The Economic Irrationality of the State

As states gain power, liberty recedes

"The truth is that the State is a conspiracy designed not only to exploit, but above all to corrupt its citizens." — Leo Tolstoy

"None are more hopelessly enslaved than those who falsely believe they are free" — Johann Wolfgang von Goethe

by Eric Englund

In 1912, Ludwig von Mises's masterwork The Theory of Money and Credit was published; and to this day, this book is underappreciated. How can this be? After all, in this book, Mises unveiled his regression theorem demonstrating commodity money, such as gold, can have its purchasing power traced back in time to the point where gold was not a medium of exchange. Mises, accordingly, eliminated the conundrum in which the marginal-utility explanation of money demand would merely be a case of circular reasoning; money emerged out of barter and his logic is irrefutable. Mises also laid the foundation for the Austrian theory of the trade cycle, which correctly deduces that economic boom-bust cycles are caused by inflationary bank-credit expansion as enabled by central banks and their governments. While writing The Theory of Money and Credit, Mises was pondering the issue of economic calculation in a socialist state. Per Murray Rothbard,

Mises writes that he was led to consider the socialist calculation problem by his work onThe Theory of Money and Credit. Here Mises realized for the first time with keen clarity that the money economy does not and cannot calculate or measure values directly: that it only calculates with money prices, the resultants of such individual valuations. Hence, Mises realized that only a market with money prices based on the evaluations and exchanges of private owners can rationally allocate resources, since there is no way by which a government could calculate values directly. Hence, for Mises his article and book on socialism was part and parcel of the development of his expanded integration of micro and macro, of direct monetary exchange, that he had begun but not completed in The Theory of Money and Credit.[1]

Without private ownership in the means of production, economic calculation is impossible. Per Joseph T. Salerno, "a single human mind … would be utterly incapable of determining the optimal pattern of resource allocation or even if a particular plan were ludicrously and destructively uneconomic."[2] To be sure, the collapse of the USSR demonstrated the harmful, resource-misallocating, and uneconomic nature of the socialist state.

Economic Fallacies And The Fight For Liberty

The statist economic policies of the Keynesians become even more irrational as the Great Recession drags on

by James Miller

It’s easy to be pessimistic over the future prospects of liberty when major industrialized nations around the world are becoming increasingly rife with market intervention, police aggression, and fallacious economic reasoning.  The laissez faire ideal of a society where people should be allowed to flourish without the coercive impositions of the state is all but missing from mainstream debate.  In editorial pages and televised roundtable discussions, a government policy of “hands off” is now an unspeakable option.  It is presumed that lawmakers must step up to “do something” for the good of the people.  Thankfully, this deliberate false choice will slowly but surely bring the death of itself.   Illogical theories can only go on for so long before the push-back becomes too much to handle.  For those who desire liberty, it’s a joy that the statist economic policies of the Keynesians become even more irrational as the Great Recession drags on. The two following examples will illustrate this point.

Former Labor Secretary, public policy professor at University of California, Berkley, and political commentator Robert Reich recently offered President Obama and Mitt Romney a proposal he thinks will help American workers.  In lieu of almost 40% of workers in the U.S. not receiving paid vacation for holidays and sick days, Reich proposes that the federal government mandate every worker receive three weeks of paid time off.  Reich calls the country’s lack of a national leave policy “absurd.”  Further, he claims that imposing an increase in mandatory paid vacation would be beneficial not just for employees but employers as well.  According to the union cheerleader, paying employees for taking time off is great for productivity because they come back with batteries recharged and higher morale.  This boost in output would more than pay for the leave and for the hiring of additional labor to offset the absence.

What Reich is arguing is that by increasing the cost of labor, somehow the unemployment rate will drop.  Or that by paying employees to take time off, the extra productivity that would take place would both pay for the hiring of more workers and make up for the loss of time devoted to labor.  And finally, Reich is assuming that employers have never taken such a policy into account and are blind to the low-hanging fruit of easy profits.

Choice not part of this future

Liberal Delusions 

by mark steyn

According to Georgetown Law student Sandra Fluke, invited to address the Democratic convention and the nation, America faces a stark choice this November. "During this campaign, we've heard about two profoundly different futures that could await women in this country – and how one of those futures looks like an offensive, obsolete relic of our past," she cautioned. "That future could become real."

In one of those futures, women will be "shut out and silenced," rape victims will be "victimized all over again," pregnant women will "die preventable deaths in our emergency rooms," and "access to birth control is controlled by people who will never use it." If you're wondering where all that is on your ballot form, just check the box marked "R."

"We know what this America would look like," warned Miss Fluke sternly. "In a few short months, that's the America that we could be. But that's not the America that we should be. And it's not who we are."

Fortunately, the America that we could be that isn't the America that we should be doesn't have to be the America that we would be. The good news is that "we've also seen another America that we could choose. In that America, we'd have the right to choose," said Miss Fluke. This would be "an America in which our president, when he hears that a young woman has been verbally attacked, thinks of his daughters, not his delegates or his donors. And in which our president stands with all women. And strangers come together, and reach out and lift her up. And then, instead of trying to silence her, you invite me here, and you give me this microphone – to amplify our voice. That's the difference."

So, if you're looking for an America where strangers lift up Sandra Fluke and amplify her voice, that would be the box marked "D."

"I've seen what these two futures look like," she said. "And six months from now, we're all going to be living in one future, or the other. But only one." Because you can't have two futures simultaneously, even under Obamacare.

With respect to Sandra Fluke, I think there's a third future looming. The paperback edition of my book comes out in a week or so, and you can pretty much get the gist of it from the title: "After America." For me, the likely scenario isn't that the Republicans will be terrorizing rape victims or that the Democrats will finally pass the necessary legislation to make contraception available for the contraceptively starved millions crying out for it, but that America will be sliding off the cliff – literally, as Joe Biden would literally say. And when America slides off the cliff it lands with a much bigger thud than Greece or Iceland. I'm not certain that the Republicans will be able to prevent that happening. But I know that the Democrats can't. America owes more money than anybody has ever owed anyone in the history of the planet. But millions of Americans don't see it, and millions of those who do see it don't see it as a problem.

Sandra Fluke is one of them. She completed her education a few weeks ago – at the age of 31, or Grade 25. Before going to Georgetown, she warmed up with a little light BS in Feminist, Gender and Sexuality Studies from Cornell. She then studied law at one of the most prestigious institutions in the nation, where tuition costs 50 grand a year. The average starting salary for a Georgetown Law graduate is $160,000 per annum – first job, first paycheck.

We are suffocating in stuff, physically, psychologically and spiritually

Is Anybody Else Tired Of Buying And Owning Stuff?

by Charles Hugh Smith

I know this is a sacrilegious question, but is anybody else tired of buying and owning stuff? Is anybody else tired of dealing with all the junk cluttering up every corner of the room/house/nation?

Has anyone else noticed we have surplus stuff coming out our ears? And that therefore we don't really need any more stuff? Has anyone noticed the psychological consequences of constantly buying and managing possessions? Here is how correspondent B.D. recently put it:

Kids have a melt-down when they don't have the latest iteration of the (insert trendy electronica here) or if they are asked to tidy up the gargantuan collection of "stuff" they are slowly suffocating themselves with. Most kids these days don't have bedrooms anymore ... they have a small warehouse of goods in which they have a sleeping space.

Everybody has a warehouse of goods, even "poor" households. Of the four households on my block with one-car garages, we're the only ones who actually park a car in the garage. Everyone else's garage is jammed with stuff. And this is not an upscale neighborhood, it's working-class/renters.

Have you been to one of the many gigantic swap meets recently? You know, the kind with hundreds of sellers hawking everything under the sun. Our young friends (newlyweds renting one bedroom in a house, they don't own a car, both seeking fulltime work but currently living on one-part time job) recently described their visit to just such a sprawling cornucopia of over-consumption.

People are selling any and everything to raise some cash: birds, snakes, used iPhones, laptop computers, clothing, furniture, you name it. A guy was selling a guitar for $15. Our friend offered $5. The seller took $8. $8 for an acoustic guitar. Granted it was a cheap one, but $8? Was it even worth hauling it to the swap meet for $8? A set of strings costs $4.

The Conquest of the US by Spain

The transformation of America

by Ralph Raico

The year 1898 was a landmark in American history. It was the year America went to war with Spain — our first engagement with a foreign enemy in the dawning age of modern warfare. Aside from a few scant periods of retrenchment, we have been embroiled in foreign politics ever since.

Starting in the 1880s, a group of Cubans agitated for independence from Spain. Like many revolutionaries before and after, they had little real support among the mass of the population. Thus they resorted to terrorist tactics — devastating the countryside, dynamiting railroads, and killing those who stood in their way. The Spanish authorities responded with harsh countermeasures.

Some American investors in Cuba grew restive, but the real forces pushing America toward intervention were not a handful of sugarcane planters. The slogans the rebels used — "freedom" and "independence" — resonated with many Americans, who knew nothing of the real circumstances in Cuba. Also playing a part was the "black legend" — the stereotype of the Spaniards as bloodthirsty despots that Americans had inherited from their English forebears. It was easy for Americans to believe the stories peddled by the insurgents, especially when the "yellow" press discovered that whipping up hysteria over largely concocted Spanish "atrocities" — while keeping quiet about those committed by the rebels — sold papers.

Politicians on the lookout for publicity and popular favor saw a gold mine in the Cuban issue. Soon the American government was directing notes to Spain expressing its "concern" over "events" in Cuba. In fact, the "events" were merely the tactics colonial powers typically used in fighting a guerrilla war. As bad or worse was being done by Britain, France, Germany, and others all over the globe in that age of imperialism. Spain, aware of the immense superiority of American forces, responded to the interference from Washington by attempts at appeasement, while trying to preserve the shreds of its dignity as an ancient imperial power.

Variations of the Left

Leo Strauss and the Conservative Movement in America

By Jack Kerwick,

From talk radio to Fox News, Rush Limbaugh to Sean Hannity, National Review to The Weekly Standard, what is popularly understood as “the conservative movement” has no short supply of voices. But what few people — and even fewer people among self-avowed “conservatives” — ever bother to ask is whether the popular understanding of conservatism is an accurate understanding. That is to say, are Rush Limbaugh, Sean Hannity, and their colleagues on the airwaves and in mainstream publications really conservative? One person who has spent decades asking — and answering — this question is Paul Gottfried. He raises it once more in his most recent book, Leo Strauss and the Conservative Movement in America.  

And it is within this work that the author resolves this key question with a definitiveness that is obvious for all with eyes to see: the contemporary expression of “the conservative movement,” Gottfried declares, has little to nothing in common with “the Old Right” of yesteryear.

In other words, most of today’s self-described “conservatives” are nothing of the sort. They are, rather, neoconservatives. As such, they compose a movement, yes, but a movement that is scarcely continuous with any recognizably right-wing tradition. On the most legible reading of it, as Gottfried amply demonstrates, the contemporary “conservative movement” is nothing more or less than another variation of leftism. Indeed, the author cleverly, and provocatively, characterizes it as “the alternative left.”  

So what does any of this have to do with the twentieth century philosopher, Leo Strauss?

'Improve' or We'll Kill You

The Liberal Way To Run the World  

by John Pilger

What is the world’s most powerful and violent "ism"? The question will summon the usual demons such as Islamism, now that communism has left the stage. The answer, wrote Harold Pinter, is only "superficially recorded, let alone documented, let alone acknowledged", because only one ideology claims to be non-ideological, neither left nor right, the supreme way. This is liberalism.

In his 1859 essay On Liberty, to which modern liberals pay homage, John Stuart Mill described the power of empire. "Despotism is a legitimate mode of government in dealing with barbarians," he wrote, "provided the end be their improvement, and the means justified by actually effecting that end." The "barbarians" were large sections of humanity of whom "implicit obedience" was required. The French liberal Alexis de Tocqueville also believed in the bloody conquest of others as "a triumph of Christianity and civilisation" that was "clearly preordained in the sight of Providence".

"It’s a nice and convenient myth that liberals are the peacemakers and conservatives the armongers," wrote the historian Hywel Williams in 2001, "but the imperialism of the liberal way may be more dangerous because of its openended nature – its conviction that it represents a superior form of life [while denying its] selfrighteous fanaticism." He had in mind a speech by Tony Blair in the aftermath of the 11 September 2001 attacks, in which Blair promised to "reorder this world around us" according to his "moral values". At least a million dead later – in Iraq alone – this tribune of liberalism is today employed by the tyranny in Kazakhstan for a fee of $13m.

The Handwriting on the Wall

Rebuilding the foundations of the political culture of the West

by GEORGE WEIGEL

In recent years, roiled as they have been by a global financial and economic crisis, the phrase "the handwriting is on the wall" has become a staple of the public conversation. It is a metaphor for the general sense of disorientation, unease, and fear for the future that seems epidemic throughout the Western world, and that is having so obvious an effect on the national cast of mind in this election season.

The phrase may be ubiquitous, but how many of those who invoke "the handwriting on the wall" have looked closely at its source — the fifth chapter of the Book of Daniel in the Hebrew Bible? The story told there is a striking one. Recalling it in full might help us come to grips with whatever is being written on the wall at this moment in our national history, and in the history of the civilization of the West. Reflecting on that story might also help us identify a prophet who, like Daniel, could help us translate "the handwriting on the wall," understand its meaning, and thus know our duty.

The scene is readily set. The place: Babylon. The time: some two and a half millennia ago, in the 6th century before our era. The Kingdom of Judah has been conquered by the Chaldean king, Nebuchadnezzar, who, the Book of Daniel tells us, ordered his chief vizier "to bring some of the people of Israel, both of the royal family and of the nobility, youths without blemish, handsome and skillful in all wisdom, endowed with knowledge, understanding, competent to serve in the king's palace, and to teach them the letters and language of the Chaldeans." The most impressive of this group of talented young Jews was named Daniel. In addition to the personal qualities specified for royal service by Nebuchadnezzar, Daniel had the power to interpret the great king's dreams — a skill that led Nebuchadnezzar to acknowledge, for a moment at least, that Daniel's God, the God of the people of Israel, was "God of gods and lord of kings, and a revealer of mysteries."

The Sovereign Central Bank

Mario Draghi is the most powerful banker in the history of the world

By WALTER RUSSELL MEAD

The European Central Bank has crossed a new frontier. Judging by the events of the last two days, it isn’t just independent. It’s sovereign.

It is certainly more sovereign than countries like Spain, Portugal and Greece. These countries will now stay afloat if their economic policies meet the approval of a majority of the members of the ECB board.

The ECB has become a new kind of central bank with a new kind of transnational power less because it is ambitious than because Europe is crippled. The European Union is home to a bewildering array of institutions. There is a European Parliament, a European Commission, a Council of Europe and a Court of Justice. Europe has a president and a (sort of) foreign minister.

Some EU institutions are capable and strong: its legislative and regulatory institutions generally are pretty effective at what they do. The European Union has no shortage of either regulations or laws, and companies like Microsoft and Google have developed a healthy respect for the ability of European regulators to enforce their decisions and police the EU market.

But the European Union is still much more of a club than a country, and its weakest institutions are part of what Americans call the executive branch. The EU’s president and its foreign minister can talk but they cannot really act and very few people inside or outside Europe remember who holds these posts—or perhaps even know that the posts exist. During the gravest crisis in the history of the Union, the EU executive officials have been almost completely irrelevant, and what political impact “Europe” has had on the unfolding crisis has come from individual commissioners rather than from Herman van Rompuy or Catherine Ashton. The worse and more urgent Europe’s problems get, the less visible these two officials become.

Enron: The Perils of Interventionism

The devil's sand box

By Robert L. Bradley Jr.

"For three decades now, the dominant strain of economics from the University of Chicago has been teaching gullible undergraduates and journalists that there is no such thing as the public interest. Efficient outcomes are just the aggregation of selfish private interests, and government's main job is to get out of the way. Well, after Enron, these theorists should learn some other useful trade." — Robert Kuttner, "Enron: A Powerful Blow to Market Fundamentalists," BusinessWeek, February 4, 2002.

"Enron should be remembered as the antithesis of a true capitalist enterprise.... Enron lived, thrived, and perished in and through the mixed economy.... The capitalist worldview is stronger, not weaker, post-Enron." —Robert L. Bradley Jr., Capitalism at Work: Business, Government, and Energy (Salem, MA: M & M Scrivener Press, 2009), pp. 293, 302.

In mainstream thought, the fall of the once-iconic Enron Corporation (1986-2001) has become "Exhibit A" against unbridled business. To capitalism's critics, its collapse was about more than one company's bad management. Enron exposed the economic truth about the deregulation movement that had begun in the late 1970s, as well as the moral truth about the ebullient profit-seeking ethos that went along with it. And that truth was: In underregulated markets, greed will shamelessly sacrifice the virtues of fairness, honesty, justice, and even legality.1

"I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society," Paul Krugman wrote in theNew York Times.2 Why? Because it will mean "ending an era of laxity, in which nobody asked hard questions as long as everything looked O.K."3And Robert Kuttner, in BusinessWeek, said that Enron "should signal the collapse of a whole economic paradigm" and "signal a whole new era of re-regulation."4

Rice University business ethicist Duane Windsor lambasted "the Enron value set" of "an extreme laissez-faire ideology of absolutely 'free' (i.e., absolutely unregulated) markets."5 Diane Swanson of Kansas State University, with Enron in mind, complained that "most MBAs will graduate without an anchor in social and environmental management," leaving them with "an amoral, even brutish theory of management [that] has long been taught in business schools."6

In short, Enron seemed to embody the Progressives' view that the "idealistic" 1960s and 1970s had been overthrown by a revivified capitalism, coming out of the right-wing think tanks with a new confidence, based on Ayn Rand's ethical individualism and Milton Friedman's libertarian economics. The result was plain to see: America's most admired company (according to Fortune magazine) turned out to be America's biggest bankruptcy, and its top executives turned out to be criminals. Textbooks immediately began to incorporate this interpretation, and ten-year retrospectives of the company have not changed it.7

A False Narrative

"I believe in God, and I believe in free markets," stated Ken Lay, the founder and chairman of Enron during its entire life.8 At a Cato Institute conference on natural-gas deregulation, Lay intoned: "Imperfect markets are often better than perfect regulation."9

Instinctive Blunders

Job Protection and Redistribution

By Anthony de Jasay

Man has some instinctive reactions to events that shake one's belief in genetically selected behaviour being favourable for the survival of the species. When caught by a storm in open country, his instinct is to seek cover under a tree, which is precisely the thing he must not do if he is weighing one outcome against the chance of a much worse one. Would he rather get wet or be struck by lightning? Experience over countless millennia should have taught him the way lightning mostly strikes, but apparently his instincts have not learnt the lesson. Likewise, when he is pushed, man's reaction is to push back. Though his best defence would be to pull the pusher on and use his very momentum to bring about his downfall. To say man learns this by taking judo lessons, if he learns it at all, is only part of the answer. Perhaps genetic selection of the behaviour best for survival should have taught him over countless millennia to use judo to defend himself. While the individual's instincts seem to lead him to blunder some of the time, government's "instincts" lead it to blunders much of the time. One very grave blunder it never avoids—a blunder denounced in this column more than once over the past few years—is to tighten the labour code and pile on ever more draconian job protection measures when unemployment is high and looks like staying high.

Collateral Damages

Jobless Greeks Resolved to Work Clean Toilets in Sweden

By Oliver Staley

As a pharmaceutical salesman in Greece for 17 years, Tilemachos Karachalios wore a suit, drove a company car and had an expense account. He now mops schools in Sweden, forced from his home by Greece’s economic crisis.

“It was a very good job,” said Karachalios, 40, of his former life. “Now I clean Swedish s---.”

Karachalios, who left behind his six-year-old daughter to be raised by his parents, is one of thousands fleeing Greece’s record 24 percent unemployment and austerity measures that threaten to undermine growth. The number of Greeks seeking permission to settle in Sweden, where there are more jobs and a stable economy, almost doubled to 1,093 last year from 2010, and is on pace to increase again this year.

“I’m trying to survive,” Karachalios said in an interview in Stockholm. “It’s difficult here, very difficult. I would prefer to stay in Greece. But we don’t have jobs.”

Greece is in its fifth year of recession, with the economy expected to contract 6.9 percent this year, the same as in 2011, according to the Athens-based Foundation for Economic and Industrial Research. Since 2008, the number of jobless has more than tripled to a record 1.22 million as of June, out of a total population of 10.8 million.

“In Greece, there was no future,” said Ourania Michtopoulou, who moved with her husband to Sweden in 2010 after both lost textile industry jobs in Thessaloniki, where they had a comfortable life with a house and car. “Here, I can hope for something good to happen. Maybe not for me -- I’m 48 -- but maybe for my children.”

‘Go Home’

Their family now crams into a small apartment, while her husband, Nikos, works for a landscaper and her teenage children struggle with Swedish lessons.

“It was not easy for them,” she said. “My daughter said lots of times, ‘I hate Sweden -- I want to go home.’”

Karachalios began his career in pharmaceutical sales after his mandatory military service, working at three different companies in the southern city of Patras. He married a Chinese woman he met at the 2004 Athens Olympics, had a daughter, and divorced.

“You can plan, you can organize, you can make plans for 10 years, 20 years, but you don’t know what life brings,” he said.

Bankrupt Cyprus And The Russian Connection

The House of Cards

By Wolf Richter   

The Republic of Cyprus, with its 840,000 people, has been in the Eurozone for less than five years. Yet it burned through mountains of euros faster than anyone could count. Now it needs a bailout whose magnitude balloons every time someone blinks.

The financial problems came to a head last year when the markets refused to go along with the country’s profligacy. So Cyprus went begging to Russia and got a €2.5 billion loan last November. Which quickly evaporated. In June, banks began to crater. Bailout time. €2.3 billion would be required for the two largest ones. The bailout Troika, the despised austerity gang from the EU, the ECB, and the IMF, took a gander at the stuff the banks called “assets.” Costs jumped to €6 billion, plus €4 billion for a government bailout. Then rumors seeped out that the banks alone would need €9 billion, for a total of €13 billion [read..... The Ballooning Cyprus Fiasco].

In early August, a hullaballoo arose when it was leaked that Central Bank Governor Panicos Demetriades had told lawmakers of an even greater fiasco. He’d been appointed only on May 2, and when he opened the closet doors of the banks, he discovered the real mess: €12 billion would be needed for the banks—70% of the country’s shrinking €17 billion economy! Plus whatever the government would need. A total of €16 trillion perhaps. 94% of GDP.

U.S. and Europe : Governments of Equal Size ?

Total U.S. spending is already roughly equivalent to European spending

e21 Editorial

There is a sense among many commentators that the United States is “becoming” more like Europe in that the government is growing beyond thresholds that could be reasonably financed by the private sector. Putting aside the merits of this view, the general description of the U.S. as “moving towards” Europe makes the distance left to be traveled seem farther than it really is. The graphic below, constructed from the International Monetary Fund (IMF) World Economic Outlook (WEO) data, compares the combined government-to-GDP ratio of the 17 countries that use the euro currency to the combined government-to-GDP ratio of the U.S.

Based solely on government outlays, the U.S. government is about 8 percentage points (or about 16%) smaller than that of the euro zone. However, this is not really an apples-to-apples comparison because it does not include the disparate accounting for health insurance premiums. In the euro zone, health insurance premiums are generally financed directly through taxation; in the U.S. employer-sponsored health insurance premiums are deducted from pay checks or contributed directly by employers. The net effect is to leave after-tax income lower to pay for health insurance.

The Terrifying New Normal

A vast transfer of wealth from those who saved to those who owe

By Victor Davis Hanson

Why Save?

The hallmark advice of retirement planning was always to scrimp, save, and put away enough money to make up for retirement’s lost salary, increasing medical bills, and the supposed good life of the “golden years.” If a couple had saved, say, $300,000 over a lifetime (again, say, putting $500 away each month for 30 years at modest compounded interest), then they might expect a so-so annual return at 5% of about $15,000 a year on their stash, or about $1,250 per month.

In other words, perhaps Mr. and Mrs. Retiree could find enough with Social Security to live okay and pass on the principal to their kids. But well aside from the fact that many Americans have been laid off, taken pay cuts, lost home equity, had their 401(k)s pruned, or had to take care of out-of-work relatives, there is no 5% any more on anything, not even 2% or  in most cases 1%.  Saving money means nothing really in terms of return, only the realization that inflation eats away the principal each year.

To earn a decent return, the retiree has had to wade into bonds, stocks, and real estate buying and selling, with all their attendant risks that loom larger after 65. The old American idea of receiving a fair so-so interest on a little money in the savings account vanished. And no one seems to care.

America’s Real Fiscal Problem

Federal Gov't Has Become a Gigantic Wealth-Transfer Machine

By mark perry

The charts above illustrate two disturbing trends that help frame the long-run fiscal challenges confronting the U.S. that far outweigh any possible near-term fallout from the pending “fiscal cliff” that the federal government faces at the end of this year. 

1. The top chart above (data here, see Table 6.1) displays the increasing share of the federal government’s spending on “payments to individuals,” based on actual data from the Office of Management and Budget (OMB) for the years 1952 to 2011 and its projections through 2017.

In 1952, less than one out of every six dollars spent by the federal government represented payments to individuals.  By 2010 payments to individuals had increased so dramatically over time that roughly two out of every three dollars (66.1 percent) spent by the federal government in that year were payments to individuals for programs like Social Security, Medicare and Medicaid, public assistance, food and housing assistance, and unemployment assistance.  Last year, payments to individuals as a share of federal spending decreased slightly to 65 percent, and that category was more than three times larger than the share of 2011 federal spending on defense (20.1 percent), and more than ten times larger than the share spent by the federal government on interest payments for the national debt (6.4 percent).  The OMB estimates that payments to individuals will exceed 68 percent of federal spending in 2014, 2015 and 2016, before falling slightly to 67.5 percent in 2017 when payments to individuals will exceed $3 trillion for the first time.

False Choices and the True Dilemma

The only choice is Liberty

by Daniel James Sanchez

In 1789 a group of men gathered in Paris to sound the death knell for the ancien regime, and to inaugurate the modern political world. But there were some differences among them. Some wanted to abolish the old order more completely. Others wanted to retain some vestiges of the old privileges. In this "National Constituent Assembly" of France, the ideological birds of a feather sat together: the more radical members on the left, the more conservative members on the right.

On that day, on the eve of the French Revolution, not only was the modern political world born, but so was its terminology.[1] To this day, politics is bisected into a "left wing" and "right wing." Much digital ink is daily spilled in vain on the web over the "best" distinction between "right" and "left." Now, with regard to specific, fleeting political agendas, vague distinctions like this make sense. Movable umbrella terms are necessary, because legislation involves shifting coalitions of people who do not agree on every single point. The trouble starts when the terminology of the political moment is imported wholesale into the language of science, in which precise, fixed distinctions are called for. The left/right divide is downright confusing for social science.

Where this confusion is most pronounced is in intellectual discussion of Western society following World War I. According to common opinion, there are two politicoeconomic extremes: communism (or socialism) on the left, and fascism (or Nazism) on the right. Sound policy, then, is considered a balancing act between two opposite forms of totalitarianism. If one leans too far to the left toward the interests of the poor and weak, one arrives at communism/socialism. Veer too far to the right toward the interests of the rich and strong, and you get fascism. This political taxonomy is entirely unscientific. Neither fascism nor Nazism has ever been scientifically identifiable social orders. They are party platforms, and thus are assemblages of often-contradictory ideas and slogans. Calling fascism a "social order" makes as little sense as calling "Tea Partyism" or "Blue Dog Democrat-ism" a social order.