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The Imperative of Technological Progress: Why Stagnation Will Necessarily Lead to Disaster and How Techno-Optimism Can Overcome It – Article by G. Stolyarov II

The Imperative of Technological Progress: Why Stagnation Will Necessarily Lead to Disaster and How Techno-Optimism Can Overcome It – Article by G. Stolyarov II

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The New Renaissance HatG. Stolyarov II
August 14, 2015
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“He who moves not forward, goes backward.”
~ Johann Wolfgang von Goethe

It is both practically desirable and morally imperative for individuals and institutions in the so-called “developed” world to strive for a major acceleration of technological progress within the proximate future. Such technological progress can produce radical abundance and unparalleled improvements in both length and quality of life – whose possibilities Peter Diamandis and Steven Kotler outlined in their 2012 book Abundance: The Future is Better Than You Think. Moreover, major technological progress is the only way to overcome a devastating step backward in human civilization, which will occur if the protectionist tendencies and pressures of existing elites are allowed to freeze the status quo in place.

If the approximate technological and economic status quo persists, massive societal disintegration looms on the horizon. A Greece-style crisis of national-government expenditures may occur as some have predicted, but would only be a symptom of a greater problem. The fundamental driver of crisis since at least September 11, 2001, and more acutely since the Great Recession and the national-government bailouts of legacy financial and manufacturing institutions, is an increasing disconnect between the powerful and everybody else. The powerful – i.e., the politically connected, including the special interests of the “private sector” – seek to protect their positions through political barriers, at the expense of individual rights, upward social mobility, and economic/technological progress. Individuals from a relatively tiny politically connected elite caused the 2008 financial crisis, lobbied for and received unprecedented bailouts and lifelines for the firms whose misbehavior exacerbated the crisis, and then have attempted to rig the political “rules of the game” to prevent themselves from being unseated from positions of wealth and influence by the dynamics of market competition. The system created by these elites has been characterized by various observers as crony capitalism, corporatism, corporate fascism, neo-mercantilism, and a neo-Medieval guild system.

The deleterious influence of the politically connected today is reflected in the still-massive rates of unemployment and underemployment for the millennial generation, while many established industries fail to make openings for young people to ascend and fail to accommodate the emerging technologies with which young people thrive. While the millennial generation had nothing to do with the Great Recession, it has suffered its greatest fallout. Many millennials now encounter tremendous diminution in economic opportunity and living standards (think of young people in New York City paying several thousand dollars a month to share a tiny, century-old apartment among three people – or the emerging trend of shipping containers being converted into the only type of affordable housing for young people in San Francisco). The “Occupy” movement was a reflection of the resulting discontentment – a reflexive and indiscriminate backlash by young people who knew that their circumstances were unjustly bad, but did not understand the root causes or the culprits.

The only way for a crisis to be averted is for the current elites to stop blocking people from the millennial generation from opportunities to achieve upward mobility. The elite must also stop bailing out obsolete and poorly managed legacy institutions, and cease erecting protectionist barriers to the existence of innovative businesses that young people can and have tried to start. If the millennial generation continues to be shut out of the kinds of opportunities available to the preceding generation, however, I can envision two crisis scenarios. Each of these characterizations is not a prediction (but rather a nightmare which I hope can be avoided), is somewhat broad and, of course, is tentative. However, these scenarios are rough outlines of how the West could falter in the absence of significant technological progress.

Crisis Scenario 1: “Occupy” Times Ten: Millions of unemployed thirty-somethings (millennials in five to ten years) riot in the streets, indiscriminately destroying storefronts and setting cars alight. Economic activity and sophisticated production are ground to a halt because of the turmoil. The continuity of knowledge transfer and intergenerational symbiosis involved in human civilization are completely interrupted. Clashes with police create martyrs who are then invoked by opportunistic thugs as an excuse to loot and burn. Without the opportunity for peaceful economic cooperation, society degenerates into armed gangs, some left-wing (e.g., “Black Bloc” violent anarchists), others right-wing (e.g., survivalist militia groups). Thoughtful and intellectual people, who want the violence to end and see an imperfect peace as better than a war of all against all, are universally despised by the new tribes and cannot find a safe environment in which to work and innovate. The infrastructure of everyday life is critically damaged, and nobody maintains or repairs it. Roads, bridges, pipes, and electrical grids are either destroyed or become unusable after years of decay. The West becomes Ukraine writ large, eventually regressing into premodernity.

Crisis Scenario 2: The Reaction: Current political and crony-capitalist elites crack down with extreme force, either in response to actual riots or, more likely, to the threat thereof. Civil liberties are obliterated and an economic underclass enforced through deliberate restrictions on entry into any remunerative occupations – much like the 17th-century mercantilists advocated for maximum wages and prohibitions on perceived luxuries for the working classes. Those who do get jobs are required to work 60 or more hours per week and so have no time for anything else in life. All established industries are maintained in their current form through legal protections and bailouts, and there is an official policy that the structure of the economy must not be allowed to change for any reason. (Think of Directive 10-289 from Ayn Rand’s Atlas Shrugged.) Licensing requirements for professions become ubiquitous and burdensome, laden with Catch-22 provisions so that few or no new entrants can make it into the system. Only an elite cadre of Baby Boomers enjoys wealth and uses the force of legal entry barriers to prevent anyone else from having the opportunity to earn their own. They have ground technological progress to a halt, seeking to keep established business models in place and thwart all competition. The national government develops a massive spying capability and enforces social order through the ability to detect behaviors that might even be algorithmically correlated with dissent. All ordinary citizens are routinely humiliated in public under the pretense of thwarting crime or terrorism. TSA body searches have expanded beyond airports to highway checkpoints, shopping centers, and random stops by police on city streets. People’s homes are routinely raided by SWAT teams at the mildest pretext. This is done to make people meek and subservient to the established order. To keep young people from rioting (and get rid of the “excess” unemployed youths), the elites concoct jingoistic justifications to inflame endless foreign wars, and young people are conscripted and sent to die abroad. If any of these wars aggravate the regimes of either Russia or China, this scenario has the added risk of putting the world back on the verge of nuclear conflict. The fast-senescing crony-capitalist elites have cut off future biomedical progress and so will die eventually, but only the children of the elite will inherit any wealth. A neo-feudal oligarchy is established and becomes gradually ossified throughout the generations, while the industrial and technological base built over the past 200 years, as a legacy of the Enlightenment and individual rights, will deteriorate, eventually bringing the West back into premodernity.

I see an ossification of the status quo as leading to one or both of the above crisis scenarios. A return of premodernity is the logical conclusion of the dynamics of a fundamentally unaltered status quo. If humankind does not move technologically forward, it will go backward in a spiral of destruction and repression.

The only way for either crisis scenario to be averted is for technological progress to occur at no slower than the rates experienced during the twentieth century. Overt political revolution, even if it begins peacefully, is dangerous. To understand why this is so, one needs look no further than the recent Arab Spring uprisings – initially motivated by liberally minded dissidents and ordinary people who could no longer tolerate corrupt dictatorships, but ultimately hijacked by Islamist militants, military juntas, or both. A case even closer to the contemporary Western world is the recent Maidan revolution in Ukraine, which, while initially motivated by peaceful and well-intentioned pro-European activists, replaced a corrupt regime that occasionally persecuted dissidents with a fiercely militant, nationalistic regime that tolerates no dissent, engages in coercive historical revisionism, prohibits criticism of Nazi and neo-Nazi thugs, conscripts some of its citizens to die in civil war, and indiscriminately shells others of its citizens in the East. Revolutions always have the potential of replacing a lethargically bad regime with an aggressively destructive one.

This is why it is better for any societal transformation to be driven primarily by technological and economic development, rather than by political turmoil. The least turbulent transformations should be somewhat gradual and at least grudgingly accepted by the existing elites, who need to be willing to alter their own composition and accept bright minds from any background – not just their own progeny. A sufficient rate of technological advancement – especially due to the growth in 3D printing, robotics, nanotechnology, biotechnology, genetic engineering, vertical farming, and renewable energy – can ensure near-universal abundance within a generation, untethered from permission-granting institutions to which most people today owe a living. Such prosperity would enable most people to experience what are today upper-middle-class living standards, therefore having no motivation to riot. Technological progress can also preserve individual liberty by continually creating new spheres where politicians and lobbyists are incapable of control and individuals can outmaneuver most political restrictions.

Technological progress, particularly radical extension of the human lifespan through periodic rejuvenation that can restore the body to a more youthful condition, is also the only hope for remedying unsustainable expenditures of national governments, which are presently primarily intended to support people’s income and healthcare needs in old age. Rejuvenation biotechnology of the sort championed by Dr. Aubrey de Grey’s SENS Research Foundation could be developed with sufficient investment into the research, and could become disseminated by biotechnology entrepreneurs, ensuring that older people do not become decrepit or incapable of productive work as they age. The only way to sustainably extend average lifespans past about 85 years would be to turn back the clock of biological aging. It is not possible for most people (who do not have some degree of genetic luck) to live much longer beyond that without also becoming more youthful.

Many people who receive rejuvenation treatments will not want to retire – at least not from all work – if they still feel the vitality of youth. They will seek out activities to support human well-being and high living standards, even if they have saved enough money to consider it unnecessary to take a regular 8-to-5 job. With the vitality of youth combined with the experience of age, these people will be able to make sophisticated, persistent contributions to human civilization and will tend to plan for the longer term, as compared to most people today. If automation takes care of basic human needs, then human labor will be freed for more creative and fulfilling tasks.

Effective rejuvenation will not arrive right away, but immigration can keep the demographic disparity between the young and the old from being a severe problem in the meantime. This is another reason to reject protectionist policies and instead pursue approaches that allow more people to contribute to and benefit from the material prosperity of the “developed” world. Birth rates tend to fall anywhere there are major rises in standards of living after an industrial revolution, as children stop becoming productive helpers in an agricultural economy and instead become expensive to raise and educate so that they can participate in a knowledge-based economy. However, birth rates are still higher in many less-developed parts of the world, and people from those areas will readily seek opportunities for economic advancement in more developed countries, if given the option.

Fortunately, there are glimmers of hope that the path of gradual embrace of ever-accelerating progress will be the one taken in the early-21st-century Western world. The best outcome would be for an existing elite to facilitate mechanisms for its own evolution by offering people of merit but from humble backgrounds a place in real decision-making.

Some of that evolution can occur through market competition – new, upstart businesses displacing incumbents and gradually amassing significant resources themselves. The best instantiation of this in the United States today is the Silicon Valley entrepreneurial culture – which, incidentally, tends to finance the majority of longevity research. The most massive infusion of funds into longevity-related research has been from an offshoot of Google – Calico – founded in 2013 and currently partnering with a large pharmaceutical company, AbbVie. Calico has been somewhat secretive as to the details of its research, but there are other large businesses that are beginning to invest in similar endeavors – e.g., Craig Venter’s Human Longevity, Inc. Moreover, the famous libertarian venture capitalist Peter Thiel has given millions of dollars to Dr. Aubrey de Grey’s SENS Research Foundation – a smaller-scale organization but perhaps the most ambitious in its goals to bring about a reversal of human senescence through advances in rejuvenation treatments within the next quarter-century.

These developments are evidence that the United States today is characterized not by one elite, but by several – and the old “Paper Belt” elite is clearly in conflict with the new Silicon Valley elite. Politicians tend, surprisingly, not to be the most decisive players in this conflict, since they typically depend on harnessing pre-existing cultural currents in order to get elected and stay in office. Thus, they will tend to side with whatever issues and special interests they consider to be gaining ground at a given time. For this reason, many thinkers have characterized politics as a lagging indicator, responding to rather than triggering the defining events of an era. The politicians ride the currents to power, but something else creates those currents.

Differences in the breadth of vision among elites also matter. For instance, breakthroughs in human longevity could actually be a great boon for medical providers and the first pharmaceutical companies that offer effective products/treatments. Even the most ambitious proponents of life extension do not think it possible to develop a magic immortality pill. Rather, the treatments involved (which will be quite expensive at first) would require periodic regeneration of the cells and tissues within a person’s body – essentially resetting the biological clock every decade or so, while further innovation uncovers ways to reverse the damage more cheaply, safely, and effectively. This is a field ripe with opportunities for enterprising doctors, researchers, and engineers (while, at the same time, certainly endangering many extant business models). Some government officials, if they are sufficiently perceptive, could also be persuaded to support these changes – if only because they could prevent a catastrophic collapse of Social Security and Medicare. Approximately 30% of Medicare expenditures occur during the last year of patients’ lives, when the body is often fighting back multiple ailments in a losing battle. If this situation were simply prevented in the first place, and if most people became biologically young again and fully capable of working for a living or financing their own retirements, the expenses of both Social Security and Medicare could plummet until these programs became wholly unnecessary in the eyes of most voters.

The key to achieving a freer, more prosperous, and longer-lived future is to educate both elites and the general public to accurately weigh the opportunities and risks of emerging technologies. Too many individuals today, both elites and ordinary people, view technological progress with suspicion, conjuring in their minds every possible dystopian scenario and every possible malfunction, inconvenience, lost opportunity, moral reservation, or esthetic dislike they can muster against breakthroughs in life extension, artificial intelligence, robotics, autonomous vehicles, genetic engineering, nanotechnology, and many other areas of advancement that could vastly benefit us all. This techno-skeptical mindset is the biggest obstacle for proponents of progress and a better future to overcome. Fortunately, we do not need to be elites to play important roles in overcoming it. By simply arguing the techno-optimist case and educating people from all walks of life about the tremendous beneficial potential of emerging technologies, we can each do our part to ensure that the 21st century will become known as an era of humankind’s great liberation from its age-old limitations, and not a lurch back into the bog of premodern barbarism.

If we have a modicum of technological progress, the West might be able to muddle through the next several decades. If we have an acceleration of technological progress, the West will leave its current problems in the dust. The outcome will be a question of whether people (both elites and ordinary citizens) are, on balance, held hostage to the fear of the new or, rather, willing to try out technological alternatives to the status quo in the hopes of achieving improvement in their lives.

This essay may be freely reproduced using the Creative Commons Attribution Share-Alike International 4.0 License, which requires that credit be given to the author, G. Stolyarov II. Find out about Mr. Stolyarov here.
Janet Yellen’s Christmas Gift to Wall Street – Article by Ron Paul

Janet Yellen’s Christmas Gift to Wall Street – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
December 21, 2014
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Last week we learned that the key to a strong economy is not increased production, lower unemployment, or a sound monetary unit. Rather, economic prosperity depends on the type of language used by the central bank in its monetary policy statements. All it took was one word in the Federal Reserve Bank’s press release — that the Fed would be “patient” in raising interest rates to normal levels — and stock markets went wild. The S&P 500 and the Dow Jones Industrial Average had their best gains in years, with the Dow gaining nearly 800 points from Wednesday to Friday and the S&P gaining almost 100 points to close within a few points of its all-time high.

Just think of how many trillions of dollars of financial activity that occurred solely because of that one new phrase in the Fed’s statement. That so much in our economy hangs on one word uttered by one institution demonstrates not only that far too much power is given to the Federal Reserve, but also how unbalanced the American economy really is.

While the real economy continues to sputter, financial markets reach record highs, thanks in no small part to the Fed’s easy money policies. After six years of zero interest rates, Wall Street has become addicted to easy money. Even the slightest mention of tightening monetary policy, and Wall Street reacts like a heroin addict forced to sober up cold turkey.

While much of the media paid attention to how long interest rates would remain at zero, what they largely ignored is that the Fed is, “maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.” Look at the Fed’s balance sheet and you’ll see that it has purchased $25 billion in mortgage-backed securities since the end of QE3. Annualized, that is $200 billion a year. That may not be as large as QE2 or QE3, but quantitative easing, or as the Fed likes to say “accommodative monetary policy” is far from over.

What gets lost in all the reporting about stock market numbers, unemployment rate figures, and other economic data is the understanding that real wealth results from production of real goods, not from the creation of money out of thin air. The Fed can rig the numbers for a while by turning the monetary spigot on full blast, but the reality is that this is only papering over severe economic problems. Six years after the crisis of 2008, the economy still has not fully recovered, and in many respects is not much better than it was at the turn of the century.

Since 2001, the United States has grown by 38 million people and the working-age population has grown by 23 million people. Yet the economy has only added eight million jobs. Millions of Americans are still unemployed or underemployed, living from paycheck to paycheck, and having to rely on food stamps and other government aid. The Fed’s easy money has produced great profits for Wall Street but it has not helped — and cannot help — Main Street.

An economy that holds its breath every six weeks, looking to parse every single word coming out of Fed Chairman Janet Yellen’s mouth for indications of whether to buy or sell, is an economy that is fundamentally unsound. The Fed needs to stop creating trillions of dollars out of thin air, let Wall Street take its medicine, and allow the corrections that should have taken place in 2001 and 2008 to liquidate the bad debts and malinvestments that permeate the economy. Only then will we see a real economic recovery.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Video by G. Stolyarov II

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Video by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
September 16, 2014
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Mr. Stolyarov reviews the final installment in the “Atlas Shrugged” film trilogy.

Although Mr. Stolyarov favorably reviewed the first two installments, in his view the third film fails to do full justice to the culmination of Ayn Rand’s magnum opus, where one would expect to witness the coalescence into an integrated worldview of all of the philosophical and plot pieces that Rand meticulously introduced during the first two parts. Atlas Shrugged: Part III is not without its merits, and it is inspiring in certain respects – especially in its conveyance of Rand’s passionate defense of the creator-individualist. However, the film is also not a great one, and the creators could have made Rand’s source material shine consistently instead of glowing dimly while occasionally emitting a bright flicker.

References

– “The Accomplishments of ‘Atlas Shrugged: Part I’” – Article by G. Stolyarov II
– “Rejecting the Purveyors of Pull: The Lessons of ‘Atlas Shrugged: Part II‘” – Article by G. Stolyarov II
– “The Strengths and Weaknesses of ‘Atlas Shrugged: Part III’” – Article by G. Stolyarov II

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Article by G. Stolyarov II

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
September 13, 2014
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In my reviews of Part I and Part II of the Atlas Shrugged film trilogy, I expressed largely favorable reactions to those films’ message and execution. Naturally, I was eager to see Part III and the completion of the long-awaited Atlas Shrugged trilogy. After I watched it, though, my response to this conclusion is more muted. The film fails to do full justice to the culmination of Ayn Rand’s magnum opus, where one would expect to witness the coalescence into an integrated worldview of all of the philosophical and plot pieces that Rand meticulously introduced during the first two parts. Atlas Shrugged: Part III is not without its merits, and it is inspiring in certain respects – especially in its conveyance of Rand’s passionate defense of the creator-individualist. However, the film is also not a great one, and the creators could have made Rand’s source material shine consistently instead of glowing dimly while occasionally emitting a bright flicker.

Strength 1: There is now a complete film series spanning the entire story arc of Atlas Shrugged. What Ayn Rand herself and many successive filmmakers could not achieve, producers Harmon Kaslow and John Aglialoro have been able to bring into existence. For decades, admirers of Ayn Rand’s work have lamented that no Atlas Shrugged movie had been made. The fact that this particular lament is obsolete constitutes major progress for Objectivism (where the rate of progress is admittedly extremely slow).

Weakness 1: Part III is, in my view, the most poorly executed of the three Atlas Shrugged movies, even though it had the potential to be the best. The extreme brevity of Part III – a mere 90 minutes, compared to 102 minutes for Part I and 112 minutes for Part II – orphaned many of the events of the film from their contexts, as compared to the meticulous rationale for each of Ayn Rand’s decisions in the novel. John Galt’s speech – which received some 70 pages in the novel – had been cut to bare bones and lacks the deep, rigorous, philosophical exposition that Ayn Rand saw as the substance and culmination of the novel.

Strength 2: As was the case with the previous installments, the film’s creators conveyed a plausible sense that the events of Atlas Shrugged could happen in our own world, or at least in a world that greatly resembles ours, as opposed to the world of 1957. In this sense, the film’s creators succeeded in conveying the universality of Atlas Shrugged’s moral message.

Weakness 2: Changes in directors and the entire cast for every single one of the Atlas Shrugged films greatly detract from the continuity of the story, especially for viewers who may watch the films back to back, once all of them are available on DVDs or other media.

Strength 3: The reactions to Galt’s Speech by Ron Paul, Sean Hannity, and Glenn Beck added authenticity and relevance to the film and reinforced the message that the conflict between value-creators and “looters” (cronyists or purveyors of political pull) is very much present in our era. In addition, whether one agrees or disagrees with these notable figures, it was amusing to see them in a dramatization of Ayn Rand’s literary world.

Weakness 3: The film fails to do justice to many important plot elements in Part Three of the book. Hank Rearden – my favorite character from the book and the most compelling character in Part II – barely makes an appearance. Cheryl Taggart’s suicide is only expressed in retrospectives of her realizations that drove her to this desperate act – while she is not actually shown taking any steps toward it. The fate of Eddie Willers at the end of the film is almost completely unaddressed, with a mere intimation that the protagonists have another man in mind for whom they plan to stop – but no validation that this would indeed be Eddie Willers. The treatment of Eddie Willers in the novel is ambiguous; Ayn Rand leaves him beside a broken-down Taggart Transcontinental train engine, abandoned by the railroad workers. He might be rescued, or he might perish – but he has not yet been invited into Galt’s Gulch. The film creators neither pose the ambiguity nor attempt to resolve it. For me, the fate of Eddie Willers – a sincere, moral, hard-working man who respects the achievements of heroic individualists but is not (according to Rand) one of them – is a key concern in Atlas Shrugged. I think Rand treated him with undeserving harshness, considering that people like Eddie Willers, especially if there are millions of them, can be tremendous contributors to human flourishing. The film creators missed an opportunity to vindicate Eddie and give him some more serious hope of finding a place in the new world created by the inhabitants of Galt’s Gulch. In Galt’s Gulch, the film shows Dagny explaining her plan to have a short railroad built to service Francisco d’Anconia’s new copper mine. But who would actually physically build the railroad and do the job well, if not people like Eddie Willers?

Strength 4: The film’s narrator does a decent job at bridging the events of the previous two installments and the plot of Part III. The events in the film begin with Dagny Taggart crash-landing in Galt’s Gulch, and even those who did not read the book or watch the preceding two films would be able to follow how and why she got there. The film is also excellent in displaying the corruption, incompetence, spitefulness, and callous scheming of the crony corporatist establishment that Rand despised – and that we should despise today. The smoky back-room scene where the economic planners toast to the destruction of Minnesota is one of the film’s high marks – a memorable illustration of what the mentality of “sacrificing the parts” for the whole actually looks like.

Weakness 4: While moderately effective at conveying narratives of events and generally decent in its treatment of ethics and politics, the film does not do justice to the ideas on metaphysics and epistemology also featured prominently in Atlas Shrugged. Furthermore, the previous two films were generally superior in regard to showing, in addition to telling, the fruits of the creative efforts of rational individualists, as well as the consequences for a society that shackles these creators. In the Part III film, many of the scenes utilized to illustrate these effects seemed more peripheral than central to the book’s message. Much of the footage hinted at the national and world events that take place in the book, but did not explicitly show them.

Amid these strengths and weaknesses remains an opportunity to continue the discussion about the undoubtedly crucial implications of Ayn Rand’s message to today’s political and societal climate – where there looms the question of how much longer the creator-individualists who power the motor of the world can keep moving forward in spite of the increasingly gargantuan obstacles placed in their way by legacy institutions. Any work that can pose these questions for consideration by wider numbers of people is welcome in an environment where far too many are distracted by the “bread and circuses” of mindless entertainment. Atlas Shrugged: Part III is a film with intellectual substance and relevance and so is worthy of a relatively short time commitment from anyone interested in Ayn Rand, Objectivism, philosophy, and current events. However, those who watch the film should also be sure to read the novel, if they have not already done so, in order to experience much greater depth of both plot and philosophical ideas.

Against Monsanto, For GMOs – Video by G. Stolyarov II

Against Monsanto, For GMOs – Video by G. Stolyarov II

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The depredations of the multinational agricultural corporation Monsanto are rightly condemned by many. But Mr. Stolyarov points out that arguments against Monsanto’s misbehavior are not valid arguments against genetically modified organisms (GMOs) as a whole.

References

– “Against Monsanto, For GMOs” – Essay by G. Stolyarov II
– “Monsanto – Legal actions and controversies” – Wikipedia
– “Copyright Term Extension Act” – Wikipedia
– “Electronic Arts discontinues Online Pass, a controversial form of video game DRM” – Sean Hollister – The Verge – May 15, 2013
– “Extinction” – Wikipedia

Internet Fascism and the Surveillance State – Article by Ben O’Neill

Internet Fascism and the Surveillance State – Article by Ben O’Neill

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Ben O’Neill
July 16, 2013
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What is the purpose of telecommunication and internet surveillance?

The NSA presents its surveillance operations as being directed toward security issues, claiming that the programs are needed to counter terrorist attacks. Bald assertions of plots foiled are intended to bolster this claim.[1] However, secret NSA documents reveal that their surveillance is used to gather intelligence to achieve political goals for the US government. Agency documents show extensive surveillance of communications from allied governments, including the targeting of embassies and missions.[2] Reports from an NSA whistleblower also allege that the agency has targeted and intercepted communications from a range of high-level political and judicial officials, anti-war groups, US banking firms and other major companies and non-government organizations.[3] This suggests that the goal of surveillance is the further political empowerment of the NSA and the US government.

Ostensibly, the goal of the NSA surveillance is to prevent terrorist acts that would harm or kill people in the United States. But in reality, the primary goal is to enable greater control of that population (and others) by the US government. When questioned about this issue, NSA whistleblower Thomas Drake was unequivocal about the goal of the NSA: “to own the internet and find out what everybody is doing.”[4]

“To own the internet” — Public-private partnerships in mass surveillance

The internet is, by its very nature, a decentralized arrangement, created by the interaction of many private and government servers operating on telecommunications networks throughout the world. This has always been a major bugbear of advocates for government control, who have denigrated this decentralized arrangement as being “lawless.” Since it began to expand as a tool of mass communication for ordinary people, advocates for greater government power have fought a long battle to bring the internet “under control” — i.e., under their control.

The goal of government “ownership of the internet” entails accessing the facilities that route traffic through the network. This is gradually being done through government control of the network infrastructure and the gradual domination of the primary telecommunications and internet companies that provide the facilities for routing traffic through the network. Indeed, one noteworthy aspect of the mass surveillance system of the NSA is that it has allegedly involved extensive cooperation with many “private” firms operating under US law. This has allegedly included major security, telecommunications and internet companies, as well as producers of network software and hardware.

Examples of such “public-private partnerships” are set out in leaked documents of the NSA. An unnamed US telecommunications company is reported to provide the NSA with mass surveillance data on the communications of non-US people under its FAIRVIEW program.[5] Several major computing and internet companies have also been explicitly named in top secret internal NSA material as being current providers for the agency under its PRISM program.[6] Several of these companies have issued denials disavowing any participation in, or prior knowledge of the program, but this has been met with some scepticism.[7] (Indeed, given that the NSA did not anticipate public release of its own internal training material, it is unlikely that the agency would have any cause to lie about the companies they work with in this material. This suggests that the material may be accurate.)

Many of these companies have supplied the NSA with data from their own customers, or created systems which allow the agency access to the information flowing through telecommunications networks. They have done so without disclosure to their own customers of the surveillance that has occurred, by using the blanket advisement that they “comply with lawful requests for information.” By virtue of being subject to the jurisdiction of US statutes, all of these companies have been legally prohibited from discussing any of their dealings with the NSA and they have been well placed for retaliatory action by the many regulatory agencies of the US government if they do not cooperate. In any case, it appears from present reports that many companies have been active partners of the agency, assisting the NSA with illegal surveillance activities by supplying data under programs with no legitimate legal basis.

This has been a common historical pattern in the rise of totalitarian States, which have often sought to incorporate large business concerns into their network of power. Indeed, the very notion of “public-private partnerships” in this sector readily brings to mind the worst aspects of fascist economic systems that have historically existed. The actions of US companies that have cooperated in the NSA’s mass surveillance operations calls into question the “private” status of these companies. In many ways these companies have acted as an extension of the US government, providing information illegally, in exchange for privileges and intelligence. According to media reports, “Such cooperation is an extremely delicate issue for the companies involved. Many have promised their customers data confidentiality in their terms and conditions. Furthermore, they are obliged to follow the laws of the countries in which they do business. As such, their cooperation deals with the NSA are top secret. Even in internal NSA documents, they are only referred to by the use of code names.”[8]

We began this discussion by asking the purpose of telecommunication and internet surveillance. The answer lies in the uses to which those surveillance powers are being put, and will inevitably be put, as the capacity of the NSA expands. The true purpose of the NSA is not to keep us safe. Its goal is to own the internet, to own our communications, to own our private thoughts — to own us.

Ben O’Neill is a lecturer in statistics at the University of New South Wales (ADFA) in Canberra, Australia. He has formerly practiced as a lawyer and as a political adviser in Canberra. He is a Templeton Fellow at the Independent Institute, where he won first prize in the 2009 Sir John Templeton Fellowship essay contest. Send him mail. See Ben O’Neill’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.

Notes

[1] Mathes, M. (2013) At least 50 spy programs foiled by terror plots: NSA . The Sydney Morning Herald, 19 June 2013.

[2] MacAskill, E. (2013) New NSA leaks show how US is bugging its European allies . The Guardian, 1 June 2013.

[3] Burghardt, T. (2013) NSA spying and intelligence collection: a giant blackmail machine and “warrantless wiretapping program.” Global Research , 24 June 2013. Reports are from NSA whistleblower Russ Tice, who is a former intelligence analyst at the NSA.

[4] Wolverton, J. (2012) Classified drips and leaks. The New American, 6 August 2012. Emphasis added. Capitalization of “Internet” removed.

[5] Greenwald, G. (2013) The NSA’s mass and indiscriminate spying on Brazilians . The Guardian, 7 July 2013.

[6] Gelman, B. and Poitras, L. (2013) US, British intelligence mining data from nine US internet companies in broad secret program . The Washington Post, 7 June 2013. See also NSA slides explain the PRISM data-collecting program . The Washington Post, 6 June 2013.

[7] McGarry, C. (2013) Page and Zuckerberg say NSA surveillance program is news to them . TechHive, 7 June 2013.

[8] Ibid Poitras, p. 3.

Against Monsanto, For GMOs – Article by G. Stolyarov II

Against Monsanto, For GMOs – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
June 9, 2013
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                The depredations of the multinational agricultural corporation Monsanto are rightly condemned by many. Monsanto is a prominent example of a crony corporation – a company that bolsters its market dominance not through honest competition and innovation, but through the persistent use of the political and legal system to enforce its preferences against its competitors and customers. Most outrageous is Monsanto’s stretching of patents beyond all conceivable limits – attempting to patent genes and life forms and to forcibly destroy the crops of farmers who replant seeds from crops originally obtained from Monsanto.

                Yet because Monsanto is one of the world’s leading producers of genetically modified crops, campaigners who oppose all genetically modified organisms (GMOs) often use Monsanto as the poster child for the problems with GMOs as a whole. The March Against Monsanto, which took place in cities worldwide in late May of 2013, is the most recent prominent example of this conflation. The blanket condemnation of GMOs because of Monsanto’s misbehavior is deeply fallacious. The policy of a particular company does not serve to discredit an entire class of products, just because that company produces those products – even if it could be granted that the company’s actions result in its own products being more harmful than they would otherwise be.

                GMOs, in conventional usage, are any life forms which have been altered through techniques more advanced than the kind of selective breeding which has existed for millennia. In fact, the only material distinction between genetic engineering and selective breeding is in the degree to which the procedure is targeted toward specific features of an organism. Whereas selective breeding is largely based on observation of the organism’s phenotype, genetic engineering relies on more precise manipulation of the organism’s DNA. Because of its ability to more closely focus on specific desirable or undesirable attributes, genetic engineering is less subject to unintended consequences than a solely macroscopic approach. Issues of a particular company’s abuse of the political system and its attempts to render the patent system ever more draconian do not constitute an argument against GMOs or the techniques used to create them.

                Consider that Monsanto’s behavior is not unique; similar depredations are found throughout the status quo of crony corporatism, where many large firms thrive not on the basis of merit, but on the basis of political pull and institutionalized coercion. Walt Disney Corporation has made similar outrageous (and successful) attempts to extend the intellectual-property system solely for its own benefit. The 1998 Copyright Term Extension Act was primarily motivated by Disney’s lobbying to prevent the character of Mickey Mouse from entering the public domain. Yet are all films, and all animated characters, evil or wrong because of Disney’s manipulation of the legal system instead of competing fairly and honestly on the market? Surely, to condemn films on the basis of Disney’s behavior would be absurd.

                Consider, likewise, Apple Corporation, which has attempted to sue its competitors’ products out of existence and to patent the rectangle with rounded corners – a geometric shape which is no less basic an idea in mathematics than a trapezoid or an octagon. Are all smartphones, tablet computers, MP3 players, and online music services – including those of Apple’s competitors – wrong and evil solely because of Apple’s unethical use of the legal system to squelch competition? Surely not! EA Games, until May 2013, embedded crushingly restrictive digital-rights management (DRM) into its products, requiring a continuous Internet connection (and de facto continual monitoring of the user by EA) for some games to be playable at all. Are all computer games and video games evil and wrong because of EA’s intrusive anti-consumer practices? Should they all be banned in favor of only those games that use pre-1950s-era technology – e.g., board games and other table-top games? If the reader does not support the wholesale abolition, or even the limitation, of films, consumer electronics, and games as a result of the misbehavior of prominent makers of these products, then what rationale can there possibly be for viewing GMOs differently?

                Indeed, the loathing of all GMOs stems from a more fundamental fallacy, for which any criticism of Monsanto only provides convenient cover. That fallacy is the assumption that “the natural” – i.e., anything not affected by human technology, or, more realistically, human technology of sufficiently recent origin – is somehow optimal for human purposes or simply for its own sake. While it is logically conceivable that some genetic modifications to organisms could render them more harmful than they would otherwise be (though there has never been any evidence of such harms arising despite the trillions of servings of genetically modified foods consumed to date), the condemnation of all genetic modifications using techniques from the last 60 years is far more sweeping than this. Such condemnation is not and cannot be scientific; rather, it is an outgrowth of the indiscriminate anti-technology agenda of the anti-GMO campaigners. A scientific approach, based on experimentation, empirical observation, and the immense knowledge thus far amassed regarding chemistry and biology, might conceivably give rise to a sophisticated classification of GMOs based on gradations of safety, safe uses, unsafe uses, and possible yet-unknown risks. The anti-GMO campaigners’ approach, on the other hand, can simply be summarized as “Nature good – human technology bad” – not scientific or discerning at all.

                The reverence for purportedly unaltered “nature” completely ignores the vicious, cruel, appallingly wasteful (not even to mention suboptimal) conditions of any environment untouched by human influence. After all, 99.9% of all species that ever existed are extinct – the vast majority from causes that arose long before human beings evolved. The plants and animals that primitive hunter-gatherers consumed did not evolve with the intention of providing optimal nutrition for man; they simply happened to be around, attainable for humans, and nutritious enough that humans did not die right away after consuming them – and some humans (the ones that were not poisoned, or killed hunting, or murdered by their fellow men) managed to survive to reproductive age by eating these “natural” foods. Just because the primitive “paleo” diet of our ancestors enabled them to survive long enough to trigger the chain of events that led to us, does not render their lives, or their diets, ideal for emulation in every aspect. We can do better. We must do better – if protection of large numbers of human beings from famine, drought, pests, and prohibitive costs of food is to be considered a moral priority in the least. By depriving human beings of the increased abundance, resilience, and nutritional content that only the genetic modification of foods can provide, anti-GMO campaigners would sentence millions – perhaps billions – of humans to the miserable subsistence conditions and tragically early deaths of their primeval forebears, of whom the Earth could support only a few million without human agricultural interventions.

                We do not need to like Monsanto in order to embrace the life-saving, life-enhancing potential of GMOs. We need to consider the technology involved in GMOs on its own terms, imagining how we would view it if it could be delivered by economic arrangements we would prefer. As a libertarian individualist, I advocate for a world in which GMOs could be produced by thousands of competing firms, each fairly trying to win the business of consumers through the creation of superior products which add value to people’s lives. If you are justifiably concerned about the practices of Monsanto, consider working toward a world like that, instead of a world where the promise of GMOs is denied to the billions who currently owe their very existences to human technology and ingenuity.

Rejecting the Purveyors of Pull: The Lessons of “Atlas Shrugged: Part II” – Article by G. Stolyarov II

Rejecting the Purveyors of Pull: The Lessons of “Atlas Shrugged: Part II” – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
October 13, 2012
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Atlas Shrugged: Part II is a worthy successor to last year’s Part I, and I am hopeful for its commercial success so that John Aglialoro and Harmon Kaslow will be able to release a full trilogy and achieve the decades-long dream of bringing the entire story of Ayn Rand’s Atlas Shrugged to the movie screen. The film is enjoyable and well-paced, and it highlights important lessons for the discerning viewer. The film’s release in the month preceding the US Presidential elections, however, may give some the wrong impression: that either of the two major parties can offer anything close to a Randian alternative to the status quo. Those viewers who are also thinkers, however, will see that the film’s logical implication is that both of these false “alternatives” – Barack Obama and Mitt Romney – should be rejected decisively.

While the cast has been replaced entirely, I find the acting to have been an improvement over Part I, with the actors portraying their respective characters with more believability and emotional engagement. Samantha Mathis, in the role of Dagny Taggart, showed clearly the distress of a competent woman who is ultimately unable to keep the world from falling apart. Esai Morales aptly portrayed Francisco d’Anconia’s passion for ideas and his charisma. Jason Beghe also performed well as Hank Rearden – the embattled man of integrity struggling to hold on to his business and creations to the last.

The film emphasizes strongly the distinction between earned success – success through merit and creation – and “success” gained by means of pull. The scene in which two trains collide in the Taggart Tunnel is particularly illustrative in this respect. Kip Chalmers, the politician on his way to a pro-nationalization stump speech, attempts to get the train moving through angry phone calls to “the right people,” thinking that all will be well if he just pulls the proper strings. But the laws of reality – of physics, chemistry, and economics – are unyielding to the mere say-so of the powerful, and the mystique of pull collapses on top of the passengers.

As the world falls apart, the film depicts protesters demanding their “fair share,” holding up signs reminiscent of the “Occupy” movement of 2011 – “We are the 99.98%” is a clear allusion. Yet once the draconian Directive 10-289 is implemented, the protests turn in the other direction, away from the freedom-stifling, creativity-crushing regimentation. Perhaps the protesters are not the same people as those who called for their “fair share”  – but the film suggests that the people should be careful about the policies they ask for at the ballot box, lest they be sorely disappointed upon getting them. This caution should apply especially to those who think that Barack Obama’s administration parallels the falling-apart of the world in Atlas Shrugged – and that Mitt Romney’s election would somehow “save” America. Nothing could be further from the truth.

If there is any character in Atlas Shrugged who most resembles Mitt Romney, it is not John Galt. Rather, it is James Taggart – the businessman of pull – the sleek charlatan who will take any position, support any policy, speak any lines in order to advance his influence and power. Patrick Fabian conveyed the essence of James Taggart well – a man who succeeds based on image and not on substance, a man who has a certain polished charisma and an ability to pull the strings of politics – for a while. James Taggart is the essence of the corporatist businessman, a creature who thrives on special political privileges and barriers to entry placed in front of more capable competitors. He can buy elections and political offices – and he can, for a while, delude people by creating a magic pseudo-reality with his words. But words cannot suspend the laws of logic or economics. Ultimately the forces of intellectual and moral decay unleashed by corporatist maneuvering inexorably push the world into a condition that even the purveyors of pull would have preferred to avoid. As Ludwig von Mises pointed out, the consequences of economic interventionism are often undesirable even from the standpoint of those who advocated the interventions in the first place. James Taggart is ultimately pushed into accepting Directive 10-289, though his initial plans were much more modest – mostly, a desire to hang onto leadership in the railroad business despite his obvious lack of qualifications for the position. Mitt Romney, by advocating James Taggart’s exact sort of crony corporatism, may well usher in a similar overarching totalitarianism – not because he supports it now (in the sense that Mitt Romney can be said to support anything), but because totalitarianism will be the logical outcome of his policies.

Because, in some respects, Ayn Rand wrote during a gentler time with respect to civil liberties, and the film endeavors to consistently reflect Rand’s emphasis on economic regimentation, there is little focus on the kinds of draconian civil-liberties violations that Americans face today. The real-world version of Directive 10-289 is not a single innovation-stopping decree, but an agglomeration of routine humiliations and outright exercises of violence. The groping and virtual strip-searching by the Transportation Security Administration, the War on Drugs and its accompanying no-knock raids, the paranoid surveillance apparatus of large-scale wiretaps and data interception, and the looming threat of controls over the Internet and indefinite detention without charge – these perils are as damaging as an overarching economic central plan, and they are with us today. While not even the most socialistic or fascistic politicians today would issue a ban on all new technology or a comprehensive freeze of prices and wages, they certainly can and will try to humiliate and physically threaten millions of completely peaceful, innocent Americans who try to innovate and earn an honest living. Obama’s administration has engaged in this sort of mass demoralization ever since the foiled “underwear” bomb plot during Christmas 2009 – but Romney would do more of the same, and perhaps worse. Unlike Obama, who must contend with the pro-civil-liberties wing of his constituency, Romney’s attempts to violate personal freedoms will only be cheered on by the militaristic, jingoistic, security-obsessed faction that is increasingly coming to control the discourse of the Republican Party. There can be no hope for freedom, or for the dignity of an ordinary traveler, employee, or thinker, if Romney is elected.

I encourage the viewers of the film to seriously consider the question, “Who is John Galt?” He is not a Republican. If any man comes close, it is Gary Johnson, a principled libertarian who has shown in practice (not just in rhetoric) his ability and willingness to cut wasteful interventions, balance budgets, and protect civil liberties during two terms as Governor of New Mexico. He staunchly champions personal freedoms, tax reduction, foreign-policy non-interventionism, and a sound currency free of the Federal Reserve system. Gary Johnson was, in fact, a businessman of the Randian ethos – who started as a door-to-door handyman and grew from scratch an enterprise with revenues of $38 million.  And, on top of it all, he is a triathlete and ultramarathon runner who climbed Mount Everest in 2003 – clearly demonstrating a degree of ambition, drive, and pride in achievement worthy of a hero of Atlas Shrugged.

Ayn Rand never meant the strike in Atlas Shrugged to be an actual recommendation for how to address the world’s problems. Rather, the strike was an illustration of what would happen if the world was deprived of its best and brightest – the creators and innovators who, despite all obstacles, pursue the path of merit and achievement rather than pull and artificial privilege. Today, it is necessary for each of us to work to keep the motor of the world going by not allowing the purveyors of pull to gain any additional ground. Voting for Mitt Romney will do just the opposite – as Atlas Shrugged: Part II artfully suggests to the discerning viewer.

The Golden Age of Freedom Is Still Ahead – Article by Anthony Gregory

The Golden Age of Freedom Is Still Ahead – Article by Anthony Gregory

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The New Renaissance Hat
Anthony Gregory
October 6, 2012
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Free enterprise is often associated with the past. This perception puts the market’s champions, seen as hopeless reactionaries, on the defensive.

A typical narrative follows: America had an insufficiently active government under the Articles of Confederation. The Constitution expanded the central government to meet society’s needs. In this climate, where property rights continued to trump the common good, the central government could not maintain national cohesion and ensure racial equality. During the Civil War, the federal government grew to preserve the Union, enable commerce through expansion of infrastructure, and abolish the ancient evil of slavery. During the late nineteenth century, laissez faire reigned supreme. Unchecked, robber barons exploited their customers and workers.

American society, so continues the narrative, overcame its laissez-faire history and embraced active government in the Progressive Era. Commerce, banking, monopolies, food and drugs, and labor conditions finally became regulated. The market was still too free, however, causing the stock market crash and the Great Depression, which the New Deal’s reforms finally addressed. Anachronistic free marketers resisted this progress.

A generation later the free market proved inadequate on race relations, education, poverty, social insurance, workers’ conditions, and the environment. New regulations, taxes, and programs arose in the 1960s and 1970s to address these deficiencies. Ronald Reagan’s election marked a conservative counterrevolution toward the free market, causing the savings-and-loan crisis, rising income disparities, and, ultimately, the 2008 financial collapse. After four consecutive reactionary presidents—Bill Clinton being a practitioner of neoliberal austerity—deregulation and market fundamentalism have again revealed themselves as outdated approaches to America’s modern problems.

This repeated recognition that the free market no longer suits society’s needs is a common theme of modern liberalism. Through experience the inadequacy of the unhampered market has forced enlightened observers to accept the need for more government.

One obvious problem with this narrative is the steadily changing definition of “free market.” The free market is said to have caused problems addressed in the Progressive Era, yet once again the market economy was blamed for the Depression.The New Deal is said finally to have abolished laissez faire, yet laissez faire has been the culprit in every crisis since. Thoughtful proponents of this narrative explain that the 1980s, for example, were somehow substantially more laissez-faire than the 1970s, yet they rarely present more than a handful of superficial examples of deregulation amid an overall trend of regulatory expansion.

A major problem market proponents have in confronting this narrative, whatever its shortcomings, arises because they themselves sometimes accept it implicitly, often complaining about the liberties lost over the years. The significant kernel of truth is that the national government has unmistakably grown well beyond anything imagined in 1789 or even the nineteenth century. And surely, for every argument statists have defending this growth, compelling historical and economic counterarguments are available.

Yet we must be careful before conceding this premise that the past was laissez-faire. By celebrating the political economy of yesteryear, we risk associating our ideals with the past’s many injustices. We can and should avoid this baggage entirely.

Slavery: The Opposite of Free Enterprise

No libertarian defends the horrid institution of slavery. The problem comes in how free marketers sometimes describe slavery as a mere exception to the rule of early American freedom. In fact this exception virtually swallowed the principle whole.

Progressives love contrasting the pro-liberty, anti-tax rhetoric of the founding generation with the slavery that they tolerated or championed. Robin Einhorn’s American Taxation, American Slavery is a sophisticated contribution to the argument that those loudly protesting taxes were often the very people who clung to human bondage. This argument indicts the rhetoric of property rights, which is foundational to free enterprise and, in a warped form, the “right” of one person to own another. Infamously, the Supreme Court found in Dred Scott v. Sanford (1857) that the Fifth Amendment protected a white man’s right not to be deprived of his slave without due process. Given this association between America’s slave-owning generations and the rhetoric of liberty, it is crucial that free marketers explain, emphatically and intelligently, how slavery was the very negation of the free-market system.

The subjugation of slaves would undermine early America’s status as a free country even if slaves were a tiny minority. They were not. Slaves amounted to 18 percent of the population at the time of the Constitution’s ratification and 12.6 percent on the eve of the Civil War, at which point there were nearly four million.

Libertarians should study the brutality of this system. Historians estimate that hundreds of thousands of slaves were forced to migrate in antebellum America’s internal slave trade. Children were frequently ripped from their families. Beatings and rape were ubiquitous, and torture as punishment was hardly unusual.

Even slaves with relatively humane masters lacked the freedoms that most of today’s Americans, living under the modern leviathan, take for granted.

Peter Kolchin, in his seminal American Slavery: 1619–1877, sums up the reality:

Slaves could hardly turn around without being told what to do.They lived by rules, sometimes carefully constructed and formally spelled out and sometimes haphazardly conceived and erratically imposed. Rules told them when to rise in the morning, when to go to the fields, when to break for meals, how long and how much to work, and when to go to bed; rules also dictated a broad range of activities that were forbidden without special permission, from leaving home to getting married; and rules allowed or did not allow a host of privileges, including the right to raise vegetables on garden plots, trade for small luxuries, hunt, and visit neighbors. Of course, all societies impose rules on their inhabitants in the form of laws, but the rules that bound slaves were unusually detailed, covered matters normally untouched by law, and were arbitrarily imposed and enforced, not by an abstract entity that (at least in theory) represented their interests, but by their owners. Slaves lived with their government.

I thank God I don’t live with my government! For many years the pro-market tradition saw slavery as a grave violation of its principles. Kolchin writes:

Early political economists—including Adam Smith, whose book The Wealth of Nations (1776) remained for decades the most influential justification for the principles underlying capitalism—believed that slavery, by preventing the free buying and selling of labor power and by eliminating the possibility of self-improvement that was the main incentive to productive labor, violated central economic laws.

Although critics blame market exchange for the rise of slavery, this criticism is grossly unfair. The slave trade was indeed a market of sorts—unfree, unjust, and regulated—but the most fundamental relationship in slavery was not a market at all. Kolchin explains:

Slave owners engaged in extensive commercial relations, selling cotton (and other agricultural products), buying items both for personal consumption and for use in their farming operations, borrowing money, and speculating in land and slaves, but the market was conspicuously absent in regulating relations between the masters and their slaves. In other words, relations of exchange were market-dominated, but relations of production were not.

The slave power dominated political life in the South and enjoyed federal support through the Fugitive Slave Clause. Slavery was a major government program, its enforcement costs socialized through law. “The chief way that the South’s slaveholding elite externalized the costs of the peculiar institution was slave patrols,” writes Jeffrey Rogers Hummel in Emancipating Slaves, Enslaving Free Men. These slave patrols were “established in every slave state” to enforce black codes, inflict punishment, and suppress insurrections and were “compulsory for most able bodied white males.” Slave patrols, necessary to slavery’s maintenance, were a flagrant violation of the free economy.

The destruction of the Indians, the restrictions on women owning property, and many other antebellum policies also illustrate that the United States hardly had a free market before the Civil War. Slavery best makes the point. The conflation of a slave society with free enterprise is an obscenity.

Protectionism, Nationalism, and Corporatism

Outside of slavery nineteenth-century America often fell far short of the free-market ideal. Protectionism was a perennial problem, from the nationalist Tariff of 1816 to the sectionally biased Tariff of 1824 and the infamous Tariff of Abominations in 1828, from President Andrew Jackson’s threat to invade South Carolina to enforce the Tariff of 1832 to the Morrill Tariff of 1861. In 1870 the average tariff rate hit 44.6 percent. High tariffs financed the corporatist arrangement of federal subsidies for waterways, canals, and railroads during the Civil War, a war that defied market principles dramatically through its taxation, conscription, militarization of society, massive inflation, and inauguration of new government bureaus.

After slavery’s abolition and before the twentieth century, American economic liberty in some senses achieved a peak, but not without many qualifications. Immediately after the Civil War, state-level black codes kept nominally free blacks in a form of extended slavery, indenturing them to employers and criminalizing “vagrancy.” The U.S.  government began enforcing Reconstruction in the conquered South through military rule. Reconstruction counteracted State-imposed rights violations but also fostered a rise in government education and infrastructure projects financed through federal subsidies and considerable hikes on state-level property taxes. Government schooling became much more prevalent in the South, and by the end of the century 75 percent of the states had compulsory attendance laws.

The banking system—fundamental to any modern economy—was regulated by the federal government for most of the nineteenth century. There was a National Bank from 1791 to 1811 and again from 1816 to 1832.The Civil War birthed a new federal banking system that quickly grew, eventually culminating in the creation of the Federal Reserve in 1913.

In the late nineteenth century Benjamin Tucker identified four federally created monopoly powers that robbed Americans of their liberty—the land monopoly, money monopoly, patent monopoly, and tariff monopoly. These mostly involved federal privileges, but the heavy hand of government was also felt locally. Nineteenth-century state governments, at times working with federal authorities, displaced and killed American Indians; regulated various professions, labor relations, consumption goods, and businesses; and implemented social programs.

All in all, the U.S. regulatory state, explains Roderick Long, was not a twentieth-century innovation, but rather was “deeply involved from the start, particularly in the banking and currency industries and in the assignment of property titles to land. (Even such land as was not stolen from the natives was seldom appropriated in accordance with any sort of Lockean homesteading principle; instead, vast tracts of unimproved land were simply declared property by barbed wire or legislative fiat.)”

In substantial ways the economy of the late nineteenth century was freer than today, although some groups were heavily controlled, not least of all the southern blacks persecuted by Jim Crow laws, to say nothing of whites restricted by segregation from freely associating with these blacks.

Even nationally the twilight of the nineteenth century was a mixed bag. Veto-happy Grover Cleveland was probably the most laissez-faire president in half a century and ever since. Yet Cleveland’s terms had nontrivial blemishes: He used U.S. Marshals to quell the Pullman strike and enforce the Sherman Antitrust Act, supported the Dawes Act’s aggrandizement of presidential authority over Indian affairs, strengthened the Chinese Exclusion Act, begrudgingly acquiesced to an income tax to offset reduced tariff revenue, created the Interstate Commerce Commission, and despite a largely anti-imperialist record, threatened and used military force to assert dominance in Latin America against European influence and in favor of U.S. banking interests.

Shifting Definition

The market’s defenders often mimic its opponents in moving the benchmarks to describe historical periods as “laissez-faire.” This dangerous game does not stop with the nineteenth century.

American life before the New Deal was certainly freer in important respects, but we must be cautious in defending the 1920s. Putting aside the bloated bureaucracies lingering from World War I, the Fordney McCumber Tariff of 1922, the Immigration Control Act of 1924, and the calamity of alcohol prohibition, it was 1920s credit expansion that Austrian economists credibly blame for the boom and 1929 crash. We lose credibility in carelessly praising the pre–New Deal Era while blaming the Depression on policies enacted in that time.

Less ambitious free marketers idealize the 1950s—the decade of top marginal tax rates exceeding 90 percent (and, for the poorest Americans, 20 percent); the FCC’s puritanical regulation of the airwaves and maintenance of the telephone monopoly; the booming military-industrial complex; and the growing regimentation of industry, farming, and higher education. The transformative Great Society was in many ways an expansion on Eisenhower-era precedents more than a qualitative break from the past.

Even more desperate acts of nostalgia glorify the Reagan years. Although some government impositions were curtailed on the margins, Ronald Reagan oversaw growth of the New Deal–Great Society regime, as deficit spending exploded, Social Security and protectionism expanded, and foreign aid and bureaucracies ballooned.

None of this sober reflection backward should prompt us to see our history as an inexorable march toward liberty. There have been major advances in modern times—abolition of the draft, strengthened free-speech rights, and greater legal tolerance for minorities—but even in areas like racial oppression and personal freedom, many matters have worsened. Over two million Americans are behind bars. The drug war has devastated African-American communities. Last year the national government deported more immigrants than ever before. The war on terror has shredded basic rights. Washington’s run-of-the-mill economic interventions—in the name of health, equality, environmentalism, and fighting poverty—have escalated.The national debt and entitlement state have seen an unprecedented boom.

Neither today’s dismal state of affairs nor past oppression should make us nihilistic. History can teach us a lot about liberty. Certain areas of American life were freer in the nineteenth century than today and others were not, and the social blessings arising from relative conditions of liberty are worth identifying and understanding. Economics shows that free markets serve the masses by elevating workers’ productivity and smashing the old order of privilege and oppression. Both experience and economic science demonstrate the superiority of liberty to statism.

The golden era of freedom and free markets is not now and it’s not behind us. It is still ahead of us. This is reason to rejoice. We can happily envision a much better future.

Anthony Gregory is a Research Fellow at the Independent Institute.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Interest Rates Are Prices – Article by Ron Paul

Interest Rates Are Prices – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
September 28, 2012
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One of the most enduring myths in the United States is that this country has a free market, when in reality, the market is merely the structural shell of formerly free institutions.  The federal government pulls the strings behind the scenes.  No better illustration of this can be found than in the Federal Reserve’s manipulation of interest rates.

The Fed has interfered with the proper function of interest rates for decades, but perhaps never as boldly as it has in the past few years through its policies of quantitative easing.  In Chairman Bernanke’s most recent press conference he stated that the Fed wishes not only to drive down rates on Treasury debt, but also rates on mortgages, corporate bonds, and other important interest rates.  Markets greeted this statement enthusiastically, as this means trillions more newly-created dollars flowing directly to Wall Street.

Because the interest rate is the price of money, manipulation of interest rates has the same effect in the market for loanable funds as price controls have in markets for goods and services. Since demand for funds has increased, but the supply is not being increased, the only way to match the shortfall is to continue to create new credit. But this process cannot continue indefinitely. At some point the capital projects funded by the new credit are completed. Houses must be sold, mines must begin to produce ore, factories must begin to operate and produce consumer goods.

But because consumption patterns have either remained unchanged or have become more present-oriented, by the time these new capital projects are finished and begin to produce, the producers find no market for their goods. Because the coordination between savings and consumption was severed through the artificial lowering of the interest rate, both savers and borrowers have been signaled into unsustainable patterns of economic activity. Resources that would have been used in productive endeavors under a regime of market-determined interest rates are instead shuttled into endeavors that only after the fact are determined to be unprofitable.  In order to return to a functioning economy, those resources which have been malinvested need to be liquidated and shifted into sectors in which they can be put to productive use.

Another effect of the injections of credit into the system is that prices rise.  More money chasing the same amount of goods results in a rise in prices.  Wall Street and the banking system gain the use of the new credit before prices rise.  Main Street, however, sees the prices rise before they are able to take advantage of the newly-created credit. The purchasing power of the dollar is eroded and the standard of living of the American people drops.

We live today not in a free market economic system but in a “mixed economy”, marked by an uneasy mixture of corporatism; vestiges of free-market capitalism; and outright central planning in some sectors.  Each infusion of credit by the Fed distorts the structure of the economy, damages the important role that interest rates play in the market, and erodes the purchasing power of the dollar.  Fed policymakers view themselves as wise gurus managing the economy, yet every action they take results in economic distortion and devastation.

Unless Congress gets serious about reining in the Federal Reserve and putting an end to its manipulation, the economic distortions the Fed has caused will not be liquidated; they will become more entrenched, keeping true economic recovery out of our grasp and sowing the seeds for future crisis.

Representative Ron Paul (R – TX), MD, was a three-time Republican candidate for U. S. President. See his Congressional webpage and his official campaign website. 

This article has been released by Dr. Paul into the public domain and may be republished by anyone in any manner.