You are hereBiting the Invisible Hand—I

Biting the Invisible Hand—I

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By Islamaphobe - Posted on 26 January 2007

by John Evans
The Democrats’ victory in November, in combination with the prevalence of such phenomena as the widespread tendency to ignore what it is about Islam that conditions so many of its practitioners to behave violently and the pervasiveness of the belief that the modest rise in average world temperatures in recent years must be attributed to human activity have caused me to worry, of late, that we have become a less rational society than we were, say, fifty years ago. In some respects, I find Western culture today to be uncomfortably remindful of a scary book that I read a little over fifty years ago, Aldous Huxley’s Brave New World, one of whose themes was the suppression of rational thought processes in the world of the future. The Democrats’ victory in November, in combination with the prevalence of such phenomena as the widespread tendency to ignore what it is about Islam that conditions so many of its practitioners to behave violently and the pervasiveness of the belief that the modest rise in average world temperatures in recent years must be attributed to human activity have caused me to worry, of late, that we have become a less rational society than we were, say, fifty years ago. In some respects, I find Western culture today to be uncomfortably remindful of a scary book that I read a little over fifty years ago, Aldous Huxley’s Brave New World, one of whose themes was the suppression of rational thought processes in the world of the future. As regular visitors to this site know, my professional background is that of an academic economist. For over forty years, I was in close contact with the great American undergraduate and had the opportunity to observe first-hand the trends that were at work in what is often termed “higher education.” By the windup of my professional career, I had come to the firm conclusion that there had been some deterioration of academic standards during my career and that “grade inflation” had most definitely occurred. Although I made a conscious effort to lower my own standards after the Vietnam War era spawned an irresistible movement to concede students greater control over their education, I found that I had difficulty keeping up with the competition. As a result, toward the very end of my career, I was succeeding in alienating a higher percentage of my students in introductory courses than I had in earlier years. To some extent, no doubt, this problem resulted from my becoming a grumpy old man looking forward to retirement, but I feel that most of it came from my difficulty in lowering standards fast enough and such factors as the rise of the self-esteem movement in education. Some students who were accustomed to making As in high school could not cope psychologically with receiving a C from me. In any event, I fully retired in 2000, just in time to miss being able to participate in the sharp rise in the salaries of academics specializing in economics and finance that have occurred during the past few years.

Before you conclude that I am indeed a grumpy old man who thinks the world is going to hell, let me assure you that I am not at all sure that the social trends are all in one direction, namely downward. After all, I am by training an economist, not a psychologist or a dispensationalist anticipating the joy of Armageddon. Perhaps the trends in education are not all for the worse, and when it comes to explaining why large numbers of people behave irrationally, it is best that I stay close to familiar territory. When I do so, I find a mixed picture. A great many people obviously have views about economics that seem inexplicable from the perspective of choosing between what works and what does not, but when I look at economic history, I find that this has always been the case. Moreover, I also find that people do continue to learn from experience—though the learning process often seems to be excruciatingly slow in light of the empirical evidence. Ideology, including religion, obviously has a great impact upon the ability of people to evaluate evidence, and it is obvious that some ideologies have been more conducive to the use of reason than others.

This article is the first of three that I propose to present here in which I shall be attempting to apply the concept of rationality to economic analysis. In this article, I offer a brief explanation and justification of economists’ common assumption that people behave rationally when acting as consumers and income earners and offer some suggestions for the improvement of the operation of market forces in the American economy. In the second and third articles, I shall investigate the problem of why it is that in the conduct of economic policy, governments so often achieve suboptimal results. Article number two will examine this matter by offering an overview of the world as a whole, and the third article will examine a few instances of what I consider to be irrational economic policymaking in the United States.

Evaluating the rationality of governments’ economic policymaking is greatly complicated by the fact that in their conduct of economic policy, governments may have other objectives than the maximization of the economic well-being of the people subject to their authority. Furthermore, their actual objectives are often different from their announced objectives. Among these other objectives there stands out the retention of political power. Thus, it happens all the time that governments claim they are taking certain actions in order to maximize the economic well-being of the people when those in charge know that this is not the case. Such behavior may be perfectly rational, however, from the perspective of the decision makers. On the other hand, it often happens that when governments genuinely try to conduct economic policy so as to provide the maximum benefits to the people, they misapply economic theory and fail to heed the empirical evidence that is available to them. From my perspective, this is irrational behavior, and I shall be offering numerous examples of it.

During one summer when I was a student at the University of Texas, where I earned my BA and MA degrees before joining the U.S. Army at a place with the intriguing name of Fort Bliss, I succeeded in reading all of Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations. In those days, I had not yet come to realize that if you wanted to get ahead as an academic economist, it was dangerous to spend time reading original sources when doing so offered little payoff potential in terms of helping you write articles in professional publications that few people read but which are invaluable in padding resumes. Although I thought of myself as a kind of Hubert Humphrey liberal; i.e. having a generous heart and wanting to see other peoples’ money spent abundantly for what I considered good purposes, Smith’s book made a deep impact on me that proved to be permanent.

The most important idea in Smith’s great book is, of course, the conviction that economic progress hinges vitally upon the existence of free markets. Smith perceived that although altruism is one facet of human character, it tends to be overrated and is all too easily distorted by other influences. In fact, he believed, it is self-interest that serves as the dominant motivational factor in determining behavior, and he thought of self-interest primarily in material terms. My favorite quotation from Smith is this: “Rarely do men of the same trade or profession come together, even for purposes of merriment and diversion, but the conversation turns into a conspiracy against the public and an agreement to fix prices.” He added that although government should not prohibit such individuals from meeting socially, neither should it promote their gatherings.

Notice that Smith refers here to “men of the same trade or profession,” not corporate executives. In his day (1776), the great industrial corporations had not yet come into existence. By contrast, in our society, those politicians and media spokespeople who address issues of market rigging generally refer to the nefarious activities of industrial, mercantile, and financial corporations (other than media companies) while treading lightly upon similar activity indulged in by unions, professional associations, and government. A great scholar like Adam Smith would never have shown such partiality. And were he alive today, you can rest assured that he would be insisting that most public servants are no less motivated by self-interest than the top executives of Wal-Mart.

Depending on how a society is constructed, the pursuit of self-interest can be very damaging to the social fabric, so there is the question of how self-interest can be guided into socially beneficial channels. In large part, Smith’s answer was through the existence of market competition, which, he argued, forces an individual, “as if by an invisible hand to promote an end which was no part of his intention”; i.e. the market preferences of consumers (emphasis added). That, however, was not his entire answer. He also recognized that if free markets are to bring about optimal results, they need to operate within a social framework that has the proper moral constraints and offers a legal system that protects human rights, including property rights. He took it for granted that the United Kingdom of his day had such a social framework and consequently placed relatively light emphasis upon the non-market aspects of social organization in The Wealth of Nations. This fact has misled some would-be interpreters of Smith into thinking that the moral issues associated with free markets did not concern him. Smith, after all, had authored a book entitled The Theory of Moral Sentiments in 1759, in which he argued that people are born with a conscience that orients them toward distinguishing right from wrong. With the proper social environment, he perceived, the existence of the conscience can exercise a desirable restraining influence upon self-interest.

The Wealth of Nations, as its full title makes clear, is devoted to the subject of economic growth and development. The way to achieve such progress, Smith argued, is to establish the proper social framework for the operation of the invisible hand and allow free markets to operate to the maximum feasible extent. In arguing for this position, he assumed, of course, that when acting as producers and consumers, people behave rationally. He recognized, however, that some of the things that people choose to spend their money on are harmful to them and to society and that some restraints on the exercise of consumer choices are therefore desirable, but he also warned against allowing excessive restrictions on consumer choice at the discretion of government officials. After all, he indicated, those officials will, if given the opportunity, indulge themselves in wasteful spending that conforms to their own preferences.

In an economic system like that endorsed by Adam Smith, some consumer spending admittedly occurs that is irrational because it does society at large more harm than good and is injurious to the buyers themselves. Clearly, for example, people who shorten their lives through alcoholism, overeating, or smoking cigarettes are behaving irrationally. Economists who walk in the path cleared by Smith argue, however, that social restraints imposed on consumer sovereignty can easily become excessive and that even if consumers do not always choose wisely, the opportunity to choose freely is a tremendous motivator. Thus, while citizen X may be unwise in how he chooses to spend some of his income, the motivation to acquire that income may stimulate him to work hard and efficiently.

Although The Wealth of Nations quickly began to exercise enormous influence upon the thinking of the relatively well educated people, its ideas have always been hotly debated among what I shall term “the thinking classes.” For one thing, Smith’s book was a vigorous repudiation of many of the economic policies that governments had pursued, and that meant that it clashed head-on with powerful “vested interests” (Thorstein Veblen’s term). For another, Smith did not single out the members of the thinking classes who elected to become academics; i.e. people like himself, as being especially worthy of being on the receiving end of government largesse. Incidentally, although Smith was an academic and taught for many years at the University of Glasgow, he also had wealthy patrons, one of whom hired him to tutor his son and took Smith with him on a lengthy visit to France. During the nineteenth century, as publicly financed universities gained in prominence and academics became less dependent upon private patrons and privately run universities, they tended as a group to become more hostile to Smith’s ideas. In doing so, they validated his belief that people tend to be motivated by considerations of self-interest. Unfortunately for academics, the operation of market forces has never put them into the same income category as business tycoons, successful entertainers, and outstanding professional athletes. Thanks to their ability to obtain funds from government, however, they have been able to move up considerably on the relative income ladder.

Smith’s belief in the efficacy of the invisible hand will always be vulnerable to attack because of its assumption of the validity of consumer preferences. As I noted earlier, it is obvious that some individuals are not good judges of how they should spend their income for their own benefit, and we all obviously fall short of having perfect judgment in this regard. Moreover, with the enormous increases in per capita real income that have occurred since 1776, the fraction of income that has to be spent to provide the basic necessities of food, shelter, clothing, and health care has greatly diminished (I am a little uncertain about including health care here because government’s intrusion into that field has greatly increased its cost.). This means that people have far more income that can be spent in discretionary fashion than was formerly the case. That they spend this discretionary income rationally as opposed to indulging in conspicuous consumption and conspicuous waste (more Veblenian terms) and being suckered by modern advertising—what John Kenneth Galbraith called “bamboozlement”—can readily be questioned. Consequently, many politically liberal economists; i.e., people like Galbraith, have not hesitated to suggest that governments’ economic policies should sharply curtail the invisible hand’s freedom of movement.

But if the validity of relying upon the invisible hand can be questioned, then what is the alternative? Theoretically, in democratic countries, people can elect representatives who will pass appropriate legislation to protect them from themselves. We all know, however, that legislation is heavily influenced by special interest groups and that how legislation is implemented depends upon bureaucratic decisions and the whims of judges. It seems reasonable to conclude, therefore, that trying to constrain the exercise of consumer preferences through legislation has its limitations. And while Professor Galbraith was a likable man who wrote with elegance and wit, I shudder when I think about people like him deciding how to restrict the spending of my income.

An alternative approach, which is certainly not mutually exclusive, is to try to increase the rationality of consumer spending through education. By education, I of course include public and private schools from kindergarten through graduate school, but I also have in mind such things as government testing of products and the dissemination of information about the test results. Unfortunately, a serious problem with much of our formal system for the education of the young is that our educational establishment has become thoroughly liberal politically. This means, among other things, that it has an anti-business, pro big government bias that severely warps the education process and contributes politically to the adoption of policies that limit the scope for the operation of the invisible hand. To substantially reduce this bias will take considerable time and much effort, but it can be done. The key to reducing it is to remove the monopoly power that governments, particularly at the state and local level, have acquired over formal education.

I also include within the scope of education the role of religion in contributing to the education of adults. Churches play an enormously beneficial role in instilling in people the virtuous behavior that is essential for the operation of a free market economy. Unfortunately, for a variety of reasons, many members of the clergy share with other members of “the chattering classes” an anti-business, pro big government bias. Were it not for the fact that many churches are dependent for the financial well-being on people of exceptional means—many of them connected to the business world—this bias would be even more widely expressed among the clergy than it already is. If we are to increase the public’s general understanding of the invisible hand’s operation, we need, therefore, to greatly improve the economic literacy of the clergy.

For illustrative purposes in connection with religious education, let us consider the following passage from Matthew 19:23-24: “Then Jesus said to his disciples, “I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.” I have always loved this passage, and I know that it is one which some clerics rely upon to try to make the well-to-do feel guilty and to justify their leanings toward the liberal side of the political spectrum. Now I do believe that it is perfectly o.k. to use Scripture to encourage the “rich” to accept the notion that they have responsibilities toward society at large and should refrain from excessive self-indulgence while giving generously in ways that will benefit people who are less fortunate materially than themselves. I argue that it is often the case that people who are unusually wealthy or receive exceptionally large incomes have benefited from the possession of exceptional market power; i.e. their incomes are greater than they would have been if they had been subject to greater competition. I am persuaded that a strong case can be made for some social actions to restrain the conspicuous consumption of such individuals and to encourage them to become involved in activities that induce them to use their talents and financial ability to help others. I am not persuaded, however, that Matthew 19:23-24 or any other statement attributed to Jesus indicates that He believed that government should attempt to confiscate most of the wealth and income of the richest among us in order to supposedly provide more benefits to the general public. To this I add the observation that the mention of these verses should be accompanied by a discussion that includes their context, the grammatical issues that have been raised about them, and the extensive use of hyperbolic speech throughout Scripture. I am, incidentally, in total disagreement with people who believe that Jesus was doing His best to make the world safe for socialism.

Another thing that can be done in an effort to improve the invisible hand’s operation is to improve the way in which government administers “the rules of the game” that govern the marketplace. Of course we already have such rules, which constitute part of the social framework to which I referred earlier, but there can be no doubt that great improvements can be made in them. I am profoundly of the opinion that a major problem that we have in the operation of our economic system is that we have assigned too many tasks to government rather than seek alternatives. Adam Smith believed that, in principle, the fewer the tasks that government takes on, the more efficiently it is likely to discharge them. I certainly do not recommend that we try to return government to the relative size that it had in the economy of the United Kingdom in 1776, but I also insist that the government sector of our economy is far too large for optimal efficiency. It would be enormously beneficial, for example, if Social Security were privatized and the federal government’s intrusion into medical care were scaled back in favor of greater emphasis on market mechanisms. This could be done in ways that would not be disadvantageous for those in the lower income levels.

An interesting phenomenon that has occurred during the process of economic development in all nations that have achieved it is a growth in the relative size of the public sector; i.e. government, over time. To a large extent, this growth can be explained by simply stating that as people have experienced gains in their real per capita income, they have demanded relatively more of the types of goods and services that government provides. They also have demanded that government assume greater responsibility as a redistributor of income via government “transfer payments,” which are distributions of money, goods, and services to those whom the government favors that are financed by taxation or borrowing. It has often been the case, of course, that political considerations have caused some of the expansion in government spending to ride roughshod over the operation of the invisible hand; but then people like Galbraith have argued that even if some of the money spent by government is spent unwisely, either because of bad choices in what it is spent for or because of inefficiency in the spending process, we need to remember that people spend much of their income frivolously and that the tax revenues required to pay for the expansion of government can be taken from those who are relatively well off. Unfortunately, there comes a point where the expansion of government’s role in the economy severely retards the ability of the private sector to keep expanding, and historically it has been the private sector’s dynamism that has accounted for most of the economic growth that has made the expansion of the public sector possible. Smith, by the way, was a believer in natural law, and I suggest that there is a kind of natural law that operates in economic life that ultimately limits the ability of government to keep on growing.

Finally, I must note that the legal system of a nation plays an enormous role in determining how well markets function. The successful operation of the invisible hand requires a legal system in which personal freedom is respected, property rights are both extensive and well-protected, and those who cause injury to others are held responsible both criminally and civilly. In the ideal legal system, the law will not only be fair and impartial, but also it will be sufficiently settled so that entrepreneurs can know with a great deal of certainty what legal risks they will be subject to if they undertake expenditures that will contribute to the economy’s expansion.

Unfortunately, the American legal system has become severely suboptimal in terms of promoting the efficient operation of the invisible hand. I shall somewhat cynically suggest that the real growth rate of the U.S. economy could be increased somewhat if there were a modest reduction in the number of practicing lawyers. I suspect that most politicians in the United States have a legal background, a fact that inclines the political system as a whole toward operating in ways calculated to improve the overall well-being of the members of the legal profession at the expense of the society as a whole. We have become an incredibly litigious society, one in which many citizens who are not well off economically dream of winning a large award in a personal injury suit. Of course, many of these same people take advantage of the greatly increased opportunities for gambling that our economy now offers, but I shall not devote space to that problem.

I shall close with the observation that our evolution into being such a litigious society is a clear violation of biblical teaching, and I suggest that our preachers should spend as much—or more—time talking about Matthew 18:15-17 as they do about Matthew 19:23-24. That said, I bring this article to an end. I don’t want anyone to sue me.

Kanzei's picture

On this issue of rational behavior, I wonder how this topic can be addressed without at least some reference to praxeology and Human Action (capitalized to reflect Von Mises' work). In Professor Evans essay he says that "clearly, for example, people who shorten their lives through alcoholism, overeating, or smoking cigarettes are behaving irrationally".

I do object to calling that behavior irrational, and would refer to Von Mises who at length discussed that all sane people act to improve their own condition from their own point of view at all times. Stupid behavior is not irrational behavior. I would not want to hold that the millions of smokers and over-eaters are all insane. They are acting to improve their own condition from their own point of view. They are not abnormal these days choosing short term pleasure instead of long term health.

It may seem like splitting hairs, as the author does correctly say that "social restraints imposed on consumer sovereignty can easily become excessive". I'm not sure what consumer 'sovereignty' is, but I think it means consumer choice or freedom. If so, the point is well taken and I post this to reinforce the point.

If the reader were to accept that millions of people can behave irrationally, they might slide down a slippery slope and start advocating more and more legalism. In Ohio, the anti-smoking crowd has gone totally overboard, to the point that the new anti-smoking law is being interpreted to mean that not only is it not permitted to smoke in any public place (including on private property), but that "there can be no possibility that smoke can enter a building; smokers must stand at least 20 feet from any door or window to a public facility". It's become hysteria.

But these disruptions in the market have long term negative impacts (not even further mentioning the loss of jobs in the tobacco industry). People will begin reasoning from the principle that private property is of a lower value than a possible health risk, or that private property rights can be restricted or destroyed by plebiscite.

It would be based on a higher order principle that people behave irrationally, and must be protected from themselves. I believe in a higher degree of personal responsibility and personal freedom.

I think the author of this article would largely agree, but those comments stuck in my head and I wanted to give my 2 cents.

Kanzei

Islamaphobe's picture

Congratulations on making a reasoned argument! Whether it is rational behavior to smoke oneself into the cancer ward is debatable, I think, as is your assertion that "Stupid behavior is not irrational behavior." It may not be irrational from the perspective of the person acting stupidly, but it is certainly irrational from the perspective of those who are interested in human well-being.

Who says such people are insane? I didn't, so why bring the point in? That people will choose short-term pleasures over long-term well-being is obvious, which is one reason for putting people through the education process, including learning something about religion. I insist that there is a rational public interest in educating people not to behave stupidly.

The slippery slope is always going to be there. I do not like slippery slope arguments because they tend to degenerate into absolutism and situations where arbitrary rules displace common sense. I do think that if people insist on smoking (I smoked pipes for forty years.), some costs should be imposed upon them. I also think they should be allowed to exercise their choice to smoke if they are willing to pay those costs because of the inherent dangers of going too far in asserting the right of the "public" to control behavior. If everyone quit smoking and the tobacco industry folded up, the world would be better off, but I prefer to rely on education and sumptuary taxes as opposed to government prohibitions.

JSE

Kanzei's picture

On this rational v. irrational question, I like to utilize Von Mises.

"Human action is necessarily always rational. The term "rational action" is therefore pleonastic and must be rejected as such. When applied to the ultimate ends of action, the terms rational and irrational are inappropriate and meaningless. The ultimate end of action is always the satisfaction of some desires of the acting man. Since nobody is in a position to substitute his own value judgments for those of the acting individual, it is vain to pass judgment on other people's aims and volitions. No man is qualified to declare what would make another man happier or less discontented. The critic either tells us what he believes he would aim at if he were in the place of his fellow; or, in dictatorial arrogance blithely disposing of his fellow's will and aspirations, declares what condition of this other man would better suit himself, the critic."

Von Mises is building his prazeological argument.

"When applied to the means chosen for the attainment of ends, the terms rational and irrational imply a judgment about the expediency and adequacy of the procedure employed. The critic approves or disapproves of the method from the point of view of whether or not it is best suited to attain the end in question. It is a fact that human reason is not infallible and that man very often errs in selecting and applying means. An action unsuited to the end sought falls short of expectation. It is contrary to purpose, but it is rational, i.e., the outcome of a reasonable--although faulty--deliberation and an attempt--although an ineffectual attempt--to attain a definite goal. The doctors who a hundred years ago employed certain methods for the treatment of cancer which our contemporary doctors reject were--from the point of view of present-day pathology--badly instructed and therefore inefficient. But they did not act irrationally; they did their best. It is probable that in a hundred years more doctors will have more efficient methods at hand for the treatment of this disease. They will be more efficient but not more rational than our physicians.

The opposite of action is not irrational behavior, but a reactive response to stimuli on the part of the bodily organs and instincts which cannot be controlled by the volition of the person concerned."

And he leads later to the reason that this discussion is not esoteric, but instead critical in economics (praxeology is his basis for economic theory).

"The teachings of praxeology and economics are valid for every human action without regard to its underlying motives, causes, and goals. The ultimate judgments of value and the ultimate ends of human action are given for any kind of scientific inquiry; they are not open to any further analysis."

Islamaphobe's picture

I don't recall saying that I thought von Mises was always right. When it comes to the statement that "Human action is necessarily always rational," I must disagree. The actions of a lunatic may be rational to him/her, but they are not rational to outside observers. When I used the term rationality in my article, I had in mind the accomplishment of the objective of the maximization of economic well-being from the perspective of society as a whole using the pool of available knowledge.

Von Mises was VERY doctrinaire. On the occasion on which I introduced him to the members of our graduate school club and attendant faculty members, he proceeded to insist that the USSR simply lacked the ability to compete with the United States technologically. This was at a time when the Soviets had demonstrated that they were ahead of us in the ability to send rockets into space! Von Mises was basically correct about the ultimate consequences of departing from reliance upon price signals to guide the allocation of resources, but he was emphatically WRONG about the ability of the Soviets to cause us a lot of trouble by focusing their resources on military and political objectives. He underestimated their abilities, and his critics underestimated the soundness of his faith in the ultimate superiority of market-based resource allocation.

Kanzei's picture

Interesting.

I really think Von Mises explanation of action and his entire argument on praxeology is totally superior work to anything before or since on the topic. With all due respect, I think his prediction regarding the USSR has nothing to do with this topic. I'm not interested in ad hominem arguments, and to attack someone with the stature of Von Mises in particular is not something I feel qualified to do. To throw out his treatise on Human Action, which is considered a foundation of all of the Austrian Economic movement, simply because he made an error regarding the Soviets seems a *bit hasty. If I'm overstating your case above let me know.

I believe, as I said before, that the idea that millions of people are behaving irrationally is a dangerous one that leads to exactly what we are seeing in society; war and legalism. (too many times I've heard the war justified by the average Joe as "those Arabs are crazy, irrational kooks. Something has to be done about them")

Sane individuals always act rationally. They make errors in judgment. They get into fender benders. They burn their hand on a tea kettle. They even make bad investment decisions. They take dangerous drugs, including nicotine. But they are not irrational.

In fact, I think there are some religious implications here as well. In the minds of some folks, the belief that a virgin could become impregnated by the Holy Ghost is a quality only an irrational person would believe. But those folks also are twisting the meaning of rationality.

The ultimate given is unknowable. It is accepted by faith, antecedent to all reflection or question. The big bang is an a priori of atheists. Creation is an a priori of theists.

Von Mises said this, which was a building block of the statements he made in my previous post, which are now being questioned:

"Since time immemorial men have been eager to know the prime mover, the cause of all being and of all change, the ultimate substance from which everything stems and which is the cause of itself. Science is more modest. It is aware of the limits of the human mind and of the human search for knowledge. It aims at tracing back every phenomenon to its cause. But it realizes that these endeavors must necessarily strike against insurmountable walls. There are phenomena which cannot be analyzed and traced back to other phenomena. They are the ultimate given. The progress of scientific research may succeed in demonstrating that something previously considered as an ultimate given can be reduced to components. But there will always be some irreducible and unanalyzable phenomena, some ultimate given."

After a bit more explanation and a discussion of metaphysical monism and dualism (which have little or no application in this discussion) he then immediately builds on this foundation that all action is rational, by definition (because the behavior of the insane is no action, but re-action; similar to physical reflex).

To stretch the definition of irrational behavior so far that includes unwise behavior emboldens those that have turned science into a religion (science so called). It gives them reason to think that all theists are irrational, when in fact theists simply begin to reason from a different first principle; a different ultimate given.

I'm enjoying the conversation and hope others have some thoughts as well.

Kanzei

PS - {Human beings, utilizing their rational mind, are able to analyze their behavior abstractly. It is this that allows us to understand right from wrong. It is the rational mind that makes morality a knowable quantity. The animals do not have this ability; they only react to stimuli. It may well be that the rational mind is (in whole, or perhaps only in part) what distinguishes humans as being created in the image of God.}

tom-g's picture

Dear Dr. Evans, I am looking forward eagerly to your future articles.

I, like you, have read all of Smith's "Wealth of Nations". (studied it also for many years).

It is interesting that you seem to have adopted the "Invisible Hand" reference by Smith to your own use, as have virtually all other commentators on this most famous statement.

However, as you know, Smith was not directing his words to consumers but to how God (as by an invisible hand) was directing capitalists to domestically invest their capital, thereby most effectively benefiting and contributing to the increasing "Wealth of Nations" (the intent of his book), which was no part of their personal self interested intentions.

As you know, the immediate text for this quote is introduced by the words "As I have before explained", which brings the reader back to the remote text where he goes into great detail and explanation of the role of capital invested domestically, in domestic production for domestic consumption (Protectionism), as opposed to the less efficient use of domestic capital invested in foreign production for domestic consumption (Free Trade).

As Smith explains it; this domestic investment of capital tends to put into motion 2x (twice) the quantity of domestic labor as the same quantity capital would if it were invested in foreign production for domestic consumption.

Since Smith has explained that it is by increasing the number of those members of a nation engaged in productive labor that tends to increase the wealth of a nation, hence it is by God's leading (As by an Invisible Hand)that capitalists are induced to invest domestically, which was no part of their original intention.

It is interesting, and I firmly believe not a coincidence, that the three ideas that today war for the minds of men all had their origin in the same year, 1776.

In that year Smith published his "Wealth of Nations" in Scotland, the American Colonists authored "The Declaration of Independence", and Adam Weishopt wrote "The Code of the Illuminati" in Bavaria.

In America, for the first time in the history of civilization, a people by choice established a separated, sovereign, independent nation, consecrated to God based upon the self evident truth of the God created unalienable right to life, liberty and the pursuit of happiness.

This new nation then codified Smith's God directed (As led by an invisible hand) domestic market economic system in its Constitution and created for the first time in history the economic system of "Protectionism", which became known and identified as "The New American Economic System".

Interestingly enough, the very first law ever passed by the newly formed Congress under the new Constitution in 1789, before they even created an Army, Navy, or Marines Corps to militarily protect the nation, was to protect American manufacturing from foreign influence and intervention.

The Tariff Act of 1789, introduced by the Father of the Constitution, James Madison, and deliberately signed into law by George Washington, the Father of our Country on the significant day of July 4Th., 1789, states in its preamble that it was for: "The encouragement and protection of Manufactures."

While on the other side of the Atlantic, Weishaupt's secular humanist system was picked up by the French Philosophes and imported into England by the group of "Radical Anarchist Benthamites (Utilitarians)" known as "Classical Liberals", the last of whom are recognized as Karl Marx and J.S. Mill, who then proceeded to codify this atheistic system into the economic system of Free Trade through the Ricardian theory of Comparative Advantage. The philosophy today is advocated by individuals recognized under the label of Libertarians and is the foundation of the Godless collectivist system of free trade known as Libertarianism.

It should be noted that Lord Bertrand Russell,(the godson of J.S. Mill, who was himself the godson of Jeremy Bentham)in his monumental work "A History of Western Philosophy", clearly identifies that the Free Trade economic theory was created to be the Anti Christian Gospel. This gospel of Free Trade, to create an ecumenical, indissoluble union of the peoples of the world, he says, was created knowingly and deliberately out of their hatred for the Christian Gospel.

Karl Marx advocated Free Trade because he recognized that it broke down national loyalties, boundaries and tradional heritages. The treasurer of the Cecil Rhodes Trust declared the the only enemy standing in the way of the creation of a single world system (A Brave New World?; 1984?; 1000 points of light?) was the American tariff protectionist economic system.

As I said Dr. Evans, I eagerly look forward to your articles. I have for many years published "The American Protectionist", a monthly newsletter magazine, and am in the process of writing a book by that name intended to protect and defend the Gospel of our Lord Christ Jesus and to explain its compatibility to our original American protectionist economic System

Today, the most pejorative terms by which a person can be called are; Protectionist, isolationist, homophobe, in other words a traditional patriotic Constitutional Christian American.

While on the other hand praise is heaped upon the heads of those who identify themselves as Free Traders, in other words anti Christians.

And who are the majority of those who degrade Protectionists? Why those who are identified as modern evangelical fundamental Christians of course. And who are the majority of those who advocate Free Trade? Those same evangelical fundamental Christians, who else?

I think it was Sam who asked about Dr. Gary North. I would suggest you read his books and then ask yourself what philosophy he advocates? Then ask yourself who does he identify as his economic and philosophic gods?

But, please for your own peace of mind and sanity, do not, I repeat do not, make any positive references to Alexander Hamilton the father of the American economic system, the tariff system or to the philosophy of Protectionism.

Tom

DavidF's picture

This is very good information Tom! Thank you for bringing it up. I will be looking forward to your comments and articles as well. Do you have a website where we can learn more?

This statement of yours is notably interesting : “This gospel of Free Trade, to create an ecumenical, indissoluble union of the peoples of the world, he says, was created knowingly and deliberately out of their hatred for the Christian Gospel.”

As Preterist Christians, we know that in A.D. 70 “the kingdoms under the whole heaven will be handed over to the saints” Dan. 7:27 "The kingdom of the world has become the kingdom of our Lord and of his Christ, and he will reign for ever and ever." Rev. 11:15

The USA, Russia, China and all the rest are part of Christ’s Kingdom now - and they are our dominion. This is already reality in the Spiritual venue, but here in the material setting Christ will continue to express His work, in providence and in Christians, to shape the nations for His purposes. All post A.D. 70 historical evidence for the last two Millenniums show that His Kingdom “will crush all those kingdoms and bring them to an end, but it will itself endure forever.” Dan.2:44. Ultimately, it looks like the physical world (all those kingdoms) will conform to His Kingdom as a one world system. See Dan. 2:35 and 7:27 “the rock… became a huge mountain and filled the whole earth.” “His kingdom will be an everlasting kingdom, and all rulers will worship and obey him.”

So, I am interested in how you see the "domestic economic system" in light of Preterism‘s world-view. Do you have articles that address this perspective? The long term implications are a whole earth economy, the elimination of status for individual nations, and Christian dominion - not Atheist or Judaist/Marxist. How these matters will come to pass is extremely puzzling, especially in view of the "planned" Free Trade economy that is effectively imposed over the globe today.

DavidF

"Whoever controls the volume of money [Federal Reserve Banks] in any country is absolute master of all industry and commerce." President James A. Garfield

Islamaphobe's picture

Tom,

I'm sorry to have to tell you this, but I am anything but a protectionist! I taught international economics and finance for many years, and you had better believe that I did not teach protectionism! I did, however, go into the various arguments that have been used to restrict the freedom of movement of goods and financial capital internationally, and I duly noted that some of them are not totally without merit, depending on the specific conditions that face a nation.

I admit right up front that I have not looked at the Wealth of Nations for many years, and my memory could be faulty. I do well remember that Smith explained why businessmen preferred to invest domestically over investing in foreign nations, but my memory is that he made a good deal of the point that when you invest (in real terms) at home, you do so in a familiar environment where the laws and customs are known. Foreign investment is usually riskier unless the home country is run by someone like Saddam Hussein or Idi Amin.

In my judgment, though Smith was a theist, his invisible hand is not God so much as the institutions of the free market that exist in a nation whose social structure has been conditioned by having a sound understanding of Christianity.

Unfortunately, in my opinion, it was Smith himself who opened the door to the labor theory of value that Marx used for the building of his theory. At one point, you may recall, Smith made the mistake of stating that a commodity's value was equal to the value of the labor embodied in it and that this was equal to the quantity of labor that a commodity could command. Missing completely is the concept of marginal utility.

Ricardo's theory of comparative advantage was a great improvement over Smith's concept of aboslute advantage, and it can be applied far beyond the boundaries of international trade. It applies in many or all situations where resources lack mobility. For example, if football player A has an absolute advantage over football player B at both quarterback and defensive safety but his relative superiority is at quarterback, let A be the quarterback and B the safety. That is comparative advantage. It has nothing to do with the labor theory of value that, unfortunately, Ricardo also drew upon.

All that said, I am very much in favor of seeing America gain control over its borders and doing its best to put pressure on Mexico to adopt reforms that would, at last, provide decent employment opportunities to its people. I am utterly sick of trying to be nice to the anti-American left in Mexico, elsewhere in Mexico, and everywhere else.

Kanzei's picture

Comparative advantage has never made any sense to me. The relative efficiencies that the United States has do not justify trading simply because there is a reality that another country has relative efficiencies.

If the United States can employ 1 unit of scarce resources and produce 100 baseballs OR 50 footballs, there is no reason that the United States should buy footballs from say, Ecuador, that produces 5 baseballs and 10 footballs for the same 1 unit of scarce resources.

In this example, the United States has a towering absolute advantage in both, but Ricardo would have the United States buying Ecuador's footballs simply because Ecuador makes them better than they make baseballs.

What a sham. Ricardo seems to have been reasoning backward from a dogmatic, unquestioned (a priori) conclusion that free trade is superior. And, if one is attempting to integrate the world into a single political system through economic interdependence, fine. But don't attempt to call it sound economics!

I could go on about the advantage of domestic production for domestic consumption, but I really only wanted to address the Comparative Advantage argument at the moment.

Windpressor's picture

*************

Too late in the lifespan to do academic catch-up, I further my education by reading here, Google and Wikipedia where the entry for "comparative advantage" has a quip --

===========
'Stanislaw Ulam once challenged Nobel laureate Paul Samuelson to name one theory in all of the social sciences which is both true and nontrivial. Several years later, Samuelson responded with David Ricardo's theory of comparative advantage:

"That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them." — Paul Samuelson '
============

For an overview of free market thought
as promulgated by the late Milton Friedman,
check PBS listings for repeats of Monday's airing of --

The Power of Choice: The Life and Ideas of Milton Friedman

Friedman is credited with being among those influential in translating Smith's ideas into 20th century application.
Among other accomplishments, the remarkable growth to the economies of Estonia and Chile are showcased in the 90 min documentary.

Borrow a colleague's recording if not able to watch a repeat.

Since the piece is generally one-sided, balance may hold with perspective in the detractions given by a NYTimes review --

=============
A Free-Market Economist, Up by His Bootstraps

"The film is so unabashedly venerating — it would credit Mr. Friedman with inventing the Hubble Telescope if it could — that it ultimately does its subject a disservice, refusing the spirit of argument that was so obviously Mr. Friedman’s lifeblood."

"... Nowhere in 'The Power of Choice' is the downside of the massive deregulation that Reagan eventually implemented given much attention. The savings-and-loan scandals, for instance, go undiscussed.

The filmmakers implicitly and explicitly credit Mr. Friedman with everything from the rise of the Indian, Chinese and Estonian economies to the abolishment of the military draft. Though Mr. Friedman’s free-choice doctrine contributed to ending the draft in the 1970s, the film takes virtually no note of the cultural and political climate in which he was making his opinions known. Nor does it address one result of the draft’s elimination: a military not well represented by affluent men and women who have many choices, but dominated by comparatively disadvantaged ones with far fewer options.

Mr. Galbraith, in the film, denounces Mr. Friedman as a 'one-cause, one-cure man.' 'The Power of Choice' is just as reductive in its praise. "
===============

A couple of things to be skeptical about is that, whether by a command or free economy, necessary menial tasks are not only devalued but performed with exploited labor;
and much of cost "savings" are illusory, actually cost "shifting". Examples are:
1)the environmental degradation costs due to Chinese development and
2)the potential debt load passed to posterity.

G1
..........................

G-Juan Wind

Kanzei's picture

Good points G1.

As much respect as I have for Milton Friedman's intellect, I have no automatic respect for any man's motives or goals, and no assumption that his goals are mine.

For that reason, I would not rely on someone's "transalation of Smith's ideas into 20th Century applications". I'll read, study, and translate for myself.

Kanzei

PubliusJr's picture

I was watching a segment on the news about unlicensed Super Bowl paraphernalia being sold in Indianapolis and Florida, with severe fines and jail times for the perpetrators.

As I saw this, it came to my mind that fundamentally we are all protectionists.

We believe in protecting our nations borders from external threat with our military (except for the invasion on the southern border - qui bono?). We believe in protecting our families and communities by having a police and fire department. Many (or most) of us have may types of insurance, including medical. Life insurance is purchased for an event that could pauperize our wife and children or our business in the case of a buy sell agreement funded in that manner. We protect our private property against trespass and vandalism.

We protect "capital" (big business, multi-national corporations etc...)overseas by negotiating treaties to protect them against nationalization of their plants or facilities. Corporations need additional protection (especially overseas) of intellectual capital, i.e. copyrights, trademarks and patents and the list goes on and on.

But if we attempt to protect our authentic "American Economic System", i.e. the original free market economic system contained and give to us via our beloved Constitution, then we are attacked as being "Protectionist" autarkists, xenophobic, against consumers, for the working union goons and union thuggery, for the sugar beet lobby, etc...

We need to and must protect the market system, because when we bastardize and integrate our economy (our market system) with any and all the collectivist economies of the world, we interfere with our fragile wage and price structure, thus destroying our prosperity by the erosion of our capital base. Additionally we move our economy to "being more like them", i.e. collectivist.

There is no right for other economies to sell their wares here freely and bastardize our economy. "There is no such thing as a free lunch", which we freely give to foreigners at the expense of our system and citizens. Adding it together with foreign aid creates the largest welfare scheme/scam the country has ever produced. It makes the minimum wage debate pale in comparison.

The solution: reinstating the 40% ad valorem tariff with a very minimal "free list" of exempted items.

Anything contrary to this is based upon a faulty analysis or a hidden agenda that will lead to our beloved Republic being integrated into a world system, where the market is supreme. The world market, that is. I prefer our sovereign, Constitutional Republic given to us by our Founders.

Where do you stand??

DavidF's picture

“when we bastardize and integrate our economy (our market system) with any and all the collectivist economies of the world, we interfere with our fragile wage and price structure, thus destroying our prosperity by the erosion of our capital base.”
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Sorry (whoever you are), your greatest fear already happened in A.D. 1913: see http://en.wikipedia.org/wiki/Federal_Reserve_Act

Ask yourself what happened to our gold and silver after that (think about bastardizing an economy) and why the “wage and price structure” today are “fragile” (think about solid economic foundations).

The best to you in Christ Jesus,
DavidF

"Neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper. Deposits are merely book entries."

Modern Money Mechanics published by Federal Reserve Bank of Chicago. page 3

PubliusJr's picture

Sorry no idea what you are talking about relative to my comments.

Best to you,
Publius Jr.

Islamaphobe's picture

I can't resist pointing out that the S&L crisis had its origins in New Deal legislation that singled them out for preferential treatment. Some deregulation (before Reagan) eventually became necessary because of rising interest rates that the S&Ls had to pay savers (due to inflation), which resulted in their being caught in a squeeze since most of their assets were fixed-rate mortgages. The deregulation allowed them to take greater risks. What should have been done was to turn them into commercial banks instead of continuing the special regulations that allowed them to exist. When they finally went belly up because of all the unfortunate legislation that had been put through (mainly by Democrats), it happened on a Republican president's watch, so naturally the media assigned the blame to the Republicans, basically ignoring the long, unfortunate history of the creation of the S&Ls and the causes of their problems.

I have long maintained that part of the S&L problem resulted from the movie "It's a Wonderful Life," which hugely exaggerated the extent of monopoly power in the hands of local bankers and glorified those poor little S&Ls.

Islamaphobe's picture

I suggest that you invest a small amount of money in a used basic textbook in international economics, or new if you prefer. I could give you a simple arithmetic demonstration of comparative advantage, but I think you need more than that.

JSE

PubliusJr's picture

Professor Evans:

While I highly respect the ability to acquire a PhD.D. or any advanced degree, much of it has to do with being disciplined and "sticking" to the task at hand and "putting your nose to the grindstone" Having said that, I know much of it is regurgitating what you are being taught (being a CPA myself, I find many of the promulgations of the "leadership" questionable) and not really raising any uncomfortable questions with your professors since your grades may plummet very quickly. My grades actually rose because my professors enjoyed the challenges offered especially in the area of the social sciences. (Our group was called the Czar Nicholas group, even though we were part of the Conservative Union campus group)

I see you do not like being challenged by my associates Tom and Kanzei, although they have laid out the case for comparative advantage quite accurately.

Obviously it is very difficult for many to have long cherished beliefs challenged and having to potentially rethink various positions. I am not saying that the short correspondences would do so, but those points cannot be rejected if one is intellectually curious. I would think at my age that I would not to be challenged either, but I would not be a preterist if that were the case.

I also took economic courses and spouted the theory of comparative advantage and was a free trader (my actually degree is in accounting and have been a self employed businessman, entrepreneur and CPA since my junior year in college). I became interested more in economics after my association with Tom. Our library has most of the books of Von Mises, Rothbard, Friedman, Samuelson's textbooks, Adam Smith, Bastiat etc... and they are not just read, but they are studied, debated, pulled apart, compared and contrasted to our authentic market system, i.e. The American System of Protectionism. We do not lay out our case without much study and reflection.

The best summary of the case against free trade can easily be demonstrated by an examination of the articles included in the book; Free Trade: The Necessary Foundation for World Peace, published by The Foundation for Economic Education (F.E.E.) in 1986. This book is a compilation of the best articles on free trade by its some of its most respected economic and philosophical authorities from the perspective of the “Freedom Philosophy” i.e., genuine free trade.

One of the articles was written by Frederic Bastiat, the classical liberal economist and the author of the influential pamphlet, The Law. Bastiat, you may recall has the distinction of being cited by President Ronald Reagan as “his favorite economist.” Bastiat writing in a letter to Richard Cobden of the British Anti-Corn-Law League, a pro free trade organization, in the 1840’s stated: “Rather than the fact of free trade alone, I desire for my country the general philosophy of free trade. While free trade itself will bring more material wealth to us, the acceptance of the general philosophy that underlies free trade will inspire all needed reforms.” A commentator to this wrote “Free trade was not a narrow issue for these men; it was seen as fundamental to a free society”. (The term “free society” encompasses many things and was mostly developed by the “Chicago School” of philosophy, more specifically Robert Maynard Hutchins – no friend of Constitutional Republicanism - which would be a topic for another day)

In another article by Bastiat, “Domination Through Industrial Superiority”. Bastiat criticizes the use of military terms to describe industrial competition because such expressions “are inimical to international cooperation, hinder the formation of a peaceful, ecumenical and indissoluble union of the peoples of the world, and retard the progress of mankind.”

This is definitely not American, definitely not conservative, and definitely not economics! America and its citizens were founded to be a sovereign independent nation and not part of some “peaceful, ecumenical, and indissoluble union of the peoples of the world.”

Further along in Free Trade The Necessary Foundation for World Peace, there are sections on “Foreign Investment vs. Foreign Aid” (discussing the mobility of capital), and “Foreign Policy” (discussing among others the virtue of direct democracy in a national context and the mobility of labor). These articles again show that free trade is a globalist system. Bettina Bien Greaves, the widow of Percy Greaves the official biographer of Ludwig Von Mises. writes in her article, “Foreign Policy”:

“To minimize conflicts in the future we should aim to create a world in which people are free to buy what they want, live and work where they choose, and invest and produce where conditions seem the most propitious. There should be unlimited freedom for individuals to trade within and across national borders, widespread international division of labor and worldwide economic interdependence. Would-be traders should encounter no restrictions or barriers to trade, enacted out of a misguided belief in economic nationalism (a pejorative term for economic independence) and the supposed advantages of economic self sufficiency.

……...Individuals should have the rights of national self-determination and even to shift national political boundaries, if they so voted in a national plebiscite. For practical and economic reasons, a single administrative unit would be sovereign within the political borders so established”

This is definitely not a definition of our American System, definitely not conservative, and definitely not economics! Individual anarchy of the type envisioned by Greaves is inimical to national sovereignty and would be tantamount to the destruction of the constitutional system envisioned and constructed by our Founders. Further in the same article Greaves writes:

“To maintain peace throughout the world, the grounds for conflict should be reduced as much as possible. The first step in this direction must be to respect and protect private property throughout the world. The ideal would also include freedom of trade and freedom of movement. Political boundaries would no longer be determined under threat of military conquest or aggressive economic nationalism, but rather by legal plebiscite, i.e., by vote of the individuals concerned. In such a world, the national sovereignty under which one lived and worked would be relatively immaterial”.

In light of the preceding clap trap, which is obviously philosophical and has nothing whatsoever to do with economics, our question becomes; How is it logically possible for critically honest sincere Americans, to be at the same time both, supporters of “genuine free trade” and committed to protecting our independent national sovereignty? These are obviously mutually contradictory goals. The answer is of course that they logically cannot.

Genuine free traders, those who consciously and deliberately embrace the free trade philosophy, whether they know it or not, become philosophically the enemies of our independent sovereign Constitutional United States. This then is how insidious and destructive this alien philosophy becomes when sincere conservative Americans are duped into accepting and advocating a system that if it became the official policy of our nation, would in fact destroy the very thing they are pledged to defend.

Economics is the science of means and not ends. Free trade is a philosophy masquerading as economics and as such is a bad philosophy and bad economics.

Islamaphobe's picture

I seem to have raised the hackles of some folks on the far-out far right. Because you went to considerable trouble to post your comments, I shall take a few minutes for what I am sure will be regarded by you, Tom G., and Kanzei as an inadequate response. So be it! I am seventy-six years old and have lots of things that I want to still accomplish other than rehashing basic economic principles. I regard arguing with folks of your mindset as being a basic waste of time, but then you did go to some trouble to confront me and I shall feel a little guilty if I just ignore you.

You insist that to accept the notion of free trade means you are necessarily among "the enemies of our independent sovereign Constitutional United States." Here you set up a straw man, the believer in totally "free trade." To take advantage of the opportunities offered by comparative advantage (CA) is sound economics and reflects the consequences of imperfections in the mobility of resources and the fact that the physical capabilities of resources are limited, and it does not mean that you automatically endorse "free trade." As I noted some time ago in my interview with Virgil, when I came to the study of the Bible, I chose to follow the principle of comparative advantage and specialize in the study of the Book of Daniel. In other words, the application of CA to international trade is only one of a myriad of applications of this principle.

Although taking advantage of CA in international trade is a powerful consideration in the framing of a nation's economic policy, it is not the only consideration, and it may have to give way to other considerations, including national defense and the preservation of national sovereignty. To take just one historical example, Thomas Jefferson was dead wrong when he opposed the promotion of manufacturing in the United States, which is just one of a number of reasons why I have never considered myself a Jeffersonian. I have never been a "free trader" of the straw man type that you set up, but I do insist that CA is real and has NOTHING to do with political or any other philosophy. It is simply a FACT.

You refer to the work of Frederic Bastiat. I shall admit (gasp!) that the only work by Bastiat I ever read was the "Petition of the Candlemakers," which is marvelous demolition of rampant protectionism. I am glad to be reminded that Bastiat wrote to an officer of the Anti-Corn-Law League in the 1840s, and I suggest that the failure of the British government to repeal the corn laws had quite a bit to do with the hardships in Ireland that led the great mass emigration from that land. Of course, I suppose that one could arge that the Irish were properly punished for producing relying on CA and growing too many potatoes! I do not subscribe to the sentiments expressed by Bastiat as quoted by you regarding the use of free trade to effect an "indissoluble union of the peoples of the world."

With all the special interests at work in this land, I think we need not worry about Americans being duped into adopting all-out free trade. With folks like Lou Dobbs and Pat Buchanan out there and all the people who think that they make sense, I figure the sugar cane and sugar beet producers are pretty safe. Far more challenging, though, are industrial and financial megacorporations. I can't resist throwing out the point that when I look at the executive compensation packages that a lot of our corporate execs walk away with, I think maybe a little more foreign competition might be a good thing! By the way, I went to high school with Boone Pickens, who was one grade ahead of me.

And that is the end of this round for me.

tom-g's picture

Dear Dr. Evans,

I know your remarks were not explicitly directed to me, but I wondered, is being a partial free trader like being a partial Preterist? Or a partial Christian? Or a partial American? Or partially pregnant?

If lay persons can not correctly expect that a college professor of 42 years, who has earned the highest rank in his profession of a doctorate, will accurately and technically convey a fundamental law of that profession, to whom shall we turn for that truth?

Your credentials carry too much authority and compel acceptance when you make comments in your professional field of study. Along with the rights of your professional attainment is the responsibility to accurately convey doctrines of that profession to lay people and not to gain a semblance of orthodoxy for your own personal views by utilizing a subjective abstracted view of an economic doctrine.

As Preterists this same responsibility is expected of us in our conversations with other Christians. As Christians this is expected of us in our evangelizing with unbelievers. As Americans this is expected of us in our conversations with others.

If there are to be divisions among us let us at least be honest with each other and utilize the first act of the intellect in accurately defining our terms. As concerns CA, as the professor and PhD of economics this would seem to be your responsibility. Definition from any source, Ricardo; Samuelson; Rothbard; Von Mises; Ely; The Presidents Council of Economic Advisers. Any creditable source is sufficient.

The Scriptures tell us that even some of the Summa ***** Laude, Phi Beta Cappa Supreme Court Justices of the world at that time, got up and followed Paul when he preached the truth to them on Mars Hill.

By the way, the oldest of my 7 great grand children is now 14, but you still have me by about 1 and 1/2 years, and I was privileged to be a consultant for Pat Buchanan on the subject of CA and publicly acknowledged as such in his book "The Great Betrayal".

Tom

Islamaphobe's picture

Tom,

Based on what you have posted here, I don't see where a debate with you leads. Perhaps it would be of some interest to a few visitors to this site, but after a while these person-to-person exchanges tend to wind up with an audience of two, or in this case four since you have two associates working with you. You/they are not going to alter your/their views, and neither am I.

By the way, I have regarded Pat Buchanan as something of an intellectual scoundrel for about twenty-five years now. He's a fairly well read man with literary talent who is fundamentally a propagandist and demagog, not a scholar. On CNN's crossfire he mastered the art of not responding to his opponents' arguments by engaging in diversionary tactics and attacking while rarely defending. I quit watching it after a while because I was not a liberal and couldn't stand seeing conservatism represented by that guy, who turned out to be such a great man of principle that that he chose Lola Falani, or whatever her name was, for his VP candidate. But then if Pat hadn't run, we might have had Al Gore for president. And I guess Pat did have to shed his imported Mercedes when he made his presidential run. Wonder what he drives now?

Since I have the privilege of being a columnist here, I am now planning to do an article in the future in which I explain some of the fundamentals of international economics, including the principle of comparative advantage. I shall also explain that Adam Smith was no protectionist despite your assertions to the contrary. When I do that, I invite you fire away, but I ask you to answer my arguments point-by-point as opposed to offering sweeping generalizations and using Buchanan-like tactics.

JSE

PubliusJr's picture

Dr. Evans:

Your comments have been most insightful regarding the thought process and mindset of academia. I look forward to your writings on international economics and CA, especially where you claim it is a FACT.

As professor Samuelson indicates in his textbook Economics: "...., the theory of comparative advantage is a closely reasoned doctrine which, when properly stated, is unassailable."

So is the doctrine of evolution, the earth is flat and other nonsense. The problems with doctrine/dogma begin when people start asking questions. Then a stony silence settles in, gnashing of teeth begins and the ad hominems start to fly.

In any case, I like to follow this methodology even though obviously I am not an adherent to the Objectivist philosophy of Ayn Rand.

In her book Philosophy: Who Needs It, she writes;

“Now observe the method I use to analyze catch phrases. You must attach clear, specific meanings to words, i.e., be able to identify their referents in reality. This is a precondition, without which neither critical judgment nor thinking of any kind is possible. All philosophical con games count on your using words as vague approximations”.

After confirming the importance of definitions as a precondition for critical judgment or thinking (in agreement with the first of the three acts of the intellect - PubliusJr.), she then continues by applying that precondition in her reasoning process:

“You must not take a catch phrase – or any abstract statement – as if it were approximate. Take it literally. Don’t translate it, don’t glamorize it, don’t make the mistake of thinking, as many people do: ‘”Oh, nobody could possibly mean this!’” And then proceed to endow it with some whitewashed meaning of your own. Take it straight for what it does say and mean. Instead of dismissing the catch phrase, accept it – for a few brief moments. Tell yourself in effect: If I were to accept it as true, what would follow? This is the best way of unmasking any philosophical fraud….Philosophy provides man with a comprehensive view of life. In order to evaluate it properly, ask yourself what a given theory, if accepted, would do to a human life, (or nation - PubliusJr) starting with your own.”

Which brings me to the use of terms such as comparative advantage, specialization and the division of labor, which all are used interchangeably as the same term. Similarly economists starting writing about "a market", then it morphs to "the market" and finally it becomes "the world market".

What I will be seeking in your article is the correct use of terms and definitions. We look to you as the expert to not misuse the terms or sugar coat what is being said. Free Trade is about a lot more than "wheat and cloth" and to misrepresent it as such would turn you into an intellectual scoundrel too!! :)

I look forward to the remedial lessons.

PubliusJr.

P.S. Pat picked Ezola Foster as his running mate not Lola Faulani (an erstwhile socialist candidate) nor Lola Falana (an erstwhile actress)

Ezola is devoted Christian woman and a patriot.

tom-g's picture

Well stated PJ,

What you are saying is exactly the method that Preterists use (ought to use) in their approach to the Scriptures and their approach with futurists.

It is certainly the intelligent approach to be used by all in any of their examination on politics or any other subject. It is in fact the use of the first act of the intellect, identified in the science of logic.

It was the method used by the Bereans who were said as a result to be more blessed than those in Thessalonica. It certainly agrees with the admonition of the Apostle John when he warned us to try every spirit. And it is consistent with the often repeated instruction to study to show yourself approved unto God.

Certainly it seems to me to be very appropriate and necessary when confronted with a system founded upon self love and the love of money.

Who in good conscience would ask others to abandon that policy and why? Would blind acceptance not be brain washing?

Tom

Kanzei's picture

I've been saying this all along. Comparative Advantage is being internalized in the field of economics as dogma.

Nobody is willing to question it, or even explain it.

Dogma has replaced logic at the highest levels of economic scholarship. It's no wonder the President can sell the American people on the idea that "more jobs" is good, when any thinking person would know that working more hours and earning less real income is the opposite of prosperous.

Islamaphobe's picture

This is complete nonsense! I say again, go get a basic text on international economics. End of discussion. You only show your ignorance by keeping it up.

Kanzei's picture

You just can't play nice can you? It's always a reflex to attack people personally huh?

I feel quite secure allowing future readers of this thread to decide for themselves who needs to go back to the basic textbooks, or more importantly the foundational works upon which those textbooks are based and check their definitions.

Islamaphobe's picture

As far as I am concerned, to state that you do not understand the basic principles of international economics is not an attack. It is a statment of FACT. Now I promise that this the last thing I shall say on the matter under this post. You can demonstrate your "niceness" the next time I post an article here.

Kanzei's picture

Well, at least he answered the question from his understanding gentlemen, earlier I did not think it would be possible.

The lesson here, in my view, is that somehow comparative advantage has become an internalized dogma for many, unquestionable. As he says above, it is "a FACT" (emphasis preserved).

It may not be possible, due to the indoctrination of free trade philosophy, for many folks like this to ever question the idea that "the market is the world" (rather than a system of sovereign national free markets that peacefully trade with appropriate protections).

He and others like him may never address the fact that their own philosophers spell out very clearly that for global free trade to occur, there must be global government. It's right in Von Mises definition of a market, but it gets brushed off because "with folks like Lou Dobbs and Pat Buchanan out there and all the people who think they make sense, ..the sugar beet producers are pretty safe". I consider that the ostrich burying his head in the sand, but that's just my youthful, perhaps naive viewpoint.

So I post this response not for Islamaphobe, but for future readers of this thread to take away with them should THEY choose to objectively study the topic and question the economically unquestionable dogma of comparative advantage and global government/global free trade.

Kanzei

ps - If Jefferson was wrong to oppose the promotion of manufacturing then, would he still be wrong to do so today? Current policy is to not only allow manufacturing to be shifted overseas, it's rewarded with tax breaks for outsourcing corporations.

tom-g's picture

Thank you PJ, I did not know you were going to join in with Kanzei on this educational debate. One of the most gratifying experiences possible is to recognize that the students have surpassed the teacher.

As you well remember PJ, when I had an opportunity at the CPAC Conference in 1986 in Washington to debate Dr. Wayne Gabel who was at that time the president of the economic think tank, Citizens for a Sound economy, and a professor of economics at George Mason Univ., his response to my opening presentation on the question Protectionism vs. Free Trade, was: "Wow! I have debated a lot of protectionists but never anyone like Mr. Greenlee and frankly I am not prepared to. So I'll just give my free trade is good and protectionism is bad speech. As we know, when he was unable to refute a simple factual presentation of the Christian, protectionist history of our nation, the debate was over at that point.

Since this debate was at the National Conservative Political Action Conference (CPAC), I ended each of my segments with the statement: Free Trade is an alien liberal political philosophy on how society should be organized. As such it has never been our American philosophy, nor is it Conservative, and it is certainly bad economics. It was to these conclusions that his remarks were addressed that he was not prepared to debate.

I have since had other opportunities to debate nationally renowned Libertarian economists, including Richard Ebeling on the question: "Free Trade the destruction of the United States", attended by approximately 300 persons. Ebeling at that time held the Ludwig Von Mises endowed chair of economics at libertarian Hillsdale College. Ebeling is now the President of the Free Trade Libertarian think tank, Foundation for Economic Education, having replaced Hans Senholtz in that position. Senholtz had formerly been the head of the department of economics at Grove City College, another Libertarian stronghold.

The point I am making is that I am not unduly disappointed with Dr. Evans's negative reaction and lack of response to my comments, I expected it. It was quite restrained compared to the reaction I received when I contacted Dr. Gary North on the same subject.

It is obvious that Dr. Evans was not deterred in any way by my remarks since he has recently submitted another Libertarian philosophical article on the Immorality of the Minimum Wage, by Doug Bandeau.

There is obviously much more I could say on this subject, but I'll end this with once again congratulating both you and Kanzei on your comments and support, thanks.

Tom

Kanzei's picture

the ad hominem is not very convincing.

tom-g's picture

Thank you Dr. Evans for your reply,

You and I who understand end times from a Preterist perspective probably more than the average person are familiar with those who take clear Scriptural statements and contrary to the laws of grammar and logic appropriate them out of context for use to support their own pet theory.

I appreciate your right to personally reject the economic system of Protectionism, however I deny your right to use your personal judgment to alter the clear statements made by Adam Smith about an "Invisible Hand". I also deny your right to alter or deny the historic protectionist economic record of our nation. You may not agree with the correctness of that system, but you can not deny the historic record.

I also cannot believe that you as a professional economist and teacher, would deny the historic fact of the protectionist economic system of Our first Secretary of the Treasury, Alexander Hamilton, put in place in our nation from its foundation, or that it is still today trying to be dismantled by the internationalist free traders.

I am sorry that you that you would oppose the economic policies of every one of our famous Presidents memorialized on Mount Rushmore. In fact my favorite quote of those four, because it is so short and to the point, was made by Teddy Roosevelt: "Thank God I am not a Free Trader".

It is interesting that the example that you offer to explain the atheist internationalist Ricardian theory of Comparative Advantage is not an accurate example at all. It is in fact an example of absolute advantage, which you explicitly state.

You are correct that Smith admitted to the labor theory of value, however, it was the genius of Hamilton's free enterprise market system that cured that problem as he went beyond Smith with his protectionist economic system.

I submit to you that it is a theoretical and practical impossibility to merge the United States with a national protected economy into a single one world system. If this is to occur it was necessary for our economic system to be dismantled, hence GATT, NAFTA, CAFTA etc.

Tom

Islamaphobe's picture

I'm sorry Tom, but you live in a completely different world from the one in which I have lived. I deem further communication pointless.

Kanzei's picture

You know, Tom's reply might not have been diplomatic in your view, but as an educator in the science of economics it is worthy of response. (or so it seems to me).

I'd particularly like you to explain how you reconcile the two contradictory ideas that you expressed. You are a free trader (not a protectionist) but you wish to see the United States "gain control over its borders".

You recognize that the United States physical territory should be protected from external interferences (closing down the border), but do not recognize that the United States free market economy should be protected from external interferences. Why is that?

Have you ever questioned the idea of a global market from that point of view? Have you ever wondered if the a priori designation that "the market is the world" (as Rothbard would say) has political ramifications? Did you ever wonder if the longstanding political success of the United States has the free market established by Hamilton to thank? (particularly in light of the failure of the Articles of Confederation with it's 13 currencies, internal trade restrictions, etc.) Have you ever considered that the dumping of foreign made products, produced in an area with only a fraction of the per capita capital investment per worker, in an area with a completely different labor market and with completely different standards of living might be an interference with the fragile wage and price structure domestically? Do you not recognize the United States was established as a NATIONAL free market economy, which is DIFFERENT than a member of a GLOBAL free market?

Don't you think that our illegal immigration problem, and the idea that illegal immigration should not exist, is a reflection of a society that is now reasoning from the CONCLUSION of a global market without borders? HOW ELSE could "Americans" believe that we should NOT police our borders?

You are a professor of economic science.

In my view, you need to answer these questions.

Kanzei

tom-g's picture

Dear Kanzei,

Thank you for your input on this issue. I think the only thing that anyone needs to do to find the truth of the source of the illegal immigration invasion is to

go to WIKIPEDIA and key in the term FREE TRADE. You will find that the definition includes the FREE MOVEMENT OF LABOR ACROSS NATIONAL BOUNDARIES.

If you advocate free trade allowing the unrestricted free flow of capital and goods across national boundaries then you must also allow labor the unrestricted freedom to cross national boundaries. As Wikipedia goes on to explain, Europe began to experience this immigration problem in the 1990s. There's an old saying; "Be careful what you wish for, you are liable to get it". Including the negative unintended consequences.

Tom

Kanzei's picture

good point.

Islamaphobe's picture

No, I only spent forty-two years teaching international economics and finance and never had time to consider such things. In all seriousness, I have lots of things that I want to accomplish, and engaging in remedial education is not one of them. I would like to do and have put teaching elementary economic principles behind me. As I suggest in my other comment to you, I think that you need to invest in an basic book in the theory and practice of international economics. I had considerable respect, incidentally, for the scholarship of Murray Rothbard, incidentally, and even once favorably reviewed a book by him, but that respect does not extend to a lot of the folks at lourockwell.com. Now I don't know that you frequent lourockwell.com, but you read like you do.

I shall make this comment in answer to what you wrote. Nation states have every right to exist, and I do not favor world government. Part of a nation's nationhood is the protection of its borders from illegal immigration. I don't want a bunch of folks coming into this nation who know nothing of U.S. history and the Constitution and whose only motivation for coming is to grab a better-paying job. I believe in international trade because I am quite confident that comparative advantage (CA) is not Marxist or atheistic, but a physical fact of life, like two plus two equals four. CA allows a nation to increase its real income level and benefits a nation's trading partners as well. It DOES involve some reallocation of resources, and SOMETIMES the cost of such reallocation may be considerable. The costs, by the way, are relatively short run while the benefits are long run, and it could be sometimes that the discounted present value (PV) if the costs could be greater than that of the benefits.

In the specific case of Mexico, a country whose economy I studied for over fifteen years and in which I lived and taught, we cannot escape the consequences of having it as a neighbor. If we control the flow of labor from Mexico, as I most definitely believe we should do, that will tend to increase the operation of comparative advantage so as to produce trade between the two nations that is mutually beneficial. If we can put sufficient pressure on the government of Mexico politically or otherwise, we may be able to help them get out of the economic straitjacket into which their leftist intellectual elite and corrupt politicos have put them. Getting out of that straitjacket would involve allowing U.S. firms and individuals to invest in Mexican assets to a greater degree than is possible at present. If we just seal off Mexico from both emigration and international trade, the expletive deleted place will explode. WE CANNOT SEAL OURSELVES OFF FROM THE WORLD.

End of comment.

Kanzei's picture

Professor,

You continue to state that you are quite confident that CA (comparative advantage) benefits a nation. But saying it does not prove it or explain it. Please be specific. Please explain to me how a nation that has an absolute advantage in ALL THINGS can benefit by investing scarce resources (based on comparative advantage) by trading with a nation that produces ALL PRODUCTS at a lower level of efficiency.

I'll give you my example again for you address DIRECTLY if you can.

The United States produces 100 guns by investing 1 unit of scarce economic resources. The United States can also produce 50 pounds of butter by investing 1 unit of scarce economic resources.

Thus, by investing 2 units of scarce economic resources the United States can produce 100 guns and 50 pounds of butter.

However, China produces 10 guns with 1 unit of scarce economic resources. And China can produce only 5 pounds of butter with 1 unit of scarce economic resources.

Thus, by investing 2 units of scarce economic resources China can produce 10 guns and 5 pounds of butter.

The United States in this example has an absolute advantage (a 10-fold advantage).

Now, some businesses in the United States decide that they can produce guns more profitably in China because allthough the United States is 10 times as efficient in production, the standard of living in China is 20 times less and wage rates are 20 times less so it's more profitable but less efficient, to produce guns in China. (plus the US Senate just gave them a tax break as an incentive to outsource jobs), You see, there has not been longstanding capital investment in this area of China in my example.

Comparative advantage and free trade politics in the United States combine to advise the United States to somehow benefit by utilizing 2 units of economic resource making guns, producing 100 guns and investing their second unit of scarce economic resources buying 5 pounds of Chinese butter.

Had the United States consumed only domestically made products, it would have had 100 guns and 50 butters. But instead it has 100 guns and 5 butters.

Great deal?

I know that you said (in a very demeaning and nasty way, in my view) that you "are not interested in teaching remedial economics", but you yourself stated that you have not read Adam Smith in quite some time. You then explained your understanding of his work (which is NOT what I've read; and I *have read it recently).

I don't view Smith's work as remedial, first of all. Most of my economics professors had never read it. They had only read what others said about it. Samuelson, for example, INTENTIONALLY misquotes Smith's invisible hand passage in many of his text books. But without studying the work closely itself, 99% of economics students (and most of their professors) also never know it.

Finally, I consider at least one of your arguments to be a rather transparent strawman; nobody advocated stopping trade or "sealing ourselves off from the world". The tariff does not stop trade (and if you are NOT a labor theory of value proponent you know that it does not increase prices except perhaps in the extremely short run). The tariff prevents the combination of economic systems. In reality, the tariff defines the boundaries of the division of labor.

I'll leave you with only this last definition of a market from one of the great free market theorists; Von Mises. A free (ie-unhampered) market is that which contains a division of labor and subsequent free exchange within, a coersive government to adjudicate disputes and enforce contracts, the private ownership of the means of production, and no institutional interferences.

If we are to say that we desire to have a "world market", then we have to accept that a "world government" comes with it, under the theory of free market economics. We also have to acknowledge that trading freely (without tariff) with a communist (socialist/command/non-private property) country does NOT create a free market (in fact, it destroys our fragile wage and price structure).

Thanks professor, I look forward to you explanation of Ricardo's comparative advantage as applied to my theoretical scenario.

Kanzei

ps - I would consider it almost patriotic to buy a foreign product if it were taxed fairly. In that way, a foreign corporation or government funds the domestic operation of our Federal Government, reducing or eliminating the need to pay income tax.

JL's picture

Kanzei,

Part of those scarce economic resources is labor. In general, labor is the primary scarce economic resource. In your example, if the Chinese make nothing, all of that resource is lost. So we put our resources into guns and butter and we trade them for Chinese made baskets or whatever it is that they can produce at closer to the same cost as we can.

JL

Blessings,

JL Vaughn
Beyond Creation Science

tom-g's picture

Dear JL,

In re. your reply to Kanzei about CA, let me try to frame the question simply.

In any free mutually agreed upon exchange between two individuals there are two jobs involved in the production of that which is exchanged. If one side of that exchange is for a foreign product, then of the two jobs involved one is domestic and one is foreign. On the other hand if both sides of the exchange are for domestic products, then both jobs are domestic.

The premise of Adam Smith's book was that the wealth of nations was increased based upon the increase in the number of citizens in a nation engaged in productive labor. His conclusion was that domestic production for domestic consumption employed twice the number of domestic jobs than does foreign production for domestic consumption.

This conclusion is the same as that arrived at by the first example I gave of the human action involved in an exchange.

However, and here is the problem addressed and solved by Smith; men are motivated to act economically out of their own self interest not out of a desire to act in the best interest of their nation. Professor Percy Greaves, the official biographer of Ludwig Von Mises, in his book; "Understanding the Dollar Crises" explained it this way: "All men act to improve their own situation from their own point of view" and "Men are fallible".

So, with both Smith and modern subjective value market economic theory agreeing on the problem, Smith asked the question how can individuals be induced to cause their selfish actions to be compatible with the best interest of their nation?

Smith, the father of modern economics, answered it this way in 1776: Capitalists are induced by the "Invisible Hand" of God to invest their capital domestically without their conscious knowledge thereby benefiting the nation also, which was no part of their original intention of benefiting only themselves.

Possibly the one man who has had the greatest effect on explaining and teaching the modern market economic theory of subjective marginal theory of value, Ludwig Von Mises, explained the answer to this problem politically to a group at the University Club in Milwaukee in 1952

His speech, "capital Supply And American Prosperity" has been printed by the Libertarian Press in a book titled "Planning For Freedom" Mises ends his speech with this dire warning:

"Today only the businessmen worry about the provision of new capital for the expansion and improvement of their plants. The rest of the people are indifferent with regard to this issue, not knowing that their well-being and that of their children is at stake. What is needed is to make the importance of these problems understood by everybody.
No party platform is to be considered as satisfactory that does not contain the following point: As the prosperity of the nation and the height of wage rates depend on a continual increase in the capital invested in its plants, mines and farms, (the domestic capital investment of Adam Smith - Tom) it is one of the foremost tasks of good government to remove all obstacles that hinder the accumulation and investment of new capital. (by creating economic policies to ensure that capital is invested domestically -Tom)

I know I can't recall a more ringing endorsement for the system of economic protectionism than Mises' dire warning of the consequences to our nation's and our children's prosperity of practicing the free trade theory. And this from the foremost free market economist of the twentieth century.

Dr. Evans claims that he will not continue any further dialog with me because he and I obviously come from different worlds. I would have to agree with him that we come from different worlds. Mine is the world of love and concern for the welfare and well-being of our nation and our children, in a nation instituted among men by God to protect our God given rights and economically led by the "Invisible Hand" of God to ensure that the self interested actions of natural men are channeled into promoting the wealth of our nation.

That is the world I come from, I can only hope and pray that I misunderstood Dr. Evans and that we both come from the same world.

Tom

Islamaphobe's picture

I can't reply without being mean and nasty, so I won't bother. I repeat my advice about doing some reading in standard international economics textbooks. By the way, I own an autographed copy of Human Action (von Mises) and had the pleasure of once introducing him before he spoke.

Islamaphobe's picture

I can't reply without being mean and nasty, so I won't bother. I repeat my advice about doing some reading in standard international economics textbooks. By the way, I own an autographed copy of Human Action (von Mises) and had the pleasure of once introducing him before he spoke.

MiddleKnowledge's picture

Wow,

John. I'm impressed. I have an autographed copy of HA, too. Is yours the one with the green dust jacket, or is it a different edition?

Blessings,

Tim Martin
www.truthinliving.org

Islamaphobe's picture

Tim,

I need to go looking for it. My house is a library, and I don't know where a lot of my old books are. I don't have them catalogued by LC number! I remember the color red in some of the cover, I think, but mostly off-white. The occasion on which I introduced von Mises was in, I believe, 1958, when I was President of the John R. Commons Club, the graduate economics student organization at the University of Wisconsin. The old boy came into that den of liberals as a guest of campus conservatives and did a great job, though I thought he underrated the Soviet's technical knowhow. But he was dead right that there economy was headed for ultimate collapse! I bought a copy of his book at that time. Maybe I need to find it and reopen it!

Kanzei's picture

I know that it's tempting on the Internet where there is relative anonymity and nobody standing near you (in arm's length) to prevent anti-social behavior, but be serious. You might be the most arrogant, self serving elitist I've ever run into.
You talk about your "library of books" and your autographed copy of Human Action (written by one of the most rabidly anti-Christian humanists I can think of, by the way) as though they elevate you to a higher standard. But you admit yourself that you haven't read Smith's great work in many years, and then when your understanding of the invisible hand and Smith's commitment to domestic production for domestic consumption is questioned you immediately get defensive and nasty. Why would THOSE questions create ANY emotions in you? Just simply respond with your understanding. You are apparently unable to do that.

You've internalized free trade and comparative advantage and refuse to question it. In fact, beyond internalizing it, I think you've turned it into a dogma.

Your refusal to discuss the topic that tom-g brought up and the questions I raised remind me of some of my elitist private school professors as I think back.

GOOD teachers welcome a student with questions. You behave as though you are "above all that". Give me a break.

I've concluded you don't understand your own dogma, are not willing to question your religious attachment to the globalist philosophy of free trade.

Perhaps the old saying is true, those that can; do. those that can't; teach.

There, now you've drawn some anti-social Internet behavior out of me. I attempted to create a discussion among mature adults seeking knowledge. You refused to accept those terms.

Kanzei

PS - go ahead and call me stupid or ignorant again, it's a badge of honor coming from you if you continue to behave like this.

Virgil's picture

Guys...let's keep ad-hominem attacks out ok? Please make an effort to deal with the issues not with the person.

Islamaphobe's picture

I can't deal with such "brilliance." All efforts on my part to demonstrate that I am not an advocate of what you preach against--an advocate of all-out globalization--are, I am convinced, useless. If that comes across to you as arrogance, so be it. I believe in teaching the teachable. You insist on preaching, not arguing. So call me whatever you want to.

Sam's picture

John,

What's your take on Gary North and the Institute for Christian Economics?

Sam frost

Islamaphobe's picture

Sam,

Truth to tell, I have paid very little attention to Gary North and the ICE in recent years. I read some of Gary's stuff years ago and liked it because I agreed generally with him in his approach. Subsequently, however, I deteced a know-it-all quality about Gary's work that disturbed me; and when I looked at his theology, I found myself becoming more turned off. As a result, I haven't read anything by Gary for some time, and I am getting rusty with regard to remembering the technical points about his work that bother me. If you can point me to a specific item at the ICE website, I shall read it an offer you my opinion.

JSE

Islamaphobe's picture

Sam,

Truth to tell, I have paid very little attention to Gary North and the ICE in recent years. I read some of Gary's stuff years ago and liked it because I agreed generally with him in his approach. Subsequently, however, I deteced a know-it-all quality about Gary's work that disturbed me; and when I looked at his theology, I found myself becoming more turned off. As a result, I haven't read anything by Gary for some time, and I am getting rusty with regard to remembering the technical points about his work that bother me. If you can point me to a specific item at the ICE website, I shall read it an offer you my opinion.

JSE

Windpressor's picture

**************

Some points in this article induce ponder to bits of thought and opinion.

In search to get an accurate rendition of the cynical variant to the Golden Rule, I linked to what looks like a good reference (for those interested in warfront info) from inside Iraq --
Michael Yon : Online Magazine » Blog Archive » The Battle for Mosul: Reality Check
[Dispatch Archive goes back to Jan. '05]

Back to my point:
================
'Enemy Forces

In Mosul, the enemy has two main faces: The Former Regime Elements (FRE), and the extremists. ...
...
The main goal of the FRE is simple: under the former regime, they were in charge. They want to be in charge again. In Saddam Hussein’s regime, the Cynic’s Golden Rule—”He who has the gold, makes the rules”—worked both ways: “He who makes the rules gets all the gold.” The FRE bandits made the rules and controlled the gold. They have an understandable nostalgia for the good old days. They liked being in charge. ... '
[emphasis added]
================

History supports the notion that everyone is subsidized by some degree of plunder. The virtues of wealth are then relative. Fiascoes such as ENRON did not occur in a free or, let alone, a fair market economy. It is only the most gratuitous extremes of the ill-gotten that invoke censure.
The common dark vice side of the wealthy does not regularly receive exposure to the light. A popular mantra of conservative spin is that "the rich pay the most in taxes". I don't hear much about the offsets in contracts, corporate welfare, and other benefits.

Some analytical studies might check my perceptual bias that wealth does not actually trickle down but siphons upward. However consider some examples:

Government(public) education is a transfer of wealth to facility and hierarchical interests, purportedly "for the children". The greater percentage of the $6K to $8k or so expended per student actually goes to the pockets of those layered in and subsidiary to. The trick question is whether or not unleashing the bound wealth of the educational monopoly is ultimately better for the school bus company than the dependable bid process.

In the same way, public housing is not so much rent assistance but a transfer to landlords, investment groups, contractors, multinational construction corporations, etc.

I refer also to a recent PBS documentary --

The Water's Edge

==============
'Through an amazing collection of flood footage and in-depth coverage of repetitive flood victims, this movie uncovers the profiteering and neglect that ensure increasing devastation for our ever-urbanizing society. The precious land at the water' edge, so vital for wildlife corridors and open space, is being turned into a federally-subsidized disaster zone that brings great fortune to bankers and builders and the perpetual debt of the underclass. [emphasis added]

"The Water's Edge" offers a well-researched and personalized critique of the cultural denials, financial incentives, and policy failures behind the growing natural disaster causes the most death and damage in the U.S. and worldwide.'
[one savvy contractor rebuilt his own house even at a lower elevation than his previous housing with over $400,000 subsidized by government insurance]
=========

Do the rich have net gain from the public dispensary over their tax expenditure?
What might be the proportion of winners and losers?

G1
................................

G-Juan Wind

Islamaphobe's picture

People are constantly striving to make themselves better off economically by putting themselves in the position of obtaining what can be called economic rent, by which I mean income above what could be gained under highly competitive conditions. Unfortunately, government operates, as Smith perceived it did, for the benefit of rent seekers. And since government is much larger now than in Smith's day, the amount of rent paid to those who rig the system in their favor is much greater. Given this reality, I have no problem in agreeing that the "rich" should pay a high percentage of the taxes on income, and I would even have sumptuary taxation of some consumer spending in my ideal system. At the same time, however, I strongly believe that the rest of us should be taxed heavily enough so as to make us realize that when we demand more of government, it is going to cost US. The Democratic Party, in my opinion, operates primarily under the strategy of winning elections by promising those who vote for them various benefits that will be paid for by other people, and that to me is totally unacceptable ethically. We need to work toward handsomely rewarding economic activity that is genuinely entrepreneurial while doing our best to prevent rent seekers from gaming the system.

Some years ago, a colleague of mine who became a college administrator talked about how great it was to have the opportunity to visit a four-star resort at taxpayer's expense. My response was that I didn't envy him because I figured that most of the people there were people who had gotten wealthy through successful rent seeking or criminal activity. He seemed startled and uncomprehending. So it goes. But our problems are certainly not just with the wealthy or even primarily with them.

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