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Month: October 2014

Fount of Clarity, Op. 24 (2003) – Musical Composition and Video by G. Stolyarov II

Fount of Clarity, Op. 24 (2003) – Musical Composition and Video by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
October 18, 2014
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This 2003 piano composition by G. Stolyarov II evokes the image of absolute transparency and certainty, like the texture of water rushing from an ornate fountain, and the desired nature of ideas in the mind.

This work was remastered using the SynthFont2 software, with the Evanescence 2 and GMR Basico 1.1 instrument packs.

Download the MP3 file of this composition here.

See the index of Mr. Stolyarov’s compositions, all available for free download, here.

The artwork is “Sanssouci Palace” by Carl Graeb (1816-1884), painted between 1843 and 1845 and accessible as a public-domain image here.

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Inflation’s Not the Only Way Easy Money Destroys Wealth – Article by Frank Shostak

Inflation’s Not the Only Way Easy Money Destroys Wealth – Article by Frank Shostak

The New Renaissance Hat
Frank Shostak
October 14, 2014
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The US Federal Reserve can keep stimulating the US economy because inflation is posing little threat, Federal Reserve Bank of Minneapolis President Kocherlakota said. “I am expecting an inflation rate to run below two percent for the next four years, through 2018,” he said. “That means there is more room for monetary policy to be helpful in terms of … boosting demand without running up against generating too much inflation.”

The yearly rate of growth of the official consumer price index (CPI) stood at 1.7 percent in August against two percent in July. According to our estimate, the yearly rate of growth of the CPI could close at 1.4 percent by December. By December next year we forecast the yearly rate of growth of 0.6 percent.

Does Demand Create More Supply?

It seems that the Minneapolis Fed President holds that by boosting the demand for goods and services — by means of additional monetary pumping — it is possible to strengthen economic growth. He believes that by means of strengthening the demand for goods and services the production of goods and services will follow suit. But why should that be so?

If by means of monetary pumping one could strengthen the economic growth then it would imply that — by means of monetary pumping — it is possible to create real wealth and generate an everlasting economic prosperity.

This would also mean that world wide poverty should have been erased a long time ago. After all, most countries today have central banks that possess the skills to create money in large amounts. Yet world poverty remains intact.

Despite massive monetary pumping since 2008, and the policy interest rate of around zero, Fed policymakers seem to be unhappy with the so-called economic recovery. Note that the Fed’s balance sheet, which stood at $0.86 trillion in January 2007 jumped to $4.4 trillion by September this year.

Production Comes Before Demand

We suggest that there is no such thing as an independent category called demand. Before an individual can exercise demand for goods and services, he/she must produce some other useful goods and services. Once these goods and services are produced, individuals can exercise their demand for the goods they desire. This is achieved by exchanging things that were produced for money, which in turn can be exchanged for goods that are desired. Note that money serves here as the medium of exchange — it produces absolutely nothing. It permits the exchange of something for something. Any policy that results in monetary pumping leads to an exchange of nothing for something. This amounts to a weakening of the pool of real wealth — and hence to reduced prospects for the expansion of this pool.

What is required to boost the economic growth — the production of real wealth — is to remove all the factors that undermine the wealth generation process. One of the major negative factors that undermine the real wealth generation is loose monetary policy of the central bank, which boosts demand without the prior production of wealth. (Once the loopholes for the money creation out of “thin air” are closed off the diversion of wealth from wealth generators towards non-productive bubble activities is arrested. This leaves more real funding in the hands of wealth generators — permitting them to strengthen the process of wealth generation (i.e., permitting them to grow the economy).

Artificially Boosted Demand Destroys Wealth

Now, the artificial boosting of the demand by means of monetary pumping leads to the depletion of the pool of real wealth. It amounts to adding more individuals that take from the pool of real wealth without adding anything in return — an economic impoverishment.

The longer the reckless loose policy of the Fed stays in force the harder it gets for wealth generators to generate real wealth and prevent the pool of real wealth from shrinking.

Finally, the fact that the yearly rate of growth of the CPI is declining doesn’t mean that the Fed’s monetary pumping is going to be harmless. Regardless of price inflation monetary pumping results in an exchange of nothing for something and thus, impoverishment.

Frank Shostak is an adjunct scholar of the Mises Institute and a frequent contributor to Mises.org. His consulting firm, Applied Austrian School Economics, provides in-depth assessments and reports of financial markets and global economies. See Frank Shostak’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Waltz #4, Op. 40 (2005) – Musical Composition and Video by G. Stolyarov II

Waltz #4, Op. 40 (2005) – Musical Composition and Video by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
October 5, 2014
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This piano waltz, composed in 2005 by G. Stolyarov II, employs the contrast of major and minor keys to demonstrate the passage from serious deliberation to gloriously enlightening discovery.

This work was remastered using the SynthFont2 software, with the Evanescence 2 and GMR Basico 1.1 instrument packs.

Download the MP3 file of this composition here.

See the index of Mr. Stolyarov’s compositions, all available for free download, here.

The artwork is Mr. Stolyarov’s Abstract Orderism Fractal 28, available for download here and here.

Remember to LIKE, FAVORITE, and SHARE this video in order to spread rational high culture to others.
Contemplation, Op. 37 (2004) – Musical Composition and Video by G. Stolyarov II

Contemplation, Op. 37 (2004) – Musical Composition and Video by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
October 4, 2014
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This 2004 piano composition by Mr. Stolyarov reflects the mood of deep, intense, involved thinking, punctuated by conceptual breakthroughs.

This work was remastered using the SynthFont2 software, with the Evanescence 2 and GMR Basico 1.1 instrument packs.

Download the MP3 file of this composition here.

See the index of Mr. Stolyarov’s compositions, all available for free download, here.

The artwork is Mr. Stolyarov’s Abstract Orderism Fractal 59, available for download here and here.

Remember to LIKE, FAVORITE, and SHARE this video in order to spread rational high culture to others.

The 2014 Fight Aging! Fundraiser Starts Now: We’ll Match Your Research Donations with $2 for Every $1 Given – Article by Reason

The 2014 Fight Aging! Fundraiser Starts Now: We’ll Match Your Research Donations with $2 for Every $1 Given – Article by Reason

The New Renaissance Hat
Reason
October 4, 2014
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Note from the Editor: The Rational Argumentator strongly supports this matching fundraiser and encourages all readers to donate any sums of money to the SENS Research Foundation, in order to accelerate the basic research into and the development of cures for the debilitating diseases of old age. I personally made a donation of $100 on October 4, 2014, knowing that its impact will be tripled through a 2-for-1 additional contribution by the generous donors who established the matching fund. This is the time to leverage our resources and ensure that this literally vital research gets done as soon as possible. I am grateful to Reason of FightAging.org for his tireless efforts in advocating for life-extension research and spearheading campaigns to attract the funding that this area of science urgently needs.

~ Gennady Stolyarov II, Editor-in-Chief, The Rational Argumentator, October 4, 2014

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It is that time again, and our 2014 matching fundraiser started October 1st 2014. From now until the end of the year, December 31st 2014, we will match the first $50,000 donated to the SENS Research Foundation with $2 for every $1 given. These funds will help to speed progress in ongoing scientific programs conducted in US and European research centers, their ultimate aim being to repair and reverse the causes of frailty and age-related disease.

The SENS Research Foundation is a 501(c)(3) charity and all US donations are tax-deductible. Donations from most European Union countries are also tax-deductible, though the details vary by location. Please contact the SENS Research Foundation to find out more.

The Matching Fund Founders Ask You to Join Us

Who are we? We are Christophe and Dominique Cornuejols, David Gobel of the Methuselah Foundation, Dennis Towne, Håkon Karlsen, philanthropist Jason Hope, Michael Achey, Michael Cooper, and Reason of Fight Aging! We are all long-time supporters of SENS research aimed at rejuvenation through repair of the known root causes of aging. The few types of cellular and molecular damage that accumulate in all of our tissues cause progressive dysfunction and eventual death for everyone – unless something is done to stop it. This cause is important enough for everyone to do their part, and for us that means putting up a $100,000 matching fund we want you to help draw down: for every dollar you donate, we will match it with two of our own.

Even Small Donations Make a Meaningful Difference

Early stage medical biotechnology research of the sort carried out at the SENS Research Foundation costs little nowadays in comparison to the recent past. The cost of tools and techniques in biotechnology has plummeted in the past decade, even while capabilities have greatly increased. A graduate student with $20,000 can accomplish in a few months what would have required a full laboratory, years, and tens of millions of dollars in the 1990s. All of the much-lamented great expense in modern medicine lies in clinical translation, the long and drawn out process of trials, retrials, marketing, and manufacturing that is required to bring a laboratory proof of concept into clinics as a widely available therapy.

The SENS Research Foundation is focused on early stage research, following a plan that leads to technology demonstrations in the laboratory. With a proof of concept rejuvenation therapy the world will beat a path to their doorstep in order to fund clinical translation. The real challenge is here and now, raising the funds to get to that step. A few tens of thousands of dollars means the difference between a significant project delayed indefinitely or that project completed.

To pick one example, last year the community raised $20,000 to fund cutting edge work in allotopic expression of mitochondrial genes, a potential cure for the issue of mitochondrial damage in aging. That was enough to have a skilled young researcher work on the process for two of the thirteen genes of interest over a period of months. It really is that cheap given an existing group like the SENS Research Foundation with diverse connections and access to established laboratories.

Your donations make a real difference.

Spread the Word, Tell Your Friends

Don’t forget to tell your friends about this fundraiser. Talk to your community, online and offline. Consider running local events to help meet our goal of raising $50,000 from a grassroots community of supporters. The more people who know about the prospects for near future therapies resulting from rejuvenation research of the sort carried out by the SENS Research Foundation, the easier it becomes to raise funds and obtain institutional support for these research programs in the future.

Launched at /r/Futurology and in Conjunction with Longevity Day

Take a look at the generous spirit displayed at /r/Futurology, the futurist Reddit community, when given the chance to help. Scores of people there have already donated modest sums to the cause in response to our fundraiser: many thanks to you all!

The 1st of October marks the launch of this fundraiser, but it is also the International Day of Older Persons, and the International Longevity Alliance would like this to become an official Longevity Day. This year, just like last year, groups of futurists around the world will be holding events to mark the occasion, and this includes the scientists and advocates present at the 2014 Eurosymposium on Healthy Aging.

Download the 2014 Fundraiser Posters

The full size graphics here are large enough for 24 x 36 inch posters, but are also suitable for page-sized fliers. The original Photoshop files are available on request, but are a little large to put up here. Make as much use of these as you like – please help to spread the word and help this fundraiser to meet its target.

Color design, 3600 x 5600 pixels suitable for 24 x 36 inch posters, 11.3MB
Color design, 2400 x 3600 pixels suitable for letter size, 6.3MB

Blue design, 7200 x 10800 pixels suitable for 24 x 36 inch posters, 13.1MB
Blue design, 2400 x 3600 pixels suitable for letter size, 3.8MB

Reason is the founder of The Longevity Meme (now Fight Aging!). He saw the need for The Longevity Meme in late 2000, after spending a number of years searching for the most useful contribution he could make to the future of healthy life extension. When not advancing the Longevity Meme or Fight Aging!, Reason works as a technologist in a variety of industries. 
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This work is reproduced here in accord with a Creative Commons Attribution license. It was originally published on FightAging.org.

The Japanese Deflation Myth and the Yen’s Slump – Article by Brendan Brown

The Japanese Deflation Myth and the Yen’s Slump – Article by Brendan Brown

The New Renaissance Hat
Brendan Brown
October 4, 2014
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The slide of the yen since late summer has brought it to a level some 40 percent lower against the euro and US dollar than just two years go. Yet still Japan’s Prime Minister Shinzo Abe and his central bank chief Haruhiko Kuroda warn that they have not won the battle against deflation. That caution is absurd — all the more so in view of the fact that there was no deflation in the first place.

Some cynics suggest that Abe’s and Haruhiko’s battle cry against this phoney phantom is simply a ruse to gain Washington’s acquiescence in a big devaluation. But whatever the truth about their real intent, Japan’s monetary chaos is deepening.

Japanese Prices Have Been Stable

The CPI in Japan at the peak of the last cycle in 2007 was virtually at the same level as at the trough of the post-bubble recession in 1992, and up a few percentage points from the 1989 cycle peak. Hence, Japan alone has enjoyed the sort of price stability as might be enjoyed in a gold-standard world. Prices have fallen during recessions or during periods of especially-rapid terms-of-trade improvement or productivity growth. They have risen during cyclical booms or at times of big increases in the price of oil.

If price-indices in Japan were adjusted fully to take account of quality improvements they would have been falling slightly throughout, but that would also have been the case under the gold standard and was fully consistent with economic prosperity.

yenslumpSuch swings in prices are wholly benign. For example, lower prices during recession coupled with expectation of higher prices in expansion induce businesses and households to spend more. A valid criticism of the Japanese price experience of the past two decades has been that these swings have lacked vigour due to various rigidities. Particularly valid is the claim that price falls should have been larger during the post-bubble recession of 1990-93 and subsequent potential for recovery would have been correspondingly larger.

Prices in Japan did fall steeply during the Great Recession (2008-10) but the perceived potential for recovery was squeezed by the Obama Monetary Experiment (the Fed’s QE) which meant an immediate slide of the US dollar. It was in response to the related spike of the yen that Prime Minister Abe prepared his counter-stroke. This involved importing the same deflation-phobic inflation-targeting policies that the Obama Federal Reserve was pursuing. Washington could hardly criticize Tokyo for imitating its own monetary experiment.

Deflation and “The Lost Decade”

The architects of the Obama Monetary Experiment have cited as justification Japan’s “lost decade” and the supposed source in deflation. In fact, though, the only period during which the Japanese economy underperformed other advanced economies (as measured by the growth of GDP per capita) was from 1992-97. The underperformance of that period had everything to do with insufficient price and wage flexibility downward, the Clinton currency war, and the vast malinvestment wrought by the prior asset price inflation, coupled with a risk-appetite in Japan shrunken by the recent experience of bust.

Moreover, as time went on, from the early 1990s, huge investment into the Tokyo equity market from abroad compensated for ailing domestic risk appetites. Yes, Japan’s economy could have performed better than the average of its OECD peers if progress had been made in de-regulation, and if Japan had had a better-designed framework of monetary stability to insulate itself from the Greenspan-Bernanke asset price inflation virus of the years 2002-07. (The Greenspan-Bernanke inflation caused speculative temperatures in the yen carry trade to reach crazy heights.) But deflation was never an actual or potential restraint on Japanese prosperity during those years.

True, there was a monetary malaise. Japan’s price stability was based on chance, habit, and economic sclerosis rather than the wisdom of its monetary policy. It had been the huge appreciation of the yen during the Clinton currency war that had snuffed out inflation. Then the surge of cheap imports from China had worked to convince the Japanese public that inflation had indeed come to an end. Lack of economic reform meant that the neutral rates of interest remained at a very low level and so the Bank of Japan’s intermittent zero rate policies did not stimulate monetary growth.

The monetary system in Japan had no secure pivot in the form of high and stable demand for non-interest bearing high-powered money. In Japan the reserve component of the monetary base is virtually indistinguishable from a whole range of close substitutes and banks had no reason to hold large amounts of this (given deposit insurance and the virtual assurance of too-big-to-fail help in need). Monetary policy-making in Japan meant highly discretionary manipulation of short-term interest rates in the pursuance of fine-tuning the business cycle rather than following a set of rules for monetary base expansion.

The Yen After Abenomics

When Prime Minister Abe effected his coup against the old guard at the Bank of Japan there was no monetary constitution to flout. Massive purchases of long-dated Japanese government bonds by the Bank of Japan are lowering the proportion of outstanding government debt held by the public in fixed-rate form. But this is all a slow-developing threat given a gross government debt to GDP ratio of around 230 percent and a current fiscal deficit of 6 percent of GDP. Bank of Japan bond-buying has strengthened irrational forces driving 10-year yields down to almost 0.5 percent despite underlying inflation having risen to 1 percent per annum.

It is doubtless the possibility of an eventual monetization of government debt has been one factor in the slump of the yen. More generally, as the neutral level of interest rates in Japan rises in line with demographic pressures (lower private savings, increased social expenditure) one might fear that BoJ manipulation of rates will eventually set off inflation. Part of the yen’s slump, though, is due to a tendency for that currency to fall when asset price inflation is virulent in the global economy. This stems from the huge carry trade in the yen.

The yen could indeed leap when the global asset price-inflation disease — with its origins in Fed QE — moves to its next phase of steep speculative temperature fall. The yen is now in real effective exchange rate terms at the record low point of the Japan banking crisis in 1997 or the global asset inflation peak of 2007. So, the challenge for investors is to decide when the Abe yen has become so cheap in real terms that its hedge properties make it a worthwhile portfolio component.

Brendan Brown is an associated scholar of the Mises Institute and is author of Euro Crash: How Asset Price Inflation Destroys the Wealth of Nations and The Global Curse of the Federal Reserve: Manifesto for a Second Monetarist Revolution. See Brendan Brown’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

SWAT’s Military Tactics Put Cops at Risk – Article by Daniel J. Bier

SWAT’s Military Tactics Put Cops at Risk – Article by Daniel J. Bier

The New Renaissance Hat
Daniel J. Bier
October 2, 2014
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“Democracy means that when there’s a knock on the door at 3 a.m., it’s probably the milkman.”
—Winston Churchill (apocryphal)

On the morning of May 5, 2011, a Pima County, Arizona, SWAT team pulled up to the home of Jose Guerena, a Marine veteran who had served in Iraq. Sheriff’s deputies threw flashbang grenades as a diversionary tactic and broke down the door.

Inside, Guerena told his wife and 4-year-old son to hide in the closet and went into his hallway holding a rifle. Officers let loose, firing 70 rounds in 10 seconds, hitting him over 20 times.

From the time of their arrival to the final shot, it was all over in less than a minute. Guerena’s rifle had the safety on; he never fired a shot. Police found no evidence of criminal activity.

Police organizations sometimes defend the prolific use of military equipment and tactics as necessary precautions against criminals arming themselves before cops can arrest them. But the overuse of tactical raids carries its own risks, and not just to citizens (and their dogs) who are subjected to battering rams, flash grenades, and automatic weapon fire.

Although SWAT teams were originally developed to handle rare and violent events, such as bank heists and hostage situations, they are now increasingly deployed to handle routine law enforcement functions. Paramilitary units are often the first point of contact in any investigation, and there are some places where all warrants—regardless of the suspect, evidence, or crime—are served by SWAT.

St. Louis County, Missouri—home of the city of Ferguson—is one such jurisdiction. As the county government explains the reasons for its SWAT team, “The Tactical Operations Unit … is capable of dealing with hostage situations, armed and barricaded subjects, suicidal persons and executes all search warrants issued in St. Louis County” (emphasis added).

One of these things, you may notice, is not like the others.

St. Louis is not alone. In a typical case in Prince George’s County, Maryland, a SWAT team burst into a man’s home, shot his two black Labradors, and left his family handcuffed on the floor. A drug dealer had mailed a box of drugs to his address, intending to intercept it before it was delivered. The man was Cheye Calvo, the town’s mayor.

A subsequent lawsuit by Calvo revealed that Prince George’s County uses its SWAT team to serve every single search warrant, even when the police don’t know who the suspects are, if they might be dangerous, or if there are children present.

Calvo succeeded in lobbying for the nation’s first law to track the use of SWAT teams. The data soon revealed that 94 percent of tactical deployments in Maryland were for ordinary search warrants, not for the kinds of violent situations that might typically justify such aggressive use of force. In Prince George’s County, more than half the raids were for misdemeanors or non-serious felonies.

Statewide, only 60 percent of tactical raids actually resulted in arrests for any crime, and Maryland is far from exceptional in using SWAT for trivial issues. In Florida, paramilitary teams perform business license inspections on black and Hispanic barbershops. Tactical raids have also been conducted for such “crimes” as hosting unlicensed poker games, defaulting on student loans, violating copyrights, and making fun of a politician on Twitter.

But there is a price to be paid for sending masked men crashing unannounced through windows and doors into people’s homes 45,000 times a year, often in the middle of the night. Using SWAT to serve minor warrants introduces violence into otherwise non-violent situations, creating, rather than defusing, volatile and dangerous conditions—the very opposite of what SWAT teams were originally meant to do.

It is not unusual even for innocent people awoken in such circumstances to believe that the police are thieves or violent criminals breaking into their homes. Like anyone else confronted with such a disorienting and frightening situation, they may reach for guns or other weapons to defend their home and their family, sometimes with tragic results for both citizens and officers.

Consider just a few recent examples:

  • Ryan Frederick was charged with first-degree murder after he fired on someone smashing their way through his door one night in 2008. The intruder turned out to be Detective Jarrod Shivers serving a no-knock warrant for a non-existent cannabis farm.
  • Henry Magee was a small-time marijuana grower who in December 2013 awoke in the middle of a no-knock raid on his trailer and opened fire on the intruders, killing Deputy Adam Sowders. A grand jury refused to indict him for capital murder.
  • Marvin Louis Guy opened fire on someone breaking in through his window before dawn on May 9, 2014; the intruders were police serving a no-knock drug warrant. They found no narcotics, and no drug-related charges have been filed, but Guy faces the death penalty for killing Detective Charles Dinwiddie.
  • Aaron Awtry, a 72-year-old South Carolinian, assumed that the SWAT team members battering down his door were criminals trying to rob his small-stakes poker game. He opened fire through the door, hitting Deputy Matthew May in the arm, while vice officers returned fire. Awtry was wounded and charged with attempted murder; the other players each received a $100 fine.

Cases of disastrous raids abound, and they reveal a serious problem with the assumption that paramilitary tactics are always safer for police. Some crazy or desperate suspects may indeed justify such preemptive force. But in many other cases, the dangerous and volatile conditions put officers at risk who otherwise would not be.

If a policeman in a blue uniform had knocked on Frederick’s door in the middle of the day, what are the chances that the innocent man would have shot a cop? And surely there are many others like Magee: guilty of something, but otherwise non-violent—or at least not suicidal enough to intentionally shoot a cop—who could be frightened into using a weapon in self-defense.

The most serious problem with the overuse of aggressive, militarized raids is one of information: Residents of the home don’t know who is breaking in, and police officers often don’t know who is inside, so both sides assume the worst and act accordingly. From the perspective of a sleeping homeowner, a no-knock SWAT raid is indistinguishable from an armed robbery. And as Guerena’s case shows, these events can escalate to lethal force in the blink of an eye. It is no exaggeration to say that lives have been ruined and ended because of unnecessary and violent tactics for petty and non-violent offenses.

Before we can address such problems as the use of military equipment by local law enforcement, we must first understand what is driving their demand for armored vehicles and high-powered weapons. The overuse of SWAT and the associated overuse of military gear in civilian policing are in part a result of overblown fears about police safety. But they are also based on a false dilemma between keeping cops unsafe and turning them into an army.

Officer safety is a legitimate problem, but that does not mean more force is always a legitimate answer. The best way to keep officers safe is to try to de-escalate conflicts—reserving SWAT for only the worst situations—and to end the War on Drugs that is at the heart of the breakdown of trust in law enforcement. When that’s done, Americans may once again go to sleep knowing that if you hear a bang on your door at 3 a.m., it’s probably just the newspaper.

Daniel Bier is the executive editor of The Skeptical Libertarian. He writes on issues relating to science, skepticism, and economic freedom, focusing on the role of evolution in social and economic development.

This article was originally published by The Foundation for Economic Education.