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Volume 11, Issue 6: February 9, 2009
- Stimulus and Response
- U.S. Empire on the Road to Ruin
- China’s Policies a Net Plus for U.S. Economy
- This Week in The Beacon
- Independent Institute Seeks Student Interns
The extra-constitutional (and thus unconstitutional) “bailout” and “stimulus” programs of the Bush and Obama administrations during the present economic crisis bring to mind Herbert Hoover and Franklin Delano Roosevelt, whose failed interventions turned a recession into the Great Depression, according to Robert Higgs, Senior Fellow in Political Economy at the Independent Institute. Yet, further back in U.S history, one can find a vastly superior approach to dealing with economic fluctuations – one that brought the country phenomenal economic growth during the first century and a half of its existence.
“As recently as the major recession of 1920–21, the government took a hands-off position, and the downturn, though sharp, quickly reversed itself into full recovery,” Higgs writes in an op-ed for the Christian Science Monitor.
In another recent article, Higgs argues that although the policies of our leaders in Washington, D.C., are ill designed to restore health to an ailing economy, they are well suited to making the leaders appear to be “doing something.”
“They are pouring credit madness on credit madness because they have no real understanding of how the economic world actually works,” writes Higgs, “and, even if they understand, they are politically beholden to the owners and managers of failing economic behemoths who profited handsomely from the artificial prosperity of the boom and are now staring into the abyss.”
Many questions are being raised about the stimulus package’s contents and efficacy. Hardly anyone, however, is asking the most importation question: Should the federal government be doing any of this?
“Instead of Stimulus, Do Nothing – Seriously,” by Robert Higgs (2/9/09)
“Watching Our Rulers Destroy Our World,” by Robert Higgs (2/4/09)
Depression, War, and Cold War: Studies in Political Economy, by Robert Higgs
Neither Liberty nor Safety: Fear, Ideology, and the Growth of Government, by Robert Higgs
Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Robert Higgs
Robert Higgs’s postings on The Beacon
The elites of the U.S. empire are leading Americans down the road to ruin by overextending the government both fiscally and militarily. The French did the same in the years after World War II when they tried to retake Indochina and suppress Algerian independence. The British did the same when they invaded Egypt in 1956. The U.S. will follow suit if it “does not retract its informal overseas empire, reduce the bloated defense budget, and act with more humility overseas,” writes Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty.
More than half of the discretionary spending in the federal budget is for military-related purposes. This pool of funds should and will become a large target for Obama’s future fiscal restraint, according to Eland, although cutting it to proper size is at odds with Obama’s proposal to bolster the U.S. military campaign in Afghanistan.
“He wants to double down on a nation-building conflict that is stoking Islamist fundamentalism and will be much harder to ‘win’ than Iraq (although the U.S. hasn’t won Iraq by a long shot),” writes Eland. “Obama needs to wise up, totally withdraw from both Iraq and Afghanistan, focus on finding bin Laden in Pakistan, withdraw from the U.S. Empire, and dramatically slash the U.S. defense budget.”
“Guns and Butter (Again),” by Ivan Eland (2/2/09) Spanish Translation
Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland
The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland
Announcement: “Book TV” on C-Span 2 will be airing last month’s Independent Policy Forum, “Assessing the Bush Presidency and the Obama Promises,” featuring Ivan Eland, Ron Paul, and Richard Shenkman, Feb. 16, 8 AM and 8 PM Eastern Time.
Leaders of the People’s Republic of China are blameworthy for many misdeeds, but the U.S. recession is not among them. In fact, contrary to the claims of some pundits and politicians, China has actually helped the United States with respect to the current economic mess, as Alvaro Vargas Llosa explains in his latest syndicated column for the Washington Post Writers Group.
“Had it not been for Chinese, Japanese and British investors, the U.S. would have gone bankrupt,” writes Vargas Llosa. “Given the amount of new debt that Washington is contemplating in order to ‘rescue’ Americans from the smartest thing they have done in a long time – save some money and try to adjust – China-bashers should be aware that they will need foreign savers more than ever.”
China’s comparatively high saving rate has helped finance U.S. deficits, but it long pre-dates the U.S. economic crisis. China’s personal saving rate was 30 to 40 percent of income for the past decade. (If you count government and corporate savings, its total saving rate was almost 50 percent.) By comparison, the real personal saving rate in the U.S. was near zero until the economy worsened. “Whether one subscribes, as I do, to the view that the consumers’ frenzy and Wall Street’s lunacy originated in the Federal Reserve’s policy of easy money and the lowering of lending standards or, as many others think, in financial deregulation, the key decisions were made by Americans who were (or seemed) perfectly awake.”
“China-Bashing,” by Alvaro Vargas Llosa (2/04/09) Spanish Translation
Lessons from the Poor: Triumph of the Entrepreneurial Spirit, edited by Alvaro Vargas Llosa
Liberty for Latin America: How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa
Here are the past week’s offerings from The Beacon, the web log of the Independent Institute:
- “Has ‘Historians Against the War’ Become a Front for the Democratic Party?,” by David Beito (2/9/09)
- “Are We All Socialists Now? Not at All,” by Robert Higgs (2/9/09)
- “The Politics of ‘Jobbery’: 1883–2009,” by Jonathan Bean (2/6/09)
- “A Stable, United Iraq Is Hardly a Sure Thing,” by Carl Close (2/6/09)
- “Guantánamo and the Permanent Bureaucracy,” by Anthony Gregory (2/6/09)
- “Continuity We Can Believe In,” by Anthony Gregory (2/5/2009)
- “Nancy Pelosi: ‘Every Month 500 million Americans Lose Their Jobs,’” by David Theroux (2/4/09)
- “Craig Pirrong on Intertemporal Consumption,” by Peter Klein (2/4/09)
- “Booker and Barack,” by David Beito (2/2/09)
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