Thursday, March 21, 2013

Why You Should Root against Indiana University, and for Butler, in NCAA Tourney

If you love March Madness, but not unfair competition, there are three top seeds you just can’t root for: Indiana, Louisville or Kansas. That leaves only Gonzaga as a top seed you can support in this year’s NCAA basketball tournament. You can also, though, pull for any members of the soon-to-be-new Big East.

What makes Indiana Louisville and Kansas — all storied programs — unsupportable if you favor fair play? Are they stacked with ringers, cheaters, or just plain dirty dealers? No, but they have big subsidies from state taxpayers that give them huge advantages over little guys like the Zags.

The numbers are startling. Gonzaga, has a total enrollment of 7,764 students, making it a midget compared to its top-seeded peers. Louisville’s enrollment rings in at 21,153, Kansas has 27,939 students, and Indiana 42,731.

“If you want a level playing field — er, court — in college hoops, root for Gonzaga and the new Big East, and against big state schools.”

Why the mammoth differential? As a private college, Gonzaga has to charge students a greater share of the cost of education than heavily subsidized state institutions, greatly limiting its ability to attract students and grow. To get a sense of the handicap, the latest data from the State Higher Education Executive Officers shows that in 2012 state and local subsidies stood at $4,869 per student in Indiana; $5,184 in Kansas; and $6,269 in Kentucky.

These subsidies can lead to substantial athletic advantages, in particular the huge fan bases public universities enjoy. These enable them to fill seats in giant stadiums and get millions of television eyeballs on games, especially football, the big cash cow. That, in turn, generates major revenues to support other sports, which either keeps big state schools in conferences with lucrative television contracts, or gets them in. And it doesn’t hurt that state and local governments often kick in big bucks for stadia and arenas, as Kentucky has recently done for Louisville’s football stadium and basketball arena.

In other words, thanks to forced taxpayer support, the rich keep getting richer.

Which brings us to the new Big East.

Formed as a basketball-centric league in the late 1970s, the Big East as we’ve known it has incorporated both schools that play bowl-division football and those that do not. The end result has been constant tension between the “football” and “basketball” schools, and a model that has fallen victim to the poaching of football institutions by leagues such as the Atlantic Coast Conference and Big Ten. Louisville — which in addition to being a number one seed in the NCAA Tournament won this year’s Big East tourney — will be departing for the ACC in the 2014-15 academic year.

What is about to emerge after all of this pillaging is a new Big East, one founded by private institutions that don’t play bowl-division football. It’s the only configuration likely to give the conference stability, but it will also draw on much smaller fan bases than the “power” conferences inhabited by Kansas, Indiana, and soon, Louisville.

The founding members of the new conference are Georgetown, Villanova, Marquette, St. John’s, Providence, Seton Hall, and DePaul, and they are likely to be joined — as of this writing, there’s been no official announcement — by Butler Xavier and Creighton. The schools’ average enrollment, 11,970, is roughly half of Louisville’s and just a quarter of Indiana’s. That’s a big differential in potential fans and viewers, without even considering how many people root for their home-state schools even if they didn’t attend them.

If you want a level playing field — er, court — in college hoops, root for Gonzaga and the new Big East, and against big state schools. Anything else would be, well, madness.

Neal McCluskey is associate director of the Cato Institute’s Center for Educational Freedom and author of the book

Feds In The Classroom: How Big Government Corrupts, Cripples, and Compromises American Education.

Chris Selley Is a Pussy Libertarian; I’m Not

by Walter Block

Recently by Walter Block: My 'Debate' With George Jonas Continues

I seem to be in a rut. This essay is yet another one critical of a semi demi quasi libertarian journalist who writes regularly for Canada’s National Post, a newspaper roughly equivalent ideologically to "our" War Street Journal. Today’s missive is aimed at one Chris Selley, who wrote an op ed entitled Religious education under fire on February 5, 2013.
First, a bit of background. Canada, believe it or not, is even more politically correct than is the good old US of A. There, the Christian religion is widely and heavily deprecated as being inconsistent with the ethos of the day which supports sex before marriage, gay rights, etc. Trinity Western University (TWU), one such institution, has the temerity to insist that all students and employees must sign a covenant prohibiting "sexual intimacy that violates the sacredness of marriage between a man and a woman."
A few years ago a fuss was made by the politically correct left over allowing teacher certifications for graduates of TWU, who might infect their young charges with this unacceptable philosophy. More recently this university has now begun the process of attempting to open up a law school, and the usual howls of outrage are heard. Selley reports that the president of the Canadian Council Association of Law Deans objected to this covenant on the ground that "Discrimination on the basis of sexual orientation is unlawful in Canada and fundamentally at odds with the core values of all Canadian law schools." He did so in order to convince the Federation of Canadian Law Societies, the accrediting agency, to oppose this initiative of TWU’s, as if they needed any help in this direction.
To his great credit, Selley quite properly gives this opposition to TWU’s plan the back of his hand (he does have some libertarian sensibilities after all.) He notes that Muslim students are treated quite a bit more respectfully than Christians. He rejects the claim from this "human rights" quarter that this covenant would lead to a shoddy law school, noting that several law schools at religious universities in the U.S. are very prestigious. This journalist duly notes the several years success of TWU’s teacher’s college.

But then he gets into a bit of trouble, at least with principled libertarians. He attempts to refute this argument put forth by yet another member of Canada’s very strong "progressive" movement: "Would the governing bodies of the legal profession in Canada approve a law school that prohibited mixed-race sexual intimacy?"
How does Selley attempt to refute this charge? He states:
"Being a private university, libertarians would argue TWU should be allowed to admit whomever it wants. That’s more or less where I’m at: A private university you wouldn’t want to go to anyway is not the equivalent of a Woolworth’s lunch counter, or of government marriage benefits. But the mainstream reaction, if we discovered some hitherto unknown whites-only university in the B.C. interior, would be to shut the place down — not its law school, not its engineering faculty, the whole place. If people think TWU is doing the moral equivalent, why are we only talking about its law school? There’s no moral difference between anti-gay discrimination and anti-black discrimination. And the only legal difference is that a religious freedom defence (sic) is far more likely in the first case than in the second — and, perhaps, that we’re only just getting rolling down this road. The full spectrum of gay rights is a newer development."
What sticks in my craw here is that crack about Woolworth’s lunch counter. I cannot be 100% sure, I wish this man would write more clearly, but in my interpretation Selley is saying that this firm was not justified in refusing to serve black people; the implication is that the so called Civil Rights Act of 1964 was entirely justified. Of course, one of the basic tenets of libertarianism is the law of free association. No one should be compelled, at the point of a government gun, to associate with anyone else, against his will. Compelling Woolworths to seat blacks is thus incompatible with libertarianism. It was a violation of their private property rights over their establishment.
Free association is a very important aspect of liberty. It is crucial. Indeed, its lack was the major problem with slavery. The slaves could not quit. They were forced to "associate" with their masters when they would have vastly preferred not to do so. Otherwise, slavery wasn’t so bad. You could pick cotton, sing songs, be fed nice gruel, etc. The only real problem was that this relationship was compulsory. It violated the law of free association, and that of the slaves’ private property rights in their own persons. The Civil Rights Act of 1964, then, to a much smaller degree of course, made partial slaves of the owners of establishments like Woolworths.

Most men of good will are inclined to reject this argument. They see racial discrimination as economically harmful to the targeted group. They are economically illiterate. They do not realize that these sorts of boycotts have very little power. When employers discriminate against a given group, they drive their wages down. But this makes hiring them, by other employers, much more profitable, ceteris paribus. If some firms will not sell lunch to blacks, others will arise to do so, and be able to earn greater profits than would otherwise be the case. If some companies force blacks to ride in the back of the bus, others with no such rules will compete for their custom, and earn extraordinary profits from doing so. In all such cases, in the free marketplace, the latter (non discriminators) will tend to drive the former (discriminators) out of business.
Why didn’t this work in the south in the early part of the 20^th century? Did economic law function differently, or not at all, in that time and place? Not a bit of it. These salutary effects were not allowed to come into being due to the government and its Jim Crow laws that prohibited the competition of the non discriminators. If, is as usually assumed by our friends on the left ("progressives" as they now call themselves after having besmirched the name "liberal" which they stole from us), ordinary white people so hated and reviled black people, why were Jim Crow laws even necessary in the first place? Couldn’t racism, all on its own, have accomplished this goal? No, and this was due to the economics of the case, as mentioned above. Without Jim Crow laws enforcing such behavior, the "magic of the market" would have rendered this type of racism impotent. The two people who have done more than perhaps anyone else to shed some basic economic light on the economics of discrimination are Thomas Sowell and Walter Williams. Google them. Read them. (I note that initially Rand Paul took a splendid libertarian position on this matter, but then in an interview with Rachel Maddow, unfortunately backed down. In sharp contrast Ron Paul continues to uphold this free association banner of libertarianism.)
Another difficulty with the intellectual position of the anti discrimination, anti free association folk is that they always apply their totalitarian notions to the business world, not the personal one. If discrimination against black people ought to be against the law, why not apply this to both realms of human interaction. After all, murder is illegal both in the bed room and in the board room.

How would this work if implemented? Human "rights" commissions would insist that if blacks are, say, 10% of the population, and whites 90%, then the correct proportion of intermarriages ought to take place. If there are too few, then no more marriages should be allowed until this statistical representation once again reoccurred. After all, sans discrimination, this is exactly what we would expect. Similarly, even for dating. If there were an all white couple, or an all black couple, then each of the four of them should be queried as to whether or not ugly discrimination were responsible for their choices. They ought to be made to prove their purity. Statistical disparity, as it is now in the realms of business and education, would be evidence of racially motivated discrimination. The burden of proof to demonstrate otherwise would be upon them.
Now let us apply this to sexual relations, and we will see that anti free association laws logically imply compulsory bisexuality. Take heterosexual men, for example. They are disgusting creatures. They arbitrarily and unconscionably eliminate half the human race as potential love-bed partners. If that is not prejudice, then nothing is (it is politically correct for me to castigate heterosexual women; everyone knows they are evil; as a staunch believer in political correctitude, I am happy to abide by its mandates.) Now consider heterosexual women, for example. They, too, are disgusting creatures. They arbitrarily and unconscionably eliminate half the human race as potential love-bed partners. If that is not prejudice, then nothing is (it is not politically correct for me to castigate heterosexual men; but I am going to go out on a limb and do this anyway.) It is now the turn of homosexual men. They, too, are disgusting creatures. (I’m going to be run out of town on a rail for saying that, but the truth is the truth; I cannot tell a lie). They arbitrarily and unconscionably eliminate half the human race as potential love-bed partners. (Do you think I’m being too repetitive here?) If that is not prejudice, then nothing is. And the same goes for homosexual women. They, too, are disgusting creatures. (I can’t anymore be run out of town on a rail for saying that, since this departure of mine has already been imposed on me). They, too, arbitrarily and unconscionably eliminate half the human race as potential love-bed partners. If that is not prejudice, then nothing is.

So where are we? I lost my train of thought. Oh, yes. It is only bisexuals who do NOT arbitrarily and unconscionably eliminate half the human race as potential love-bed partners. They do not prejudicially ignore anyone; they will consider all people. Long live bisexuality. All "progressives" ought to embrace this life style choice, if they want to stick to their principles. But wait! Bisexuals, too, as it turns out, are disgusting creatures. They, as does everyone else mentioned above, I think I’ve been exhaustive but I’m really not sure, are also discriminators. They don’t eliminate half the human race as potential love-bed partners, but hear this: Bisexuals (remember, they are disgusting creatures) favor beauty ("lookism"), intelligence ("IQism"), compatibility ("compatibilityism"), age ("ageism"), and a whole host of other qualities. Bisexuals, like everyone else, disgust me, progressive that I am.
Where does "pussy libertarianism" come into play? Ann Coulter accused libertarians of this character flaw, because, she said, among other things, we refuse to apply our philosophy to racial and sexual discrimination. We limit our views to pussy issues such as imperialism and drug legalization. This, of course, is an outright lie; but it sure got press coverage. But, it does seem to apply to those such as Chris Selley who refuse to apply libertarianism to these hot button issues.
Am I being unfair to Chris Selley? I honestly don’t know for sure, but I expect I am not. That nasty remark about "Woolworth’s lunch counter" seems to indicate he does not fully accept the libertarian view on free association and racial discrimination. But the point is, he is not at all very clear on this, as in the case of his colleague George Jonas. Perhaps in a future column Mr. Selley will clarify this matter.
Mr. Selley, do not be such a pussy. Embrace your inner libertarianism. Let it come out of the closet.

February 25, 2013

Dr. Block [send him mail] is a professor of economics at Loyola University New Orleans, and a senior fellow of the Ludwig von Mises Institute. He is the author of Defending the Undefendable, The Case for Discrimination, Labor Economics From A Free Market Perspective, Building Blocks for Liberty, Differing Worldviews in Higher Education, and The Privatization of Roads and Highways. His latest book is Yes to Ron Paul and Liberty.

The Best of Walter Block

Two Views of Libertarianism

by Laurence M. Vance

Recently by Laurence M. Vance: Murder Is Still Murder

There exists much confusion in the political sphere about libertarianism. Conservatives often mischaracterize it as discounting human nature and disdaining morality at the same time that liberals depict it as grossly naïve and overly utopian.
One can read what some opponents of libertarianism say about it and then what some proponents of libertarianism say about it and conclude that there is no way that both groups could possibly be talking about the same thing.
Exhibit A is Tony Greco, writing for the Daily Kos the essay "Four Reasons to Reject Libertarianism."
Greco argues that there are "four broad reasons why progressives should firmly reject" libertarianism:

1. Libertarian values are repellent – Libertarianism celebrates greed and selfishness.
2. Libertarianism is intellectually myopic – Libertarians cherish freedom above all, but their concept of freedom is constricted and myopic.
3. Libertarianism is utopian – An active state is a universal feature of advanced societies.
4. Libertarianism is politically hopeless – You might well agree with me on the three preceding points but still feel that libertarianism has to be reckoned with politically.

Exhibit B is Jacob Hornberger, writing for the Future of Freedom Foundation the essay "The Glory of Libertarianism."

Hornberger argues that libertarianism is glorious for these four reasons:

For one, it is founded on the principle of genuine freedom — a society in which people are free to live their lives the way they want, so long as their conduct is peaceful. What could be more glorious than that?
Second, libertarianism is founded on solid moral and religious principles, the protection of free will being the best example. Another one is its recognition of the wrongfulness of stealing, even when it’s done by people acting collectively through the government and even when the thief uses the money to help others in need.
Third, in the economic realm, libertarianism is the only system that raises people’s standard of living, especially those at the bottom of the economic ladder. That’s because many people who are accumulating wealth inevitably save some of that wealth, which is then available as capital, which enables business owners to purchase better tools and equipment, which in turn make their workers more productive, which then leads to higher real wage rates.
Fourth, a society in which people have the widest possible ambit for free will and freedom of choice will be one that nurtures, develops, and encourages such important traits as compassion, caring, and responsibility.

According to Greco, libertarians don’t care much about the poor. They "are simply not much bothered by social and economic inequality." Their "hearts bleed for the rich and successful, not for the underprivileged." Libertarians "understand freedom almost exclusively in terms of freedom from government." They don’t recognize that "unfettered capitalism" and the "free market economy" can be "as great a threat to freedom as government action." They refuse to recognize that "government action is necessary to mitigate the oppression inflicted by markets." The minimal government society that libertarians envision "doesn’t exist anywhere in the industrial or post-industrial world, and never has." Libertarianism "is as distant from real world possibilities as traditional socialism, and should be taken no more seriously." Libertarians can never achieve mass appeal because they are "hobbled by their principled consistency." Politically, they have "an elitist economic program plus some sensible proposals"

According to Hornberger, libertarians "strive to convert our country into one that Franklin preferred, one where liberty dwells." Liberal and conservative statists think they live in a free country because "they define freedom in a totally different way than we libertarians do." They define freedom as "the extent to which the federal government takes care of people with welfare" or "the extent to which the U.S. military and the CIA police the world." Libertarians think just the opposite. Freedom "is defined by the absence of government paternalism and the absence of a vast military empire and national-security state apparatus." Freedom for libertarians entails the right to "engage in any peaceful behavior whatsoever, no matter how irresponsible, dangerous, or self-destructive," to "make choices, for better or for worse, so long as they don’t involve the initiation of force against someone else," to "engage in any occupation without seeking permission of the government," to "engage in economic transactions with anyone anywhere in the world without government interference, regulation, or control," and to "accumulate unlimited amounts of wealth and the right to decide what to do with it." Yes, libertarianism necessarily entails free markets, but rather than oppression-inflicting, free markets "are nothing more than sellers and consumers peacefully interacting with each other for mutual gain."
So, whose view of libertarianism is correct?
I think someone has a tremendous misconception of just what libertarianism is, and it is not Jacob Hornberger.
As libertarianism’s greatest theorist, Murray Rothbard, explains:

Libertarianism is not and does not pretend to be a complete moral, or aesthetic theory; it is only a political theory, that is, the important subset of moral theory that deals with the proper role of violence in social life. Political theory deals with what is proper or improper for government to do, and government is distinguished from every other group in society as being the institution of organized violence. Libertarianism holds that the only proper role of violence is to defend person and property against violence, that any use of violence that goes beyond such just defense is itself aggressive, unjust, and criminal. Libertarianism, therefore, is a theory which states that everyone should be free of violent invasion, should be free to do as he sees fit except invade the person or property of another. What a person does with his or her life is vital and important, but is simply irrelevant to libertarianism.

Do libertarians celebrate greed and selfishness? Some no doubt do. Do libertarians not care for the poor? Some no doubt do not. Are libertarians not bothered by social and economic inequality? Some no doubt are not. Are libertarians not concerned about the underprivileged? Some no doubt are not. But this has nothing to do with libertarianism. One can be a liberal, a progressive, a moderate, or a conservative and celebrate greed and selfishness, not care for the poor, not be bothered by social and economic inequality, and not be concerned about the underprivileged. And not caring for the poor, not being bothered by social and economic inequality, and not being concerned about the underprivileged does not involve committing violence against anyone. Greco’s solutions to righting what he perceives as the wrongs in society all involve aggression against person and property.
Libertarianism celebrates liberty, property, peace, laissez faire, anything that’s peaceful, individual responsibility, free markets, free thought, a free society, and the absence of government attempts to do violence to these things in the name of social justice, correcting inequality, or promoting fairness.
Libertarianism is glorious indeed.

February 26, 2013

Laurence M. Vance [send him mail] writes from central Florida. He is the author of Christianity and War and Other Essays Against the Warfare State, The Revolution that Wasn't, Rethinking the Good War, and The Quatercentenary of the King James Bible. His latest book is The War on Drugs Is a War on Freedom. Visit his website.

The Best of Laurence M. Vance

I Am Sick of Veterans Who Wave the Flag and Send Others Off To Die

by James Glaser March 21, 2013 via The Future of Freedom Foundation at www.fff.org

A World War II vet told me something once that I have found to be true:
“If you walk into a VFW or American Legion Post bar and hear some guy telling everyone what a hero he was and how he fought the enemy so well, but at the end of the bar there sits a man alone not talking to anyone, chances are great that the silent man was the one who really saw the thick of combat, while the braggart never even saw action.”
I see the same thing today over and over, not in the bars, but on the Internet – veteran men, and it is almost always men, who wave the flag while telling us that we had to attack Iraq or that we had to attack Afghanistan for the safety of our country.
After a while, if you read what these men have to say, you will find that almost to a man they never even saw combat. In fact, most never made it to a war zone, or they served in peace time. But inexplicably that does not stop them from encouraging others to fight and die or be maimed.
Most men and women who have been in combat fall into two camps: those who have seen the horror of actual war and speak out against it, and those who have seen the same and are silent. Yes, there are always exceptions. Many career military men and women will expound on the necessity of military action, but you find that after retirement even these veterans seem to fall to one or the other of the camps, silent or anti-war.
Those veterans who expound the virtues of armed conflict seem to have some money involved. Either they have a book to push, or they are employed by the defense industry or by some news organization that is pro-war. It just galls me that men, who will even admit that they have no idea of what combat is like, will still push for more and more of it, and will disparage those of us who call for peace and bringing our troops home.
The odd thing is that as ravenous as these men seem to be for battle and blood, many of them could have signed up to serve in combat and fill that void in them that is so hell-bent on sending others, but perhaps they had better things to do. When I was in the Marines in Vietnam, I met men who had served in the Air Force or the Navy who, after their enlistment was up, joined the Marines to, as they said, “see if I had what it took.” I am sure the Army had its share of these veterans signing up for the same reason. So the option was always there for these war enthusiasts to truly get out there and “defend” our country, but they didn’t.
I can respect a war veteran saying he thinks we need this war or that war. I usually disagree with them, but I can see they have the experience to make their judgment even if I think it is flawed. But veterans who get some sort of thrill at having “served” and make sure everyone knows they “served”, but never made it to the war zone let alone to combat make me sick when they shout out a call to arms to our government and the general population.
They have no idea what they are talking about. They never had to put their friend or parts of their friend into a body bag. They never had to see dead mothers holding their dead child after their unit had opened fire on a village or town, and they were sent in to see what was left. They never had to smell the smells or hear the screams that are tragically common to every combat situation. They do not know whereof they speak.
Peace time veterans who wave the flag and push for war still see themselves in the crisp dress uniforms with shiny medals everyone who signs up gets to wear. They remember how people showed them respect because they wore the uniform – the uniform that others made honorable in combat.
Maybe that is some of the problem for them. Deep down inside, they know that they did not pay the price with their lives, their health, their bodies, their minds, their sleep, their vocation, and their families. They know that combat veterans pay a huge price that they didn’t. So maybe they feel that they have to sound the battle-cry to appear as much a part as their war-time comrades.
I wish more combat veterans would speak up, but I understand how hard that is for many. They just don’t want to talk or write about war, because it brings all their memories back to them. I do feel that it is right that most who do speak out are solidly against war and want us to start them only as a last resort. Almost all combat veterans know that when Washington prolongs a war, it is no longer in defense of our nation, but rather in defense of the profits all of our wars make for the defense industry.
I live in America and am grateful to be an American. I also believe everyone has the right to voice his opinion about whether or not we should go to war. However, I do wish those who advocate war, but have never actually been to war, would be honest enough to admit that they really don’t have any idea what they are talking about. Admit they don’t have any idea of what they are pushing our young troops into. Admit they are pushing them into something they never had the guts to do. But I guess that would take courage.

Sunday, March 17, 2013

The Politics of Anti-Interventionism

Posted By Justin Raimondo from www.antiwar.com

The response to Rand Paul’s historic filibuster continues to generate waves – I keep calling it "historic," and I know some of my more skeptical readers think I’m simply being hysteric, and yet…

I have never listened to Rush Limbaugh’s radio program, but perhaps I should start. Because I do read Conor Friedersdorf, I discovered that the embodiment and symbol of all that is Red State is taking Rand Paul’s side against neocon blowback from the usual suspects – the "amigos," the Kristol-Krauthammer-Frum axis of hubris, and their various journalistic spear-carriers. Here’s Rush:
"There is a fear among McCain, Lindsey Graham, and others who favor an interventionist foreign policy. Think of the neocons. Think of going into Iraq and not just securing Iraq, but building a democracy. Nation building, if you will. Think of the outbreak of the Arab Spring and the people on our side who thought, ‘Wow, this is wonderful. This is the outbreak of American democracy,’ when it wasn’t. It was the exact opposite. Rand Paul, they’re asking themselves, is he his father’s son or is he on his own here? They’re worried that he’s his father’s son. They’re worried that Rand Paul is an isolationist. They’re worried that Rand Paul’s diatribe on drones really means that Rand Paul wants to bring the military home and not use it unless we’re attacked. He doesn’t like it being used in an intervention. This is what they fear. And as he succeeds in making a connection with the American people, they are worried, the neocons are worried that they are being undermined by this."You’ll notice Limbaugh deploys none of the usual epithets – "appeasement," "anti-American," "cheese-eating surrender monkey" – that usually accompany any criticism of our foreign policy of perpetual war. Also note Limbaugh’s critique of how wrong the neocons and the administration were in their analysis of the so-called Arab Spring, which he brings up later in the broadcast:
"And there’s more to it than that, too. It’s also the whole notion of jealousy in power politics. Let me put it this way. They, I think, are worried that Rand Paul might be skillful enough to move the Republican mainstream away from the McCain, Kristol, neoconservatism view of the world and toward a position that is not as extreme as his father’s, but is suspicious of interventionism, suspicious of Islamic democracy building, suspicious of financial and military support for dubious regimes."Putting aside the dig at the senior Paul – after all, Limbaugh has to justify his past record – the last part of this paragraph is significant: "Islamic democracy building" is indeed at the core of our foreign policy in the Middle East and North Africa, and those conservatives who were so gung-ho about the war on "radical Islamist jihad" are particularly sensitive to its contradictions.
Libya, the ongoing intervention in Syria, and all the rest is a continuation of the Bush administration’s "Sunni turn," in which we allied with the very elements that make up al-Qaeda’s base against the alleged threat emanating from Iran. As the consequences of the Iraq invasion coalesced into an Iraqi-Iranian de facto alliance, the tactical turn that started with the "Anbar Awakening" morphed into a full-fledged strategic turnaround – so that, today, Washington is contending with the black-flag-flying Al Nusra and its allies for control of the Syrian opposition.
Limbaugh-style conservatives, who are incapable of re-examining their own past positions, are understandably baffled by this. And they’re angry: but they don’t have any answers. Rand Paul, on the other hand, does have answers, and more: he has the gumption to stand up and say "No more!" That’s what has Rush denouncing the McCain-Graham "old bulls," who are just plain "jealous" of the conservative movement’s newest folk hero, and "I’ll tell you why, he says:
"Rand Paul made a connection with the American people. These other people do not. He made a connection. Therefore, he has the ability to influence and motivate people. I’m telling you what their fears are. They thought that Ron Paul was absolute nutcase, wacko. That’s why they’re calling Rand Paul a wacko, ’cause that’s what they thought of Ron Paul. Libertarian, fruitcake, nutcase, isolationist, shut down the US military, speak positively about Islamists, all this kind of stuff. They are afraid that’s who Rand Paul is, and they’re afraid that what Rand Paul was doing with this filibuster was not just speaking out against the use of drones on American citizens on American soil. They’re afraid that Rand Paul is actually setting the stage for building up public support to stop the interventionist usage of American military might and foreign policy all over the world. It’s a fear that they’ve got."The neocons are absolutely right to be fearful of the junior Senator from Kentucky. Rand Paul managed to combine the conservative critique of untrammeled state power with the distinctively libertarian critique of our interventionist foreign policy, showing how the neocon program of perpetual war abroad must at some point lead to the end of constitutional law at home. It is a powerful case that rings true with all the elements needed to forge a new national coalition – one that can wrest power from the War Party.
That Limbaugh is defending Sen. Paul against the neocon onslaught is an indicator that at least one element of that potential coalition – the "wingnut" grassroots – are finally shedding the interventionist dogmatism of the Bush era. It is a transformation greatly accelerated by two stunning electoral defeats, in which the party’s neocon commanders went down in flames. Republicans are tired of losing, and Sen. Paul very deftly picked up on this yearning for a breakthrough by going after his detractors from the CPAC stage: "The GOP of old has grown stale and moss-covered," Paul said. "I don’t think we need to name any names here, do we?"
We sure as heck don’t.
Limbaugh perceptively frames the Rand Paul vs McCain-Graham brouhaha in terms of populism versus elitism:
"It was a very simple question he was posing, and all this was going on while our guys are out dining with Obama, dining with the architect of this current nationwide mess. Rand Paul was standing up opposing this while these guys were out yukking it up with the architect of it all. You know it was a great example of the ruling class and the country class, and the ruling class not liking what this country class senator was doing. It’s no more complicated than that, but a lot of people are ticked off about this, too."Limbaugh has it exactly right: the country class versus the ruling class – that’s what it’s all about.
This explains why contempt for the Paulian upsurge extended from the neocon "right" to the "progressive" sectors of Washington’s political class: they were defending themselves against a populist upsurge, expressing their utter disdain for the peasants-with-pitchforks who came out in support of Sen. Paul on Twitter and talk radio. Putting aside their differences, the fake-"conservatives" and authoritarian "progressives" came together against the Paulian country party threat.
Senator Paul has pointed the way to understanding how change – a real change in our militaristic foreign policy – can come about in our lifetimes. The answer to that ever-vexing question is: by flying the banner of the "country party," and storming the fortress that is Imperial Washington. In showing how a war with no temporal or geographic limits means gutting the Constitution, Sen. Paul is showing us the way forward.
To say I’ve had my differences with Sen. Paul in the past is surely an understatement, but in wartime the question is posed pointblank: which side are you on? For my part, there can be no question: I #StandwithRand!

NOTES IN THE MARGINI’m having great fun on Twitter and I urge you to join me on this wonderfully interactive site: you can do so by going here.
I’ve written a couple of books, which you might want to peruse. Here is the link for buying the second edition of my 1993 book, Reclaiming the American Right: The Lost Legacy of the Conservative Movement, with an Introduction by Prof. George W. Carey, a Forward by Patrick J. Buchanan, and critical essays by Scott Richert and David Gordon (ISI Books, 2008).
You can buy my biography of the great libertarian thinker, An Enemy of the State: The Life of Murray N. Rothbard (Prometheus Books, 2000), here.

The Robber Barons: Neither Robbers nor Barons

David R. Henderson

from Liberty Fund at www.econlib.org

"The 'robber barons' helped consumers and, in one famous case, destroyed a monopoly." 

One of the most prevalent myths about economic freedom is that it inevitably leads to monopolies. Ask people why they believe that, and the odds are high that they will point to the "trusts" of the late 19th century that gained large market shares in their particular industries. These trusts are Exhibit A for most people who hold this view. Ask them for specific names of the villains who ran these trusts, and they are likely to point to such people as Cornelius Vanderbilt and John D. Rockefeller. They even have a label for Vanderbilt, Rockefeller, and others: robber barons.

But a careful reading of the economic research on the "robber barons" leads to a diametrically opposite conclusion: the so-called robber barons were neither robbers nor barons. They didn't rob. Instead, they got their money the old-fashioned way: they earned it. Nor were they barons. The word "baron" is a title of nobility, one typically granted by a king or established by force. But Vanderbilt, Rockefeller, and many of the others referred to as robber barons started their businesses from scratch and were granted no special privileges. Moreover, not only did they earn their money and not only were they not granted privileges, but they also helped consumers and, in one famous case, destroyed a monopoly.
Consider the case of Cornelius ("Commodore") Vanderbilt. Even the excellent recent book Why Nations Fail, by MIT economics professor Daron Acemoglu and Harvard political scientist and economist James A. Robinson, gets the Vanderbilt story wrong. And not just wrong, but spectacularly wrong. They claim that Vanderbilt was "one of the most notorious" robber barons who "aimed at consolidating monopolies and preventing any potential competitor from entering the market or doing business on an equal footing."
In fact, it was Vanderbilt's competitor, Aaron Ogden, who persuaded the New York state legislature to grant Ogden a legally enforced monopoly on ferry travel between New Jersey and New York. And Vanderbilt was one of the main people who challenged that monopoly. At the tender age of 23, Vanderbilt had become the business manager for a ferry entrepreneur named Thomas Gibbons. Gibbons' goal was to compete with Aaron Ogden by charging low fares. In doing so, they were purposely breaking the law—and helping their passengers save money. In the case Gibbons v. Ogden, the U.S. Supreme Court ruled that, indeed, the New York state government could not legally grant a monopoly on interstate commerce.1 In short, Cornelius Vanderbilt was not a monopoly maker in this case, but a monopoly breaker.
What about John D. Rockefeller? Acemoglu and Robinson get that one wrong also. They write that by 1882, Rockefeller "had created a massive monopoly" and that by 1890, Standard Oil "controlled 88 percent of the refined oil flows in the United States." Let's look at the facts.
Early on, Rockefeller knew that he was at a disadvantage relative to his competitors. His company's headquarters were in Cleveland, 150 miles from Pennsylvania's oil-producing regions and 600 miles from New York and other Eastern markets. Thus, Rockefeller faced higher transport costs than many of his competitors. To offset that disadvantage, he built a pipeline to ship his own oil and used this pipeline to bargain down railroad rates. He got the lower rates in the form of rebates rather than outright rate cuts. Why? I don't think economic historians are sure about why, but here's my hypothesis: the railroads gave rebates because this is a standard way that members of a cartel "cheat" on price. They can truthfully tell the other customers not getting the rebates that they are charging everyone the same rate. To the extent that this was happening, Rockefeller was, himself, breaking down a railroad cartel. And breaking down cartels is supposed to be good, not bad.
But why would railroads single out Rockefeller for rebates? As noted, it was partly because of his credible threat to use his own pipeline. Also, as Reksulak and Shughart note, he strategically built his first refinery in a place that would allow him to ship oil to Lake Erie and then on to the Northeast market. This, note Reksulak and Shughart, allowed him to bargain for lower railroad rates during summer months.2 In addition, Standard Oil provided loading facilities, discharge facilities, and fire insurance at its own cost. Finally, Standard Oil provided a heavy volume of rail traffic at predictable periods, an advantage that was crucial for railroads with their high fixed costs and low variable costs.
One puzzle I have always had is how Rockefeller got "drawbacks" from the railroads. Drawbacks were rebates based on shipments by Rockefeller's competitors. Reksulak and Shughart offer a plausible explanation. They write:

[B]y helping to reduce the average cost of rail transportation in the ways we have documented, Rockefeller conferred a positive externality on his rivals, reducing the railroads' average cost of handling their shipments as well. Drawbacks were a way for the railroads to share those gains with the company that was responsible for them.3

One other advantage that Rockefeller created was the product itself. His main product at the time was kerosene. Kerosene, if not produced to a tight specification, had a nasty tendency to explode and kill or injure its users. That's not good, to put it mildly, for a firm seeking market share. Rockefeller wanted buyers to know that his product was safe because it met a stringent production standard. Thus his company's name: Standard Oil.
The most speculative part of the above reasoning is why Rockefeller got rebates rather than outright price cuts. But what is not speculative is how he expanded his market share. He did so by cutting prices and almost quadrupling sales. University of Chicago economics professor Lester Telser, in his 1987 book, A Theory of Efficient Cooperation and Competition,4 points out that between 1880 and 1890, the output of petroleum products rose 393 percent, while the price fell 61 percent. Telser writes: "The oil trust did not charge high prices because it had 90 percent of the market. It got 90 percent of the refined oil market by charging low prices." Some monopoly!
Nor were the Vanderbilt and Rockefeller cases flukes. If the trusts of the late 19th century had monopolized the industries they were in, as many people believe, then as those trusts gained market share, they should have not increased output much and should have raised prices. In fact, the opposite happened. Output increased many times over and prices fell. In some path-breaking research in the 1980s, Loyola University economist Thomas DiLorenzo documented these facts. In a 1985 article,5 DiLorenzo found that between 1880 and 1890, while real gross domestic product rose 24 percent, real output in the allegedly monopolized industries for which data were available rose by 175 percent, over seven times the economy's growth rate. Meanwhile, prices in these industries were falling. Although the consumer price index fell 7 percent in that decade, the price of steel fell 53 percent, refined sugar 22 percent, lead 12 percent, and zinc 20 percent. The only price that fell less than 7 percent in the allegedly monopolized industries was that of coal, which stayed constant.
Why do we get such a distorted view of the era of the so-called robber barons? One reason is that the popular press at the time trumpeted that view. Interestingly, Ida Tarbell, the famous "muckraker" who gave Rockefeller his bad press,6 was not a disinterested observer. Early in her life, she had seen her father, an oil producer and refiner, lose out in competition with Rockefeller. Her father had been prospering, and her family, as a result, was enjoying "luxuries we had never heard of."7 All that came to an end and Tarbell never forgave Rockefeller.
Indeed, virtually none of the impetus for antitrust laws came from consumers. Much of it came from small producers who had been competed out of business. They didn't want more competition; they wanted less. DiLorenzo quotes one of the "trust busters," Congressman William Mason, who admitted that the trusts were good for consumers. What he didn't like was that when large trusts cut prices, small firms were put out of business. Mason stated:

[T]rusts have made products cheaper, have reduced prices; but if the price of oil, for instance, were reduced to one cent a barrel, it would not right the wrong done to the people of this country by the "trusts" which have destroyed legitimate competition and driven honest men from legitimate business enterprises.8

In short, the robber barons, at least the ones whose actions tend to be highlighted, were neither robbers nor barons.
But why is that so? Why is it that the late 19th-century trusts thrived, not by monopolizing but by fiercely competing? Therein lies the economics lesson. As the late University of Chicago economist George Stigler, who won the Nobel Prize in 1982, pointed out, "[M]ost important enduring monopolies or near monopolies in the United States rest on government policies."9 That's because if governments do not restrict entry, high profits of firms with market power attract new entrants and new competition the way honey attracts ants. As I put it in the tenth of my Ten Pillars of Economic Wisdom,10 drawing on similar wording from Stigler, "[C]ompetition is a hardy weed, not a delicate flower."

For more information, see Creative Destruction by W. Michael Cox and Richard Alm in the Concise Encyclopedia of Economics and the EconTalk podcast McCraw on Schumpeter, Innovation, and Creative Destruction.

Stigler focused on price competition, but the late Austrian economist Joseph Schumpeter emphasized what he saw, correctly, as an even more important source of competition. Schumpeter wrote:

[I]n capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)—competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.11

Schumpeter's memorable term for this kind of competition was "Creative Destruction"—"creative" because the new commodity, technology, etc. created a new product or service and "destruction" because it destroyed the old. Think back to Rockefeller. He created safer kerosene and a pipeline to ship his oil. In doing so, he destroyed many smaller competitors—and made American consumers much better off. We could use more such "robber barons."

Footnotes

Burton W. Folsom, Jr. tells this fascinating story in The Myth of the Robber Barons, 6th ed. (Herndon, VA: Young America's Foundation), 2010, pp. 2-4.

Most of the facts in this paragraph are taken from Michael Reksulak and William F. Shughart II, "Of Rebates and Drawbacks: The Standard Oil (N.J.) Company and the Railroads," Review of Industrial Organization, 2011, Vol. 38, pp. 267-283.

Reksulak and Shughart, p. 280.

Lester Telser, A Theory of Efficient Cooperation and Competition. New York: Cambridge University Press, 1987.

Thomas DiLorenzo, "The Origins of Antitrust: An Interest-Group Perspective," International Review of Law and Economics, 1985, Vol. 5, No. 1: 73-90.

Ida M. Tarbell (1904). The History of the Standard Oil Company. New York: McClure, Phillips & Co.

See "Ida Tarbell," a biography at American Experience. PBS.org.

Congressional Record, 51st Congress, 1st session, House, June 20, 1890, p. 4100.

George J. Stigler, "Monopoly," in David R. Henderson, ed., The Concise Encyclopedia of Economics, 2nd ed. (Indianapolis: Liberty Fund, 2008), p. 364.

10.

David R. Henderson, "The Ten Pillars of Economic Wisdom," EconLog, April 12, 2012.

11.

Joseph A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1975) [orig. pub. 1942], p. 84.

*David R. Henderson is a research fellow with Stanford University's Hoover Institution and an associate professor of economics at the Graduate School of Business and Public Policy at the Naval Postgraduate School in Monterey, California.

For more articles by David R. Henderson, see the Archive.

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Saturday, March 9, 2013

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