The Hayekian Book of Revelation

Gregory Alan Thornbury, the new president at The King’s College, recently gave a fascinating convocation address to begin the school year. In it, he made reference to Austrian economist Friedrich Hayek, and encouraged students to think about philosophical ideas that have stood opposed to some of the philosophies that dominated much of the world during the last century: “totalitarianism, fascism, and a century of holocaust.”

Jerry Bowyer of Forbes magazine interviewed Dr. Thornbury on this and other matters—ranging from economics to Harry Potter to Dr. Who to Christian eschatology—and I thoroughly enjoyed it! For those who don’t want to listen to the entire interview, Bowyer has transcribed the portion of the interview devoted to Hayek and John’s Apocalypse. Here’s an excerpt:

I think that when you study the texts of particularly the New Testament, although it has its origins in the Mosaic Law, I think what you see there is the seedbed of freedom of conscience. You see democratic religion in the pages of the New Testament. So whereas some people in Acts chapter 5 see some kind of nascent socialism, actually what you’re seeing is free people electing to gather together in solidarity around key principles and ideals and goals, and the people who joined in that were people like Lydia. There was a mercantile aspect to the early Christian movement. When I read Hayek and I see his argument for the link between private property and freedom, I see a direct line going all the way back to those pages of the New Testament, because what the Apostle Paul and others were representing was an alternative to totalitarianism. When you look at the Apostle John – and whatever else you think the Book of Revelation says about the future—what it definitely was, was the greatest political protest letter ever penned in the history of the world, because he was saying, “The state has no business telling us how we should govern our own life together.” And when I say “society” or “culture”, here’s how I’m defining that, Jerry: I take a nineteenth century definition by Johann Herder, who many recognize as the founding father of modern sociology. He said, “Culture is the lifeblood of a civilization. It’s the flow of moral energy that keeps a society intact.” So, when I see Hayek talking about making sure that we stay free of tyranny, I see the entailments of that going all the way back to the emperor and Domitian and the Apostle John.

This article is definitely worth your while! Read the rest here.

[Image credit]

The Great American Taxing Game

The folks at Learn Liberty have put out another interesting video. This one is interactive! Here you have the opportunity to choose between three commodities lawmakers seem to be particularly fond of taxing (gas, cigarettes, and luxury items), and then see some of the consequences of such a tax. Check it out!

These videos are a good way to demonstrate once again the “one lesson” from Henry Hazlitt’s Economics in One Lesson (my review), which is summed up in the following sentence:

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

On Doing Good for the Poor

In the mid-18th century, the British Parliament was tampering with the price of various commodities, imposing tariffs and duties on the importing and exporting of these commodities in the American colonies and elsewhere in the Empire. Then, as today, this type of government meddling was ostensibly meant to help the poor. Thankfully, many American patriots realized that these centralizing policies helped no one but the State, and only served to perpetuate the dependency of the poor on their masters.

Check out this scathing commentary from a letter penned by Benjamin Franklin, published in The London Chronicle in 1766, titled “On the Price of Corn and Management of the Poor”:

I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.

There is no country in the world where so many provisions are established for them; so many hospitals to receive them when they are sick or lame, founded and maintained by voluntary charities; so many alms-houses for the aged of both sexes, together with a solemn general law made by the rich to subject their estates to a heavy tax for the support of the poor. Under all these obligations, are our poor modest, humble, and thankful; and do they use their best endeavors to maintain themselves, and lighten our shoulders of this burden? On the contrary, I affirm that there is no country in the world in which the poor are more idle, dissolute, drunken, and insolent. The day you passed that act, you took away from before their eyes the greatest of all inducements to industry, frugality, and sobriety, by giving them a dependence on somewhat else than a careful accumulation during youth and health, for support in age or sickness. In short, you offered a premium for the encouragement of idleness, and you should not now wonder that it has had its effect in the increase of poverty.

[Read the full letter here. It’s great!]

Capitalists and libertarians are often accused of being apathetic toward the condition of the poor. In reality, capitalism remains the best and most effective means of alleviating poverty ever devised. For more on why Christians who are concerned for the poor (and, really, this ought to be a redundant phrase) should be capitalists, I highly recommend Jay Richards’ book Money, Greed, and God (my review).

God Rest Ye Thrifty, Gentlemen

The latest video from the folks who brought us the excellent Fight of the Century is another winner! Here’s their holiday special, “Deck the Halls With Macro Follies”:

As usual, they’ve done their homework, and provided an informative backstory on the men and ideas presented in this video:

Each year, our attention turns to the holidays… and to holiday consumer spending! We’re told repeatedly that, because consumer spending is 70 percent of measured GDP, such spending is vital to economic growth and job creation. This must mean that savings, the opposite of consumption, is bad for growth.

This view of macroeconomics was first popularly asserted by Thomas Malthus in 1820, nearly 200 years ago. Malthus believed recessions were caused by “underconsumption” because there was a “general glut” of goods unsold. To recover from a recession and grow, we needed to stop all the saving and spend more to buy up all the goods on store shelves. Savers are like the miserly Ebenezer Scrooge. If you want a happy holiday, you’ve got to clear those shelves and give people a reason to produce more and create jobs. Or so Malthus thought…

Read the rest here.

Have a happy, economically responsible holiday season, everyone!

I, Pencil

The Competitive Enterprise Institute has produced a great little film based on Leonard Read’s classic essay on the complexity of the free market and Adam Smith’s concept of the “Invisible Hand”. It’s well worth six minutes of your time!

There’s a reason that the “you didn’t build that” rhetoric resonates so well with people: it’s true! To a point. Our President is correct that nothing is built independently of the work of others, but he is absolutely wrong in his application of our interdependence.

Unfortunately, a lot of conservative responses have been equally wrong, insinuating that people are solely responsible for the results of their labor. This fails to grasp the complete picture of how markets work. Understanding the complex principles involved in free trade helps us see that it is precisely this interconnectedness that provides the foundation for our concepts of property rights and the right to profit from one’s own labor. Leonard Read’s essay is one of the very best illustrations of how this works.

CEI is also producing a series of educational videos based on I, Pencil that provide further commentary on the economic ideas it contains.

Here is the first, on “Spontaneous Order” and “Connectivity”:

More videos will be available soon at this website, where you can also find curriculum and other educational resources for teaching these concepts (or learning them yourself). Enjoy!

Stimulating Sandy

Every time a natural disaster strikes, it serves as an opportunity to remind people about the “Broken Window Fallacy”. This faulty economic idea basically states that things like wars, natural disasters, and other destructive actions actually provide a boost to the economy. In his terrific book Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics (my review), Henry Hazlitt wrote that “the broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics.”

We see this fallacy in action in the writing of New York Times columnist Paul Krugman (a winner of the Nobel Prize in economics), who wrote three days after the terrorist attacks of 9/11, “Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could even do some economic good.” Similarly, he said last year that fabricating an invasion of space aliens would provide a great way to end the economic slump.

With the arrival of Super Storm Sandy, several publications (including, again, the NYT) have been quick to point out the silver lining that this will result in “increased economic activity”. But while it’s true that there will be increased economic activity that we can see, this type of thinking fails to account for the lost economic activity that we cannot see. Here’s a great video from LearnLiberty.org that demonstrates why the Broken Window Fallacy is wrong:

If this whets your appetite to learn more about economics (one of my favorite subjects!), a great place to start is the aforementioned book by Henry Hazlitt. Additionally, you might check out Frederic Bastiat’s 1850 essay, “That Which Is Seen, and That Which Is Not Seen”, which is the origin of the “broken window” illustration. I also highly recommend the Economics for Everybody DVD series by R.C. Sproul, Jr.

Think Monetary Policy Is Hard to Understand?

Don’t tell that to this 12-year-old, who seems to have it pretty well sorted out. Well done!

Want to educate yourself better about how central banks work? A great place to start is Ron Paul’s book End the Fed. To see why economics is such a big deal (and why I talk about it so much), see my post called Greed and Virtue.