Mises Memo Spring 2003

8/7/2019 Mises Memo Spring 2003

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M i s e s MemoNews f rom t h e Ludvvig v ox Mise s I n s t i t u t e S p r i n g 2 0 0 3

W a r a n d R e c e s s i o n

B y tradition and convention,economics and foreign mili

tary policy are seen as radicallyseparate categories. In the classroom and newspapers, war istreated in the area of politics while

economic s is cove r ed u n d e r th ecategory of business.

But are they really all that separate? Neither in theory nor history, a fact which is currently hitting home in the most brutal way.

In U.S. politics, it is commonfor pundits to favor both freeenterprise and militarism, whileopponents of war sometimes tendtoward socialist th inking. Theconfluence of these positions,however common, lacks intellectual justification.

SOCIALISMLu&vigvcnMises

EQUALITYg

^ ECONOMICS^

.g ^V/EALTHg^Distributionownership

Big government can come inmany forms, and it is naive tothink free enterprise can be protected against encroachments solong as government insists onfunding an overblown military

machine. By the same token, thosew h o favor th e welfare s ta te a thome empower the same government to expand internationallythrough intervention and war.

Looking at history, war oftenfo l lows an economic down t u r n .

P ol it ic ia ns s ee i n t e rna t i ona l c o n

flict as a nice d is tr ac ti on f rom

falling incomes and declining economic prospects. To follow the

Keyncsian prescription preciselyboosting spending to give aggregate demand a solid kick warwould seem to be just the ticket.

S E C O N D E X PAND ED ED IT ION

(THE

os t sW a rO FAM E R I C A ' SPYRRHIC

V I C T O R I E S

IJOHN V.DENSON

In fact, Mises was right thatwar prosperity is like the prosperity that cholera brings. It increasest he i ncome o f under takers b u t it is

hardly good news all around. Thesheer was t e o f mater ia l and human

resources, diverted from product ion to destruction, represents anincredible imposition on society.

T h e l ink b e tw ee n w ar and

recession also appears in the following chain of events. A recess ion results f rom o ve re xt en si on

during the boom times, and putsnew pressures on industries unaccustomed to strains on profitability. These industries lobby forprotectionist measures. Thesemeasures rupture formerly peaceful international relations and giverise to conflicts that spin out ofcon t ro l .

That is not the precise coursethat the war on Iraq has taken


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A History ofMoney andBanking in the United States

though 10 years of sanctions didno t fos ter wa rm relations be tween

th e U.S. and Persian Gu l f states.

In fact, these sanctions have beenvariously cited by terrorists andtheir sponsors as the proofthat theU.S. represents a destructive forcein in ternat ional affairs.

The sanctions not only harmedcivilians in Iraq; they were the reason many people joined the terrorist armies. The U.S. government isnow using this dircat as the excusefor the largest expansion of government power in several generat ions .

The causal l ink can run the

other way too. War can lead government to engage in a bout ofdebt and inflationary finance thatappears to create a t empora ry

prosperity, only to be followed bya recession and attempts by thepolitical class to avoid itsinevitable effects.

Finally, both war and recessionare man-made calamities, or, moreprecisely, government-made. They

The Mises Memo is published quarterlyby th e Ludwig von Mises Ins ti tu te . Volume 9, No. 1. Copyright 2003 by th eLudwig von Mises Institute, 51 8 Wes tMagnolia Ave., Auburn, Alabama 36832-4528; 334-321-2100; fax 334-321-2119;[email protected]; www.mises.org.

EGALITARIANISMAS A REVOLT

AGAINST NATURE

a n d O t h er Essays

Murray N. Ro thba rd

are the evidence that the politicalsector exercises too much powerover society, so much so that thepeace and prosperity that comeswi th free markets and free t rade is

displaced byan atmosphere of conflict and even violence.

Ludwig von Mises wrote several books attempting to explainth e c on ne ctio n b etw ee n e co no mic

policy and political conflict. HisNation, State, and Economy (1919)examined Wo rl d Wa r I and it s af te r

math. Socialism (1922) demonstrated how much die central planners like die atmosphere of wartimeas a great breeding ground forsocialism. Liberalism (1929) showedhow a free society replaces conflict

THE R IS E OF XTHETOTALSTATE^JANDTOTAL T P ^ JWAR f JPtH

T x l f l V


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frankly with die problem of thenational security state and its relationship to a free society.

Whereas the founding fathersworried about standing armies, wemust now worry about completelymilitailed societies, whole nations

organized around the principlethat they should engage in globalwar in order to bring security. Butthis book argues that the entireapparatus of national security,despite many trillions in expenditures, has actually managed toweaken security for all Americans.

The cont r ibu tors dea l w i th s u ch

questions as: how did the idea thatdie state must havea monopoly on

security services originate? Howdid monarchies handle the question? How was security providedin the Colonial experience? Howand to what extent can security beprovided at a profit? What is therole of ideologv in the national-defense state? Is there any basis forthe claim that security is a public-good that can only be provided bythe government? In a fully privatized society, what kind of institutions would replace the nationalsecurity state? What is the bestmeans toward achieving fully private security provision?

There ' s never been a book like

this, and we are expecting the

scholarship showcased within thebook to shake up opinion in andou t of libertarian circles. Rarely isthe logic of freemarkets pushed tothe point that such fundamentalquestions are examined. But in anage when gated subdivisions, pri

vate security companies, and private firearms provide more security than a $400 billion nationaldefense budget, the question iswo r t h c lose examina t i on .

L o v i n g Mises .org

O n e of th e 9,000 subscribersto the daily email from

Mises.orgwrites: uPvc been reading

Ludw i q v o n M i s e s I n s t i t u t e

Per iod ica l s Dally Articles Coming Even t s Resources Aud io Membe r sh i p

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Home About E-mail Lists Catalog ^ii/

Costs of War on I r aq"War," said Ludwig von Mises "is harmful, not only to theconquered bu t to the conqueror. Society has arisen outof the works of peace; the essence o f soc ie ty ispeacemaking. Peace an d no t war is th e fa th er o f allthings. Only economic action has created th e wealtharound us; labor, no t th e profession of arms, bringshappiness. Peace builds, wa r destroys." More...

T h e E c o n om i c s o f t h e R o s e Ma r k e t

Nationwide, rose prices ar e often double on Valentine'sDay from wha t t he y ar e on most other days of th e year.Why ar e rose prices so high on Valent ine' s Day? Andwhile we answer th e ques ti on, le t's be careful to keepcause an d effect straight. More...

N o t in S t a c k s

Grego ry Bres ige r mere ly wan ted to check o ut a videothat both th e library catalog and a clerk said wa s on th eshelves . Ins tead, he s tood face to face with whatseemed to be th e very embodiment of th e entire publicsector. Whether running libraries or global economies,the public sector isn't up to th e job. More-

S p r i n g 2 0 0 3 News i-uom tup: Luowic. von Misk s I n s t i t i t k

Content

Marke t Upda t e

LewRockwe l l . c om

ASC8 Pap e r s

C a l e n d a r

Specia l Repo r t

A b o u t M i s e s

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F u n * F re e A d s

S T U D E N T S

Library

Working Pape r s

Study Guide

C o n f e r e n c e s

Fellowships

ON L I N E B O O K S

Human A c t i o n

M i s e s B o o k s a n d

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P a l m B oo ks


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the daily articles since you startedsending them, and I have to saythis is the single most valuablepiece of email I get each day theone I can be absolutely certain willnever be a waste of my time. TheMises I n s ti t ut e c on tr i b ut o r s offer

the most varied, yet consistentlybrilliant, commentary available,no matter what the topic.

"Anyone following thesepieces as closely as I have wouldgain a better education in economics and ai l th e soci a l s c iences than

they could get in any classroom(except, possibly, yours). I'm notan economist, just an interestedlaymanwho loves liberty and the

Aus tr i an t h in k er s who have donemore than any others to defend it.

"I n fact, the Austrians havehelped shape my outlook by giving me deeper insight into politica l a nd e co no mic realities. You

might callthis an unintended consequence, and perhaps not animportant one. But it has beenveiy meaningful to me. In shortthanks, and keep up the greatwork ! "

R on P au l

T h e G o l d Standa rd

W i th a war looming and therecession lingering, gold

shot up in price, once againastounding the critics who keepproclaiming the death of this prec io u s m e ta l t ha t once served as th e

basis of the nation's currency. Lud-wig von Mises, of course, was thetwentieth century's leading champion of the gold standard against

the Keyncsian celebration of papercurrency. His students like MurrayRot hb ar d a nd H an s Sennholz fo l

lowed in his footsteps, and similarly championed sound moneywith commodity' backing.

Visiting Massey Fellow Niko-lay Gertchev, who is completinghis Ph.D. at the University ofParis, has been investigating criticisms of the gold standard and has

come to see the money question asth e crucial one tha t divides thela issez-faire school f rom t h e s t at i st

school. In the end, if you want biggovernment , pape r cur re ncy pro

vides the ticket because it permitsexpansion without taxation.

Investigating the classical economists in a series o f art ic les, he hasfound diem all to be champions ofsound money and opponents of

paper currency. He has also foundthat they made subtle errors, latercorrected by the Austrians, that ledto the undoing of hard money infavor o f sof t .

Interestingly, Alan Greenspanrecently confirmed the relationship

be tw een the welfare s ta te andpaper money in a letter to our Distinguished Counsellor, Congressman Ron Paul. Paul had to ask why,in light of the recessions so clearlywrought by a boom fueled by loosemoney and credit in the 1990s, weshouldn't consider gold backing forthe currency. Greenspan respondedthat the gold standard "is inconsistent with significant governmententitlement programs."

Gertchev's papers are beingdelivered at the weekly AustrianWorkshop at our offices in Auburn,along with many other talks onaspects of economics, philosophy,law, and politics. Other fellowsworking on projects include StevenYates, who has completed his bookon logic, and Scott Trask who isworking on American banking history. Resident Fellow Guido Hiils-mann leads ou r weekly seminar.Members are welcome to attend (seeMises.orgfor the schedule).

Ni-;ws f r o m Tin-: I . r invic . v o n M i s k s I n s t i t i t i - : Sp r i n g 2 0 0 3


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Robert Higgs

Aus t r i an S g h o i a r s

Ga t h e r

T h e Au st ri an S cho la rs Confe r

ence is an even t t h a t neve r

stops growing. In its nine years,each year's program has attractedmore presenters and attendees.This year, we are expecting thebiggest showing yet, with morethan 80 new pieces of scholarshipcovering an incredible array oftopics on economics, history, philosophy, law, and more.

In a dd it io n to d ie fo ur lectures

named in honor of Hayek, Mises,Rothbard, and Hazlitt (givenrespectively by Sudha Shenov, JohnCochran, Butler Shaffer, and GeneCallahan), a new plenary lecturehas been added this year: The LouC h ur ch M em or ia l L e ct ur e in Reli

gion and Economics.T h e f i r s t Chu r c h l ec ture will

be given by Timothy Terrell ofWofford College. His topic concerns the growing influence offaith-based environmental politics,and its penetration of both religious denominations and publiclife. He argues that the championsof religious cnvironmentalism neither know no r care abou t eco

nomics, but that the underlying

assumptions of their worldview arecontrary to basic notions of property rights.

We will also present the second annual Kurzweg Family Prizefor outstanding personal achievement in the scholarship of liberty.Made possible by scholar-surgeonFrank Turner Kurzweg, the prizethis year goes to Robert Murphy, agraduate student at New YorkUniversity. In addition to doingoutstanding academic work, hehas been a vigorous participant inpublic debates about economictheory and policy, and has alreadypublished his first book on therole of insurance in the provision

of security. Finally t he w in ne r ofthe Lawrence W Fcrtig Prize inAus t r i an Econom i c s wil l b e

a n n o u n c e d .

S u m m e r 2 0 0 3

S u m m e r is th e bus i e s t t ime o f

the year at the Mises Institute.This year, the Mises University hasattracted a continuing stream ofapplicants hoping for a chance tostudy under a top faculty of Austrian economists. This year will beth e lcSth t im e f o r s tuden t s a nd

Sp r i n g 2 0 0 3 News f rom t h e Ludwio v on M is es I n s t i t u t e

Ralph Raico

faculty to assemble to teach thefundamentals and applications ofAustrian theory. In that time, theprogram has developed a reputation for excellence in teachingunmatched by any other programavailable.

W e also look fo rw a rd to tw o

week-long history seminars, oneled by Ralph Raico and the otherby Robert Higgs. Raico is a leading authority on European history,the origin and development ofclassical-liberal thought, and the


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politics of war. Higgs's specialty isthe role of economic and militarycrisis in the rise o f d ie Am er ic an

l ev ia than . B o t h se t s o f l ec tu re s a re

open to die public (pending application) . Both will be recorded andmade available after the seminars .

Also, the Rothbard GraduateSeminar this year offers a guidedtour dirough Murray N. Roth-bard's great economic treatisesMan, Economy, and State, andPower and Market . These books

s tand wi th Mises ' s Human Action

as primary texts on Austrian theory. Under the guidance of anexpert faculty, students will walkthrough the texts page by page.

When it comes to teaching thedetails of Austrian theory, nobooks are as good as these.

N e w Tex t s Onl i ne

Taking advantage of onlinetechnology, we've been busy

making many important books,monographs, and articles available. Among the newest offeringsare The Underground Economy byHans F. Sennholz; "Keynes, TheMan," by Murray Rothbard; andThe Historical Setting of the Austrian School of Economics by Ludwig von Mises. In addition, ourlibrary of writings on taxationcontinues to grow. The Tariff History of the United States, a classic byFrank Taussig, until now very hardto find, is now online.

Othe r i tems on li n e i n cl ud e the

Freedom Calendar for 2003, andthe complete editions of die Journalof Libertarian Studies, the Austrian Economics Newsletter, th eQuarterly Journal ofAustrian Economics, the Review ofAustrian Economics (vols. 1-10), and the MisesReview. Mises.org also offersdozens of audiotapes, including acomplete seminar by RobertLeFev r e .

Gene Callahan

More R e v i e w s

T w o familiar books cam e in

for top reviews in the Barrow'syear-end book roundup. "I f I wereteaching an introductory course ineconomics," writes Gene Epstein,"I'd assign Gene Callahan's Economics forReal People: An Introduction to the Austrian School. I also

commend it to folks in search o f a

good read on the joys of economicinsight."

T h e s econd b o o k o n t h e l is t is

T h om a s DiLo r en zo ' s Th e Rea l

Lincoln. Epstein writes: "Morethan 16,000 books have alreadybeen wr i t t en abou t Abraham Lin

coln . Bu t it t ook an e conom i s t t o

get die story right. The Real Lincoln, by Loyola College economicsprofessorThomas J. DiLorenzo, isthis year's top. . . . I personallyrevere Lincoln as a great writer(I've read the Second Inaugural sooften, I can recite long passagesfrom memory). But the short andriveting book, The Real Lincoln,made me actively dislike him as apolitician."

LewRogkwel l . COM

Congratulations to Lew Rockwell, founder and president of

the Mises Institute, on his personal website. Though just threeyears old, it enjoys a higher traffic-ranking than National ReviewOnline and even Rush Limbaugh'spersonal site. His daily links includecommentaries on economics, war,

L e w R o c k w e l l . c o m@0Q(D

' the premier an t i - s t a t e /p ro -marke t si te on t he n et ' PffflgQFriday, February 14, 2003

B u s h t h e I n f a l l i b l eFrom Ihc VaultWa r ha ordalne th . Jeffrey Tucker on th e religious mind of th e pr e s lden t .

Governmen t Asphyx ia ti on Greg Davi s on th eS i mp s on s a n d Nasa.Homeland Security ca n kill you. Article by Brian Duneway,

Bob Wa l la c e on do ing

T h e H e r o i c R on P a u l Osama ' s d i rt y work .Th e Texas Observer is as ton i shed to f ind an an t iwa r Repub l i c an .

Micha e l P e ir c e o n th e

Trac ing th e Bo x Cut t e r sF u h r e r .

Joseph Sobran on Bush's evidence. T h o m a s J. D i L o r e n z o o nAb e a nd t he I n d i a n s .

What Happened?Burt Blumert on th e gold marke t . Ro n L i eb e rm a n n o n th epe t ro -do l l a r and war.

Wha t Ca n I Do To Stop t he Wa r ? J o h n A t t ar i a n o n FleaPlenty, says Harry Browne. f ibbing.

Arb i t r a ry Ar re s tDaniel McCarthy onMicha e l N o v a k .

Bob Murphy on another totalitarian ploy.Richard C ummi n gs o n

Why Our Side Is Different American Empire.A mathematical explanation from Donald Mills.

Dav i d D i e t e m a n on Go dan d Unc l e S am .

Confede ra t e HaggisJe ff Adams on on e aspec t of th e Southern-Celtic connection. Alan Turin on a n o pe n

l e t t e r to F r a n c e .

Saving th e Wor ldOn e rol l of duct t ape at a t ime , by Mark Flore. Ltw* Columns

News f rom t h e Ludwig vo n Mises I n s t i t u t e Spr ing 2 0 0 3


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history; politics, and culture. It hasbeen a w on d e r fu l s o u r c e f o r

directing people to Mises.org,which enjoys higher traffic rankings than any libertarian or conservative th ink ta nk . R oc kw ell 's

commen ta r i e s con t i nue t o r u n in

the Washington Times, the American Conservative, and public-radio's Marketplace. Also, herecently spoke at Grove City College in honor of the accomplishments of Hans Scnnholz, and waskeynote speaker at the Sage Capita l annual economic conference in

Houston, "Beyond the Storm."

H a y e k . G a r r i s o n ,

a ndL S E

W h e n EA. Hayek left Vienna,he taught at the London

Schoo l o f Economic s . F r om hi s

post there, he employed Misesianbusiness cycle theory to attack theinfluence of John Maynard Keynes.Today, die influence of Misesianideas is being revived through aseries of lectures made possible inpart through the influence of theMises Ins t i tu te . The first scries o f

lectures will be delivered by RogerGa rr ison , a dj un ct s chol ar andauthor of Time and Money, animportant book on Austrian cycletheory. His syllabus will beposted on Miscs.org. Truly, this isan important milestone in the

FA. Hayek

advancemen t o f Misc s 's i n fl u en c e

across wor l d academia . Many

thanks to L SE a lum nu s a nd Bri t i sh

beef baron Toby Baxendale for

making it possible.

A m e r i c a n Co l l e g e s

and Univers i t i es

T h e Austrian presence in academia is growing in the U.S. and

abroad. The faculty list of theMises Institute gives some indication of die wide variety of institutions where Austrians are teachingand working, not only in economicsdepartments but also in history, philosophy, and even the humanities.

To assist students, the following has been assembled to highlight particular institutions wheres tuden t s can f ind tw o o r mor e

professors in economics departments who are broadly sympathetic with the Austrian perspective. The list is by no meansexhaus t ive .

Auburn University,Auburn, Alabama.

Contact: Roger Garrison

California State University,Hayward, California.Con t a c t : Cha r l e s Bai rd

George Mason University,Fairfax, Virginia.Ph.D. program.C o n ta c t: P et er B o et tk e

S p u i n g 2003 NIO.VS FROM Till-: Ij-nWIC. VON MlSliS I.NSTITITI-:

Florida State University,Tallahassee, Florida.Contac t : Randa l l Ho l combe

Grove City College,Grove City, Pennsylvania.Contact: Jeffrey Herbener

Hampden-Sydney College,Llampden-Sydney, Virginia.Contact: Anthony Carilli

Hillsdale College,Hillsdale, Michigan.Contact: Richard Ebeling

Loyola University,New Orleans, Louisiana.

Contac t : Walter Block

Metropolitan State College ofDenver, Denver, Colorado.

Contact: John CochranNew York University,New York, New York.Ph.D. program.C o n ta c t: M a r io R i z z o

Ohio University,Athens, Ohio.

Contac t : Richa rd Vedder

Pepperdine UniversityPepperdine, California.

Contact: George ReismanSa n J os e S ta te University,

San Jose, California.Contact: Edward Stringham

Wofford College,Spartanburg, South Carolina.Contact: Timothy Terrell.

T i m e s o e G i i a n c ; e

T h e F ed 's r ec es si on has been

tough on charitable organizat ions . The Mises In s t i t u t e is so l id

as a rock, but diis is not true fo rsome other organizations that generally support the free market. Thisis grim news because it is sad tolose a single voice for liberty, of anysort. The ideas of capitalismwouldn o t s t and a c h an c e a lo n e. We need

every institution, every website,every opportunity for teaching.


8/8

Given this, the Mises Institutemus t t ake o n ne w bu rd en s and

new responsibilities. We must doeverything possible to maintainand indeed expand our activitiesand ou t r e ach . We mu s t mak e s ur e

that no promising student, nofuture leader of freedom, slipsthrough the cracks. We must lifthigh the uncompromising bannerof freedom, and never let it fall, oreven dip, no matter what.

This is a huge burden andresponsibility. We are eager toshoulder it. But we need your help.We have the greatest library andcampus of liberty. We have the bestjournals and books and teachers.We a tt ra ct d i e f inest minds . And

we do it with the minimum possible expenditure. Yet, the demandfor what we do isoutstripping ourability to provide. Even now, weturn awayhundreds of students.

Insti tutions like th e Mises Insti

tu te a re v it al to th e fu ture o f civi

lization. When Mises was driven

ou t of his home in Vienna , he wasable to seek refuge in an independent institution of learning inGeneva. The Mises Ins ti tu te is, inmany ways, die successor to diatinstitute, providing sanctuary forscholarship and sustaining die ideasof liberty when others buclde.

The Miscs Ins t i tu te has bui l t

its work on die support of peoplelike you, who care enough to support ideas that would be muffled.N ow is d ie t ime t o bols ter t ha t

support, to back free markets,sound money, and liberty with allour strength.

I n M e m o r i a m

We mourn the passing of:Robert N. Tuller (1907-

2002), an Indiana boy whobecame a Wall Street giant. Heand his late wife Jo were dedicatedto international amity, sound

Robert N. Tuller

(1907-2002)

municipal finance, the gold standard, and the cause of publichealth. The bequest of their histo r ic F lo r i da h ome will fund an

annual scholarship in their honor;

New Jersey inventor andentrepreneur Edward J. Monett(1902-2002), who dedicated as t u d e n t research office a t t he I ns ti

tute in honor of his son, Jack;

Hermona Beardslee, whose

dedication to the Old Right was

inspired by her businessmanfather, a great opponent of FDR;on the dark day of the election in1932, he told her: "That man willfoment strikes and take us to war ";

Truman Johnson (1914-2002),a teacher and champion of freedom who, with

his wife of63

years, Floy, ran a reading group inAus t r i an economic s .

Famed entrepreneur William B.Ruger, who through the production of millions of pistols, rifles,and shotguns, was a living embodiment of the second amendment;

Texas bus ine s sman an d hard-

money advocate Justin G. Brad-burn, Jr.; an d

Pittsburgh businessman andchampion of the free market,Ro b e r t Kohma n .

We mourn, and remember indeepest gratitude, all the InstituteMembe r s w h o have d ied ove r th e

last nine months. Requiescat inPace, dear friends of liberty a

In Memoriam

We mourn the passing, and will always be inspired by the dedicationto liberty, ofour benefactors.May they rest in peace,

and may we always strive to be worthy of them.

Hermona Beardslee, JustinG. Bradbum, Jr., Truman Johnson,Robert Kohman,Mrs.Robert E. Miller, EdwardJ. Monett,

WilliamB. Ruger, Robert N. Tuller

George T. Adair, H. N. Crecelius, StanleyHirsch, James R.Malott, Jr.,Charles Mason,MargaretMink,CharlesF. Row,J.T.Wallace

PhilipF. Bagwell,WilliamP. Cook, LouisB. Dailey, E.M. Erickson,John G. Fifield,DonGoldberg, John D. Kennedy, Richard Mader,

John Muhl, Dennis A.Wight, C.W. Zimmerman

News f rom t h e Ludwig v on M is es I n s t i t u t e S i - r i n o 2 0 0 3

Documents

Mises Memo Spring 2003