Why Did Edmund Burke so Inspire Leonard Read?"

Why Did Edmund Burke so Inspire Leonard Read?"

01/12/2018Gary Galles

Leonard Read, founder, leader and long-time heart and soul of the Foundation for Economic Education, and one of liberty’s most insightful adherents, took seriously his belief that the purpose of one’s life was to grow. He sought out sources of light, wherever he could find them, and incorporated them into his thoughts.

Those familiar with Read, whose works are now easily available online, know that he peppered quotations throughout his work. Those quotations provide us an added window into his thoughts. The person Read quoted most frequently in his books was Edmund Burke, which reveals a great deal about Read. In How Do We Know?, Read said “I am often criticized — in a friendly way — for so copiously quoting those whose wisdom is far superior to mine, Edmund Burke, for instance…why not share the wisdom of seers—those who have seen what most of us have not—with freedom aspirants!”

So as we mark Burke’s January 12 birthday, consider some of the words that inspired Leonard Read to cite Burke so copiously:

He who profits of a superior understanding, raises his power to a level with the height of the superior understanding he unites with.

How often has public calamity been arrested on the very brink of ruin, by the seasonable energy of a single man? Have we no such man amongst us? I am as sure as I am of my being, that one vigorous mind without office, without situation, without public function of any kind, I say, one such man, confiding in the aid of God, and full of just reliance in his own fortitude, vigor, enterprise, and perseverance, would first draw to him some few like himself, and then that multitudes, hardly thought to be in existence, would appear and troop about him.

No government ought to exist for the purpose of checking the prosperity of its people or to allow such a principle in its policy.

It is a general error to suppose the loudest complainers for the public to be the most anxious for its welfare.

It is not only our duty to make the right known, but to make it prevalent.

I hope to see the surest of all reforms, perhaps the only sure reform—the ceasing to do ill.

Example is the school of mankind. They will learn at no other.

But his unbiased opinion, his mature judgment, his enlightened conscience, [your representative] ought not to sacrifice to you, to any man, or to any set of men living…They are a trust from Providence, for the abuse of which he is deeply answerable. Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.

The only thing necessary for the triumph of evil is for good men to do nothing.

Whenever a separation is made between liberty and justice, neither…is safe.

Power gradually extirpates from the mind every human and gentle virtue.

Whatever each man can separately do, without trespassing on the rights of others, he has a right to do for himself.

All men have equal rights, but not to equal things.

The great difference between the real statesman and the pretender is, that one sees into the future, while the other regards only the present; the one lives by the day and acts on expediency; the other acts on enduring principles and for immortality. 

Depend upon it, the lovers of freedom will be free. 

Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites; in proportion as their love of justice is above their rapacity; in proportion as their soundness and sobriety is above their vanity and presumption; in proportion as they are more disposed to listen to the counsels of the wise and good, in preference to the flattery of knaves. Society cannot exist unless a controlling power upon will and appetite be placed somewhere; and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.

The greater the power, the more dangerous the abuse.

Tell me what are the prevailing sentiments that occupy the minds of your young men and I will tell you what is to be the character of the next generation.

Having looked to government for bread, on the very first scarcity they will turn and bite the hand that fed them.

The people never give up their liberties but under some delusion.

All who have ever written on government are unanimous that among a people generally corrupt liberty cannot long exist.

If circumspection and caution are a part of wisdom, when we work only upon inanimate matter, surely they become a part of duty too, when the subject of our demolition and construction is not brick and timber, but sentient beings, by the sudden alteration of whose state, condition and habits, multitudes may be rendered miserable…the true law-giver ought to have an heart full of sensibility. He ought to love and respect his kind, and to fear himself.

Leonard Read quoted Edmund Burke in roughly two-thirds of his books. And when you consider those quotes in connection to Read’s work, you can see why Read held Burke in such high esteem and echoed so many of his views.

In The Path of Duty, Read commented on Burke’s views of the American experiment in liberty — “He was sympathetic to and promotive of the American colonies and had no hesitancy in proclaiming his position. Stalwart! He was blest with foresight, seeing into the future: America, home of the free and land of the brave! Here was found the purest practice of freedom in world history, and Burke’s support was based on ‘enduring principles and for immortality.’ In my reading of history, never before or since his time has there been a greater statesman.” In The Freedom Freeway, Read wrote “Edmund Burke has put the solution for disunion better than anyone known to me.” 

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The Mises Lecture That Inspired Ron Paul to Run for Congress

04/18/2018Tho Bishop

It's amazing what you can find in the Mises digital archives.

Here is a lecture by Ludwig von Mises on Socialism that he gave at the University of Houston. In the audience was a doctor from Lake Jackson, TX. After listening to this talk, he decided to run for Congress.

This was the only time Ron Paul met Mises, as he notes in his book Mises and Austrian Economics: A Personal View.

Because of my interest in individual liberty and the free market, I became closely associated over the years with friends and students of Mises, those who knew the greatness of Mises from a long-term personal friendship with him. My contact, however, was always through his writings, except on one occasion. In 1971, during a busy day in my medical office, I took a long lunch to drive 60 miles to the University of Houston to hear one of the last formal lectures Mises gave—this one on socialism. Although 90 at the time, he was most impressive, and his presentation inspired me to more study of Austrian economics.

Between Mises's Austrian accent and the recording quality of the 70s, it's not the easiest to understand. But still, a very neat piece of history. 

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Historical Controversies Podcast: Season 3

04/18/2018Mises Institute

Today, Chris Calton kicked-off the third season of his Historical Controversies podcast, which will recount the controversial history of the American Civil War.

The complete series (including Seasons 1 and 2) is available on iTunes, YouTube, Soundcloud, Google Play, Stitcher, Mises.org, and via RSS feed.

If you enjoy the podcast, please leave a positive rating and review.

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Peak Politico

04/18/2018Tho Bishop
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Trump Nominates Another Obama-Approved Federal Reserve Nominee

04/17/2018Tho Bishop

In no area has President Trump differed more from his campaign rhetoric than the field of monetary policy. Yesterday Trump announced the nominations of Richard Clarida and Michelle Bowman to the Federal Reserve Board of Governors, with the former to fill the role of Vice Chair. Clarida’s nomination in particular illustrates how uninspiring Trump’s appointments have been, as he was a finalist for a Fed governorship under Obama until he withdrew his name from consideration. Interesting enough, doing so resulted in Jay Powell, Trump’s new Fed Chair, to fill the position.

Richard Clarida, a former Bush Treasury official, currently serves as a Columbia University professor and an adviser to Pacific Investment Management Co.  He is a New Keynesian who has published a great deal on “Optimal Monetary Policy.” (Guido Zimmerman has an interesting QJAE article on the topic which references some of Clarida’s work.)

In terms of his policy views, he offers an interesting contrast to fellow Marvin Goodfriend – whose nomination has currently been stalled in the Senate. To Clarida’s credit, he reject’s Goodfriend’s support for negative interest ratesgoing so far as to question their legality for the Fed. In his advisory role at Pimco, his analysis has questioned the effectiveness of contemporary monetary activism. As he co-wrote in a June 2016 analysis:

In recent years we have described “riding a wave” of central bank interventions, as a range of unconventional policies have been rolled out across countries, driving asset price returns. This wave-riding has worked well in the past. Looking out over the secular horizon, however, diminishing returns to central bank interventions – and the potential for policy activism to do more harm than good, notably in the case of negative policy rates – advise against such an approach.

Of course he also differs in one area where Goodfriend is good, the use of the Fed’s balance sheet. Goodfriend has warned that the Fed’s buying of non-Treasury assets, like mortgage backed securities, gets it into the business of allocating capital. Instead, Clarida thought the Fed was too modest in buying up assets following the financial crisis.

As Matthew C. Klein  of Barons notes:

Clarida thought the Fed could effectively respond to downturns by committing to buying as many bonds – including mortgage bonds and corporate bonds – as necessary to "cap" interest rates at the levels it wants:

Much of the existing literature either misses entirely or under-appreciates how robust an LSAP [large-scale asset purchase] program can be at lowering bond yields and/or credit spreads...a central bank can everywhere and always put a floor on any nominal asset price (or set of nominal asset prices) for as long as it wants...So long as the central bank is willing to buy an unlimited volume of those bonds (potentially including the entire outstanding stock) at the interest rate it wishes to put a ceiling on, it will succeed. And of course, the above reasoning also applies directly to an Lsap program targeted at corporate bonds or mortgage backed securities.

The Fed successfully capped U.S. government borrowing costs in the 1940s, and this experience was cited by the Fed's staff in mid-2003. While the idea failed to gain traction among American policymakers, the Bank of Japan has successfully used "yield curve control" to limit yields on Japanese government bonds since 2016. Clarida's position in 2010 suggests he would be keen on something similar, perhaps also including mortgage bonds and corporate bonds, should he be at the Fed during the next downturn.

In terms of Fed reform, Clarida is likely to be an ally for House Republicans who have pushed to make the Fed adopt a rules-based monetary policy framework. Clarida has long written about the advantages of a rules-based framework and even has his own “forward-looking” version of the Taylor Rule.

As a voting Fed member, Michelle Bowman will also have an impact on the future of monetary policy – but as far as I can tell she has made no public comment on the subject. Rather than being an economist, she’s an attorney who had a long career as Washington staffer. Her employers include Senator Bob Dole, House Transportation Committee, the House Oversight Committee, FEMA, and Homeland Security Secretary Tom Ridge. Not the best resume for draining the swamp.

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Bring Back Interest Rates!

04/17/2018Jeff Deist

Let interest rates rise. Better yet, let interest rates function in the marketplace, wholly independent of central bank attempts at rate-setting or targeting.

How? Not through a laughably small and slow process of Fed tapering, but through a wholesale and aggressive selloff of assets still polluting the Fed's balance sheet since it began aggressively those assets from commercial bank in 2008.   

This was the critical point made by all three speakers at our event in Nashville this past weekend: interest rates need to rise before any true economic recovery can occur. The manipulation of interest rates by the Fed and other central banks causes untold distortions throughout the entire economy. Unless and until we address this problem, no fiscal or monetary policy changes will make much sense or have much salutary effect. Money and credit will continue to flow into less than optimal uses, investors will be forced to continue chasing yields in the casino equity markets, and Congress (plus other western legislatures) will continue to produce trillion dollar annual deficits without much worry about debt service. 

Perhaps worst of all, the world will continue to believe a fairy tale: that the Fed effectively recapitalized US commercial banks in the 2008 crisis and through successive rounds of QE without pain or consequences. Are we really to believe the monetary base underpinning the world's reserve currency can be quadrupled in less than a decade without causing lasting damage? That gross overspending by Congress can be wished away simply by having the Fed provide a ready market for Treasury debt at miniscule interest rates? Or that interest rates should have no connection to the savings habits of society? 

It all strains credulity, which is precisely why monetary policy relies so heavily on technocratic jargon and opaque processes: they want to confuse or bore us into not paying attention. And thus the can is kicked down the road, politically and policy-wise. That's how we became a high time preference society almost by stealth.

You can watch these engaging presentations by Dr. Robert Murphy, Carlos Lara, and myself here.

These excerpts from my talk attempt to remind the listener that none of this is normal, in fact quite the opposite. Not too long ago prosperous societies were based on the notion of capital accumulation, of producing more than they consumed, making the next generation better off in the process.

**********************************

This is the fundamental and foundational change that has to occur. We need real, positive interest rates, meaning rates above inflation rates. We have to reward saving if we intend to have a growing or sustainable economy.

It is not exaggeration to say interest rates drive civilization.

They are the most important signals in an economy. Everything flows from them, because the cost of borrowing money effects the cost of almost everything.

This is the fundamental and inescapable starting point for building not only a real economy but a real culture. Every healthy society accumulates capital, every healthy society produces and saves more than it consumes and borrows. The human desire to leave something to future generations explains why all of us sit in splendor today, in this restaurant, enjoying conditions our great grandparents could not have imagined.

To do this you need actual real interest rates, market prices for money. Savers and borrowers, supply and demand, need to meet. We have a mechanism for this, it’s called the market. Without market prices you have socialism, the opposite of markets.

So why do so many otherwise free-market economists not object to monetary central planning?

The most important interest rate is the Federal Funds rate, the rate at which commercial banks borrow from each other overnight if they need to meet reserve requirements for their loans. The Fed controls this rate, or “targets” it, by manipulating the amount of reserves banks have in their accounts with the Fed. Banks with high reserves don’t much need to borrow from each other, so the Fed Funds rate stays low. And since 2008 commercial banks have received interest on excess reserves parked at the Fed, which encourages high balances and keeps rates low.

All commercial interest rates — e.g., the interest you pay on your mortgage — flow from the Fed Funds Rate on a cost-plus basis.

But when the Federal Reserve effectively keeps interest rates lower than they would be naturally, it creates a terrible disconnect between lenders and borrowers. And this disconnect causes unbelievable distortions throughout the economy. As David Stockman says, because of central banks there is no honest pricing of goods anywhere — we simply don’t know, for example, what a barrel of oil or a bushel of wheat or a Honda Accord should cost. The Fed has distorted the single most important price in the entire economy — the Federal Funds rate.

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The Gains from Trade

04/17/2018Mark Thornton

Here is a simple example of the gains from trade. The exact some physical goods has different subjective values for their owners and both benefit from exchange! 

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Livestream of Tonight's Fractional Reserve Banking Debate between Bob Murphy and George Selgin

04/16/2018Mises Institute

Tonight Mises Senior Fellow Bob Murphy is debating George Selgin of Cato's Center for Monetary and Financial Alternatives on the topic of fractional reserve banking. The host is Gene Epstein's Soho Forum, an excellent monthly debate series based in New York City. 

You can watch live tonight at 6:30 ET on Reason's Facebook page

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Ostrowski: Pro-Gun-Rights Tactics Are "Archaic, Dated, Spent"

04/16/2018Ryan McMaken

In a talk at the Second Amendment Town Hall in Batavia, New York, James Ostrowski discusses how the long-used efforts to preserve gun rights are doomed to failure. Shouting "the second amendment is enough for me!" is a failed tactic:

We are losing the fight for the Second Amendment. We are losing it in the courts. We are losing it in the legislatures. We are losing it in the media, in the schools and with young people. The approach we have been using to protect the Second Amendment for many years has failed, is failing and will continue to fail. That approach has basically focused on lobbying, elections, voting and using the litigation process without any serious attempt to change the philosophical or ideological bent of the country or to change the ideological trajectory of the country to the left which in the last five years has been accelerating, and without any attempt to change the basic progressive mindset which has dominated American politics for many decades. The tactics we have used are archaic, dated, spent, don’t work and there has been no attempt to use bold new innovative tactics and unless that changes, we are going to lose this fight.

We are close to losing a right that has been recognized in the West for many, many centuries. It’s an ancient right that great minds had to first do the philosophical work to identify, then define, then do the hard political work to have this right recognized by governments and by government law. We are on the verge of losing this ancient right in these times and perhaps very soon because of our own failure to properly defend it with good arguments and good strategy and tactics and the efficient execution of those strategies and tactics.

Read the full talk.

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Governor of Bank of Canada Doesn't Know Canada's Own History

04/16/2018Tho Bishop

Unfortunately I will not be able it make the highly anticipated debate between Bob Murphy and George Selgin on fractional reserve banking tonight, it should be a great event between two great scholars (and former Mises Institute alums). Though I'm obviously on Team Bob tonight, I did want to point out a great tweet from Dr. Selgin over the weekend that help shows the very superficial grasp of history many central bankers have.

In a thread sparked by recent comments from Mark Carney of the Bank of England about central bank digital currency, a participant pointed to an article from Stephen S. Poloz — the head of the Bank of Canada. While explaining his skepticism of cryptocurrency, Poloz remarks that providing cash "is an absolutely vital public good, which has always been provided by the central bank." 

The problem as Selgin notes, is that central banks didn't provide cash for Cananda until the BoC was founded in 1935. Prior to that, Canada had a system of free banking and private currency — a monetary regime that proved to be far more stable than the United States under the Fed.

While this could perhaps be dismissed as simple absent mindedness on part of Poloz — his own "57 states" moment — the problem is that his entire point about the inherent "public value" of government-backed currency is directly undermined by Canada's own history. It is precisely because the record has shown that money is best left up to the market — coupled with the past decade of unprecedented monetary policy — that recent projects such as cryptocurrencies (along with private gold/silver/etc.-backed money) are so fascinating. On this point, I'll continue to shamelessly borrow from Selgin's work by pointing to his blog articles (Part 1Part 2, and Part 3) that critique a paper about what Canada's history of private bank notes might mean for cryptocurrency.

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The Winter 2017 QJAE Is Now Online

04/13/2018Mises Institute
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