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Free Will and the Problem of Evil

I don't really have much to add to Scott's excellent analysis of the problem of evil. I think he gets the explanation of the problem exactly right and does a very nice job of exploring the various bullets that a theist might choose to bite. I think, however, that Scott may be giving the much-vaunted free will defense more credit than it rightly deserves.

The heart of the problem of evil, as Scott nicely illustrates, is that it seems to involve a set of mutually inconsistent claims. But theists face a similar problem when it comes to the topic of free will. Consider the following:

  1. God is omniscient.
  2. God is omnipotent.
  3. God is infallible.
  4. God created the universe.
  5. Humans have free will.

You can see the problem, I'm sure. If God really does know everything, then God is already aware of all the things that I will do. And if God created the universe, then She created a world already knowing that I would do whatever it is that I'm going to do. So we have an obvious problem here: if God already knows what I'm going to do and if God cannot possibly be wrong, then it looks like maybe my will isn't as free as I'd initially thought. I pretty much have to do whatever it is that God knew I would do when She created the universe.

Of course, there are ways around this. The most obvious one would be to deny that "free will" really just means "could have done otherwise." Harry Frankfurt offers what seems to be a pretty good knock-down of the freedom-means-the-ability-to-have-done-otherwise thesis:

Allison is contemplating whether to walk her dog or not. Unbeknown to Allison, her father, Lloyd, wants to insure that that she does decide to walk the dog. He has therefore implanted a computer chip in her head such that if she is about to decide not to walk the dog, the chip will activate and coerce her into deciding to take the dog for a walk. Given the presence of the chip, Allison is unable not to decide to walk her dog, and she lacks the ability to do otherwise. However, Allison does decide to walk the dog on her own.

In other words, even though Allison absolutely must walk the dog, there is a very real sense in which we can say that Allison freely chose to walk the dog in this instance. We can look at the chip and see that it didn't activate. Even if she couldn't have done otherwise, she could have chosen otherwise. So maybe it's possible after all to have free will even in if we couldn't possibly do otherwise. And thus God and free will turn out to be compatible after all. Score one for the theists!

Except, maybe not so much.

See, if we're going to make any sense at all of the idea of free will, then it will have to be the case that, regardless of what I end up actually doing, I will have to have had the ability to have chosen otherwise. So, for instance, when I made a snotty remark to my spouse last night (not the worst form of evil, but still a bad thing, all else being equal), it must be the case that I could have freely chosen not to make that remark. That is to say, it is logically possible that I might have refrained from making the remark.

But that, you see, is something of a problem for our theist. See, God, being omniscient, can envision every single logically possible world. That means that, prior to creating the universe, God already knew about possible world A (this one) and possible world B (the one that is exactly like this one, only I freely chose not to make the snotty remark to my spouse). And God, being omnipotent, had to choose to actualize one of those two possible worlds. Yet God chose to actualize A -- the one in which I freely chose to make a snotty remark to my wife -- rather than B.

The problem, in a nutshell, is that the moment we make free will perfectly compatible with God both knowing what I will do and creating the world in which I do it, the free will defense stops being a defense against the problem of evil. God could just as easily have actualized the possible world in which I (and everyone else) freely chose good all the time. That's because God's knowing that I would choose X and creating the world in which I choose X is not, ex hypothesi, inconsistent with my still having the ability to freely choose X.

For that matter, there's an even simpler response to the free will defense. God could have let me freely choose all I want but still made it the case that my poor choices never ended up causing evil to anyone other than myself. That gets us free will, real responsibility and far less evil in the world. But we don't have that, which leads me to think that the free will defense won't allow the theist to consistently hang on to God's omnipotence, omniscience and omnibenevolence.


Hypothetical History Without the Civil War

Today I was thinking about the outcomes of the American Civil War. The War, and the Union victory, affirmed the fact that the individual states do not have the right to seceded. The war resulted in the loss of hundreds of thousands of American lives. I would like to go through the possibilities of history if the war had never come to fighting.

The North was generally more technologically advanced and industrialized, which allowed them to win the war. The South was rather stuck with an outdated agricultural system. The North would have had outpaced the South economically.

All around the world, the practice of slavery was slowly declining. The agricultural system of the south was highly dependent on manual labor, which economically encouraged the practice of slavery. With technological advancements, the dependence on slave labor would diminish and slavery would become less important. Eventually the South would give up on slavery.

So here is my question: would the USA and the CSA have recombined at a later point without going to war? How long would that have taken? Would we have seen any other secessions at later points in our history? Would blacks have made progress toward equal rights in the 1960s, sooner, or later? Most importantly, would we be more free today?


Second-level Libertarianism

So if you haven't yet read Patri's Cato Unbound essay, you should go do that now. And, if you didn't happen to catch it live, you should also check out the podcast of his Seasteading talk at Cato. Of course, regular DR readers are already familiar with Patri's basic thesis: governments are inefficient local monopolies that impose (a) high barriers to entry and (b) exceptionally strong customer lock-in. That's not an especially controversial claim. What is, perhaps, somewhat more controversial Patri's diagnosis: Policy Libertarianism is useless in the face of overwhelming institutional obstacles, so if we want a truly free society, we should instead focus on changing its fundamental structure.*

But it strikes me that a lot of PL types (and certainly a lot of the commenters at Cato) rather significantly misunderstand Patri's vision. Will Wilkinson offers the clearest -- though hardly the only -- such example:

That said, one of the merits of Friedman’s "dynamic geography" is that it is not really a "libertarian" project at all...I think there’s good reason to expect competing sea-top jurisdictions to settle on a scheme of governance more libertarian than what the world’s current nation states have to offer. But I also think there’s little reason to expect a seastead to embody the system of most libertarians’ dreams unless a lot of libertarians coordinate and settle there.

I don't want to get into any sort of I'm-more-libertarian-than-you shouting match here. Still, I think it's wrong to dismiss dynamic geography as not libertarian. I submit that it's best to understand Patri's project as what I'm going to call second-level libertarianism.** I'll try to explain what that means below.

Many (perhaps most) PLs are concerned with bringing about what we might call first-level libertarianism. That is, they want to live in a society with a minimal (or possibly even nonexistent) state, one with little-to-no taxation, an unfettered market, purely voluntary associations, and no restrictions on self-regarding or consensual behavior. Appropriately enough, PLs concentrate on ways of making our society more like that. And, as Patri allows in his talk, this can be a positive development. Lowering tax rates and increasing growth (even if only by a little) can have large positive-sum utility when aggregated over lots of people.

Moreover, the PLs have a point when they complain that Patri may be giving them too little credit for the work that they are doing. To the extent that seasteading is practical, it will be because enough people in the United States are willing to let seasteaders go their own way. To put the point another way, the best way to keep the U.S. Navy from parking a carrier group outside Floating Libertopia is to convince lots of Americans of the value of allowing small groups to pursue alternative political arrangements. Wilkinson and Reason's Brian Doherty are right to suggest that seasteading would be even less likely to succeed without Reason, Cato and the rest of the PL crowd. For that matter, it's not totally unreasonable to suggest that absent the work of Patri's grandfather, there's a real possibility that the Seasteading Institute's venture capital would have gone to cover Peter Thiel's 90% marginal tax rate.

But Patri's critique is fair in another way. See, where the SLs and the PLs part company, I think, is that Patri isn't really aiming at a first-level libertarian society. Will is right in that respect. But Patri is aiming at what I'm calling second-level libertarianism. The analogy I have in mind is similar to the distinction made between act- and rule-utilitarianism.***

Basically, the idea is that, like with utilitarianism, libertarianism can be applied in two different ways. It can be applied to particular governments -- that is, we can say that a particular state is more or less libertarian depending on the extent to which it conforms with whatever principles we take libertarianism to consist of. But both utilitarianism and libertarianism can also be used in a second-level fashion, as a way of generating the specific rules (in the case of utilitarianism) or the specific societies (in the case of libertarianism) that govern our ordinary, day-to-day lives.

What the particular rules are don't really matter here; the point is just that, on the second-level view, we don't necessarily appeal directly to utility at the level of action. We might, if it works out that direct appeals to utility are the best rule-of-thumb available. But if they aren't, then we might well end up being guided by rules that don't look particularly utilitarian.****

I think Patri is doing much the same thing. Indeed, he says as much during the talk, though it's a point that seems to have escaped most of the audience. Dynamic geography -- and by extension, the seasteading project -- isn't about creating a first-level libertarian society. It is, rather, aimed at creating a libertarian framework for creating new governments. If we take seriously Patri's argument that government is just another industry, then we should aim at a world in which the industry of government is a competitive market. We ought, in other words, to apply the principles of libertarianism to the generation of government itself.

To put the point another way, libertarianism -- much like utilitarianism -- can be applied at either of two levels. It can be used as a set of guidelines for a particular government. But it can also be used as a set of guidelines for generating the set of existent governments. PLs are aiming primarily at the former. SLs like Patri are aiming primarily at the latter. The idea, of course, is that a libertarian framework will -- as Will suggests -- be likely to generate particular libertarian societies. But even if it doesn't, I think that there is a good case to be made for the argument that a world in which governments are generated via a libertarian framework is, in some very real sense, a libertarian world even if none of the actual societies generated from that system looks like Libertopia.

* I'd like to point out how thoroughly -- and quickly -- Jacob's PL/SL distinction has become standard parlance; Cato's Doug Bandow, for example, uses the term throughout his response to Patri.

** For those philosophers out there, yes, I am borrowing the idea of two-level libertarianism from R.M. Hare. Obviously the analogy is far from perfect. That's why the actual post uses act- and rule-utilitarianism rather than Hare's critical and intuitive levels. I've stuck with stealing Hare's terms, though, because rule-libertarianism sounds like such a glaring oxymoron.

*** I am, by the way, particularly delighted by this analogy since (a) many of the Catallarchs are on board with Patri's vision of dynamic geography and (b) most of them also hate rule-utilitarianism. It's a nice analogy in another way, too: as with "utilitarianism" people use the word "libertarian" as if it has but one meaning, when in fact, it encompasses a huge array of possible meanings. Still, I think it's useful to talk about both in a general fashion, as long as we're aware that we are really talking about a set of theories with a strong family resemblance and not any particular concrete theory.

**** Again, for the philosophers out there, yes, I am arguing that second-level libertarianism might well turn out to be self-effacing.


so they ‘got all violent’ to ‘make a scene’ and ‘make sure that their voices were heard’. It was kinda like they were simulating

http://www.hipsterrunoff.com/2009/04/feeling-sad-that-altbros-got-violent-at-the-g20-summit-protests.html


But where would we be without the Rating Agencies?

http://www.google.com/hostednews/ap/article/ALeqM5jWl3nZ3lcclT5n9eZkPfI35cVlIgD97D2PLG0


Obama Doesn't Speak Austrian, Only Keynesian.

I don't see why Michelle Malkin is making such a big deal about Obama saying he doesn't speak Austrian. I thought everyone knew he only speaks Keynesian, and not because his father is from Kenya either.


Social Security. It's Insolvent Now.

Tom Blumen writes an article on how Social Security is likely to be insolvent six years earlier than expected.

Are you kidding me? It's insolvent now like any Ponzi scheme. Just because Madoff made payments to investors doesn't mean his operation was solvent at any point. It became insolvent the minute it used new investor money to pay old investors. That's exactly what Social Security does.


The True Meaning of The Pitchfork

Obama is now quoted as saying, "My administration,“is the only thing between you and the pitchforks" to AIG officials giving out bonuses.

Obama, let me clue you into the true meaning of Christmas the pitchfork.

This Pitchforks for You, Politician
Me and My Pitchfork - Feb 28, 2009
Picture taken by Arthur B. with my camera.

My pitchfork was aimed at the politicians and their appointees.

Politicians are the ones that interfered in free markets to cause this economic crisis. They’re the ones throwing my money in the air around their rich friends. They are the ones who attempted central monetary planning with the Fed, and GSEs.

Obama, Bush, Clinton, Paulson, Geithner, Bernarke, Franks, Raines, and most importantly Greenspan, all need the business end of a pitchfork.

Update: I had used a publicly posted picture that had no copyright notice without crediting the photographer, Eugene Gannon. He had intended for his picture to be shared but wanted credit. I hadn't thought he would care and I should have asked first. I added a credit yesterday but apparently he didn't notice and posted another comment where he still seemed upset. So I have now replaced the photo with one taken by my camera. You can see Eugene Gannon's Photo at his site.

While I was at it I'll also add some sexy protest babes who are way better looking than me. My photo but anyone who wants can use it. I don't care. Ask me if you want full resolution. You can crop out the Frankenstein monster that way if you want.

I didn't take many pictures but I had to get a picture of the poster on the left. It was the best one I saw.

Protest Babes


The Freeloader Problem

This Daily Dish reader raises what (paradoxically) seems like an obvious point, but one that is not often discussed - that even tax paying, middle class Americans are direct benefits of redistributionist policies due to a progressive tax system. I like how he describes himself as a "taker" for benefitting from public services that he doesn't pay his "fair share"* for.

This reasoning I think is flawed from a few perspectives, but most strikingly he seems confused by the idea anyone is a beneficiary of the progressive tax system (and particularly in the form we have today).**

http://en.wikipedia.org/wiki/Fair_tax

*"Fair" in his sense I gather means ratably according to percentage of gross personal income.

**He is also confused on Socail Security. He comments "Social Security [is] one of the most successful "taker" programs in human history". Besides being an obvious hyperbole (for which I do am sure he is aware), he ignores the fact that nearly every other type of tax on income in the world today is more "taker" than FICA because it doesn't cut off at $90k.


Vending machines

Why stuff from a vending machine is usually more expensive than from a shop? It does not make sense, does it? One doesn't need to hire any assistant selling the goods one doesn't need to pay so much for rent. What is the point of putting a potential customer off by raising the price? And people go to queue in a shop instead of buying a drink or cigarettes from the machine round the corner!


Homoparadox

Every gay person comes from a man-and-woman relationship - a heterosexual couple. By promoting homosexual relations they immanently act against themselves.


In Love with the Welfare -corrected

In Denmark where I'm staying at the moment people are really excited about Obama's victory. And these are not random people but rather highly educated Danes I find pleasant to meet and talk to, some of them are my good friends! Strikingly, it is hard to picture anyone in this country thinking or knowing clearly what's going on in real politics, they are completely unaware. It seems like they are living some dream, led solely by television (here media are extensively controlled by the state), mentally switched off, like hypnotised and not perceiving the reality.

Otherwise, the whole society is really well programmed, including those living purely on allowance, they know very well how to do nothing and get the stolen, pardon, redistributed wealth. The society have a great deal of order and harmony and everything seems to be functioning pretty well, although nearly every aspect of life is somehow regulated by the government. And when you think about it it is really awful, a golden cage model, but when you don't think about it you can be really happy! And that's the whole point!

The state-based media, surely knowing what to broadcast to ensure the happy substituted reality, help to maintain the common certainty of a brilliant social system taking care of them and keeping them secure. When they speak about it, they all believe, naturally, that they're articulating their own thoughts and are deeply confident about that.

Their life standard is relatively good (that is why the Master's of the society are praised by people who do not even care about the massive robbery exercised on them day by day) AND THAT'S THEIR CURSE! from the freedom expansion viewpoint. There would not be really anything spectacular about it, most democratic countries are simillar, now even the United States become communist, but what is striking here is that the common social acceptance for this system is very high. This could be a good exaple of a power of media and control. This is a new version of socialism, socialism with a human face, upgraded form which will not rely on terror anymore, but on the common acceptance! That's the point. You will have your CHANGE in the States soon too. Mr. Change started very well, happy cash printing is not a huge but some change indeed. Venezuelization is on its way. The Founding Fathers are turning in their graves.

The common relative well-being, lack of pressures (although now the crisis is intensifying, it is probably not this one yet to have an outbreak of people's anger, they are too well trained for that, democratic republic invested so much over so many decades) keeps them and other similar societies away from capitalistic mentality. The key is adaptation to risk which has to be taken to get anywhere, to set the Future as the major aim, having descendants in view. But having children is not very popular in democratic Europe nowadays (excluding immigrants of which Muslims dominate, and this may bring about a civilizational switch, which steadfast Oriana Fallaci emphasized). European nations are shrinking! dying! This is the plan of the greatest enemies of our civilisation being brought to life. It is easiest to guide our world (Western World) to self-destruction, invert its strongest values and humiliate its foundation - Christianity. This is why this consumption-driven, human action-deficient system is so harmful! So demoralising! Such humans seem to be addicted to their peace of mind, substituted reality, not human-like from psychological perspective but more cattle-like, thought-voluntarily-less. So down-hearted and brainwashed by media that they prefer paying so lot for their safety and security (which is just an illusion) to taking their lives in their hands. This is a plague of nearly all modern societies manipulated to the very core of human consciousness. Still trusting the banks and government, even after Iceland experience or credit crunch in the US or UK, which strikingly showed that people who are in control of our money are not responsible at all! Democratic societies are rusting very fast. It is not even a hundred years of democracy in Europe!

All in all Danes are well, maybe very well if measured by their frame of mind and there's absolutely no stimulation to start questioning things. There's only this kind of mental laziness and fear of what could the liberal changes do with this well organised society, supposedly based on the notion that better is the enemy of good, as stated by Francois-Marie Arouet known under the nickname Voltaire. This socialism is still strongly supported by the society because the symptoms of bankruptcy are not yet noticeable, and may still remain unseen for a long time. Therefore it is hard to explain to a person being a part of this machine that it is doomed to failure even though it miraculously still holds up. Or maybe does so rather due to the decent capital accumulated by many generations of strict protestants saving every penny (and the fact that it is so small population of about 5 million, largely honest and corruption free). The losses and squandering this system creates is smashing, however, they can't feel it because there's still this desensitizing (and in a way demoralising!) excess of wealth. Such societies need a serious crisis to wake up from the dream. Such a deep hypnosis requires a proportional shock to open the eyes again and turn the attitude from glorification of social security to appreciation of freedom and voluntary society. This is probably true for all Scandinavian and other countries where taxes are astronomical but the leftovers still sufficient to keep people's mouths shut. It takes time to consume a lot of wealth, but it cannot take forever.


Obama nixes Yucca Mountain, nuclear power.

Another crosspost from the Science in Society blog:

From the AP:

Energy Secretary Steven Chu said Thursday the proposed Yucca Mountain site in Nevada no longer is an option for storing highly radioactive nuclear waste, brushing aside criticism from several Republican lawmakers.

To date about $13.5 billion has been spent on the project and last year the Bush administration submitted an application for a construction and operating license to the Nuclear Regulatory Commission....

Instead, Chu said the Obama administration believes the nearly 60,000 tons of waste in the form of used reactor fuel can remain at nuclear power plants while a new, comprehensive plan for waste disposal is developed.

But President Barack Obama's first budget a week ago proposes scrapping all spending on Yucca Mountain except for what is needed to answer questions from the NRC on the license application "while the administration devises a new strategy toward nuclear waste disposal."

The lack of a permanent storage site for nuclear waste has been a significant impediment to the expansion of nuclear power in the US. Despite the vague talk of other options for waste disposal, this plan means that plants will have to continue to store their waste on-site, and above ground, making the construction of new power plants very difficult. And given the amount of time and money required to prepare the Nevada site so far, it is unlikely that another solution will be forthcoming anytime soon.

While environmental advocates are usually the first to promote clean-energy subsidies, many have been lukewarm towards nuclear power. Some of this aversion is due to safety - while there are 104 nuclear power plants operating in the US currently, the specter of Three Mile Island still haunts the industry. Some of it is cultural, feeding off an aversion towards the "unnatural" in the environmental movement.

Yet of the various zero-emissions energy sources, nuclear power has been the most significant success, generating 80% of the electricity used by France. (The only alternative energy that comes close is hydrothermal, which generates a similar proportion of Iceland's energy. But Iceland has both a smaller population and extraordinarily favorable geography for power generation.) Because of this success, some within the environmental movement have been pushing for increased nuclear power as the best option to combat CO2 emissions.

But, like the majority of the environmental movement, Obama has a record of being less than wholehearted in supporting nuclear power, even as he pushes for subsidizing less quantitatively promising - but politically safer - sources of alternative energy. The safety problem with nuclear power is a real and significant challenge, but by piling up waste at over a hundred discrete sites, this move will likely only exacerbate the problem in the short to medium run. In the long run the risk may decrease, if only because nuclear power generation will stop altogether as old plants are shut down.

The cynic in me must note that the Senate Majority Leader, Harry Reid, is from...you guessed it, Nevada.


Obama's statist service plan is about to pass Congress.

I've previously talked about the dangers of Obama's creepy mandatory service plan, a far-reaching campaign promise to enlist students in government-designated "service." Well, now a version of it is before Congress, tucked into the budget.

From here:

The legislation will, in many circumstances, force our children to participate in charitable activity as part of school – and that activity may well be chosen by or approved by a bureaucrat. The bill causes a federally chartered, Washington-based institution to, essentially, pick priorities and winners and losers in the charitable universe – undoubtedly putting many charities at a significant disadvantage…

None of this even considers the lack of Constitutional basis for such a massive federal intervention into local charities and volunteerism… but when does that ever stop anyone in Washington?

And:

This is how it goes in the Senate. Rush a 300 page bill through the Senate that will fundamentally re-shape the relationship not just between government and charity – but between our national government and charities nationwide, small and large… all so that Senators don’t have to be bothered over the weekend. After all, they have fundraisers to attend – fishing trips to take – golf matches to make....

Our national government in Washington – the same folks who are supposed to be managing our budget ($10 Trillion+ in debt and running), our borders (10 million illegal immigrants or more?), and who brought you social security and medicare (each of which are bankrupt) – are now going to tell us how to volunteer, and start telling our kids that they must volunteer and with whom they must do it.


Shortages are Bad

When I was a teaching assistant for introductory microeconomics, one of the main lessons I really tried to impress on the students was the wastefulness of shortages caused by price controls. Lots of issues are controversial in economics, but the wastefulness and pure social loss of shortages are not one of them. Usually the students understand this quite well.

And then I read articles like this [HT: Instapundit], and I despair:

I spent last week staring at parking meters. And wondering if I was witnessing the beginnings of a boycott.

Boycott is probably too strong a term. Quiet rebellion may be more like it.

Whatever the word, on Wednesday at 10:30 a.m. there were at least 10 open parking meters down one short block of Clark Street next to Lincoln Park.

At noon in Wicker Park, where Milwaukee Avenue is usually packed with parked cars, there were open meters waiting.

And at 2 p.m. around the Sheraton Hotel on Columbus Drive, a place where normally you can't crowbar your car into a space, there were at least three or four parking spaces. What's up with this?

What's up is that a month ago, when the City of Chicago privatized parking meters, rates were immediately jacked way up, and you now have to feed 28 quarters into the meter to park a car in the Loop for two hours. In exchange for a 75-year lease, the city got $1.2 billion to help plug its budget holes.

Look, this is a good thing. When the city privatized the meters, then the price for parking went to something resembling a market-clearing rate. And what happened? Well (surprise!) there are no longer chronic shortages of parking spaces. Imagine!

What's exasperating in this article is the idea that the optimum quantity of open parking spaces is zero. That's rubbish of the first order. Where the Sun-Times sees a boycott, I see a market. I see the opportunity to park in front of the Sheridan, rather than the extraordinary inefficiency of 100% occupancy. We don't say it's a "boycott" of milk if the grocery store sets prices above zero and so there is actually an inventory of milk present. Why should it be different with parking spaces?

People think of free parking as a God-given right and costless. It is neither. While I would prefer fully-privatized ownership of parking spaces, competitively set meter rates would actually be a reasonable close substitute. And the cost of "free" parking is enormous. There's a wonderful book on this topic.

Think of all the time you have to circle for thirty minutes to find a place to park. Think of all the traffic that consists solely of people in the endless hunt for the perfect spot. These are real costs. Just because they aren't monetized doesn't mean they don't exist.

I'm sympathetic to people who think that allowing legitimate road pricing just gives the government more revenue[*]. But there is a name for these people, even those that call themselves libertarians. The word is socialist. And it's no wonder this kind of socialism fails spectacularly.

*I actually don't necessarily agree (as I think other mechanisms determine the overall size of government), and I also think that the deadweight loss of our "free" roads and parking is so enormous that I'd deal with it if the government gets slightly bigger in exchange for real pricing. Congestion is an abomination.


Get With the Program Krugman

Paul Krugman is finally, very late in the game, criticizing just some of the economic madness that has been going on for the past twenty years. He points this out in his article, More on the bank plan. He does so for all the wrong reasons.

Krugman states in his article, “A bank, broadly defined, is any institution that borrows short and lends long.”

Get with the program Krugman. This is the bust phase of an Austrian business cycle. A bust caused by the fact that you can't borrow short and lend long without causing a mismatch between the plans of the lenders and the borrowers.

Eventually the short term plans of the lenders cannot be serviced by the borrowers. The lenders want their money back to spend but it's all tied up. They thought they had more savings than they actually did because fractional reserve acts as a monetary multiplier. There are more short deposits than actual liquidity to serve the accounts.

If your definition of a bank implicitly includes that then you should be against banks. However, banks don't need to do that. They could match maturities. They don't because they can cheat the system that way, with the help of the government. It allows them to leverage on the backs of savers without them being fully aware of the game. It’s implicit fraud.

You know that Austrian Economics is the way to go. This Keynesian/Monetarist Frankenstein hybrid you mainstream economists, yes YOU, have been running the country on is going to end up destroying us.

You don't give a sh_t about the poor unless you are willing to swallow your pride, admit you've been wrong all these years, and join the good guys. Join those who are against the reckless governmental destruction of the past twenty years.

I've known this mess was coming down from at least 1996. My coworkers and I have been speculating on when this sham economy was going to come down around our feet since at least then. Fractional reserve monetary inflation coupled with margin account leverage was not the answer to prosperity during Clinton. Reflating the fractional reserve bubble with absurdly low interest rates was not the answer during Bush. Now printing fiat money will not help correct the fractional reserve monetary deflation problem.

Money is NOT goods. Inflating the money supply is not the way to prosperity. Government spending is consumption not production. This “plan” is idiotic and will fail, as would your plan. You say time for a Swedish solution? Get real. That would just set us on the path to socialism, and further destruction of the economy. Nationalization of industry is NOT the way to go.

People are going to starve if this keeps up. Not just here but all over the world. We've had central monetary planning and it doesn't work just as Austrian Economics predicts. That's science. Nationalized banks aren’t going to help. This whole mess was caused by government sponsored entities in the first place. The Fed, Fannie and Freddy, etc.

Setting interest rates below market is a price control. Like all price controls it causes producers to produce less and consumers to consume more. For interest rates that means low savings (the producers) and high borrowing (the consumers). So that's economics 101 in ANY school of economics. Shame on Alan Greenspan for not following those metrics and shutting down the monetary pumps. Shame on the Fed and Bernarke who was instrumental in helping Greenspan ruin the economy.

Furthermore, with low interest rates, Austrian economics predicts that there will be asset price inflation in goods that are far away from production and companies that produce them. That describes internet companies and housing to a tee. Can anyone say Internet bubble? Can anyone say housing bubble?

It also predicts, according to theory, that commodity prices will skyrocket as the extra money injected into long term goals bids up the prices of those first. They go up highest because interest rates are more important to the costs of production of things that are far away from consumption.

That's exactly what happened confirming the theory.

Furthermore Austrian theory predicts that commodity prices will collapse as fractional reserve monetary inflation contracts at the end of an expansionary period. It happened confirming the theory.

Plus it predicts that there will be trade deficits as the fractional reserve (or fiat) inflation proceeds and other countries still accept the currency. This causes a shift of production to foreign countries according to Austrian theory. This is exactly as it happened. Shame on Greenspan for causing this. Shame on him for adding the additional incentives that caused capital flight. Incentives like the Mexican and the Asian Crisis bailouts.

It also predicts that under a metallic standard such monetary inflation will cause an outflow of the backing assets. In the case of the US during and before Nixon it was gold. We had below market interest rates back then too. Plus a currency pegged above gold. So the gold flowed out. Being the idiot he was Nixon took the final steps to get us off gold and made us have a completely fiat currency.

What is our backing asset now that we are on fiat currency? It's our ability to pay. So taxpayer debt is the backing asset to our currency. Increasing governmental debt is equivalent to the draining of gold now days. This whole time the central bank has been watching as our coffers have been drained. A sure sign that monetary policy was too loose.

Austrian Economics now predicts massive inflation. When that event happens will you finally believe in proper theory?

Austrian Economics also predicts that you can't do the kind of quantitative predictions that other economists are so fond of. You have to do the qualitative types of predictions as I did above. No mainstream economists saw this coming with their physics based mathematical models. Just as Austrian theory predicts.

Every step of the way the Austrians have been right and the Keynesian and Monetarists have been wrong.

Yet after Keynesianism just failed twice, once with the internet bubble, and now with the housing bubble, now Obama is going to try the same stupid “solutions” again. Lower interest rates, print money, and spend. This is Bush and Clinton on steroids. Who the hell is this guy listening too?

If he were smart he'd look me up and fire his entire cabinet.

You know the next government steps. Inflation will harm old people, people who will lose their jobs, orphans, everyone in the US trying to buy foreign trade goods. So the incredibly stupid politicians we have will try price controls which will further cripple the economy.

Krugman, Greenspan, Paulson, Bernarke, you are all economic ignoramuses. Try applying scientific principles to economics. All scientific principles like self consistency. Stop believing the fantasies of Keynesianism a self contradictory system with all its "paradoxes". They are not paradoxes to be accepted they are contradictions that falsify the theory.

You call your column, "The Conscience of a Liberal". How can you live with yourself when you know you've been wrong all these years? Do the right thing and abandon your socialist tendencies and failed economic policies.

Update: I posted this comment at Krugman's blog. It stayed up for a while. Now it is gone. This guy is as honest with his blog as Delong. That is to say totally dishonest. His comment section is a echo chamber.


Liberal Emotion

From David Henderson:

Interestingly, the difference between the liberals and the libertarians was less on the economic analysis and even the bottom-line policy conclusions than it was on our feelings about the bottom line. The libertarians--Anderson, Zycher, and I--loved it when the answer was that free markets work; and that was usually the answer. The liberals, Krugman more than Summers, seemed often upset when that was the answer; they seemed to want a big role for government.

It had been puzzling me why economic literacy so often does little more for a liberal than to make him an even more effective advocate of big government. The above observation helps to explain it.


Just the Science?

Cross-posting from the Science in Society blog:

Last week, the Obama administration rolled back restrictions on federal funding for embryonic stem cell research on newly created embryos. When he was in the Senate, Obama said the following:

...the promise that stem cells hold does not come from any particular ideology; it is the judgment of science, and we deserve a president who will put that judgment first.

A recurrent theme of this blog is that science policy is more than just science. Like all policy decisions, it is informed by facts but fundamentally comes down to a question of priorities. What is the value of a human embryo, and is it worth trading off X of these to develop Y therapies? What is the cost of climate change, and how much are we willing to pay economically to mitigate the effects? The "judgment of science" can tell us the characteristics of a blastocyst and vaguely sketch out possible benefits from stem cell research. But the decision whether to have the government fund it is a political and ideological one, and to point to one side of the argument as "science trumping ideology" is disingenuous.

The Economist article goes on to point out that Obama opposes human cloning. In his remarks on embryonic stem cell research he called human cloning "dangerous, profoundly wrong, and has no place in our society, or any society," and promised that "we will ensure that our government never opens the door to the use of cloning for human reproduction." Now there are good reasons for this opposition: even on animals there is a very low success rate, and even for successful clones there are often lingering medical issues. But notice how the reasoning has suddenly changed - he is morally opposed to human cloning based on these known risks, thus justifying at least defunding of the research and possibly (the wording is unclear) banning it altogether. From science trumping ideology we now have ideology directing science.

Not that this makes these decisions necesarily wrong. There are strong arguments for embryonic stem cell research, which become stronger or weaker depending on the value you place on a human blastocyst. Likewise many (but not all) believe that the suffering attendant upon human cloning efforts is too great to justify scientific advance in that field. But we need to be clear that these decisions are informed by science but ultimately based on personal beliefs and priorities, not solely on "the judgment of science."

Politicians ought to appoint scientific advisors on a nonideological basis and listen to what they have to say, but it is ultimately their job to issue a judgment based on their value system. However rhetorically convenient it may be, it is disingenuous for them to claim to follow science's lead when approving of research, only to voice moral disapproval when they wish to hit the ideological brakes.


AnCap Entrepreneur Network

I just returned from my first event at the Ludwig von Mises Institute. I generally pick up the recorded events a few days later on the podcast feed. But, after seeing that Gil Guillory was presenting a paper (scheduled to join the others on his site) "Marketing Subscription-Based Patrol and Restitution", I decided to take the drive down to Alabama to meet him.

Gil's research is on a business model similar to the product I speculated about back in September. Finding Gil's research was a watershed moment for me: this anarcho-capitalism stuff is becoming real. We've studied the ideology, we've discussed scenarios, we see the old economic model crumbling--now it's time to combine land, labor, and capital in the real world. It's time to look at generating revenue streams not decades away, but this year.

I am proposing that we create a network of business people interested in starting profitable organizations based on anarcho-capitalist ideology in the short to medium term. My draft of the manifesto is here. Here's a rough plan for us to develop.

Who's ready to build a free society?


AnCap Entrepreneur Network - Rough Plan

This is the start of my brainstorming, so I'll leave this as bulleted items with minimal explanation.

  • Social networking site - Members' contact info and business skills, member blogs, wiki, private conversations, shared documents. Partner with similar site to leverage hosting and development?
  • Research program for business models and background info - submit to Libertarian Papers?
  • Conferences - Piggy-back on existing conference. Session track at Austrian Scholar's Conference? Other conferences to get geographic/ideological/seasonal spread? Additional smaller, more frequent, less formal meetups?
  • Funding - What model to use: donations in kind (open source)/financial donation/subscription/advertising/pay-per services/paper topic "bounties" (perhaps awarded as prizes at conference and chosen by donors: $300 for best presentation on 'When to Change your Accounting Currency to Gold; a Breakeven Analysis', $100 2nd prize)
  • Expenses - Site hosting
  • Marketing - Associated projects: LvMI, Free State Project, Freedomain Radio, Seasteading Institute, Global Guerrillas (resilient communities and failed states), Factor e Farm (distributed manufacturing, response to unsustainable social institutions)
  • Progression as sector develops - e.g. "Rothbardian Contract Law"
    1. Theory presentation at conference
    2. Course on how to create compatible contracts
    3. Course for mediators/arbitrators (M/A)
    4. M/A network
    5. Advertising for M/A organizations
    6. Feedback from M/A on difficult issues develops theory further
    7. Contract boilerplate for purchase
    8. M/A Certification service
    9. Contract history rating service to certify parties' reputations in honoring contracts