties the Constitution safeguards.”

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The concurring opinion of Justice Rebecca Bradley is also a brilliant exposition of what used to be considered Civics 099 (i.e., high school level stuff) but apparently today requires detailed explanation, even to state supreme court justices, the dissent of one of whom Bradley eviscerates in footnote 3: “Spurning more than two centuries of fundamental constitutional law as well as the Wisconsin Constitution’s guarantee of liberty, Justice Brian Hagedorn shockingly proclaims ‘the judiciary itself must never cast aside our laws or the constitution itself in the name of liberty. … Setting aside the self-contradictory nature of that statement, Justice Hagedorn’s 53-page opinion contains no constitutional analysis whatsoever.” One assumes Hagedorn, like many of us, is suffering from Lockdown Brain.

Look for more court decisions in the weeks to come, hopefully ones where the Bradleys outnumber the Hagedorns.

Robert E. Wright is the Nef Family Chair of Political Economy at Augustana University in Sioux Falls, South Dakota.
School shutdowns may demonstrate to parents the low quality of public school learning

The Schools Shutdown May Dent The Power Of The Government’s Public School System.

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Twenty twenty is likely to be a watershed year in the history of public schooling. And things aren’t looking good for the public schools.

For decades, we’ve been fed a near-daily diet of claims that public schooling is one of the most important—if not the most important—institutions in America. We’re also told that there’s not nearly enough of it, and this leads to demands for longer school hours, longer school years, and ever larger amounts of money spent on more facilities and more tech.

And then, all of sudden, with the panic over COVID-19, it was gone.

It turns out that public schooling wasn’t actually all that important after all, and that extending the lives of the over-seventy demographic takes precedence.

Yes, the schools have tried to keep up the ruse that students are all diligently doing their school work at home, but by late April it was already apparent that the old model of “doing public school” via internet isn’t working. In some places, class participation has collapsed by 60 percent, as students simply aren’t showing up for the virtual lessons.

The political repercussions of all this will be sizable.

Changing Attitudes among the Middle Classes

Ironically, public schools have essentially ditched lower-income families almost completely even though school district bureaucrats have long based the political legitimacy of public schools on the idea that they are an essential resource for low-income students. So as long as the physical schools remain closed, this claim will become increasingly unconvincing. After all, “virtual” public schooling simply doesn’t work for these families, since lower-income households are more likely to depend on both parents’ incomes and parents may have less flexible job schedules. This means less time for parents to make sure little Sally logs on to her virtual classes. Many lower-income households don’t even have internet access or computing equipment beyond their smartphones. Only 56 percent of households with incomes under $30,000 have access to broadband internet.

Nonetheless, working-class and lower-income parents are likely to return their children to the schools when they open again. Many believe they have no other choice.

Attitudes among the middle classes will be a little different, however, and may be more politically damaging to the future of the public schools.

Like their lower-income counterparts, middle class parents have long been happy to take advantage of the schools as a child-care service. But the non-educational amenities didn’t stop there. Middle-class parents especially have long  embraced the idea that billions of dollars spent on school music programs, school sports, and other extracurriculars were all absolutely essential to student success. Sports provided an important social function for both the students and the larger community.

But as the list of amenities we once associated with schooling gets shorter and shorter, households at all income levels will start to wonder what exactly they’re paying for.

Stripped of the non-academic side of things,  public schools now must sell themselves only as providers of academic skills. Many parents are likely to be left unimpressed, and this will be all the more true for middle class families where the parents are able to readily adopt homeschooling as a real substitute. The households that do have the infrastructure to do this are now far more likely to conclude that they simply don’t need the public schools much of the time. There are now so many resources provided for free outside the schools—such as Khan Academy, to just name one—that those who are already savvy with online informational resources will quickly understand that the schools aren’t essential.

In addition to this, many parents who were on autopilot in terms of assuming they were getting their money’s worth may suddenly be realizing that public schools—even when they were physically open—weren’t that much of a bargain after all. As Gary North recently observed,

For the first time, parents can see exactly what is being taught to their children. They can see the quality of the teachers. They can learn about the content of the educational materials.

Many parents may not like what they see, and as many increasingly take on the job of providing in-person instruction, school teachers won’t look quite like like the highly trained heroes they have long claimed to be.

Budget Cuts

With the image of schools as indispensable social institutions quickly fading, the political advantage they have long enjoyed will rapidly disappear as well. It wasn’t long ago that schools could go back to the taxpayers again and again with with demands for more money, more resources, and higher salaries. Teacher unions endlessly lectured the taxpayers about how getting your child into a classroom with one of their teachers was of the utmost importance. Voters, regardless of political ideology or party, were often amendable to the idea.

That narrative is already greatly in danger, and the longer the COVID-19 panic ensures that schools remain closed, the more distant the memory of the old narrative will become. As school budgets contract, school districts from Las Vegas to Denver and across the nation are bracing for furloughs and layoffs.

With smaller staff, fewer teachers, and smaller budgets, expect virtual public learning to become even more bare bones, and less rewarding and engaging for students.

What Will Things Look like This Fall?

Even if schools open this fall, the reforms currently being pushed will ensure that schools continue to lack many of the amenities many have come to expect. If these reforms are adopted, students can forget about social events. They can expect shorter school days, and an ongoing role for online schooling. Team sports will be gone. Old notions of universal mandatory attendance and long days will seem increasingly quaint and old fashioned—or possibly even dangerous.

For many parents, this will just reinforce their growing suspicions that public schools just aren’t worth it anymore. Maybe they never were.

Ryan McMaken is a senior editor at the Mises Institute.

Francisco d’Anconia and Satoshi Nakamoto Assert the Moral Case and Viable System for Sound Money

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The concepts of justice and money were highlighted in the May 1st article featuring economist Paul Krugman of the New York Times, and government strongman Wesley Mouch from Ayn Rand’s 1957 novel, Atlas Shrugged. The relationship between justice and money is critical because the nature of justice and the nature of money are essential to Western Civilization.

Much like sound money and objective law are corollaries, soft money and subjective law are also corollaries. For any form of money to be sound, it will pass three tests. As a medium of exchange, it must be widely accepted as payment for goods and services. This happens when it is also a unit of account, meaning that producers can easily negotiate prices in terms of that money. In our postmodern era, the US dollar is the best global example.

Most important, sound money must be a reliable store of value. If money is expected to lose purchasing power over time, it will become less acceptable as a medium of exchange. This attribute of sound money transcends the here and now of trading values, and enters the fourth dimension of time and space. It becomes transferrable wealth, anywhere in the world, at any time.

The moral foundation of sound money is the productive work of its creator, stored as wealth, that has not been spent on other material values. Its moral purpose is to trade values with other producers, making it the keystone of civilization. In the modern and premodern eras, gold was the best global example.

While gold can be minted in many size-values, what makes it an ideal form of money is its durability and the difficultly and expense of producing more. This last attribute is gold’s very low flow-to-stock ratio, meaning the flow of new gold into the existing stock is very small and predictable.

Conversely, paper currency has the advantage of being easy to transport and secure cheaply, but it’s also very easy and cheap to produce. Corrupt and incompetent political elites are happy to mint their unlimited counterfeit money because they don’t produce anything else, and they’ll be dead before the money collapses anyway. To hell with that store of value, time and space thing, its for the public good.

As a result of their extremely soft money and morally subjective law, large Western democracies are now all welfare states. It began with their war to end all wars, funded by public debt (World War I), that led to even greater mass atrocities. Today, social justice warriors are demanding free health care and education because their government monopoly currency has inflated costs to criminally expensive levels. In Atlas Shrugged, copper fortune heir Francisco d’Anconia declared,

Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion; when you see corruption being rewarded and honesty becoming a self-sacrifice, you may know that your society is doomed.

Perhaps the only way for moral justice to resume, and ignite a radical change in the dominant philosophy of American culture, is to create a new form of sound money. For a new currency to be accepted globally, it must first become a reliable store of value. To achieve this, it must be very difficult and expensive to produce, solve the portability and security issues of gold, and make the foreign exchange markets irrelevant.

This is a mind-boggling challenge, by orders of magnitude, and one accepted by the infamous Satoshi Nakamoto. On November 1, 2008 Satoshi announced the birth of Bitcoin to the world. According to economics professor Saifedean Ammous, Nakamoto (a pseudonym) sent an email to a cryptography mailing list claiming “that he had produced a new electronic cash system that is fully peer-to-peer, with no trusted third party.”

What this means is a totally decentralized system (peer-to-peer) with no institutional control (trusted third party). Network verification replaces trust. As statistician Nassim Taleb explains,

Rational markets do not require any individual trader to be rational. In fact they work well under zero intelligence. A zero intelligence crowd, under the right design, works better than Soviet-style management composed of maximally intelligent human beings.

Of course, the idea of maximally intelligent human beings concentrated in government is beyond absurd. Regardless, the design is known as Blockchain, and it is specifically engineered for Bitcoin. Its process for mining and recordkeeping is highly complex, expensive, and slow. For example, when Ammous published his 2018 book, The Bitcoin Standard, he estimated the computing power dedicated to Bitcoin mining to be the equivalent of 2 trillion laptop computers. Additional costs and infrastructure include the electricity and high speed fiber-optic cable networks needed to run the computers.

The complexity of the Bitcoin network reminds one of the human mind itself, and according to d’Anconia’s thinking, it may be no coincidence,

Men had always thought of wealth as a static quantity, to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.

To make money belies the efficient deployment of capital. Under rational circumstances, capital investment is funded by wealth saved for future consumption, and owned by people with a lower time preference than political elites. They are willing to postpone consumption now for greater possible wealth to spend later.

Human beings are unique in that they can envision and shape their futures. Long-term thinking is imperative for investors, for entrepreneurs, and for civilization. Government induced, artificial, short-term incentives destroy that. Francisco relates,

They start by destroying money, for money is men’s protection and base of moral existence. Destroyers seize gold and leave its owners a counterfeit pile of paper. This kills objective standards and delivers men into the arbitrary power of an arbitrary setter of values.

Fortunately, Satoshi Nakamoto has a different plan, as computer scientist Ralph Merkle explains,

Bitcoin is the first example of a new form of life. It lives on the internet. It lives because it can pay people to keep it alive. It can’t be changed. It can’t be argued with. It can’t be corrupted. If nuclear war destroyed half of our planet, it would continue to live uncorrupted.

Until Bitcoin matures, it is merely a volatile trading vehicle for crypto speculators. Ideally, it will become a lousy investment, a reliable store of value, a tool for moral justice as gold has been for centuries, and inspire echoes of Ayn Rand laughing all the way to the bank.

 

 

The Only Role Of Government Should Be To Promote The Economic Life Of The Community, Not To Save Lives.

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It is tempting to oppose the harmful effects of COVID-related lockdowns with arguments couched in terms of tradeoffs.

We may contend that when public authorities promote the benefits of “flattening the curve,” they fail to properly take into account the actual costs of imposing business closures and of forced social distancing: the coming economic depression will lead to mass unemployment, rising poverty, suicides, domestic abuse, alcoholism, and myriad other potential causes of death and suffering which could be considerably worse than the harms of the pandemic itself, especially if we consider the spontaneous mitigation that people normally apply under the circumstances.

While I have no doubt that lockdown policies can and will have serious deleterious consequences, I believe that the emphasis on tradeoffs is misguided and counterproductive. It immediately invites a utilitarian calculus: How many deaths and how much suffering will be caused by lockdowns? How many deaths and how much suffering would occur without the lockdowns? How exactly are we to measure the total harm? What time frame should we consider when we ponder the costs of one option versus the other?

It’s easy to see that no one can have any firm answers to those questions. No one can convincingly make the case that one policy is better than the other on utilitarian grounds, which is what tradeoff language encourages us to do. That is especially true if we consider that lockdown policies are invariably modified in response to changing circumstances and aim toward ever shifting goalposts.

This goes to the heart of Ludwig von Mises’s criticism of the empiricists and behaviorists of his day: they could only conceive of social phenomena in mechanical terms and failed to see that human action makes the planning of human affairs irreducible to predictive calculus. Things have not changed. Ludicrous presumptions hide behind mathematical wizardry and statistical modeling continues to rule.

IT’S ALL ABOUT THE ECONOMY

On what grounds, then, should we oppose lockdowns if not by calling attention to the great harms that will ensue?

It seems to me that lockdowns should be opposed not by arguing in terms of “quantity of harm,” but by pointing out that the only role for government—whether in pandemic times or not—is actually to promote the economy.

But we need to understand what the economy is to begin with.

In its broader, original meaning, the economy is not simply a sum total of exchanges of material goods and services among consumers, businesses, and governments, to be measured as a “GDP.” That is the concept that the utilitarians are accustomed to, and it’s how mainstream political philosophy conceives of the economy. Originally, however, the Greek term Oîkonomia meant “household affairs” and came to refer, by extension, to the entire life of the community as such.

The reason to consider the life of the community as such is that the human being is, by nature, a social animal who depends essentially on the division of labor that takes place within an integrated and wholly interconnected society. We depend on the division of labor from the moment we are born: we need parents who can feed us, and our parents themselves need the specialized work of others to survive—specialized work that invariably crosses different generations. The division of labor forms a more or less tight-knit “political” community that promotes and defends the interests of its own members. That community may be a small primitive tribe or a huge nation-state, it is nevertheless one community engaged in the division of labor in its own unique way.

The division of labor, then, is not a matter of personal choice. Being connected to a community is not an option that one can choose to either engage in or refrain from. No one can live as an outcast. Even the hermit depends on others, and therefore on society. True ostracism is a death sentence, and involuntary partial ostracism (imprisonment) is a most severe punishment. The economy is as necessary to human life as oxygen or water are.

For that reason, the famous evolutionary sociobiologist E.O. Wilson has changed his perspective on the human race. He has taken the position that human beings are a “eusocial species,” whose members are totally dependent on a complex, intergenerational division of labor in much the same way that bees are dependent on other bees. Man is indeed a very social animal.

THE TRUE COMMON GOOD

The broad division of labor on which we all essentially depend amounts to far more than the accounting transactions that occupy the attention of professional econometricians. It includes the myriad ways in which we depend on others, ways which may be at once measurable yet uncountable, self-interested yet gratuitous. Understood properly, the economy points to the true common good, the good that unites us as the eusocial animals that we are. That true common good does not distinguish between “essential” and “nonessential” worker or activity.

That understanding of the common good is a far cry from the perverted notion of it that dominates modern political thought: a stock of material goods or services to be taken from some and redistributed to others by the government according to “shared interests” and “rights.” We should be especially fearful of that notion given that the same government determines what those shared interests and rights are based on mechanistic, utilitarian norms—norms that invariably garner votes.

If the government’s role is to safeguard the true common good, then it should do so primarily by safeguarding the integrity of the society, in which the division of labor naturally takes place. Government acts properly when that integrity is threatened, either from within (by criminal activity) or from without (by outside invaders or aggressors). Its role is to deter or defend from those threats when private efforts cannot prevail. The role of government is not to defend or promote the particular goods of certain individuals. That’s an abomination!

Even individual lives are not for the government to “save,” because efforts by the government to save the lives of some invariably infringe on the goods and sometimes on the lives of others. The saving of individual lives cannot possibly be a promotion of the true common good.

But does not the saving of lives help safeguard the integrity of society?

Not really. To see this we must distinguish secondary effects from primary ones. For example, imagine that the police successfully intervene to stop Smith from murdering Jones. Did they act because the police has a mission to save Jones’s life? No. The primary effect of the police action is to protect the integrity of the community by putting Smith and his sociopathic behavior out of commission. It is not, per se, to save Jones’ life—even if he should be so lucky.

Likewise, when soldiers are deployed against an invading army, the primary aim is to defend the integrity of society. Military defense is not carried out primarily to save individual lives or reduce individual suffering: more lives might conceivably be lost and more individual suffering occasioned in the process of defending the country than if the country were to capitulate and allow the invader to take over.

BEWARE OF METAPHORS

Might one argue that a pandemic threatens the integrity of society precisely as a foreign invader would? Doesn’t the COVID-19, then, warrant government action for that very reason?

I don’t believe so. Such an argument falls into the metaphorical trap of considering the COVID-19 virus in martial terms. The virus is not an invader. It has no intention of destroying or taking over society. In fact, as Jörg Guido Hüllsman recently pointed out, it has no intention whatsoever. It is not even alive! To be sure, SARS-CoV-2 is a very dangerous and transmissible pollutant that can cause much harm and many deaths. But it is not, as such, a threat to the integrity of society.

It is the true economy and the integrity of society that the government should protect or promote. Lockdowns do the exact opposite. They fracture us, harm us, and weaken us all. If maintained long enough, they will disintegrate us. In the meantime, they undoubtedly obstruct our efforts to find the best way to respond to pandemics. They should be opposed—not because of tradeoffs—but because they are antithetical to the economy, that is, to the good of society.

Michel Accad, MD, practices cardiology and internal medicine in San Francisco, offering individualized care in a free-market setting. His blog about health care and medicine is AlertandOriented.com. He also co-hosts the Accad And Koa Report podcast.

Isabel Paterson is the Poetic Justice Warrior for the American Ideals of Property, Production and Profit

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During this Wuhan inspired individual rights and supply-side economic disaster, no governor in America has garnered more Mediocrity Worship from progressives and conservatives than Ohio’s Mike DeWine. The Chicago Tribune reported on April 28th, “DeWine’s decisiveness, closing schools before any governor in the country, and postponing the state’s March 17 primary to protect voters, sent his popularity soaring. Seven weeks into the crisis, DeWine is being guided by health experts while avoiding partisan fissures over stay at home orders.”

At the governor’s disposal are media hysteria, public fecklessness, and force. In contrast, individualists depend on reason, trade, and heroic souls like Poetic Justice Warrior Isabel Paterson. In her 1943 book The God of the Machine, Paterson describes the statist’s philosophical contradiction, and its false premise,

Why did the humanitarian philosophy of 18th century Europe usher in the Reign of Terror? It did not happen by chance; it followed from the original premise, objective and means proposed. The objective is to do good to others as a primary justification of existence; the means is the power of the collective; and the premise is that “good” is collective.

Because the Tribune’s standard of value is DeWine’s decisiveness for statist solutions, not moral principles, we get compulsory schools, election tampering, authoritarian healthcare policy, liberty as partisan fissure, and productivity as crime. Regarding schools, Paterson teaches,

Free education is the most absolute contradiction of facts by terminology of which the language is capable. A tax-supported, compulsory educational system is the complete model of the totalitarian state.

The statists in Chicago and Columbus understand government education and elections – it guarantees their popularity and power. Paterson understands the statist’s impotence,

That is what education under the political power must do, once it has obtained full control. It routes human energy into the dead-end political channels.

So if Governor DeWine is closing schools, postponing elections, and forcing bankruptcies, why his he so popular? Why do people sanction their own victimhood? One reason is dependent government employees, as defined by Paterson,

If a man were paid to pick up pebbles on the beach and throw them into the ocean, it would be the same as if he were in a “government job,” or on the dole; the producers have to supply his subsistence, thus preventing the normal increase of jobs.

Another reason is fear of Wuhan virus infection, regardless of the actual risk to the individual. This is rooted in today’s groupthink, “we’re all in this together.” Here, Paterson anticipates DeWine’s morality of good intentions,

Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends.

But we’re not all in this together. America is predicated on the ideal of “life, liberty, and the pursuit of happiness.” What unites Americans is ownership of our lives, individually, and our mutual defense of rational self-interest. Paterson explains,

Fear and want are subjective. Poverty is the absence of wealth. If no man should ever stand naked, who is to produce clothes? Who is to have absolute power over every person? The only condition in which no one can experience poverty, want, or fear, is rigor mortis.

Yet absolute power is what Americans have concentrated in our political executive. Naturally, “It did not happen by chance. It followed from the original premise, objective and means proposed.” First, demean the moral principle of rights, as soon-to-be President Woodrow Wilson did in his 1911 Jefferson Club speech,

If you want to understand the real Declaration of Independence, do not repeat the Preface. Call on mankind to witness that we are not doing this in the spirit of insurgents, but in the spirit of free men. Men who have the true interests of humanity at heart.

The premise of progressivism maintains we owe a duty to humanity through government. An elite class of experts can be trusted to derive rights from government, and subjectively invent justice. Wilson states the objective is “to dissolve the partnership between the machine and the corporations, that is the problem of modern democracy.”

Wilson’s depravity really means dissolving men from their minds, and reinstituting the problem of modern democracy – mob rule America’s Founders had crushed 130 years earlier. To our political/education overlords, life is too complex for the “consent of the governed,” the masses must be socialized. Wilson’s means is called submission, “we, above all other men, are under bonds to prove ourselves worthy of freedom.”

Born worthy, Paterson explains Wilson’s horrific 20th century political way,

Politics is the power to prohibit, obstruct, and expropriate. It tends to encroach on the primary field of freedom. The producer may be compelled to obtain permission before he can get to work. Where expropriation is possible, consideration may be extorted.

As the second decade of the 21st century comes to a close, cleveland.com reported on May 7th that Governor DeWine was threatening a veto,

We are in the middle of an emergency now. I don’t understand why anyone would think this is a great time to be changing the law, to be taking away the power of the executive branch to protect people.

Our executive overlords are revealing their impotence. The Ohio House of Representatives had just passed a bill requiring a legislative panel to approve health department orders, if they extended beyond 14 days. In quaint modern times, this was called due process. In DeWine’s postmodern confusion,

We’re trying to bring the economy back. We have a budget we’re trying to balance. So many, many things we have to do. I guess I just don’t quite understand it.

The bill also grants legal standing to any Ohio citizen to sue over health orders, of which DeWine complained would be “chaos.” Too late, on April 16th, the 1851 Center for Constitutional Law had already filed suit over the Ohio ban on “non-essential business.” Progressives foment chaos in order to mitigate chaos. The alternative is Western Civilization’s moral precepts. According to a review of Paterson’s book by the Cato Institute,

Paterson sees in Rome the origin of law in its modern sense: an abstract set of principles, with their own internal logic, independent of the will of any particular ruler.

Paterson’s book also describes pre-American feudal “status societies” (and “non-essential work”), and Cato continues,

Like planned economies, these locked workers in particular roles, preventing adjustment to circumstances or new ideas. Paterson considers antitrust law, and concludes that, far from preserving competition, it tends to resurrect the society of status.

Personal liberty is a fundamental right, not a political fissure. Without just cause and due process, stay at home orders are the crime, not productive ability. Paterson further teaches about moral justice,

If profit is denounced, it must be assumed that running at a loss is admirable, and requires justification. Profit is self-justifying.

The mother of all Poetic Justice is profit, and one of three godmothers of the modern American libertarian movement is Isabel Paterson. As founding editor of The Freeman John Chamberlain wrote over fifty years ago,

If it had been left to (timid) males, nothing much would have happened. It was three women, Paterson, Rose Wilder Lane, and Ayn Rand – who, with scornful side glances at the male business community, decided to rekindle a faith in an American philosophy.

 

 

 

 

 

 

Technology Improves Lives By Generating More Output From Less Labor. The Government’s PPP Aims To Achieve The Opposite.

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They would stop you at job creation. Who would? Venture capitalists and other capital allocators if, when presenting your new business idea, you led with how many jobs the venture would create.

No one starts a business to put people to work. It should more realistically be stated that every commercial and technological advance is all about shrinking the amount of labor required to achieve some kind of laudatory outcome. Technology is the process whereby machines and other advances produce exponentially more with fewer hands.

This is so often forgotten by economic types on the left and right as they obsess over “labor force participation” rates. How very backwards. If readers are looking for 100% labor force participation, just travel to the world’s poorest countries. Everyone is realistically working all the time. Life is defined by unrelenting drudgery.

In rich, economically advanced countries work is the norm, but more and more it’s a choice as opposed to a necessity. There are dual-earner couples, and people who work until their dying day not because doing so is a matter of survival, but because work itself brings its own rewards.

Crucial is that work is most rewarding in the parts of the world where jobs are destroyed the most rapidly. Looking at it in terms of the United States, “what do you do?” in 2020 would elicit wildly different answers relative to 1920 when agriculture was still a major part of the U.S. economy, but so would the answer have been very different in 1990, 2000, and 2010.

In rich countries what we call work is constantly changing precisely because technological advances mothball the toil of the past. Contrast that with the poorest countries where “what do you do?” results in the same answer for all-too-many year after year, and decade after decade.

Which brings us to the federal government’s Paycheck Protection Plan (PPP). As always, this plan from our federal minders will have attached to it the non sequitur description that it most certainly rates. No one was clamoring for a PPP two months ago simply because politicians at that point hadn’t happened on the shockingly dim idea whereby they would engineer mass unemployment, business bankruptcy, and desperation as the solution to a new virus.

About the U.S. economy pre-coronavirus, it’s not as though businesses weren’t failing then. In truth, they were going under with great regularity. Such is the way of a dynamic economy: endless experimentation conducted by entrepreneurs, and as a consequence, lots of businesses shuttering all the time. Lest readers forget, growing use of the internet already had certain retailers under the gun.

Needless to say, a certain sign of economic sclerosis is a static business scenario whereby the ones populating malls and other shopping areas are unchanging. Conversely, somewhat rapid turnover signals progress as the present is constantly replaced by the future. In short, with or without the coronavirus, the nature of work and the names of businesses meeting our needs was going to change markedly between 2020 and 2030, and just as reasonably, between 2020 and 2025. Market driven failure is progress.

Back to the rollout of the PPP, it once again wasn’t being called for two months ago even though the future for most businesses was far from certain. But with the forced lockdowns by politicians that wrecked the present and future of all manner of businesses indiscriminately, and for reasons that had nothing to do with “free markets,” government stepped in to throw the money of others at what it broke. The PPP shows yet again why government cannot – ever – play investor, lender, or any kind of resource allocator.

Indeed, with politicians having cruelly put tens of millions out of work as a consequence of bankrupting businesses with their lockdowns, the PPP was created by government so that businesses could rehire some of the very people government had rendered unemployed. And in classic government fashion, this non sequitur of a program required that 75% of the PPP funds go toward employee pay. Maintain jobs at all costs!

That’s how people in government think. In state and national capitols, it’s all about doing less with more people. Hiring to hire. Don’t you get it, hiring without regard to the purpose of the job creates “economic growth”! Actually, productivity powers economic growth, which is why businesses routinely strive to do more with fewer hands. Technology enables all this.

Looking at the present, for many businesses their biggest expenses are rent related, and physical infrastructure. This is particularly true in prosperous cities. A business close to the well-to-do is in some instances going to pay quite a bit more just to be in that location, than to employees working in, say, Beverly Hills, Greenwich, or River Oaks.

Which speaks to why the PPP in so many instances cripples, as oppose to reviving businesses. That’s the case because there’s no present way of knowing what the future will look like for companies in terms of human employees. Precisely because some consumers will prefer less human interaction in the future with virus-spreading top of mind, it’s possible that businesses will devise all manner of ways to save on labor while meeting needs of customers that they didn’t express before the spread of the coronavirus.

After that, let’s not forget that businesses will to some degree be impaired going forward simply because previously locked down consumers will be. For government to demand pre-virus levels of employment as a pre-condition of receiving PPP money is for government to set the stage for business failure just as soon as these hideous and unnecessary lockdowns end.

All of which brings us back to the venture capitalists, investors and lenders who will decide whether cruelly impaired businesses will make it in the aftermath of this most political of crack-ups. About the future, it should be said yet again “they would stop you at jobs.” No business will attract funds if it presumes to operate at staffing levels that perhaps made sense before March of 2020.

It’s all a reminder of the persistent truth that’s informed all of these columns since politicians on all levels lost their minds: government cannot ever play investor, lender, or anything else. Crucial is that it needn’t play those roles. The only answer, as always, is to end the lockdowns as soon as possible so that businesses can resume with market-disciplined investors and the marketplace itself guiding their decisions.

John Tamny is editor of RealClearMarkets, and Vice President at FreedomWorks.

What Have We Learned?

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A few things revealed in recent months.

Most businesses operate on razor-thin margins.

Financial advisors recommend people have a six-month emergency fund. But many businesses faced bankruptcy after losing a few weeks of sales. This is less about poor preparation and more about revealing the tightrope walk of business operations.

Some of the lowest-paid workers are the most essential.

Garbage collectors, janitors, grocery store clerks, food delivery, truck drivers, farmers, daycare providers – with few exceptions (doctors) the jobs that are most vital during a pandemic are ones that got little respect before it.

The two most important economic stories are the size of the business collapse and the magnitude of the stimulus.

It’s easy to focus on the former because it’s personal and devastating while ignoring the latter because it’s political and hard to contextualize. But they are equally huge. Despite 15% unemployment, Goldman Sachs estimates household income will be higher in Q2 2020 than it was in Q2 2019, largely because of stimulus.

No business model or investing strategy is proven until it survives a calamity.

Even then, nothing’s guaranteed. I don’t think we’ll hear the words “recession proof” after this.

Done right, forecasting is a delicate balance of probabilities. But people want certainty, especially when the stakes are high.

The people who make forecasting models probably have less faith in their accuracy than those who read them, if only because things like confidence intervals are rarely discussed in the media.

Opposite outcomes currently seem equally plausible. So whatever happens to the economy it will look obvious in hindsight.

If we collapse into years-long depression people will say, “Of course we did. 20 million people lost their jobs in one month. What did you expect?” If we quickly develop a vaccine and optimism returns people will say, “Of course we figured this out. Every pharmaceutical company in the world was focused on defeating one virus. What did you expect?”

Some people intuitively grasp the dangers of leverage.

Others learn it the hard way. The cost of debt is the interest rate plus the requirement that at various points in the future (when interest payments are due and when the debt matures) you will be in control of your cash flow. The former is easy to calculate; the latter can be impossible.

There are no atheists in foxholes and no deficit hawks in meltdowns.

The $2.2 trillion CARES Act passed the senate 96-0. People suffering from sudden, unexpected catastrophe are likely to adopt views they previously thought unthinkable.

Catastrophe can be larger than you ever imagined but adaptation can be bigger than you ever considered.

Two months ago, the idea of shutting down most businesses would have seemed impossible. The idea that many could continue operating – even thrive – with every employee working from home would have sounded equally ludicrous.

History is only interesting because nothing is inevitable.

The biggest lesson from the last three months is that whatever your view of the future is, it’s probably wrong. Things change in ways people can’t imagine at times they never considered.

Democratic Governors Demonstrate That Temporary Possession Of Emergency Powers Reveals The Hidden Tyrant In The Most Unremarkable Politicians.

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Abraham Lincoln is frequently credited with the following aphorism: “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” These words may well have been misattributed to the Great Emancipator, but their wisdom is difficult to dispute. Indeed, during the past two months, the nation’s Democratic governors have clearly demonstrated that the temporary possession of emergency powers can unmask the hidden tyrant in even the most unremarkable politician. Virtually all have overreached their legitimate mandates, and few show any inclination to relinquish their newfound authority. This has not only produced widespread protests but has also led to dozens of constitutional lawsuits.

These governors behave as if they recognize no legal boundaries. Consequently, the voters have sought to correct them. New Jersey Gov. Phil Murphy (D), for example, is the defendant in at least two federal lawsuits, including a challenge to his prohibition of religious services in the Garden State. Rabbi Yisrael A. Knopfler of Lakewood has joined Rev. Kevin Robinson in a lawsuit that points out the obvious fact that “churches and synagogues can easily accommodate the kind of social distancing that keeps some commercial businesses open.” Murphy doesn’t care. Indeed, he refuses to provide the voters with a target date for lifting his “indefinite” lockdown. As he snarled during a recent public briefing:

I’m sorry we can’t give you more definitive guidance yet on things that we’re working on. By the way, non-essential retail, I hear morning, noon and night. I appreciate all that, I appreciate all the inputs and the wisdom on beaches.… Nobody is itching more to get this state back up and running than yours truly and the team up here. But we’ve got to do it right. We’ve got to do it responsibly. We’ve got to do it safely and we are committed to that whether folks, frankly, whether you like that or not.

This high-handed attitude is not limited to Gov. Murphy, of course. Nor is he alone in being sued pursuant to interference with religious services. A federal lawsuit was filed against Gov. Andrew Cuomo (D) by Brooklyn lawyer Lee Nigen, who vehemently objects to Cuomo’s threat to use law enforcement personnel to coerce compliance with his ban on large gatherings — including religious congregations. As Nigen’s attorney told the New York Post, “Clearly, there is a grave public health emergency.… But lawful process matters and emergency orders of this sort, if left unchallenged, will evolve into precedents with horrifying consequences.”

The lockdown order issued by Gov. Walz isn’t limited to violations of the First and Fourteenth Amendment rights of the plaintiffs — it’s utterly incoherent.

Nor are such infringements limited to lockdowns in the Northeast. Further down the coast, in Virginia, one such incident was so egregious that the Department of Justice (DOJ) has filed papers in the Fourth U.S. Circuit Court of Appeals in support of Pastor Kevin Wilson of the Lighthouse Fellowship Church on Chincoteague Island. Pastor Wilson was served a summons for holding a Palm Sunday service on April 5 and has been threatened with jail and a $2,500 fine. He subsequently filed a federal lawsuit against Gov. Ralph Northam (D). The DOJ’s submission noted, “There is no pandemic exception to the Constitution and its Bill of Rights.” This point was evidently overlooked by Minnesota Gov. Tim Walz (D), who has been sued by a coalition of religious and secular organizations:

Worshipers across Minnesota have been prohibited from assembling to celebrate Easter and the Passover, while liquor stores have remained open. Target, Walmart, Walgreens, and CVS are open, while local Hallmark stores are closed. Golf courses and bait shops are open, but indoor amusement facilities are shut. Nobody can legally get a haircut, but dogs may now be groomed. Businesses in Minnesota have been forced to carry rent obligations … without income.

As the above excerpt from the lawsuit renders obvious, the lockdown order issued by Gov. Walz isn’t limited to violations of the First and Fourteenth Amendment rights of the plaintiffs — it’s utterly incoherent. What were these people on when they made the decision to forbid haircuts yet permit pet grooming? Perhaps it was the same substance that inspired California Gov. Gavin Newsom (D) to suddenly order Orange County beaches closed on May 2, despite a very low COVID-19 fatality rate. As the Mayor of Newport Beach, Orange County, wrote, “Gov. Newsom decided to substitute his will for our judgment.” Similarly capricious nonsense is why Newsom is the defendant in several federal and state lawsuits.

Three California churches have jointly filed a federal lawsuit claiming that the Golden State governor’s shelter-in-place order violates their First Amendment religious protections. At least seven small businesses have also sued Newsom on the basis that the orders violate their civil liberties. This pattern is repeated over and over again in states with Democratic governors. Innumerable lawsuits have been filed against Wisconsin Gov. Tony Evers, North Carolina Gov. Roy Cooper, Illinois Gov. J. B. Pritzker, Michigan Gov. Gretchen Whitmer, Connecticut Gov. Ned Lamont, Washington Gov. Jay Inslee, Nevada Gov. Steve Sisolak, Kentucky Gov. Andy Beshear, Louisiana Gov. John Bel Edwards, ad nauseam.

All of these defendants have four things in common: They are Democratic governors, they have used the COVID-19 pandemic as a pretext to arrogate illegitimate authority, none will voluntarily relinquish their newfound power, and all have committed multiple violations of the Constitution. By the standards of the above-quoted aphorism, all have been found sorely wanting in the kind of character intrinsic to genuine leaders. All deserve the utter contempt of the voters who elected them to office.

 

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