History’s verdict

Economics and Moral Courage, by Llewellyn Rockwell, is one of the most intellectually inspiring articles I have ever read. It is a beautiful reminder of the transience of what we think is worldly success and accomplishment:

While Mises worked at the Chamber of Commerce because he was denied a paid position at the University of Vienna, [Hans] Mayer served as one of three full professors there, along with socialist Othmar Spann and Count Degenfeld-Schonburg. Of Spann, Mises wrote that “he did not teach economics. Instead he preached National Socialism.” Of the count, Mises wrote that he was “poorly versed in the problems of economics.”

It was Mayer who was the truly formidable one. Yet he was no original thinker. Mises wrote that his “lectures were miserable, and his seminar was not much better.” Mayer wrote only a handful of essays. But then, his main concern had nothing to do with theory and nothing to do with ideas. His focus was on academic power within the department and within the profession….

[Mayer] thrived before the Nazis. He thrived during the Nazi takeover. He helped the Nazis purge the Jews and the liberals from his department. Note that Mayer was no raging anti-Semite himself. His decision was a result of a series of discrete choices for position and power in the profession against truth and principle. For a time, this seemed harmless in some way. And then the moment of truth arrived and he played a role in the mass slaughter of ideas and those who held them.

Perhaps Mayer thought he had made the right choice. After all, he maintained his privileges and perks. And after the war, when the Communists came and took over the department, he thrived then too. He did all that an academic was supposed to do to get ahead, and achieved all the glory that an academic can achieve, regardless of the circumstances…. He played the game and that was all he did. He thought he won, but history has rendered a different judgment. He died in 1955. And then what happened? Justice finally arrived. He was instantly forgotten. Of all the students he had during his life, he had none after death. There were no Mayerians. Hayek reflected on the amazing development in an essay. He expected much to come out of the Wieser-Mayer school, but not much to come out of the Mises branch. He writes that the very opposite happened. Mayer’s machine seemed promising, but it broke down completely, while Mises had no machine at all and he became the leader of a global colossus of ideas.

If we look at Mark Blaug’s book Who’s Who in Economics, a 1,300-page tome, there is an entry for Menger, Hayek, Böhm-Bawerk, and, of course, Ludwig von Mises. The entry calls Mises “the leading twentieth-century figure of the Austrian School” and credits him with contributions to methodology, price theory, business-cycle theory, monetary theory, socialist theory, and interventionism. There is no mention of the price he paid in life, no mention of his courageous moral choices, no mention of the grim reality of a life moving from country to country to stay ahead of the state. He ended up being known only for his triumphs, about which not even Mises was ever made aware during his own life.

And guess what? There is no entry at all in this same book for Hans Mayer.

Mayer was the typical academic intellectual dwarf and richly deserves to be forgotten by history, but to me the ultimate villain of the piece is Friedrich von Wieser. Can you imagine having the opportunity to anoint either Ludwig von Mises or Joseph Schumpeter as your successor and then somehow deciding to choose neither of them? That has got to be the worst employment decision in the history of economics, and quite possibly academics. It may even have been the most calamitous if one thinks through how much unnecessary economic pain and devastation could have been prevented.

As brilliant and revolutionary as Mises was, I think I would have preferred to hire Schumpeter to head the department. His History shows that his perspective was unusually broad and saddling him with the bureaucratic responsibilities would have kept Mises free to focus entirely on research. Then Schumpeter could have gotten rid of Spann, hired Hayek, and you’d have had the greatest economics department in history despite its small size. And with that collection of highly functioning brainpower assembled in one place, it’s quite possible that they would have achieved sufficient prestige to prove capable of preventing the Keynesian ascension. What a tremendous opportunity for Mankind missed. And what an interestingly esoteric possibility for an alternate history novel….

WND column

The Return of the Great Depression

Eighty years ago this Thursday, the Great Depression began. While the great stock market crash of 1929 actually began on Oct. 24, it was the fourth day of the crash, Oct. 29, 1929, now known as Black Tuesday, that confirmed the severity of the four-day decline and alerted the world to the fact that not all was well with the U.S. economy. Those who appreciate historical rhythm will probably be aware that the most intense part of the subsequent depression was the four years from 1930 through 1933 that Milton Friedman described as the Great Contraction. Although 1929 marked the beginning of the Great Depression, it is important to understand that very few people, let alone politicians or economists, recognized at the time that what they were experiencing was the Great Depression.

RGD: release the hounds

This is the official starting gun for the Amazon book bomb for The Return of the Great Depression. If you’re interested in buying it, either for yourself or for someone else, I’d encourage you to order a copy from Amazon in the next 12 hours. Its initial ranking was 19,795 overall and 50 in Economic History, so that’s the starting point. If you’re keeping track of the ratings as well as your fantasy team, feel free to post them here as they change on an hourly basis. I think 1,000 and 10 would be an excellent objective; anything above that would be a smashing success.

By way of encouragement, I’d like the Dread Ilk to be the first to know about the dedicated book site, which was developed for RGD by WorldNetDaily. In addition to featuring a collection of my WND columns related to the economic crisis dating back to 2002, it also has some economic prediction trackings – including a rather nice one in 2008 that I’d completely forgotten – scheduled events, reviews, and an economics blog where I will be posting daily. The official publication date isn’t until Thursday, but I believe that WND intends to announce the book site tomorrow. Some additional content, such as YouTube videos, will likely appear on the site in the relatively near future. I also plan to make some of the spreadsheets I used in producing the charts for the book available for download from the site as well.

I very much appreciate the encouragement that people here have shown throughout the writing of RGD and I hope that you will find that it does not disappoint you. It is not a massive book, but it is most definitely a data-rich one. And we should probably all hope that it is a massively incorrect one.

UPDATE – Thank you very much if you participated in the Amazon launch last night. It was a huge success and significantly exceeded my hopes for it by reaching #90 overall and #5 in Economics. You even made it the #1 Mover and Shaker on Amazon! I appreciate the confidence you have shown in the book and will look forward to hearing your thoughts on it after it arrives and you read it.

MFL Week 6

118 Judean Front (5-1)
29 Black Mouth Curs (3-3)

85 Alamo City Spartans (4-2)
35 Valders Valkyries (4-2)

79 Winston Reverends (3-3)
49 Mounds View Meerkats (4-2)

104 Masonville Marauders (2-4)
64 Bane Silvers (2-4)

82 Burns Redbeards (2-4)
54 Greenfield Grizzlies (1-5)

VP-AFL

87.70 Masonville Marauders (5-1)
67.55 South Plains Storm (2-4)

103.25 Village Valkyries (4-2)
88.85 Oakies (2-4)

144.80 The Thunder (4-2)
99.60 Lesbian Dorito Night (5-1)

135.70 Cranberry Bogs (2-4)
62.60 COS McRays (1-5)

146.00 Supernaut’s Jihad (2-4)
126.25 Az Thunder Chickens (3-3)

This will serve as your open NFL thread for today. I know you’re all as excited about Michael Crabtree’s debut as I am. I have to confess to being very nervous about what Big Ben may be able to do against a Winfield-less Vikings secondary. Fortunately, Pittsburgh offensive line is pretty bad, so the big question today appears to be if the Vikings front four can get to the quarterback before the secondary collapses.

The NYT attempts to butch up Obama

Yeah, not so much:

The suspicion flared in recent weeks — and not for the first time — after President Obama was criticized by women’s advocates and liberal bloggers for hosting a high-level basketball game with no female players. The president, after all, is an unabashed First Guy’s Guy. Since being elected, he has demonstrated an encyclopedic knowledge of college hoops on ESPN, indulged a craving for weekend golf, expressed a preference for adopting a “big rambunctious dog” over a “girlie dog” and hoisted beer in a peacemaking effort.

I can’t wait until they try to dress him in a leather motorcycle jacket and put him on a Harley. It will be Dukakis-in-a-tank times ten. Love him or loathe him, George W. Bush was a guy’s guy. I despised the man and his disastrous presidency, but I can’t honestly say that I’d object to him coming over to watch the game with the guys. Whereas you know Obama would prefer be in the kitchen drinking white zinfandel and exchanging arugula recipes with the women.

This piece tells you more about the alienation of the New York Times from all things masculine than it does about the Obama administration. It reminds me of the time that the Chilliette’s girlfriends from San Francisco were concerned that her Scandinavian computer programmer fiance was “too macho” If Obama was a real guy’s guy, he’d respond by inviting some of the women who have been critical of him to the next basketball game, then blowing them off the court. And then, in a month or two, hosting a game of tackle football in the snow.

Finishing off Euthyphro’s dilemmas

I was a little disappointed that drj wasn’t able to come back and finish our discussion of the Euthyphro Dilemma the other day. Drj made an interesting case for distinguishing between the Dilemma, referring to the Socratic dialogue, and the dilemma, referring to the logical structure of the argument that is the conclusion of the Dilemma. Now, I still take issue with the validity of attempting to utilize the dilemma ex nihilo and ignoring both the integral flaws and specifics of the Dilemma, but since drj and others were willing to concede that a) the Dilemma does not apply to a non-polytheistic situation and b) Socrates was artificially narrowing the definition of “the pious” in order to create the dilemma, I was willing to consider the dilemma in its various modern formulations.

After being requested to provide a modern formulation, drj gave us this one: “Is that which is moral commanded by God because it is moral, or is it moral because it is commanded by God?”

This formulation avoids several problems with the Dilemma, since the substitution of “moral”, “commanded”, and “God” for “the pious”, “loved”, and “gods”, not only avoids the problem that caused Socrates to twice narrow his definition of “the pious”, but further narrows the key definition by limiting it to actions alone. When I responded that a similar formulation – Is that which is science performed by scientists because it is science or is it science because it is performed by scientists? – does not cause anyone to insist that science does not exist or that scientists cannot perform science, drj argued that it is not the mere fact of the tautology that matters, but rather, the specific implications of which horn is selected for the relevant subjects.

That conclusion doesn’t arise by simply formulating the argument – it is proposed to come about after one picks the second horn of the dilemma. If one accepted the second horn in your science version, than yes, science would then be simply defined as whatever scientists do. If one were to then say the phrase “scientists are very scientific”, it would appear to have lost any substantive meaning.

As for the first horn, I’m not sure it your version has the same issues that the monotheistic dilemma does. It makes sense to pick the first horn, but doing so simply doesn’t raise any controversial issues about the nature of a scientist or science, as it does with theism and morality.

Scientists do practice science because it is science, but not everything they do is science. It poses no problem for the scientist to say that he is constrained in his actions as a scientist, to the rules of science. It however, might pose a problem for certain claims about the monotheistic God, since it suggests that God is actually subject to external rules (just like the scientist).

But first, this explanation removes the idea that the argument’s core logical structure is the relevant part. Moreover, the idea that a scientist is limited to the scientific method in performing science is not quite as uncontroversial as drj suggests, because acceptance of the first horn would eliminate everything from string theory to evolution from the realm of the scientific. Second, another formulation will suffice to demonstrate that the logical structure of the argument poses no theological or philosophical problems for either morality or God.

“Is that which is legal legislated by the legislature because it is legal, or is it legal because it is legislated by the legislature?”

As with the modern formulation, the answer here is quite obviously the second horn of the “dilemma”. Judicial- and executive-branch encroachment on the legislative function notwithstanding, the legality of a law depends solely upon the fact that it was legislated by the relevant legislature. Nor can there be any question that a legislature has the power to set itself above the legality of its own laws since we see Congress doing this on a regular basis. And yet, no sane being would claim that this somehow calls into question the existence or the substantive meaning of either the law or the legislature.

An act which was not legal yesterday is transformed into legality by the act of legislation. So, unless one genuinely wishes to argue that there is no substantive meaning to saying “that which is legal is legal because it is legislated by Congress”, one cannot possibly argue that there is no substantive meaning to saying “that which is moral is moral because it is commanded by God.”

And therefore, Euthyphro’s Dilemma and Euthyphro’s dilemma are defeated, both the Socratic argument as well as the modern logical structure. Should drj or anyone else wish to take exception to this conclusion, I invite them to demonstrate any flaws in my reasoning.

RGD book bomb tomorrow

Are you in? It’s precisely 26 hours away… 12 noon to 12 midnight central. WND mentioned the book in an email last week, which resulted in RGD shooting all the way up to #13 in Economics – two positions above our favorite Nobel Prize winner’s latest – so it will be interesting to see how things go tomorrow. Whether you’re buying the book tomorrow or not, stop by as I’ll be providing a sneak preview of the site where I’ll be doing daily economics-only blogging for the next few months. This will not have any affect on the blogging here as what will be posted there is going to be the more wonkish sort of thing with which I seldom see fit to annoy everyone here.

In other words, we’re talking pure chart-and-spreadsheet porn for the stat sickos. You know who you are. And on that edifying note, I will leave you with Jonah Goldberg’s verdict on the book.

“Vox Day is a punk rock Jeremiah who knows how to use a spreadsheet. In The Return of the Great Depression, he aims his voracious mind at our economic predicament and makes a powerful and well-documented case for why Faulkner was right: The past is never dead. It’s not even the past.”
—Jonah Goldberg, author of Liberal Fascism

The “conservatives” editing NRO

NRO’s Editors acted like panicked little girls who knew nothing about economics, history, or politics when they endorsed the banking bailouts last November. Now that the government has spent hundreds of billions on the financial institutions and assorted other corporations, and in some cases owns them outright, they want to suddenly rediscover their long-lost principles in order to argue that limiting executive pay is somehow a sin against capitalism and small government:

Three things about the Obama administration’s publicity-seeking move to curb executives’ pay at bailed-out companies: It is inevitable, it is stupid, and it is inevitably stupid…. TARP was an emergency measure. The emergency has subsided, and the first order of business is restoring at least some separation between Washington and Wall Street, between political power and the private economy. The love of power can prove at least as corrupting as the love of money, and the American political class does not seem likely to resist either temptation, much less both at once.

Given that the “emergency measure” cop-out has been a known scam since Marius was scaring the Romans into throwing out their law against repeat consulships with the threat of a German invasion, that little bit of attempted posterior-covering isn’t convincing. The sell-outs supported the bailouts, which tells you all you need to know about the depth of their commitment to capitalism, small government, the Constitution, and American liberty. Obama’s decision to slash executive pay at bailed-out companies falls far short of what he should do – shut the corporations down and prosecute those guilty of committing fraud – but interrupting the executive feeding frenzy is far more justifiable than the original bail-outs ever were.

This column is a disgusting display of true colors by false conservatives who sold out whatever conservative principles they once held in service to Wall Street. Where on Earth do they think these “talented” executives are going to go if they are legally prevented from shoveling millions in taxpayer dollars to themselves? Move to Swaziland and utilize their highly refined lobbying “skills” there?

Speaking of bailed-out, government-owned banks, Karl Denninger notes something very fishy is going on at Citi and suspects another financial meltdown is in the works:

* Standard “purchase” interest rate is going to 29.99%.

* The “default rate” is also now 29.99%.

I have since confirmed that this letter is not just going to people who have had credit “challenges”. Indeed, this appears to be a blanket change on the part of Citibank. I now have multiple copies from people who assert that they have 750+ FICOs and have never missed a payment on this or any other obligation – the “paragon” of so-called “responsible” credit use. All of the letters are identical…. Perhaps what we’re really seeing is a business reacting to hidden deterioration of asset bases that are not known by investors and the public due to the legitimation of bogus accounting that happened this last March, but which is known by company executives!

Why do I believe this is a plausible, even likely explanation for this behavior by Citibank? That’s simple: This sort of “terms change”, which is an effective declaration of default even against those who haven’t defaulted (see above; the same 30% rate is being applied to defaulted and non-defaulted accounts!), will drive two consumer behaviors that could ultimately destroy Citibank’s credit card business and perhaps the bank as a whole:

1. Those who can transfer balances out somewhere else and/or pay them off will immediately do so. Nobody is going to pay a 30% interest rate and an imposition of default rates on non-defaulted balances willingly and on purpose unless they have no other choice.

2. A significant number of people, on receipt of this notice and understanding what it means (a declaration that non-defaulted accounts are being charged the same penalty rate as a defaulted account!) will immediately go out and charge up the entire unused balance on their card and then intentionally default.

This whole “recovery” theme and corresponding market rally has stink, stank, stunk like putrifying fish from the start. I don’t know how much longer the Fed will be able to prop it up, but I very much doubt it’s going to last another six months.