The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 13, Issue 35: August 30, 2011

1. George Selgin’s Good Money Now in Paperback
2. Eland Urges Realism about the Libyan Revolution
3. Barack Obama: Another Herbert Hoover?
4. No Silver Lining in Hurricane Irene
5. New Blog Posts

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ALERT: Senior Fellow Benjamin Powell to appear on Fox Business Network’s Freedom Watch with Judge Napolitano TONIGHT, August 29, at 8:00 and 11:00 pm ET, 5:00 and 8:00 pm PT.

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The Independent Institute is delighted to announce the publication of the paperback edition of George Selgin’s Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775–1821, winner of the 2009 Bronze Medal IPPY Award. It has long been maintained that governments alone are fit to coin money, but the story of the early decades of Great Britain’s Industrial Revolution disproves this conventional belief. In Good Money, Selgin (Professor of Economics, University of Georgia; Research Fellow, The Independent Institute) shows how private entrepreneurs solved the problems caused by the Royal Mint’s failure to provide enough silver and copper coins to meet the needs of a growing economy. Their solution? They began to mint coins themselves.

From 1787 to 1797, private merchants and industrialists issued 600 tons of custom-made “commercial” copper coin—more copper coin than the Royal Mint had supplied during the previous half century. The coins were struck by a score of private mintmasters, most of whom began as button makers. One of them, Matthew Boulton, owned the world’s largest and most technologically sophisticated mint, the first to employ steam power. Far from being inferior to official coins, Great Britain’s commercial coins were superior to them: they were heavier, more esthetically pleasing, and harder to counterfeit, making them merchants’ preferred choice to accept in trade.

The late Milton Friedman wrote, “George Selgin’s story of how private enterprise solved a monetary problem that threatened seriously to retard the Industrial Revolution is a splendid piece of historical analysis.” But Good Money not only examines the crucial role of private coinage in fueling Great Britain’s economic development, it also challenges beliefs upon which all modern government-currency monopolies rest. It thereby sheds light on contemporary private-sector alternatives to government-issued money, such as digital monies, cash cards, electronic funds transfer, and (outside of the United States) spontaneous “dollarization.” Good Money will fascinate readers of all backgrounds and persuasions, especially those with a prior interest in British history, monetary affairs, technological innovation, and heroic entrepreneurs.

Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821, by George Selgin

Read a detailed book summary.

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The Gadhafi regime appears to be on its last legs. The euphoria that has accompanied the rebels’ progress may prove to be short lived, however. If the United States and NATO send ground troops to help stabilize and rebuild Libya, Americans may see a replay of the bloodshed that followed the U.S. invasions of Afghanistan and Iraq. But even if that doesn’t happen, pressure will build for Washington to commit funds to help rebuild Libya, a prospect that would add to America’s fiscal woes, according to Ivan Eland, director of the Independent Institute’s Center on Peace & Liberty.

“Worst of all, we don’t really know what will come next in Libya,” Eland writes. “Gadhafi may look much better if radical anti-U.S. Islamists eventually take over the country.”

Political instability may come to the region even without an Islamist takeover. Libya, Eland notes, is reportedly missing some of the regime’s 20,000 portable anti-aircraft missiles. Officials in neighboring Chad and Algeria worry that some of the weapons have been smuggled into their countries and are now in the possession of al-Qaeda in the Islamic Maghreb, the North African affiliate of the 9/11 terrorist network. “So perhaps the removal of Gadhafi in Libya is not as much of a triumph as it first appears.”

Triumph in Libya, Not So Fast, NATO, by Ivan Eland (8/24/11)

The Empire Has No Clothes: U.S. Foreign Policy Exposed (Updated Edition), by Ivan Eland

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

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Historian Jonathan Bean finds strong parallels between Barack Obama and Herbert Hoover. Both were viewed by their supporters as extraordinarily intelligent and by their critics as know-it-alls whose wizardry failed to impress business leaders. More significantly, Obama and Hoover employed similar—and similarly unsuccessful—policies to restore economic growth.

Consider Hoover’s response to the economic contraction that followed the October 1929 stock-market collapse. “When the economy tanked, he increased government spending, cut taxes, bailed out businesses ‘too big to fail,’ and proposed a massive infrastructure bank to employ men in shovel-ready jobs,” Bean writes in the Washington Times. “Contemporaries called this stimulus package ‘priming the pump.’ Yet unemployment soared, and the GOP lost control of the House of Representatives in 1930. Hoover blamed his woes on the international economic situation and his political opponents. Sound familiar?”

Moreover, Hoover and Obama saw their popularity plummet after riding high early during their tenure. Recall the euphoria that greeted Obama’s electoral victory and the early months of his administration. Hoover, too, had been popular. But by 1931, people said Hoover “beat them down if they were in business, and his speeches sounded robotic,” Bean continues. “We all know Hoover’s legacy. It’s starting to look like ‘déjà vu all over again.’”

You’re Not Reagan, You’re Hoover, by Jonathan Bean (The Washington Times, 8/24/11)

Race and Liberty in America: The Essential Reader, edited by Jonathan Bean

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Last March, a few grossly mistaken pundits spouted off about the supposed economic benefits that would result from the deadly earthquake and even deadlier tsunami that devastated Tōhoku, Japan. But that natural disaster—like all destructive calamities—delivered no real benefits at all. None. Those events can only change how resources are deployed and how money is spent—capital goods and funds that would have been put to good use in the absence of disasters. But that fundamental truth, best explained a century and a half ago by Frederic Bastiat and popularized again in the mid-twentieth century by Henry Hazlitt, bears repeating. Natural disasters make us poorer, not wealthier, as Independent Institute Research Fellow Art Carden explains in his latest piece.

Nature’s calamities “might create new flows of spending, but those new flows of spending are created in order to replace destroyed wealth,” Carden writes at Forbes.com. “The resources that will go into repairing earthquake and hurricane damage are resources that have alternative uses—alternative uses that have to be given up.... The time and energy people will devote to rebuilding will be time and energy that won’t be devoted to new production.”

The broken window fallacy, as it is known, has been repeated throughout the centuries. At best (if one may use the term), the fallacy “merely” misleads people about the true nature of wealth creation. At worst, the fallacy’s underlying premise has been used to rationalize all manner of economic destruction. Don’t let pundits propagate it!

The Earthquake Wasn’t Good for the Economy. Hurricane Irene Won’t Be, Either., by Art Carden (Forbes.com, 8/25/11)

“Walking on Broken Glass?” by Art Carden (Forbes.com, 3/12/11)

Disaster Relief as Bad Public Policy, by William F. Shughart II (The Independent Review, Spring 2011)

Larry Summers Claims Japanese Disaster Will Boost Economy, by David J. Theroux (3/17/11)

“The Use of Knowledge in Natural-Disaster Relief Management,” by Peter T. Leeson and Russell S. Sobel (The Independent Review, Spring 2007)

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From The Beacon:

From MyGovCost News & Blog:

The Independent Institute’s Spanish-language blog is available here.

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