Libertarians From The United States

"I omit from consideration here the fact that people who demand neutrality in any situation are usually not neutral, but in favor of the status quo."

"Stalinism is worse than fascism, more ruthless, barbarous, unjust, immoral, anti-democratic, unredeemed by any hope or scruple, ... better described as superfascist."

"More goods and fewer people is the slogan I should like to see carried at the head of humanity's march into the future."

"Stalinism, as we have seen, contains all of the evils of Nazism and Fascism, most of them in extremer form."

"What happened here is the most significant, as it is the most devastating human thing that has happened in America since Sherman marched to the sea."

"A liberal mind is a mind that is able to imagine itself believing anything."

"I still think the worst enemy of human hope is not brute facts, but men of brains who will not face them."

"Hegelism is like a mental disease—you cannot know what it is until you get it, and then you can't know because you've got it."

"Marxists profess to reject religion in favor of science, but they cherish a belief that the external universe is evolving with reliable, if not divine, necessity in exactly the direction in which they want to go."

"The backers of Hitler in Germany made the same mistake about the Nazi party that the workers and soldiers in Petrograd made about the Bolshevik party. Each group believed that this new brutal, rabid, monolithic fighting gang, on achieving power, would promote, as had been promised, its enlightened interests."

"An honest, bold, loyal, and within its limits extremely highbrow attempt to produce through common ownership a society of the Free and Equal, produced a tyrant and a totalitarian state;…"

"The Masses marked, I have been told, the first appearance of "realism" in an American magazine. But I was ignorant of, and indifferent to, schools of art and literature. Of the new movement in art represented by John Sloan, George Bellows, and the other pupils of Robert Henri, I had never heard."

"No monetarist, certainly not Friedman, welcomed this side-effect of monetary restraint. But then again, had Friedman been listened to earlier (and had the likes of Paul Samuelson been ignored), things would never have come to this tragic stage. By way of analogy, should we blame those who would end the war in Iraq, and who opposed it all along, for the tragic consequences that are likely to follow any rapid U.S withdrawal?"

"In one respect, however, I agree that monetarism was wrong, namely, to the extent that it failed to recognize the need to allow inflation to occur to the extent that it was solely due to falling output or productivity—a case I have argued, along with the symmetrical one for letting prices fall as productivity improves, in my IEA pamphlet Less Than Zero."

"It is indeed true that the reduction of inflation came at a big price—that Volcker's tightening, for instance, succeeded in lowering inflation only in the wake of a severe recession. But this possibility was, first of all, one concerning which monetarists were perfectly aware: they understood the danger that, once inflation, and accelerating inflation especially, came to be anticipated by the public, putting the breaks on money growth would result in prices and wages continuing for some time to rise beyond their new, less-rapidly rising equilibrium values, with a consequent rise in unemployment."

"Although I realize that Austrian-school economists have themselves been highly critical of monetarism, many of its most fundamental claims are in fact fully consistent with their own understanding of monetary theory. Indeed, back in the 1970s the difference between Austrian and monetarists writings about money seemed trivial compared to the difference between them and the writings of other (broadly "Keynesian") economists. I recall very well how I myself got "deprogrammed" from mainstream thinking about money and inflation by reading Henry Hazlitt's wonderful book, The Inflation Problem, and How to Resolve It . Hazlitt was, of course, a thoroughgoing Misesian. Yet no one who reads his book can fail to note the many crucial similarities between his arguments and those of Milton Friedman concerning the same subject."

"Your friend, rather perversely I think, refers to the "disastrous results" that followed the monetary tightening of Volcker and other more monetarist-minded central bankers without even hinting at the facts that that the tightening was aimed at bringing down inflation rates, and that it succeeded remarkably well in doing precisely that. In other words, the tightening did precisely what monetarism said it would do, and what monetarists' critics at the time, wedded to the view that monetary policy was ineffective, and that inflation was entirely caused by OPEC (or by unions, or by anything except monetary policy) insisted it could not do. And yet your friend imagines that the experience proved the monetarists wrong!"

"It is with considerable reluctance that I criticize the monetarists, because, though I consider their proposed monetary policy unfeasible, they are after all much more nearly right in their assumptions and prescriptions than the majority of present academic economists. The simplistic form of the quantity theory of money that they hold is not tenable; but they are overwhelmingly right in insisting on how much "money matters," and they are right in insisting that in most circumstances, and over the long run, it is the quantity of money that is most influential in determining the purchasing power of the monetary unit. Other things being equal, the more dollars that are issued, the smaller becomes the value of each individual dollar. So at the moment the monetarists are more effective opponents of further inflation than the great bulk of politicians and even putative economists who still fail to recognize this basic truth."

"I do not mean to suggest that all those who call themselves monetarists make this unconscious assumption that an inflation involves this uniform rise of prices. But we may distinguish two schools of monetarism. The first would prescribe a monthly or annual increase in the stock of money just sufficient, in their judgment, to keep prices stable. The second school (which the first might dismiss as mere inflationists) wants a continuous increase in the stock of money sufficient to raise prices steadily by a "small" amount—2 or 3 per cent a year. These are the advocates of a "creeping" inflation. … I made a distinction earlier between the monetarists strictly so called and the "creeping inflationists." This distinction applies to the intent of their recommended policies rather than to the result. The intent of the monetarists is not to keep raising the price "level" but simply to keep it from falling, i.e., simply to keep it "stable." But it is impossible to know in advance precisely what uniform rate of money-supply increase would in fact do this. The monetarists are right in assuming that in a prospering economy, if the stock of money were not increased, there would probably be a mild long-run tendency for prices to decline. But they are wrong in assuming that this would necessarily threaten employment or production. For in a free and flexible economy prices would be falling because productivity was increasing, that is, because costs of production were falling. There would be no necessary reduction in real profit margins. The American economy has often been prosperous in the past over periods when prices were declining. Though money wage-rates may not increase in such periods, their purchasing power does increase. So there is no need to keep increasing the stock of money to prevent prices from declining. A fixed arbitrary annual increase in the money stock "to keep prices stable" could easily lead to a "creeping inflation" of prices."

"But this brings us to what I consider the fatal flaw in the monetarist prescriptions. If the leader of the school cannot make up his own mind regarding what the most desirable rate of monetary increase should be, what does he expect to happen when the decision is put in the hands of the politicians? … The fatal flaw in the monetarist prescription, in brief, is that it postulates that money should consist of irredeemable paper notes and that the final power of determining how many of these are issued should be placed in the hands of the government—that is, in the hands of the politicians in office. The assumption that these politicians could be trusted to act responsibly, particularly for any prolonged period, seems incredibly naive. The real problem today is the opposite of what the monetarists suggest. It is how to get the arbitrary power over the stock of money out of the hands of the government, out of the hands of the politicians."

"In the last decade or two there has grown up in this country, principally under the leadership of Professor Milton Friedman, a school calling itself the Monetarists. The leaders sometimes sum up their doctrine in the phrase: "Money matters," and even sometimes in the phrase: "Money matters most.""

"Suppose a clothing manufacturer learns of a machine that will make men’s and women's overcoats for half as much labor as previously. He installs the machines and drops half his labor force.This looks at first glance like a clear loss of employment. But the machine itself required labor to make it; so here, as one offset, are jobs that would not otherwise have existed. The manufacturer, how ever, would have adopted the machine only if it had either made better suits for half as much labor, or had made the same kind of suits at a smaller cost. If we assume the latter, we cannot assume that the amount of labor to make the machines was as great in terms of pay rolls as the amount of labor that the clothing manufacturer hopes to save in the long run by adopting the machine; otherwise there would have been no economy, and he would not have adopted it.So there is still a net loss of employment to be accounted for. But we should at least keep in mind the real possibility that even the first effect of the introduction of labor-saving machinery may be to increase employment on net balance; because it is usually only in the long run that the clothing manufacturer expects to save money by adopting the machine: it may take several years for the machine to "pay for itself."After the machine has produced economies sufficient to offset its cost, the clothing manufacturer has more profits than before. (We shall assume that he merely sells his coats for the same price as his competitors, and makes no effort to undersell them.) At this point, it may seem, labor has suffered a net loss of employment, while it is only the manufacturer, the capitalist, who has gained. But it is precisely out of these extra profits that the subsequent social gains must come. The manufacturer must use these extra profits in at least one of three ways, and possibly he will use part of them in all three: (1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other industry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will increase employment."

"In brief, on net balance, machines, technological improvements, economies and efficiency do not throw men out of work."

"The spread-the-work schemes, in brief, rest on the same sort of illusion that we have been considering. The people who support such schemes think only of the employment they would provide for particular persons or groups; they do not stop to consider what their whole effect would be on everybody.The spread-the-work schemes rest also, as we began by pointing out, on the false assumption that there is just a fixed amount of work to be done. There could be no greater fallacy. There is no limit to the amount of work to be done as long as any human need or wish that work could fill remains unsatisfied. In a modern exchange economy, the most work will be done when prices, costs, and wages are in the best relations to each other."

"Let us begin with the simplest illustration possible: let us, emulating Bastiat, choose a broken pane of glass.A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? Fifty dollars? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $50 more to spend with other merchants, and these in turn will have $50 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $50 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $50 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye."

"So we have finished with the broken window. An elementary fallacy. Anybody, one would think, would be able to avoid it after a few moments’ thought. Yet the broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics. It is more rampant now than at any time in the past. It is solemnly reaffirmed every day by great captains of industry, by chambers of commerce, by labor union leaders, by editorial writers and newspaper columnists and radio commentators, by learned statisticians using the most refined techniques, by professors of economics in our best universities. In their various ways they all dilate upon the advantages of destruction."

"Though some of them would disdain to say that there are net benefits in small acts of destruction, they see almost endless benefits in enormous acts of destruction. They tell us how much better off economically we all are in war than in peace. They see “miracles of production” which it requires a war to achieve. And they see a postwar world made certainly prosperous by an enormous “accumulated” or “backed up” demand. In Europe they joyously count the houses, the whole cities that have been leveled to the ground and that “will have to be replaced.” In America they count the houses that could not be built during the war, the nylon stockings that could not be supplied, the worn-out automobiles and tires, the obsolescent radios and refrigerators. They bring together formidable totals.It is merely our old friend, the broken-window fallacy, in new clothing, and grown fat beyond recognition. This time it is supported by a whole bundle of related fallacies. It confuses need with demand."

"It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half. But to consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning. Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive. The bad economists rationalize this intellectual debility and laziness by assuring the audience that it need not even attempt to follow the reasoning or judge it on its merits because it is only “classicism” or “laissez-faire,” or “capitalist apologetics” or whatever other term of abuse may happen to strike them as effective."

"Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever. Whenever there is long-continued mass unemployment, machines get the blame anew. This fallacy is still the basis of many labor union practices. The public tolerates these practices because it either believes at bottom that the unions are right, or is too confused to see just why they are wrong. The belief that machines cause unemployment, when held with any logical consistency, leads to preposterous conclusions. Not only must we be causing unemployment with every technological improvement we make today, but primitive man must have started causing it with the first efforts he made to save himself from needless toil and sweat."

"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."

"Every man knows there are evils in this world which need setting right. Every man has pretty definite ideas as what these evils are. But to most men one in particular stands out vividly. To some, in fact, this stands out with such startling vividness that they lose sight of other evils, or look upon them as the natural consequence of their own particular evil-in-chief."

"The "Austrian" economists, more consistently than those of any other school, have criticized nearly all forms of government intervention in the market — especially inflation, price controls, and schemes for redistribution of wealth or incomes because they recognize that these always lead to erosions of incentives, to distortions of production, to shortages, to demoralization, and to similar consequences deplored even by the originators of the schemes."

"Clearly, there is a great deal in Becker’s legacy to be deeply disturbed about. But there is also something about Becker’s approach I find bracing. A lot of people are greatly offended by the implicit suggestion in Becker’s work that decisions like marrying, or having children, are economic transactions like any other — no different than buying a car or a pair of shoes. And of course those are entirely different categories of decisions — in one sense. But marital relationships, parent-child relationships, decisions to marry and divorce, etc., are also profoundly economic acts. That can sometimes be hard to see, given the pervasiveness of sentimental claptrap about the family throughout American society. But Becker blasted through the Victorian detritus of all that bourgeois romantic ideology to analyze the ways in which marital and reproductive behaviors are fundamentally rooted in a utilitarian economic calculus. You could appreciate his general approach without necessarily buying into the details of his argument. That was a real contribution, and even a radical one, after a fashion."

"I think Gary's work is focused on outcomes. Sometimes people react to it because they don't like it as a description of the process. They think about marriage; they think about what they went thought when you got married, and they say it didn't resemble Gary's model. One doesn't think, "Was I calculating what my wife could get or could produce?" No one thinks about getting married in these terms explicitly. But the idea is that somehow those considerations are sufficiently important that they must be incorporated into the process. Moreover, you can test the model, so that if the theory is off, the data will let you know about it."

"You can see why Foucault chose him as the ideal interlocutor. No one saw and stated more clearly the biopolitical dimensions of modern economic theory than Becker."

"[Gale and Shapley assumed that each person has] a given ranking [among] potential mates that determines rather than is determined by the equilibrium sorting."

"An efficient marriage market develops ‘‘shadow’’ prices to guide participants to marriages that will maximize their expected well-being. These prices, central to the analysis in this chapter and the subsequent one, are responsible for the more powerful implications found in these chapters than in traditional discussions of marriage. Some other approaches are evaluated in Chapter 4."

"The phrase ‘marriage market’ is used metaphorically and signifies that the mating of human populations is highly systematic and structured."

"This Chicago-style approach, sometimes known as ‘Price Theory’ because of the fundamental role that prices often play, is exemplified in the path-breaking work of Gary Becker, Ronald Coase, Milton Friedman, Sherwin Rosen, George Stigler, and many others. Price theory has shed light not only on the most fundamental topics of traditional economics (e.g. consumption, saving, taxation, regulation), but also pioneered the use of economic tools in studying a wide range of other human behavior (e.g. crime and corruption, discrimination, marriage)."

"The bumping of lower-quality men out of their marriages through competitive reductions in the incomes of higher-quality men continues until the incomes of the lowest quality men are reduced to their single levels."

"[ Milton Friedman was] the dominant member of the so-called Chicago school of economics [during his tenure at Chicago]... The economics department increasingly reflected his approach and interests. These included deep commitment to the truth, appreciation of markets and free enterprise, frank and blunt discussion, and enormous zeal to convince the heathen. But most important was the commitment to economic analysis as a powerful instrument for interpreting economic and social life."

"I conclude by listing several main points of this essay: 1. Human capital is of great importance in the modern economy. 2. Human capital has become of much greater significance during the past two decades. 3. Human capital is crucial to the international division of labor. 4. Much unmeasured learning goes on in companies and by adults. 5. People need to invest in themselves during their whole lives. 6. Distance learning will become of crucial importance to the teaching and learning process. 7. Human capital stimulates technological innovations and the high-tech sector."

"[A] revenue-neutral carbon tax would benefit all Americans by eliminating the need for costly energy subsidies while promoting a level playing field for energy producers."

"Imagine each family as a kind of little factory--a multiperson unit producing meals, health, skills, children, and self-esteem from market goods and the time, skills, and knowledge of its members. This is only one of the remarkable concepts explored by Gary Becker in his landmark work on the family. Becker applies economic theory to the most sensitive and fateful personal decisions, such as choosing a spouse or having children. He uses the basic economic assumptions of maximizing behavior, stable preferences, arid equilibria in explicit or implicit markets to analyze the allocation of time to child care as well as to careers, to marriage and divorce in polygynous as well as monogamous societies, to the increase and decrease of wealth from one generation to another."

"His great mind is now still, but he lives on in the ideas he passed on to his students, colleagues, and friends. It has been said that only poets and songwriters are immortal, but as an economist, Jim’s work surely approaches immortality because it will continue to be read and discussed throughout time to come. We still read Adam Smith (at least some of us), and it is a good bet that over 200 years from now, young scholars will pore over Jim’s articles and books in search of ideas, insights, and inspiration. This may not be an eternity, but it is a very long half-life. Better yet, maybe some future political generation will see fit to put our fiscal house in order and in so doing pay homage to our memory of Jim Buchanan. Rest in peace."

"The basic idea of Buchanan's constitutional economics was that public decision really comes in two stages, not one: the constitutional stage, and the political stage. People generate constitutions that create an institutional environment constrained in ways that they perceive to be beneficial. This has implications for how we think about the subsequent political stage. It rejects that Lysander Spooner take on things that says that unanimous consent is required for just policy decisions, because people will consent to a constitutional arrangement where legislation passes with less than unanimous consent because they think that the whole package of policy that such an institutional environment produces is preferable to policy produced in a unanimous consent environment. You can think about it as a sort of nested optimization."

"The basic concern of Buchanan (e.g. Buchanan, 1975) is to deny that a libertarian position requires the making of ethical judgments of the kind made by social philosophers who 'play God'. ... It follows that liberalism is about determination of the 'correct' contractual procedures which will allow individuals to consent to intervention by government. That procedure, if it is to be compatible with an individualist position, requires, so far as is practically possible, unanimous consent. Therefore, the common procedure used by economists to identify a social welfare function which is then to be 'maximized' implicitly rejects the individualistic decision-making process, which is the only mechanism through which individuals both express preferences and have them acted upon. To claim that preferences can be revealed and acted upon by governments, unencumbered by individuals' consent, is to presuppose that they and their officials will always act in an enlightened and wholly disinterested way. It is a curious paradox that, in the light of Buchanan's distaste for Keynesian elitism (see Buchanan, 1991), there are elements in Keynes's rather fragmentary thinking on political matters which express a sympathy with an individualistic stance."

"Unlike Kenneth J. Arrow or Robert M. Solow, Buchanan is not a puzzle solver, but rather a system builder, someone who has come up with a whole new paradigm, an innovative way of looking at the world in general and at politics or collective choice in particular (see Horn, 2009, pp. 85–90.) As mentioned, the roots of this are to be found largely in his personal background and his experience and cultural inheritance as a Southerner. From the outset, what interested him more than anything else was how it is possible for people to live in society without infringing on each other’s rights."

"Buchanan’s work changed political economy in fundamental ways. Thanks to him and his colleagues, three things are true: No one who wishes to talk responsibly about politics can be ignorant of public choice theory. No one should ever invoke the language of market failure (including externalities) without having digested his work on government failure. And people who run around talking about the constitution better be able to understand something of his contributions to constitutional political economy."

"In short, if Buchanan's argument was that liberal demands for an ever expanding welfare state would lead to chronic deficits, history has shown him to be wrong. If the argument is that the desire for tax cuts and increased military spending, coupled with macroeconomic mismanagement, could lead to large deficits, there is a strong case."