Sunday, August 29, 2010

Weekly Column - 08/28/2010

This week's column:

“There are those who still think they are holding the pass against a revolution that may be coming up the road. But they are gazing in the wrong direction. The revolution is behind them. It went by in the Night of Depression, singing songs to freedom.” – Garet Garrett, “The Revolution Was”

Among libertarians and contrarians of a conservative bent, it is customary to discuss the moment in history when the American Republic went awry, degenerating into an Empire and making inevitable its demise.

A small group of hardliners insist that the original mistake was ratifying the Constitution. The anti-federalists were right; the Articles of Confederation ought to have remained in place. Though drafted for noble purposes, the Constitution could too easily serve ignoble ends. The very document which enshrined limited government contained the seeds by which tyranny could grow unchecked.

Tuesday, August 24, 2010

How a bubble works

Housing prices fell during July:

Sales of previously occupied homes in the United States fell 27 percent in July, the weakest showing in 15 years, the National Association of Realtors said Tuesday. It was the largest monthly drop in the four decades that records have been kept.

Vox Day has a helpful chart over at his site.

Add this to the list of the reasons there is not and will not be an economic recovery--at least in the near future. But not only is this news not surprising, it's actually good.

Everyone recognizes that there was a bubble in housing. Apparently, though, no one knows what a bubble is. If they did, they wouldn't be greeting this as bad news. A good in a bubble is priced too highly. There are two ways to rectify this. The most obvious and straightforward way is to allow prices to fall on the bubble good; once they reach the prices the market is willing to pay, the bubble has been popped. True, those who bought at the peak of the bubble will be out of luck; but this is the inevitable nature of bubbles.

The other way to rectify the bubble problem is to inflate like mad. That way, homeowners can sell their houses at the bubble price. This is illusory, of course, since the real value of money has been reduced through inflation, but the hope is that the people don't notice this. It's problematic, too, because it runs the risk of creating another bubble. So when the dot com bubble burst, we got the housing bubble, which was worse than its predecessor.

Housing prices need to fall. They will do so. Government cannot defy the laws of economics. They can only pretend to do so for a time.

It's becoming apparent that the stimulus did little good for the economy. It is becoming even more apparent that, in the absence of government intervention, the economy will go about correcting itself. When it does this, it's called a depression.

Sunday, August 22, 2010

Weekly Column - 08/21/2010

I'm not going to post the full article here, as I'm trying to encourage traffic to the site which is kind enough to allow me to write for them. However, the start of the column is posted below. Follow the link for the rest of it.

“[T]here is no shortage of historical examples to support the idea that even those who nominally subscribe to an empirical approach don’t hesitate to abandon their empiricism when the data doesn’t support their theories.” – Vox Day, The Return of the Great Depression

The first tipoff as to the inadequacy of the current economic models should have been the inability of any of the mainstream economists to detect the economic crisis that hit the US at the end of 2007 . It’s not true to say that no one predicted it; among others, Peter Schiff certainly did. But it is true to say that both the neo-Keynesians and the monetarists were caught completely unawares. Throughout 2007, the economic advisors of both parties continued to offer reassurances to the captain’s of the economy, blissfully oblivious to the coming iceberg.

Sunday, August 15, 2010

Tuesday, August 10, 2010

Rousseau: On the Social Contract - Part II

Resuming where we left off, Rousseau observes that "Gods would be needed to give laws to men." (p. 286) He speaks here, not to advocate theocracy, but to point out the difficulties involved in making good law. The legislator has tremendous power, but while he needs to possess the power to make laws, he should not have the power over men, that is, the power to enforce them. Tyranny ensues when we combine the legislative authority with sovereign power. (p. 286)

The laws must be suited to the men who are to abide by them. But some men are unruly and will not abide by good laws. There seems to be a contradiction here, but I think what Rousseau is saying is that while there is some variation between people, and therefore of laws which would suit them, some people will not even abide by good law. (p. 287) The injunction to cast not your pearls before swine is good advice, but I'm not certain it fits with the general will.

We come to a curious quote: "Free peoples, remember this maxim: Freedom can be acquired, but it can never be recovered." (p. 288) As Rousseau was an undoubted influence on the Revolutionaries, this strikes me as intriguing. He follows this by pointing out that nations, like people, age. But nations may occasionally experience a resurgence, too. He offers another amusing quip: "The Russians will never be civilized because they were civilized too early." (p.288)

He argues that man may change laws for the worse. (p. 288) Obviously, this is true, but this does not seem consistent with the idea of the general will. He also asserts that "the force of the State creates the freedom of its member." (p. 289) Yet force is the antithesis of freedom.

Aside from the types of laws, fundamental or political, and criminal, the most important of all is engraved on the hearts of its citizens. (p. 289) This strikes me as one of the wisest things Rousseau has said thus far.

Government is defined as follows: "An intermediate body established between the subjects and the sovereign for their mutual communication, charged with the execution of the laws and the maintenance of civil as well as political freedom." (p. 289)

Of the different forms of government, we have democracy: in which "there are more citizens who are magistrates than are private citizens"; aristocracy: in which "there are more simple citizens than magistrates"; and monarchy, in which there is a single magistrate. (p. 290) Different forms of government are better in different cases, but in general, the larger the state, the fewer should be the magistrates.

Making explicit what he implied before, Rousseau notes: "It is not good for him who makes the laws to execute them..." (p. 291) Despite some of his inclinations towards democracy, a true one cannot exist. But he is speaking here of an assembly of citizens, rather than some form of indirect democracy. "If there were a people of Gods, it would govern itself democratically. Such a perfect government is not suited to men." (p. 291)

Finally, there are three kinds of aristocracy: natural, elective and hereditary. "The first is suited to simple peoples. The third is the worst of all governments. The second is the best; it is aristocracy so-called." (p. 292)

Sunday, August 08, 2010

Rousseau: On the Social Contract

This post will contain all of the posts PJ and I put up in our discussion of Jean-Jacques Rousseau's On the Social Contract. The division into parts is arbitrary.

Part I
Part II

Rousseau: On the Social Contract - Part I

Rousseau is kind enough to give us his intention right away: "I want to inquire whether there can be a legitimate and reliable rule of administration in the civil order, taking men as they are and laws as they can be." (p. 280)

In short order, this is followed up with the famous line: "Man was born free, everywhere he in chains." (p. 281) This is hyperbole, but it is effective. We are ready to follow where Rousseau leads in examining the evils of civilization to see if we can't find something better.

Like Hobbes, Rousseau believes in a contract, and for similar reasons. Unlike with Hobbes, however, men do not place all authority in the sovereign, but rather in themselves under the general will: "Each of us puts his person and all his power in common under the supreme direction of the general will; and in a body we receive each members as an indivisible part of the whole." (p. 282)

It is unclear, to me at least, in what this will consists. Logically, it should be akin to simple majority, but as it is clear that the general will may run counter to it, this can not be the case. In any event, the difference between the role of contracts in Rousseau and Hobbes is clear enough.

Rousseau's contract involves a trade off: "What man loses by the social contract is his natural freedom and an unlimited right to everything that tempts him and that he can get; what he gains is civil freedom and the proprietorship of everything he possesses." (p. 282) This latter claim is hard to swallow. If we are to give up all of our rights, surely that includes our possessions. But if we do not have property rights, some means must be enacted to handle disputes. If the general will solves this dilemma for us, it must be demonstrated, for this would be an extraordinary accomplishment.

We see the general will sketched to some extent in the next book. It may not be alienated; it also tends toward equality. (p. 283) We also learn that it is rare for a man's private will to agree forever with the general will. Since the latter is binding, those entering the contract must understand this. Rousseau also asserts that the general will is indivisible.

We see that "the general will is always right and does not err." (p. 284) Yet this is different from the will of all, which is liable to err. This comes about through the creation of factions. The only solution is to ensure that all men speak their own opinion, which is presumably different from that of the faction. (p. 284)

Toward the end of this section, Rousseau hints at some limit to the general will's infallibility. It can only apply itself to a case of an entire people. In the next section, we learn that it is therefore competent to make laws. Determining whether or not the laws have been broken, in an individual case, is thus beyond the purview of the general will.

We need only remind the collectivists that society is comprised of individuals. One can have the latter without the former, but the latter are a necessary prerequisite to the former.

I'll try to add commentary for the rest of the book some time later this week.

Saturday, August 07, 2010

Weekly Column - 08/07/2010

My first column is up over at Gitche Gumee Gamut. I've also added a link to the site's main page in the side bar.

Rousseau: Discourse on Inequality, pt.2

In my previous post I claimed that the topic of the second part of the "Discourse" was the emergence of society from the state of nature. Re-reading it, however, I find Rousseau to be decidedly vague on the emergence of society. It has something to do with the geographical spread of the race, the development of technologies, and the emergence of property. If you can reconstruct a succinct argument, please do share. The real focus of this section, as I now see it, is the transformative effects of civilization on "savage man."

As with Hobbes and Locke, property takes center-stage in Rousseau's treatment. It affords him this opening: "The first person who, having enclosed a plot of land, took it into his head to say 'this is mine' and found people simply enough to believe him, was the true founder of civil society" (302). So his attitude toward this development--property as a sort of ruse on the simple-minded--we can see, is markedly different than his predecessors'. A bit later he writes, "in short, competition and rivalry on the one hand, opposition of interest[s] on the other, and always the hidden desire to profit at the expense of someone else[:... a]ll these ills are the first effect of property and inseparable offshoot of incipient inequality" (309). So what Hobbes, certainly, and Locke to a lesser extent, invoke society to remedy, Rousseau accuses it of introducing.

Society introduces the vice of inauthenticity. People become unduly interested in public esteem (305). How we appear to others becomes crucial to our own self-assessment, and this leads to vanity, contempt, envy, and shame. Furthermore, provided with leisure time, people develop a taste for new "conveniences," so that "being deprived of them became much more cruel than possessing them was sweet, and they were unhappy about losing them without being happy about possessing them" (305)--a criticism of consumer culture as relevant as ever today.

So there are two issues on the table: why do some people claim property, and why do others accept their claims? As Rousseau would have it, the poor are essentially duped by the wealthy. The poor lack resources to protect what little they possess, and so they readily agree to property regulations proposed by the rich, effectively legitimizing inequitable distribution (310). Hence the natural inequality that allows some men to work more efficiently than others is transformed into political inequality. And this is passed along through generations via inheritance so that this inequity becomes disassociated even from one's natural productive capacities.

This summary might not be comprehensive, but I hope I've hit the main points. Looking forward to your treatment of the "Social Compact"--