Crony Capitalism and the Expansive Central State

Crony Capitalism flourishes in an economy dominated and controlled by a Central State

By Charles Smith

Crony capitalism arises when an expansive Central State dominates the economy. The Central State can then protect crony-capitalist perquisites, cartels, quasi-monopolies and financialization skimming operations of the sort which now dominate the U.S. economy's primary profit centers.

If we step back, the larger context is the purpose and role of establishing a State to protect its citizens from foreign and domestic predation and exploition.

What Shakespeare's shepherd knew

The Ban On Cruel And Unusual Punishment Gets A Test Case
By GEORGE F. WILL 

James Donneley 16 years old
convicted of stealing some shirts
sentenced to 2 months - 1903

In the summer of 1787, just 94 years after the Salem witch trials, as paragons of the Enlightenment such as James Madison, George Washington and Benjamin Franklin deliberated in the Constitutional Convention in Philadelphia, a mob pelted and otherwise tormented to death a woman accused of being a witch. Prosecution of alleged witches, writes historian Edmund Morgan, had ceased in the colonies long before the English statute criminalizing witchcraft was repealed in 1736. Some popular sentiment, however, lagged.

Today, 221 years after the Bill of Rights was added to the Constitution, the Supreme Court is again pondering the Eighth Amendment's proscription of "cruel and unusual punishments." The case illustrates the complexity of construing some constitutional language in changing contexts of social science and brain science.

Counting the Dead Equally

First and second class victims

by Paul Gottfried

Much to the consternation of Western intellectuals and journalists, Hungary’s government sponsors a House of Terror in Budapest which dares to devote attention to not only Nazi crimes, but also Stalinist ones.

Ever since the ascendance of the “antifascist” (read: neo-Stalinist plus PC) persuasion in our “liberal democracies,” it has become gauche and somehow even anti-Semitic to compare Nazi (or more generally “fascist”) atrocities to the collateral damage of the communist forced march into the globalist future.

But the House of Terror’s director, Gábor Tallai, says it is sometimes hard to distinguish between victims of Nazi and Soviet terror. “Many Hungarian Jews who escaped Auschwitz were then dragged off by the Red Army to perform compulsory labor in Siberia.” Since my cousin was one of these forced laborers, I concede Tallai’s point.

The hunger for a simpler, black-and-white world

The Hunger Games trilogy is the fictional equivalent of Occupy’s adolescent worldview

by Patrick Hayes 

‘I don’t write about adolescence’, said Suzanne Collins, discussing her Hunger Games novels in arecent interview. ‘I write about war. For adolescents.’

Regardless of the intended audience of The Hunger Games, its appeal has been much broader. The first novel has sold an estimated 10million copies worldwide and is now as likely to be read by adults as adolescents. Following the pattern of the Harry Potter novels, respectable-looking covers have been produced so adults don’t look out of place reading the books during the daily commute. Critics gush about The Hunger Games offering ‘attractions that many grown-up novels don’t’. The film adaptation has proven to be one of the most successful films of recent years.

It’s not hard to see why. The books are fast-paced thrillers, riffing with a now extremely familiar conceit – a sci-fi dystopia where a group of people are placed in an arena to do brutal combat, with their every move being filmed for a reality TV show called ‘The Hunger Games’. It’s effectively The Running Man with hot teenagers, a made-for-Hollywood version of the Japanese hit, Battle Royale.

Now For An Arab Economic Revolution

Free Goods Versus Freedom

By Saifedean Ammous

Revolution across the Arab world has forced the region’s peoples and governments to grapple with the need for change. Years of sclerosis have given way to a frantic push for reforms to match the aspirations and discontent of millions.

But reform momentum is tugging in two, quite opposite, directions. One push is for governments to provide for their people; the other calls for governments to stop restricting their people’s freedom, particularly their economic liberty. The first type of reform will likely only exacerbate the Arab world’s grave problems; the second offers hope for positive and sustainable change.

The Trouble with Libertarian Paternalism

Choices and Options

By Raghuram Rajan

There are many arguments against government paternalism: apart from limiting individual choice (for example, the choice to remain uninsured in the current health-care debate in the United States) and preventing individuals from learning, history suggests time and again that the conventional wisdom prevalent in society is wrong. And, since governments typically try to enforce the conventional wisdom, the consequences could be disastrous, because they are magnified by the state’s coordinating – and coercive – power.

Too Big to Jail

Crooks Vs Suckers

By Simon Johnson

Among the fundamental principles of any functioning justice system is the following: Don’t lie to a judge or falsify documents submitted to a court, or you will go to jail. Breaking an oath to tell the truth is perjury, and lying in official documents is both perjury and fraud. These are serious criminal offenses, but apparently not if you are at the heart of America’s financial system. On the contrary, key individuals there appear to be well compensated for their crimes.

Capitalism, Socialism or Fascism?

Whatever we have, it isn’t free market capitalism

by WashingtonsBlog

What is the current American economy: capitalism, socialism or fascism?

Socialism

Many people call the Bush and Obama administration’s approach to the economic crisis “socialism”.

Are they right?

Well, Nouriel Roubini writes in a recent essay:

This is a crisis of solvency, not just liquidity, but true deleveraging has not begun yet because the losses of financial institutions have been socialised and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest…

The releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending.

Where does Money Come From?

Money as Debt

By Paul Grignon

The simple answer to the title question is DEBT. Whether paper cash or numbers on a computer screen, all money (except coins) is “evidence of debt”.

What is "cash” and where does it come from? Cash can be the familiar paper stuff, or it can be credit at the national central bank which banks use to settle accounts between banks. “Credit cash” at the central bank is always convertible to “paper cash” upon demand.

So, where does cash come from? Is it just printed by the government as we are shown on TV?

The Celtic Mind

How Adam Smith and Edmund Burke saved civilization
By Bradley J. Birzer

One contemplates the power, depth, and breadth of the finest 18th-century minds only with some trepidation and humility. Or at least, one should.

The favorite study of the great men of that day, famed editor of The Nation E.L. Godkin explained in 1900, was the glorification of the person against political power. In “opposition to the theory of divine right, by kings or demagogues, the doctrine of natural rights was set up. Humanity was exalted above human institutions, man was held superior to the State, and universal brotherhood supplanted the ideas of national power and glory.”

Exodus

White Muslims and Black Jews

By Mark Steyn

As far as the media were concerned, the murder of Jewish schoolchildren in Toulouse and a black teenager in Florida were the same story — literally: Angry white male opens fire on "the other," his deeply ingrained racism inflamed by the tide of toxic right-wing hate infecting our public discourse. Alas, in Florida, the angry white male turned out to be a registered Democrat and half Hispanic — or, as the New York Times put it, a "white Hispanic," a descriptor never applied by its editors to, say, Sonia Sotomayor or Gloria Estefan or indeed any other person living or dead. And in Toulouse the angry white male turned out to be yet another Muhammad.

Oh, well. Better luck next time, although the pickings seem likely to get thinner: Pitch the Western world a decade or two down the road, riven by an ever-more-fractious tribalism between blacks, Hispanics, and Muslims, and the one surviving nonagenarian neo-Nazi white supremacist will be at the retirement home. But it'll still all be his fault.

Happy Birthday Generation Y

Blog Birthday

A child of five starts school, but a blog of the same age has already taken more daring steps. Today I am making an effort to remember that quiet and fearful woman, from before April 9, 2007, who created Generation Y. But I can’t. Her face disappears, dissolving among all the beautiful and difficult moments I’ve experienced since I posted my first text on the web. I can no longer imagine myself without this accidental and personal diary. I have the impression that I have always, in one way or another, been writing a blog. When the indoctrination and the injustice reached intolerable points, my childish head glossed the reality–from the fringes–in ways I could never say out loud. The evasive adolescent I became did the same thing: narrating her daily life, trying to explain it and trying to escape it.

The better solution

Is the EU Too Weak?

By Charles C. W. Cooke

In the wake of the ongoing eurozone crisis, the New York Times reports that the European Union is looking to make “fundamental changes,” mooting the creation of a “central financial authority — with powers in areas like taxation, bond issuance and budget approval.” This, notes the Times, could “eventually turn the Eurozone into something resembling a United States of Europe.”

And so, in the face of arguably the most significant crisis in the history of the European integration project, the conclusion drawn by those who seek further federation is predictable: The problem with Europe, they say, is not that there has been far too much integration of a continent which is inherently unsuited to union, but that there has been too little. Plus ça change, plus c’est la même chose.

WWII referred to as the European Civil War

The EU cannot be serious?

By Donal Blaney

The great polemicist Richard Littlejohn has a phrase that sits alongside Victor Meldrew's "I don't believe it!" as being increasingly apt.

Littlejohn frequently says "You Couldn't Make It Up" (and it became the name of a book he published) - and for good reason.

Increasingly we find ourselves shaking our heads as yet another astonishing pronouncement comes from on high that we, the governed, are expected to take in our strides. 

Today we learn that the European Union (our real ruler) is opening a £44m museum that will be a House of European History. This vanity project in and of itself is an offensive waste of money as governments and peoples tighten belts across Europe. 

But what I found most offensive of all is that World War II is to be described as "the European Civil War". 

Rights concern the liberty of individuals, not the prerogatives of the collectivity

Judging, the cosmic way

By George F. Will

Judge J. Harvie Wilkinson III, a Reagan appointee to the 4th U.S. Circuit Court of Appeals, is a courtly Virginian who combines a manner as soft as a Shenandoah breeze with a keen intellect. His disapproval of much current thinking about how the Constitution should be construed is explained in his spirited new book, "Cosmic Constitutional Theory: Why Americans Are Losing Their Inalienable Right to Self-Governance" (Oxford).

A "cosmic theory," Wilkinson says, is any theory purporting to provide comprehensive and final answers. The three jurisprudential theories Wilkinson criticizes are the "living Constitution," "originalism" and "constitutional pragmatism." Each, he says, abets judicial hubris, leading to judicial "activism."

Marxist Dreams and Soviet Realities

Freedom Vs Servitude

by Ralph Raico
The sharp contrast that Alexis de Tocqueville drew in 1835 between the United States and Tsarist Russia — "the principle of the former is freedom; of the latter, servitude"[1] — became much sharper after 1917, when the Russian Empire was transformed into the Soviet Union.

Like the United States, the Soviet Union is a nation founded on a distinct ideology. In the case of America, the ideology was fundamentally Lockean liberalism; its best expressions are the Declaration of Independence and the Bill of Rights of the U.S. Constitution. The Ninth Amendment, in particular, breathes the spirit of the worldview of late-18th-century America.[2] The Founders believed that there exist natural, individual rights that, taken together, constitute a moral framework for political life. Translated into law, this framework defines the social space within which men voluntarily interact; it allows for the spontaneous coordination and ongoing mutual adjustment of the various plans that the members of society form to guide and fill their lives.

Spain is Greece…

Only Bigger and Worse

On the Surface, Spain’s debt woes have many things in common with those of Greece:

1.   Bad age demographics

2.   A toxic bank system

However, you’ll note that as we tackle each of these, Spain is in fact in far worse fiscal shape than Greece.

Currently there is one person of non-working age (65 or older) for every four people of working age (15-64) in Spain.  This is expected to worsen to one person of non-working age for every three people of working age by 2025 and an astounding more than one person of non-working age for every two people of working age by 2040.

These demographics alone set Spain up for a sovereign debt Crisis. According to Jagadeesh Gohkale of the Cato Institute Spain would need to have 250% of its GDP sitting in a bank account collecting interest forever in order to meet its unfunded liabilities without raising taxes or cutting government outlays.

Bibi’s Dilemma — and Barack’s

The “October surprise” of 2012

By Patrick J. Buchanan

“Bibi” Netanyahu was disgusted.

“My initial reaction is that Iran has gotten a freebie. It has got five weeks to continue enrichment without any limitation.”

The Israeli prime minister was referring to Saturday’s meeting in Istanbul of the P5-plus-1 — the five permanent members of the U.N. Security Council and Germany — with representatives from Iran.

Subject: Iran’s nuclear program. After a “constructive” meeting of one day, all agreed to meet again in Baghdad, May 23, and departed.

For Bibi, it was a strategic defeat.

For Israel’s goal is a halt to Iran’s enrichment of uranium and the removal of enriched uranium from that country.

Cubans have come to rely on each other for five long decades in order to survive

In Cuba, hitchhikers bemoan a host of economic problems

BY KEVIN G. HALL

“Subanse,” climb aboard, I said repeatedly, pulling the right wheels of my eight-seat van off the dangerous two-lane highway that snakes hundreds of miles across an island considered off limits to most Americans.

Ostensibly, I was in Cuba to cover Pope Benedict XVI’s visit. But over the week and across the length of the Ohio-sized country, I gave more than five dozen Cubans a botella — in Cuban slang, a ride.

The end of innovation

The contrasting fates of  Ιnstagram and Kodak shows there’s more money in navel-gazing than transformative tech

by Norman Lewis

Facebook’s acquisition of the social mobile photo-sharing application Instagram for $1 billion reveals two fundamental realities. First, that despite being the darling child of the media - who keep trumpeting its youthful uniqueness - Facebook is simply another large enterprise that is slow to innovate and is driven by the inexorable logic of age-old capitalist economics. Second, the deal truly marks the end of the age of innovation; the purchase of Instagram can be contrasted to the fact that Kodak, the company that pioneered photography from the end of the nineteenth century, went into receivership earlier this year. The contrasting fates of two photographic-based companies speak volumes about the world we now live in.

Markets Vs Jungles

Markets - A Layman's Primer

By David R. Henderson

In his famous book, The Wealth of Nations, published in 1776, Adam Smith explained to his countrymen why some economies grew and others stagnated. Thus the book’s complete title: An Inquiry into the Nature and the Causes of the Wealth of Nations. Many of Smith’s keen insights have weathered the test of time and evidence, and thus are still relevant today. Particularly relevant, to the world and to this article, are Smith’s insights about markets. Economists since Smith, particularly Friedrich Hayek and Ludwig von Mises, have added their own insights about the power of markets in creating wealth and opportunity. In this article, I will not always identify the particular economist who first had a given insight. Rather, my focus in this article is on the insights themselves no matter what their origin.

Japan Runs Out Of Capital

Going Poof

By Jeff Harding

What did you think the odds were of seeing this headline when Japan was here buying up Rockefeller Center back in 1990: “In a Shift, Chinese Capital Flows to Japanese Firms.”

In late ’80s and early ’90s the Japanese were here buying large real estate projects such as Rockefeller Center and the Pebble Beach golf course. The way overpaid and by then mid ’90s, many of these projects were bought back. A syndicate comprising, among others, Arnold Palmer and Clint Eastwood, bought Pebble Beach back from the Japanese lender who foreclosed on the property. Mitsubishi bought Rockefeller Center for $1.4 billion in 1989 and lost the property in bankruptcy in the mid-’90s. It is now owned by an American syndicate.

Welfare and unintended consequences

The New York Times’s Welfare Myopia

Poverty remains a story of bad decision-making and out-of-wedlock child-rearing.

BY HEATHER MAC DONALD

Desperate single mothers are mugging illegal aliens, shoplifting, and fencing stolen goods in order to survive, and it’s all the fault of those heartless Republicans and spineless Democrats who passed the 1996 welfare reform law. Such, at least, is the message of a front-page article in the New York Times, the first salvo in a likely campaign to roll back the most successful federal law in recent memory.

Temporary Assistance to Needy Families (TANF) limited federal welfare payments to five years and conditioned them on a recipient’s effort to find work—in essence, stripping welfare of its entitlement status. As a result, the welfare rolls dropped two-thirds from 1996 to 2009, work rates of never-married mothers surged, and black child poverty fell to its lowest level ever.

Egypt on the Edge

State of chaos prevails over Egypt's divisive candidates

By Issandr El Amrani

Not the revolutionary groups that have become a sideshow as politics has moved from the streets to parliament and the courts. Not the politicians who, even if they were not spending most of their time bickering and manoeuvring for advantage, are bound by rules that are a bundle of contradictions. Not the generals now nominally running the country, who sulk at the ungratefulness of their subjects and have lost whatever moral authority they may once have had. Not even the country's leading presidential candidates, all of whom may be barred from the race on various technicalities by the time of the vote. And certainly not the Egyptian people, hostage to all this political confusion, who have seen their "glorious revolution" go from crisis to crisis since Hosni Mubarak was forced out over a year ago.

Egyptians have a dark sense of humour, and are used to making light of their misfortune. The present situation offers them plenty of material, but even so the jokes often seem half-hearted. Never over the tumultuous events of the last year has the country seemed more on the brink, or has there been more talk of a potential military coup or some other sort of political earthquake.

A framework to interpret the world

The Chicago School versus the Austrian School

By R. Murphy

People often ask me, "How are the Austrians different from the Chicago School economists? Aren't you all free-market guys who oppose big-government Keynesians?"

In the present article I'll outline some of the main differences. Although it's true that Austrians agree with Chicago economists on many policy issues, nevertheless their approach to economic science can be quite different. It's important to occasionally explain these differences, if only to rebut the common complaint that Austrian economics is simply a religion serving to justify libertarian policy conclusions.

The Political Economy of Morality

Political Pretense vs. Market Performance

by Dwight R. Lee

There is a large gap between the performance of markets and the public's approval of markets. Despite the clear superiority of free markets over other economic arrangements at protecting liberty, promoting social cooperation and creating general prosperity, they have always been subject to pervasive doubts and, often, outright hostility. Of course, many people are also skeptical about government. Yet when problems arise that can even remotely be blamed on markets, the strong tendency is to "correct" the "market failures" by substituting more government control for market incentives. Recent evidence of this bias is healthcare reform, which, instead of freeing up healthcare markets to correct the distortions created by government subsidies and mandates, made the distortions worse by expanding the subsidies and mandates.

The Trouble with Money

A Broken Narrative

By Chris Martenson

Recently I was asked by a high school teacher if I had any ideas about why students today seem so apathetic when it comes to engaging with the world around them. I waggishly responded, "Probably because they're smart."

In my opinion, we're asking our young adults to step into a story that doesn't make any sense.

Sure, we can grow the earth's population to 9 billion (and probably will), and sure, we can extract our natural gas and oil resources as fast as possible, and sure, we can continue to pile on official debts at a staggering pace -- but why are we doing all this? Even more troubling, what do we say to our youth when they ask what role they should play in this story -- a story with a plot line they didn't get to write?

What Are Economists For?

Economics is extremely useful as a form of employment for economists

By Tim Price

Most economists, it seems, believe strongly in their own superior intelligence and take themselves far too seriously. In his open letter of 22 July 2001 to Joseph Stiglitz, Kenneth Rogoff identified this problem. “One of my favourite stories from that era is a lunch with you and our former colleague, Carl Shapiro, at which the two of you started discussing whether Paul Volcker merited your vote for a tenured appointment at Princeton. At one point, you turned to me and said, “Ken, you used to work for Volcker at the Fed. Tell me, is he really smart?” I responded something to the effect of, “Well, he was arguably the greatest Federal Reserve Chairman of the twentieth century.” To which you replied, “But is he smart like us ?”

               - Satyajit Das.

Greece without the sunshine

Austerity in the U.K.

Britain discovers that shrinking government is a lot harder than expanding it.

BY THEODORE DALRYMPLE

In Britain, government spending is now so high, accounting for more than half of the economy, that it is increasingly difficult to distinguish the private sector from the public. Many supposedly private companies are as dependent on government largesse as welfare recipients are, and much of the money with which the government pays them is borrowed. The nation’s budget deficit in 2010, in the wake of the financial crisis, was 10.4 percent of GDP, after being 12.5 percent in 2009; even before the crisis, the country had managed to balance its budget for only three years out of the previous 30.

Deficits are like smoking: difficult to give up. They can be cut only at the cost of genuine hardship, for many people will have become dependent upon them for their livelihood. Hence withdrawal symptoms are likely to be severe; and hardship is always politically hazardous to inflict, even when it is a necessary corrective to previous excess. This is what Britain faces.

Animal care is too important to be left to the wiles of the free market

The Good News on Health Care

By Jeffrey Tucker

One sector, technology, is advancing at a pace never seen before. Customers have a range of services to choose from, and price competition is very intense. The doctor sees you whether you have insurance or not. Customers mostly pay directly for services. Overall spending is increasing, but that’s because there are more services to purchase. Competition between providers is very intense.

Sadly, for humans, all this is taking place within veterinary medicine, and the beneficiaries are animals, mostly pets. According to The New York Times,  the demand for advanced treatment is booming, and supply is responding. The paper cites the case of Tina, the 10-year-old chow that recently underwent chemotherapy and a bone marrow transplant at a clinic associated with the Mayo Clinic. The $15,000 spent on this may sound like a lot, but it is far cheaper than the same services provided to people.

The False Civil Rights Vision

Frederick Douglass’s suggestion

By Walter E. Williams

For all intents and purposes the civil rights struggle is over and won. At one time black Americans did not have the constitutional guarantees afforded other Americans; now we do.

I think it is fair to say that black Americans, as a group, have made the greatest gains, over some of the highest hurdles, in the shortest span of time of any racial group in history. If we were to think of black Americans as a nation and add up their spending power, they would be the 17th or 18th richest nation on earth. Black Americans have been chief executives of some of the world’s largest and richest cities. Black Americans rank among the world’s most famous personalities, and a few black Americans are among the world’s richest people.

Plato's take on next Greek elections

People who bite the hand that feeds them usually lick the boot that kicks them

By Ed Kaitz

It might be worth everyone's while in these troubled times to set aside an evening in order to carefully read Book VIII of Plato's Republic.  The dialogue is nothing less than chilling in its illustration of what happens in a popular government when corrupt politicians inflame the vices of undisciplined citizens in order to destroy the business class and establish a tyranny.

Here's a link to Book VIII.  Plato's objective is to show how highly self-disciplined regimes gradually devolve into more inferior and immoderate governments.  Socrates begins the discussion showing how Aristocracies (rule of the wisest) devolve into Timocracies (rule of the military) which then descend into Oligarchies (rule of the wealthy).  Oligarchies descend into Democracies (rule of the people) which in turn become Tyrannies.

The Population Boon

Progress? You ain’t seen nothin’ yet

By PHILIP E. AUERSWALD

As U.S. troops were massing in England for the Normandy invasion, the U.S. Congress engaged in a heated debate about how to avert mass unemployment when millions of servicemen came home at war’s end. Their concern followed precedent. Only a dozen years earlier, at the nadir of the Great Depression, World War I veterans had converged on Washington to demand early disbursement of congressionally mandated payments. The result was an ugly confrontation between the “Bonus Marchers” and U.S. Army units led by none other than the chief of staff, General Douglas MacArthur. Wishing to avoid a repetition of this disturbing scenario, Congress enacted the GI Bill, signed into law by President Roosevelt on June 22, 1944.