Ferguson Must Study Mises

Yesterday, I had linked to an article by Niall Ferguson titled “America: The Fragile Empire,” where he predicts that this Evil Empire might end soon. He ends this article with the words, “Washington, you have been warned.”

It is a lucky coincidence that I have only just finished reading Niall Ferguson’s bestseller: The Ascent of Money: The Financial History of the World. I enjoyed the many interesting facts he has recounted in riveting prose but, overall, I must say that he is the typical example of an economic historian who is not equipped with the exact praxeological theories with which to “understand” – or verstehen – all the numerous facts he has accumulated.

He begins well, showing how all the silver in Potosi did not enrich the Spaniards. But then he falters, recounting the history of government bonds – perpetual irredeemable debt – as something “good.” He does not see this financial development as something horrible, and the cause of wars and capital consumption – as I had pointed out, quoting Mises, in a previous post. I further elaborated on this in another post.

Ferguson seems to be a Chicago School man – he quotes Milton Friedman often, and cities the Friedman-Schwartz history of the Great Depression as the final word on the subject: that the US Fed did not do enough. He quotes many US Fed chairmen with approval, and seems to be, like the Chicago School types, a believer in a role of the State in providing money. He quotes Keynes often. The only Austrian he cites is his fellow Harvardian, Joseph Schumpeter; that too, on the concept of “gales of creative destruction.” Yawn.

In this book, the story of the US mortgage scam is well told, as is the story of the quantitative economists who ran Long Term Capital Management into the ground. He shows how their silly formulae did not work. Yet, he seems to be blissfully unaware as to how markets actually work.

In one important chapter of the book, on housing, he is actually wrong: he discredits Hernando de Soto’s emphasis on clear property titles and favours “micro-credit” instead. The latter is just a joke; another scam. I have met innumerable street vendors who are perfectly happy with the informal credit networks that sustain them. And here is an article on an Indian champion of clear property titles, DC Wadhwa. This gent had an interesting article in my copy of the Indian Express of yesterday, but the website does not carry it as yet. So this is an area where I am in complete and total disagreement with Ferguson.

But to be fair to this Harvard historian, he seems to be “getting there.” He seems to have realized that something is terribly wrong with the Anglo-Saxon financial system which dominates the world of today. He talks well of the gold standard years, of that phase of globalization, and Gladstonian liberalism. More than that, as his article citied above shows, he seems to have arrived at the conclusion that time has run out for the Bretton Woods system, and the empire run on fiat US dollars.

I suggest some reading for Ferguson, who does not claim to be an economist. I suggest he carefully study the chapter on “Indirect Exchange” in Ludwig von Mises’ Human Action; A Treatise on Economics – PDF here. This is Chapter XVII.

I also suggest he carefully study a book that Mises wrote titled Theory and History, (pdf here) and how they must complement each other as we seek to study “human action.” In particular, he must study the central idea of verstehen in historical studies. He is young. He has much to learn. And he is getting there. All the best, Niall.

The USSA - Heading For Doom

Harvard professor of financial history, Niall Ferguson, has an article titled “America, The Fragile Empire” that says Uncle Sam is headed for doom. He ends with the words: “Washington, you have been warned.” The article is from the LA Times, and is worth reading in full.

After reading this, you might wonder why.

After all, Uncle Sam has been injecting a trillion dollar “stimulus” into the economy. To understand why such Keynesian strategies are worse than the disease, I advise you read Robert Higgs' piece in The Beacon, titled “Anatomy of the Current Recession.” He shows how the most important indicator of recovery, private investment, is falling – not despite, but because of, the great government stimulus. I quote:

If real investment spending has taken a huge hit, however, federal government spending has raced ahead in high gear. Between 2007 and 2009, federal purchases of newly produced final goods and services—the federal government’s “contribution” to GDP—increased by more than 13 percent in constant dollars. Unfortunately, whereas private investment is the engine of economic growth, government spending (despite what generations of Keynesian economists have asserted) is the brake. Although increased government purchases by definition increase the measured national product, their substantive effect on the process of sustained economic growth is decidedly detrimental.

In other words, Uncle Sam is engaged in “capital consumption” and the USSA is therefore heading towards “de-civilization.”

Who is their only hope? Of course, Ron Paul. Here is this principled politician and Austro-libertarian writing on what he would do as President if he took over. Note how much trouble he will have dismantling “welfare.” Note how he will put an end to “warfare.” Note how he will kick the shits out of the federal bureaucracy. And note how he will put an end to federal control over education. He also says he will end federal control over the police – who should always be “local.” So there’s the only good politician in America, who swears to stand by the ideals of the US Constitution.

However, the last article I recommend today is by someone who argues, quite tellingly, that the US Constitution was designed to rob the citizens of their property. The author is Tom Mullen, and this is a post from his blog. I got the link from LewRockwell.com. It is well worth a read.

Then think: What do we do about our very own Uncle Sham?

On Self-Publishing

Aristotle the Geek made a comment on my post of yesterday suggesting that I "self-publish" my books.

No thanks, Geek. Been there; done that. And I have been published so widely - by Macmillan, by Liberty Institute, by Centre for Civil Society, by Friedrich Naumann Stiftung Für Die Freiheit, by International Policy Network - that I have no need for vanity publishing.

Indeed, I think of myself more like the silk-cotton tree, of which there are several in the Goan village in which I live these days. In the season, when it flowers and "broadcasts" its seeds - and the scientific word "broadcast" is pertinent - the local lanes look as thought they are covered in snow.

I am therefore perfectly happy broadcasting my message, sending the spores abroad. I expect nothing from the process except that some of them might germinate, and grow into mighty trees.

Indeed, self-publishing for free on the internet, through my blog, is the best thing that could have happened for a guy like me. I am now going to put up some more of my unpublished works for free - "broadcast" them. That is "my way."

If someone is motivated, by profit or ideology, to publish some of these works in book form, I would be happy and expect nothing in return. I have enough to survive on.

The Ludwig von Mises Institute is my role model: they broadcast for free.

And Diogenes the Cynic is also my role model:

My message to our The Total Chacha State is:

Don't Stand Between Me And The Sun.

Some More Useful Knowledge

While on the phone with Chandra the other day, I was suddenly reminded of the fact that there is an expanded 2nd edition of my Free Your Mind: A Beginner’s Guide to Political Economy. This was written in Mangalore in 2004, and Sudha Shenoy helped me a lot with many worthwhile comments. Of course, it was never published because my Mangalore adventure was interrupted by the police; but, some years later, London’s International Policy Network published this 2nd edition in a CD titled Ideas For A Free Society that was distributed all over the world, especially the Third World.

Chandra informed me that Free Your Mind (first edition) is now out of print, so I found my copy of the IPN CD and e-mailed him the relevant file, hoping he will be able to find a publisher.

While reading review comments from eminent people at the end of the book, I was also reminded of another short book I had written then, as an accompaniment to Free Your Mind.

This was titled Free Your Life: A Citizen’s Guide to Justice & the Law. I found this too quite easily, and both these are now available as free downloads on this blog.

I have kept both editions of Free Your Mind available. The first is better suited for schoolchildren, around the age of 15. The second is for the college-going, and adults. I hope you find these useful knowledge.

Free Your Mind 2nd edition is available here.

Free Your Life, here.

Both are also permanently featured on the right-hand bar, along with all the other free downloads.

For An Indian Edition Of "Human Action"

A while back, there was a post on Lew Rockwell’s blog, which has a huge Indian readership, suggesting that there be a Hindi translation of Ludwig von Mises’ Human Action: A Treatise on Economics. I welcome the idea. But then, why stop at Hindi. Why not a Bengali translation for a people long suffering under Communism? Why not a Malayalam one too, for the same reason? And then again, why not in Konkani, the language of the west coast?

But before all that, I think what we need most of all is an Indian edition of Human Action, in English. I have been working all these years with the third and fourth editions, but I find something wrong with them. Mises has failed to “front load” his book. It does not begin by telling the reader two important things:

1. Why the reader must study this book, and
2. What is so important about the knowledge contained in this book.

Indeed, Mises answers these questions only at the fag end of his book, so only the reader who has taken the trouble of going through all 900 pages is made aware of the importance of this treatise.

Part Seven, the concluding part of Human Action, is titled “The Place of Economics in Society” and contains three short chapters:

Chapter XXXVII on “The Nondescript Character of Economics;
Chapter XXXVIII on “The Place of Economics in Learning”; and
Chapter XXXIX, the final chapter of the book, on “Economics and the Essential Problems of Human Existence.”

I do believe that a new Indian edition should be published with a foreword containing extracts from these closing chapters, in order to motivate both the student as well as the lay reader to carefully study the entire treatise.

Let us begin with the words with which Mises ends his book:

The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.

I do believe that we need a foreword in which these words appear right on top, thereby “front loading” the book. But there is more, both for students and well as lay persons, and I offer these quotes from the chapter on the “place of Economics in learning.”

First, for the students. Writing of what happens to students in the universities of today, Mises says:

The students are bewildered. In the courses of the mathematical economists they are fed formulas describing hypothetical states of equilibrium in which there is no longer any action. They easily conclude that these equations are of no use whatever for the comprehension of economic activities. In the lectures of the specialists they hear a mass of detail concerning interventionist measures. They must infer that conditions are paradoxical indeed, because there is never equilibrium, and wage rates and prices of farm products are not so high as the unions or the farmers want them to be. It is obvious, they conclude, that a radical reform is indispensable. But what kind of reform?

The majority of the students espouse without any inhibitions the interventionist panaceas recommended by their professors. Social conditions will be perfectly satisfactory when the government enforces minimum wage rates and provides everybody with adequate food and housing, or when the sale of margarine and the importation of foreign sugar are prohibited. They do not see the contradictions in the words of their teachers, who one day lament the madness of competition and the next day the evils of monopoly, who one day complain about falling prices and the next day about rising living costs. They take their degrees and try as soon as possible to get a job with the government or a powerful pressure group.

But there are many young men who are keen enough to see through the fallacies of interventionism. They accept their teachers’ rejection of the unhampered market economy. But they do not believe that the isolated measures of interventionism could succeed in attaining the ends sought. They consistently carry their preceptors’ thoughts to their ultimate logical consequence. They turn toward socialism. They hail the Soviet system as the dawn of a new and better civilization.

I think that if students read this right at the outset of the proposed Indian edition, they will be strongly motivated to carefully study this rich treasure of essential knowledge. They will study it themselves, at home, just as they study for the CAT, JEE, GRE, GMAT, UPSC exams at home today. Who knows, maybe coaching classes will emerge.

Let us now move on to citizens. In this same chapter, Mises has an entire section titled “Economics and the citizen.” It is brief, so I will reproduce the entire section below. I do believe that this too should be “front loaded” so that lay citizens take the necessary trouble to study this vital book, just as they study so many things on their own today, from ayurveda and homeopathy to what not. The book shops are full of teach-yourself books that ordinary citizens buy and use. Human Action deserves to be one such book. Here is what Mises says on “Economics and the Citizen.”

Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.

To mention this fact is not to indulge in the often derided weakness of specialists who overate the importance of their own branch of knowledge. Not the economists, but all the people today assign this eminent place to economics.

All present-day political issues concern problems commonly called economic. All arguments advanced in contemporary discussion of social and public affairs deal with fundamental matters of praxeology and economics. Everybody’s mind is preoccupied with economic doctrines. Philosophers and theologians seem to be more interested in economic problems than in those problems which earlier generations considered the subject matter of philosophy and theology. Novels and plays today treat all things human—including sex relations—from the angle of economic doctrines. Everybody thinks of economics whether he is aware of it or not. In joining a political party and in casting his ballot, the citizen implicitly takes a stand upon essential economic theories.

In the sixteenth and seventeenth centuries religion was the main issue in European political controversies. In the eighteenth and nineteenth centuries in Europe as well as in America the paramount question was representative government versus royal absolutism. Today it is the market economy versus socialism. This is, of course, a problem the solution of which depends entirely on economic analysis. Recourse to empty slogans or to the mysticism of dialectical materialism is of no avail.

There is no means by which anyone can evade his personal responsibility. Whoever neglects to examine to the best of his abilities all the problems involved voluntarily surrenders his birthright to a self-appointed elite of supermen. In such vital matters blind reliance upon “experts” and uncritical acceptance of popular catchwords and prejudices is tantamount to the abandonment of self-determination and to yielding to other people’s domination. As conditions are today, nothing can be more important to every intelligent man than economics. His own fate and that of his progeny is at stake.

Very few are capable of contributing any consequential idea to the body of economic thought. But all reasonable men are called upon to familiarize themselves with the teachings of economics.

This is, in our age, the primary civic duty.

Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists. Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.

I hope this post will prompt some of our think-tankers and their publisher friends to consider rushing through an Indian edition of Ludwig von Mises’ masterpiece Human Action: A Treatise on Economics. If they do so, I would be honoured to write a foreword in which I will “front load” direct quotations from the closing chapters that will motivate the reader to treat this as a private study of great importance indeed.

PS: For a free download of Human Action, click here. I suggest you read chapters 37, 38 and 39 first.

A Poem That Inspires

A dear friend sent me this inspiring poem on the human spirit by the black American poet Maya Angelou yesterday. Angelou's autobiographical book on her childhood, I Know Why The Caged Bird Sings, graces my bookshelf. Enjoy the poem:

Still I Rise
by Maya Angelou

You may write me down in history
With your bitter, twisted lies,
You may trod me in the very dirt
But still, like dust, I'll rise.

Does my sassiness upset you?
Why are you beset with gloom?
'Cause I walk like I've got oil wells
Pumping in my living room.

Just like moons and like suns,
With the certainty of tides,
Just like hopes springing high,
Still I'll rise.

Did you want to see me broken?
Bowed head and lowered eyes?
Shoulders falling down like teardrops,
Weakened by my soulful cries?

Does my haughtiness offend you?
Don't you take it awful hard
'Cause I laugh like I've got gold mines
Diggin' in my own backyard.

You may shoot me with your words,
You may cut me with your eyes,
You may kill me with your hatefulness,
But still, like air, I'll rise.

Does my sexiness upset you?
Does it come as a surprise
That I dance like I've got diamonds
At the meeting of my thighs?

Out of the huts of history's shame
I rise
Up from a past that's rooted in pain
I rise
I'm a black ocean, leaping and wide,
Welling and swelling I bear in the tide.

Leaving behind nights of terror and fear
I rise
Into a daybreak that's wondrously clear
I rise
Bringing the gifts that my ancestors gave,
I am the dream and the hope of the slave.
I rise
I rise
I rise.

Good Morning, America!

Some of you may already be familiar with my old friend and soul-brother, my alter-ego, so to speak, Baba Pagal Nath Charsi, whose fiery political speech in the crude, street Hindi of barbarous Delhi was podcast on this blog many months ago, and saw record downloads.

Well, here is the good Baba again, this time in a more urbane avatar, in English, with a long song, a lyrical essay that is hilarious, risqué, and political dynamite. The F-word is sprinkled through it like confetti, so Eminem fans will love this long song.

The background to this composition must also be told. This was written in 2004, when the Baba was on the run from the Karnataka State Police, their goon squads, and their hired assassins who disapproved of his peaceful political activism: spreading the Gospel of Freedom.

Afraid for his life, and wanting to send out his final message to his faithful followers, he holed up in a small hotel in a remote mountain village and hammered in out on his laptop. He then jeeped it to a nearby small town, into a cyber café there, and e-mailed it to the faithful few. It is from these records, carefully preserved, that this long song has now been unearthed and is being aired. The Antidote Blog is proud to host Baba Pagal Nath once more: “He ain’t heavy, he’s my brother.”

Good Morning, America is an “immigrant song”: it challenges the visa-passport regime. But it challenges many other forms of tyranny, including, of course, that great tyranny against the Noble Herb.

To enjoy this long song of freedom, click here. It is also permanently featured on the right hand bar, along with all the other free downloads.