How Far from Hell Are We?

A quick note on the debate between Peter Leeson and Ivan Pongracic on the severity of the crisis.

Pete, you are right to say that doomsayers are often quick to speak, but then nothing really happens in the end. The US economy has gone through many crises in the last 200 years and we are currently going through another one. I believe what Ivan was saying was that monetary phenomena have real effects and that it is hard to see how “the real economy” would not be affected by a years of poor allocation of savings and bad monetary policy. Ivan was not saying that civilization is about to collapse, but that we may have crossed a new threshold in government intervention in the US. The most worrisome aspect is the dynamic of interventionism as you know. Outside a period of war, the current interventions of the government in the US are as far out as they have ever been with the possible exception of the Great Depression and the nationalization of mines and a few other assets. In Europe on the other hand, it all started with the nationalizations of banks, utilities, and transports – the commanding heights of the economy – around 1936. This was after massive manipulations of the monetary system (Weimar Republik, etc) and it led not only to WWII but also to the socialistic economies of Western Europe after the war.

This debate is at the heart of the Misesian research program and it seems to me that the current data point towards something more serious than what you portray it to be. The question is indeed whether the creative and entrepreneurial capacity of the civil society can continue to outstrip the deleterious activities of government. You are right to say that there is still plenty of freedom left in the US to create value and to improve our standards of living, but this current crisis shows that the distance that separates us from hell has shrunk and continues to do so every day. We should be afraid of the fact that the US government has decided to force upon banks its solution. This is exactly what many of us have seen happening in Europe many times in the past. This politicization of the banking industry is but another step that will be extremely difficult to unwind.

It is even scarier that the US engages in this government activity because it is supposed to show a different face to the rest of the world. Remember that America is often a model and a counter weight to idiotic policies done elsewhere. Witnessing this model change slowly but surely may have huge repercussions on the rest of the world.

Regarding your six questions, I don’t think they demonstrate your point. First would you evaluate Mises’s warnings prior to the great depression by examining his investment portfolio? He may or may not have made the right decisions regarding his assets, but this doesn’t change the quality of his argument regarding the role of money in the economic system in the 1920s.

1. It is now a bad time to divest out of one’s 401(k).
2. The price of gold is near $1000 an ounce. It is higher than it has been in years. Gold prices have steadily climbed in the last 5 years and this shows that the market anticipated the loss in value of many financial assets and the US dollar.
3. The recent issuances of short term bonds have not been that successful. The reason is that there have been a massive influx of bonds over the last few weeks and this is affecting all the markets (including the municipal bond market for instance). This means that many investors are actually now seeing more risk in US Treasuries than before.
4. Many small banks in Northern Virginia have experienced a huge influx of cash in the last two weeks. See for instance Virginia Commerce Bank. There was an article on this in the Washington Post last week. So yes, people at the margin are moving out of big banks that are not seen as safe as before.

5 and 6 are not really relevant to the current discussion.

So yes you are right Pete to say that we are probably still far from Armageddon and that the US economy will come out alive of the current mess. It would not be smart, however, to ignore the long-term dynamic and to not recognize that we have just taken a big leap on the road to hell.

Comments

[liberty]

Very well said. Particularly the point about the US economy moving to a position of no longer being the "free" Western economy to counter-balance European economies.

I used to think I could do simple econometrics comparing the US and European economies to show that the US system - the freer system - had better economic performance given its freer labor policies, and lower tax rates (just for illustration). This is very nearly no longer the case.

On the plus-side this is because many European economies began to lower corporate tax rates, and free up their labor markets. But now it is beginning to be because the US is turning more and more into Europe.

My concern is less "hell in a hand basket" and more the "new FDR." Back in 2001, right before 9/11, Brink Lindsey wrote a great book called Against The Dead Hand about globalization which was very optimistic about the slow move toward free markets around the world - and the problems still disrupting markets from the leftovers of command economies. Unfortunately, recent trends make me question the optimism of the book. It looked for a while like we'd learned the lessons of socialism and were on a path toward worldwide belief in markets. But, especially with this opportunistic power grab resulting from failed intervention in financial markets, it seems like we're backsliding toward a command mentality.

[Steve Horwitz]

Pete might want to amend his #2. Gold closed at $730.30 today, hardly "near" $1000. He's right about the last 5 years, but if you look only at 2008, gold is now trading near its low for the year: http://66.38.218.33/LFgif/au2008.gif . That graph for the year hardly suggests that investors are flocking to gold in light of the last month or two.

Just call me Horwitz the Empirical. :)

[Pete]

Fred, I don't disagree with much of what you've said here. As I tried to be clear about in my posts, *intervention is making us poorer.* This includes misallocations of capital generated by credit expansion and the perverse incentives created by bailouts. I think you'd have a tough time arguing to anyone who's ever heard me talk for more than 5 seconds that I don't believe this.

My point is: growing intervention is nothing new. Many of the last 50 years have been years of unprecendented intervention into the economy. Government has pretty much grown continuously over this period. I've said it before and I'll say it again--this growth of intervention makes us poorer. But the economy hasn't collapsed and I don't think it will as a result of this round of unfortunate intervention either.

[Pete]

Steve, that was Fred who said that. And what you're saying about gold is precisely my point. Most investors, like Ivan, are not flocking to gold, which is what we would expect if the dollar was about to collapse as Ivan and the other doomsayers predict.

[lwaaks]

The following is an excerpt from a post by David Ramsay Steele on the Libertarian Alliance discussion group (Yahoo):

"Actually, I now see a parallel between the Austrian trade cycle theory and other notions which used to be popular among libertarians. What a lot of these different notions share is the premiss that the spontaneous market order is a frail bloom that can easily be killed. So libertarians fifty years ago used to talk as if a welfare state or a lot of regulation would quickly take us to the Soviet system and thus the end of civilization.

The truth is that the market is amazingly resilient and capable of amazing adaptations, and this keeps growing all the time with higher real incomes and faster and more accurate communications. What this resilience means is that the market can take a lot of punishment and still function surprisingly well. And what that means is that a heavily regulated welfare capitalism is a lot less unstable than we used to suppose. Of course, deregulating would lead to greater efficiency and benefit everyone, and various crises will crop up now and then, like the crisis of the NHS in Britain and the crisis of "social security" (old age pensions) in the US, but a continual heavy burden of regulation and unfortunate sabotage by government is compatible, as a simple matter of fact, with indefinitely rising real incomes for everyone. Or if you want to translate this into Randian terms, Atlas never gets round to shrugging because Atlas is doing okay, and both Atlas and the looters can keep on improving their situation indefinitely. Atlas doesn't notice the burden because his muscles are fully up to it, and they improve their tone with every passing year, despite the increasing absolute weight of the looters."

[Steve Horwitz]

Sorry Pete. Boo on Fred. :) That's what I get for reading quickly while surfing the web between periods of the Red Wings game.

And being someone who hasn't changed a dime of my portfolio, I think DRS has it more or less right. That said, Koppl's concerns about *civil liberties* in the other thread are well-taken.

I really do worry that we'll reach a point where people with our views will be seen as unpatriotic etc for disagreeing with the large role for gov't. The Weisberg piece blaming libertarians for the crisis might be a preview of just such a world.

We need only remember why Baldy Harper left Cornell.

[Pete]

Thanks, lwaaks. This DRS quote is spot on and says what I was trying to get at much better than I was able to say it.

[Vedran]

Iwaaks,

While what you mention is very true, we cannot forget the times things went extremely wrong. Perhaps, the chances of things getting out of hand are really small, say 1 in 50 that suddenly the recession will turn the U.S. into a fascist state.....but even that is a frightening probability considering the consequences.

So yes maybe we've rolled the dice and come out in favor thus far but we cannot assume that these previous positive outcomes will always result in the same manner. A drastic disaster once is all you need to make the world a bad bad place.

1917 happened. Nazi Germany happened. These events don't take place at the brink of every catastrophe but we should never forget that the opportunity for them to occur is present always and must be diminished if possible. When we forget this possibility and point to the fare luck of past, we invite disaster with open arms.

[Frederic Sautet]

Steve, thanks for keeping me on my toes. I should have checked the price of gold before writing the entry. The general point however was that gold has been going up and flirted with $1000 an ounce sometime in 2008 even if it has actually levelled off in the last six months and even gone down in the recent weeks. The recent strength of the USD may give credence to the idea that this crisis is not going to rock the boat more than it has so far.

I don't disagree with the resiliency argument at all. My point in writing the entry was to say that the dynamic of interventionism is real. It may not be a problem for our generation, it could be one for the next or the one after that. There are examples of countries (and NZ comes to my mind of course) that have lived through years of bad policies that eventually brought them near the abyss. It takes a lot to get there, especially in terms of reduction of the gains from trade and innovation, but it is not unheard of. And again, the US is not on that direct path, but it has been taking a detour.

Many States in the US are currently in very bad fiscal situations. Is it just transitory or is it going to lead to more serious outcomes such as bankruptcy (defaulting on their bonds)? I am not sure what the answer is, but I believe defaulting is much more likely than we may think (a good example is NJ). Already many states (eg MA, CA, MD) and counties (eg Montgomery County in MD) are forced to cut spending because they have no other choice. We could see a cluster of states defaulting on their debt within the next two years. And this is a reflection of the issues that the Federal state is also facing.

Now we may rejoice when states and the Federal state go bankrupt (I will), as this will finally curtail public spending, but the road before we get there might be pretty bumpy.

[lwaaks]

I agree with David Ramsay Steele that if the past is any indication, our future is rosy indeed, in spite of the depradations of the state. Temporary poverty and unemployment today is not the nightmare it was a generation ago. But the long-term view would have been no consolation to a mother (cue violin) trying to feed her children in the dust bowl during the 1930s. And, while we are far removed from that era (I hope!), the long-term view is still no consolation to someone who is forced to delay retirement due to his diminished portfolio. Yes, we are richer than ever but most of us who don't have creative, fun teaching jobs at George Mason U. would prefer to work shorter hours for less years. The welfare/warfare state impedes growth and steals years away from people in terms of leisure time.

[Richard Ebeling]

That the market is adaptable to a wide variety of government interventions and controls has certainly been demonstrated historically.

And it is always easy enough to see one's own time as uniquely in peril -- a turning point in history.

Anyone who reads the despair of (classical) liberals in the 1920s and 1930s following the eclipse of the pre-World War I "liberal era" in the face of the rise of totalitarian collectivism in Europe knows that they thought that a new dark age was permanently descending on Western Civilization.

And many in the post-World War II era believed that, if not history, then, at least the ideological tide was pushing the global in the direction of Soviet-style communism.

Yet, the institutions of a relatively free society have endured. And out of the chaos and destruction of two World Wars and experiments in central planning, the market economy has survived and prospered.

But. . . we should not neglect that fact that the market economy's survivability has been punctuated with long periods of economic irrationality.

In the long-run "capitalism" survived. Tell that to the victims -- the dead, tortured, and beaten -- under Nazism and Communism.

Is this too extreme? Well, America survived FDR's New Deal. Tell that to those who never had the chance for bettering their lives and that of their families due to the prolonging of the Great Depression due to fascist-like, and interventionist policies of the Roosevelt administration.

Still too extreme? Then what about Bastiat's "what is seen and what is not seen"? What about all the everyday opportunities that were never allowed because of interventions, regulations, controls, taxes? What about the every liberty that was reduced or eliminated that made life less free for the ordinary and extraordinary individual?

Watch an old movie from, say, the 1950s or 1960s where there is an airport scene. No metal detectors, no x-rays of baggage, no taking off of shoes, no -- as will be implemented as of January -- presenting ID with one's full name, nationality, addresses, and gender to federal authorities to board a plane. And notice, people are shown in those old movies going up to the ticket counter at the airport smoking a cigar! No "political correctness"!

We often have forgotten what a world was like without these petty controls, restrictions and regulations -- which cumulatively add up to major losses of liberty once taken for granted.

Will America and the market economy survive in the long run the latest intrusions of the government into our personal and economic affairs? Probably, in the long run.

But in the mean time the state will have grown in strength, expanded its tentacles of control, limited various additional corners of freedom, and reduced economic opportunities and innovations. And most probably delayed the recovery from its own recession-creating policies.

Your and my family will be a little poorer for longer than we needed to be. Will have to work more and longer years to make up for what the government does to prevent our economic recovery from its wrong-headed policies. We will have less freedom in various corners of our lives. And some of these lost liberties may never be fully restored.

Oh, and finally. Sometimes we do live at turning points in history. And, who knows, this may be one -- one that we do not recover from for a very long time.

Richard Ebeling

[Rick]

"Watch an old movie from, say, the 1950s or 1960s where there is an airport scene. No metal detectors, no x-rays of baggage, no taking off of shoes, no -- as will be implemented as of January -- presenting ID with one's full name, nationality, addresses, and gender to federal authorities to board a plane. And notice, people are shown in those old movies going up to the ticket counter at the airport smoking a cigar! No "political correctness"!"

Yep. No netflix, no web, no satellite tv, etc, etc

Yep. The 50's & 60's were great relative to now. All aboard for the time machine leaving at platform 6! Any-takers?

[Steve Horwitz]

Oh come on now Rick, you're gonna open up an old debate around here and you might even coax Prychitko out of the sauna to tell you how awful things are now. He and Richard will probably go smoke cigars out on the back porch and trade stories about the good old days while they yell at Leeson and Coyne to stay off the lawn.

Meanwhile, a hip old coot like me who knows life has never been better (all things considered) will be inside watching Red Wings hockey on digital cable on a large, cheap color TV.

(Here's where text cannot communicate the teasing wink with which this comment should be read.)

[Richard Ebeling]

Rick:

Just because the market has had the ability to overcome and get around a growing spider's web of controls, regulations, and restrictions, as well as taxes to provide us with the internet, satelittle tv, netfilx, does not mean there is not a problem with government in our society today.

What else would the market have provided us with beyond the things you mention if there had not been the Great Society programs introduced, if taxes had been cut back to what they were before the first World War (5 percent of national income at that time), if the regulatory agencies had been repealed, etc.

I think that is what is meant by Bastiat when he referred to what is seen and what is not seen?

To point out that government was, to certain degrees less intrusive, say, forty or fifty years ago, is not an appeal of going back to the standard of living at that time.

But it is to suggest that we would be alot freer today, and alot more prosperous today, if the state had not grown in power that way it has during the last decades?

Or are you suggesting that if not for the Great Society programs we would not have netflix today? That is a line of causation that, I must confess, is a little too subtle for me.

Richard Ebeling

[Rick]

"But it is to suggest that we would be alot freer today, and alot more prosperous today, if the state had not grown in power that way it has during the last decades?"

So why not just say that instead of all the waxing lyrical about smoking in the 50's & 60's etc?

[Rick]

More substantively, Richard seems to imply that we are less free today than in the 50's & 60's (when we had liberty to generate negative externalities by smoking stinky cigars in airports). I think we are freer today than back then.

How many of you would really accept the time-machine ride back to then? If you say no then I guess you place a higher value on your standard of living than liberty (as seemingly defined by Austro-libertarians like Richard) at the margin.

Or am I missing something? Apologies if so.

[Steve Horwitz]

I'm with Rick. I would NOT accept the time machine ride, not even a question.

[Richard Ebeling]

First, there are (were) externalities only when spaces have not been privatized. So if you don't like the smell of cigars -- go some place else where the property owner shares your values or sees profits by serving the interests of non-smokers.

Some people like the enjoyment of a cigar and others even like the smell. God, am I tired of the self-righteous attitude that only one set of preferences are good, healthy, "in tune with nature," etc., etc. Give me a break! That type of religious intolerance should have gone out with the Middle Ages -- but I guess history repeats itself, with slight variation.

As for not wanting to go back into a time machine. I suppose you would have said it was great that Germans supported Hitler -- after all, all they had less of in, say, 1939 were some civil and economic freedoms. After all, they had a better standard of living that in 1933.

I believe that liberty is the soil in which prosperity can grow by freeing men and their minds to peacefully produce, compete and exchange.

But to put my cards on the table: even if the free market economy was less productive than socialism, communism, fascism, Nazism, the interventionist-welfare state, I would choose liberty.

But I do realize that in our post-modern world, it is all a matter of opinion in which our opinons are the result of having been victims of our environment.

I do understand that some people believe in respect for others, tolerance of diverse preferences and values among men, allowing the latitude for spontaneouse social processes.

While others just like to lord over their fellow men, to command and order, to beat, torture, and kill; to make other minds conform to what one personally wants even if violence and coercion are needed to make others do the conforming.

But I do understand, who am I to judge? "I'm ok, you're ok."

Richard Ebeling

[Steve Horwitz]

Let me also put my cards on the table: If the systems Richard names really did make humans better off, I'd support them.

I also think the question of whether we are more free today than, say, in the 1950s is not obviously answered "no." Before one says "even economically?" one might consider the range of industries that are less regulated than 50 years ago, not to mention the arguably freer global economy.

In other realms, such as civil liberties, I think the answer is also that we're more free, although there have certainly been gains and losses. The end of state-sponsored racial and gender discrimination needs to be accounted for as well as the end of limits on a variety of reading and visual materials. Yes, we have the TSA, but we don't have J. Edgar and the FBI. A gender, sexual, and racial minorities have options they certainly didn't have back then.

So I am prepared to argue that not only are we better off than 50 years ago, we are quite possibly freer, all things considered.

[Rick]

Firstly, I don't have anything to add to what Steve H says in response to Richard above.

But I will just say that, ladies and gentlemen - I give you Richard Ebeling & sophisticated free-market propaganda (ill-informed sneering at postmodernism & sneering at much much else together with phraseology about "victims" that all suggests he really has no arguments).

Why does Richard not move to a small cabin somewhere like Thoreau? Methinks his twittering about 'liberty' is just expressive twittering when all said & done. As a good Rotbardian might say, "Richard has demonstrated his preference for high living standards over liberty by his actions"

I'm ok.

[Rick]

"While others just like to lord over their fellow men, to command and order, to beat, torture, and kill; to make other minds conform to what one personally wants even if violence and coercion are needed to make others do the conforming."

May I deign to nominate Richard for 'most melodramatic austrian of the year' award?

This kind of hate-filled screed may play well with curmudgeonly old gentlemen who read FEE publications (eg - his 'review' of Burczak's seriously flawed but fascinating recent book) but it cuts zero ice with anyone else.

[Richard Ebeling]

Oh, boy! Here we go!

As much as I find myself uncomfortable with disagreeing with Steve. . .

Yes, there should never have been state-sponsored and enforced discrimination against race, gender, or sexual-orientation. And the end to such political coercion has been a major advance for the cause of individual rights and liberty.

But it has not come without a reverse form of discriminatory policy. That is, forced integration.

Here is an instance of that old saying, "I may disagree with what he says, but I'll defend to the death his right to say it."

I may disagree with discriminatory conduct, but if it is private and non-coercive, I believe that people have the right to associate -- or not -- with whomever they choose.

The state has prevented private race, gender, or sexual orientation discrimination. But why? Why should someone be forced to hire, assoication or deal with someone they don't want to?

So a black man should not be forced to hire a white man. A women's only club should not be forced to accept men as members. A Muslim should not be required to rent an apartment to a Jew. A "gay" should not have to serve a "straight guy" in his restaurant if he does not want to.

It's called the right of freedom of association. Rather than individual rights, for the last 50 years we have classified people on the basis of race, gender, and sexual orientation. And defined group rights, group privileges, group burdens.

I do not consider any of this to the better. And this affects all of us today in many of our social and economic activities.

We have "group speak," meaning you cannot use certain words, or express certain beliefs without being legally held responsible for just using words. When I was growing up there was a phrase: "Sticks and stones can break my bones, but words can never harm me." Oh, I fogot, that phrase is part of the bad old days.

No, I would not like to go back to southern segragation. Or stupid ideas about race and sexual orientation.

But there could have been and should have been classical liberal solutions to these problems rather than collectivist ones.

When the classical liberals in England ended slavery in the British Empire they did not combine this with employment quotas and anti-discrimination laws.

They trusted good-well, rationality, and the incentives of the market to reduce "bad behavior" and "stupid attitudes" over time. Through the logic and the practice of freedom.

When Jews were finally liberated from the discriminatory laws in central Europe in the middle of the 19th century, they were not given special college or employment quotas, nor were Christians required to hire them or live next door to them.

They were just, finally, recognized as having before the law the same individual rights as all others in society. And they did just fine.

It was only the envy and resentment of those who could not compete with their new Jewish competitors that led to the rise of political anti-semitism (as opposed to private, or personal anti-semitism) and therefore the counter-revolution of racial collectivism.

I consider the means that have been used to overcome prejudices and discriminations of the past to have been means that have enslaved us to other forms of tyranny and intolerance.

We are not a better or a freer society for having chosen this route.

Oh, yes, and about smoking. It used to be considered good manners to ask people around you if they minded if you lite up. If they did, you did not smoke, or went into a different room or outside.

But today everything is politicized. You don;t like something, or you don't like the way someone acts, speaks, or interacts with others? Then just pass a law and make others comply with the way you want people to behave. And, of course, behind that law is the power of state coercion. That is, the right to arrest you, imprison you, or even kill you (if you resist arrest).

Why? Because someone didn't to rent an apartment to person "X." Or said a "bad word" in reference to person "Y." Or refused to hire person "Z."

I don't call this freedom. But, I forgot, we are in that post-modern world where slavery = freedom, censorship = free speech, intolerance = "sensitivity." And on and on.

No, I don't call this freedom. I call it versions of what Herbert Spencer warned against -- "The New Slavery."

Richard Ebeling

[Rick]

"But to put my cards on the table: even if the free market economy was less productive than socialism, communism, fascism, Nazism, the interventionist-welfare state, I would choose liberty."

To pose the question once again: Would Richard go back in a time-machine? If not, then I suggest much of what he says about liberty is cheap talk plain and simple.

And yes, Richard. I do believe the state should use violence to prevent you from smoking in a public place like an airport (sure, you'll say the first-best is that the public space be privatized but we are in second-best land here) just as I believe the state should use violence to stop you carrying a bucket of grenades around the airport or going to McDonalds with a bazooka strapped to your back.

Sure you'll say I'm a Stalinist, etc, etc.

[Richard Ebeling]

Rick:

Do you believe that the state should -- if necessary in the face of a citizen's resistance -- kill someone to redistribute his income to others in society?

Say, so Billy can have a college scholarship? Or Sally can have a dental expense covered? So Citigroup won't be faced with bankruptcy? So the Poland can have a nuclear umbella against Russia (or, I mean Iran, sorry!).

So National Socialist Radio -- oh, I mean National Public Radio -- can broadcast "touchy, feely" stories for middle class liberals? So Archer-Daniels Midland can laugh all the way to the bank for subsidized corn-based fuel?

If you think I'm extreme, just think of the thing that government spends money on that you hate the most, that would be on the top of the list for you to end government doing.

Now try to resist not having your wealth and income taxed away to fund that thing you really hate the most. You will end up with your property confiscated for back taxes; if you resist the confiscation they will arrest you; if you resist arrest the police authorities have the right to use force to subdue you; and if you continue to resist they have the authority to kill you.

So do you believe that government should -- in principle -- kill you to fund that policy that you dispise the most?

Why not? Obviously, you don't care if they kill me or Steve for not wanting the government to do some other thing?

Oh, its just your favorite good causes that should be funded with other people's blood. I forgot, we're in that post-Modern world.

Give me a break!

Richard Ebeling

[Roger Koppl]

Richard,

I don't think Rick has invoked postmodernism. I think he's been quite reasonable, actually. You said, "But there could have been and should have been classical liberal solutions to these problems rather than collectivist ones." Yeah, I think that's right. But I think the question was not whether we have as much freedom as we could have had or something like that. The question was wether we have greater freedom now or then. Then was, I think, pre-1964. If "now" were August 2008 or, certainly, September 10th 2001, I would have no hesitation about saying we are more free "now." As you may know already, I'm worried about the combination of 1) measures associated with the supposed war on terrorism and 2) measure associated with the bailout. But you seem to be saying that 1955 was more free than 2000. Not sure I see that one, honestly.

[Rick]

Richard, this kind of screed may win applause at a FEE bootcamp or when you lecture to crazy old ladies at Hillsdale, but it impresses very few others.

Roger is dead-on target with respect to what the question actually was.

So once again, any takers for the time-machine back to the halcyon 50's and early 60's.

Who'd have thought the Austrian 'bliss point' was an episode of Leave it to Beaver!

[Steve Horwitz]

Rick - I'm on your side on this one, so I'd only ask that you not characterize Richard's position in such a way that it's "the" Austrian, or even "an" Austrian, view.

Aside from the fact that Austrians such as myself reject Richard's position, this debate is really about libertarianism and how one weighs various forms of freedom. One's "Austrianness" is pretty orthogonal to one's answer to these issues.

There's nothing necessarily "Austrian" about either Richard's position or mine on this set of issues.

[liberty]

I am not sure its very productive to compare 1955 to 2000 or 2008 in blog comments format. There are so many variables. We are certainly freer in some ways and less free in others. There are also two different trajectories, and a myriad of possible trajectories. We could have gone a number of different ways then (more classically liberal solutions could have been taken) and now if one feels we are headed toward even worse policies this may color the perception of freedom today.

[Richard Ebeling]

Roger:
Part of what I'm saying is that more goods and services does not mean more freedom.

In an earlier post in these exchanges I raised the example of Nazi Germany (admittedly an "extreme example) that certainty by, say, 1939 (before the war broke out)many average Germans had a higher standard of living than they had had at the depth of the Great Depression in 1933 when Hitler came to power.

But while many Germans had more goods, and even some better goods, they did not have more freedom. Set the German Jews aside. Germans no longer had the freedom of assoication, speech, enterprise (in 1936 the Nazis had imposed four-year central planning without nationaliztion of property), travel, etc.

And part of my point, when I said that even if various forms of economic collectivism were productively superior to a free market economy I would still choose freedom. In my mind, personal liberties of the types I just mentioned seem more important than a couple of extra suits in the closet, and the ability to go to the movies more often based on a job provided for me by state control of the economy.

Is the world more prosperous today in terms of material wealth (I'm thinking of America in the context of this discussion)? Most certaintly. As Michael Cox of the Dallas Fed and others have shown our real standards of living have grown greatly over the decades.

Do we have some civil liberties that were not recognized or respected in, say, the 1950s or 1960s? Yes, that is true, too.

But has there been any "drift" in the other direction? To my mind, yes.

I think (especially since 9/11) many of our personal freedoms and mobilities have been diminished in the name of national security and a war on terrorism.

That is what I meant by the comparison with airports fifty years ago and today. By the way, unlike the impression that Rick tried to give, I of course don't want a mad bomber on any airplance I'm traveling on.

But I don't know what type of security we might have had -- less costly, less intrusive, less humiliating -- if airports were private, with private security, and the concern was with the safety but also the respect and convenience of the passengers. Why? Because they are the volunatry customers of the airport and the airlines.

Instead, we have crude, blunt instrument of government monopoly security at government-operated airports.

As I also mentioned in an earlier post in this exchange, of course, I would not want to return to the Jim Crow laws of the South in the 1950s, and other forms of compulsory segregation. These were humilitating and inhuman toward blacks, and an unacceptable violation of the rights of any non-blacks who wanted to voluntarily associate with blacks in the South.

But the end of state segragation has not been without a cost. I mean that the means chosen because of the ideologies of then (and now) presumed that to end segregation it was necessary to compel forced integration.

If it is immoral to prevent me from assoicating with someone I want to, it is equally immoral to force to associate with someone I don't want to.

You may recall that in his 1933 lecture at the LSE on "The Trend of Economic Thinking," Hayek mentioned that the advocate of the market often finds himself in the company of people he otherwise completely disagrees with.

To oppose forced integration sometimes meant guilt by association because white racists opposed it also. But the classical liberal opposes it for totally different reasons that the white racist. And wants a different outcome than the racist.

I think that political correctness with language, behavior, and attitude has been extremely oppressive of thought and deed. And like all forms of censorship it means that a person thinks one thing buts feels compelled to say something else in public.

For example, I could give examples of what I mean. But I will not because of what mighty on this blog be considered "appropriate." But this, at least partly, is not due to politeness, good manners, a proper desire not to offend another. It is partly because you, me, and the blog overseers implicitly have "thought police" to some degree in the back of our minds.

I do think, also, that there are a wide variety of economic regulations and controls that have become more extensive over the last fifty years.

And what is equally bad, fewer people even doubt the wisdom of whether these are legitamate concerns or responsibilities of government, compared to how many people thought, say, fifty years ago.

In that sense the policies and political biases have resulted in the "taken-for-granted" drifting further to the left in people's minds. I do not consider that an improvement in our society, either.

Richard Ebeling

[Roger Koppl]

Richard,

I was going on civil liberties, not material abundance. No Miranda rights, no Gideon rights, rape within marriage a legal impossibility, Jim Crow, and so on. It does seem that affluent white men were freer in the period 1945 - 1964 than they are today, at least if they bore no taint of communist ideology. But the people as a whole were freer in 2000 than in the period 45-64. Some posts on my side of this issue have mixed up the “positive freedom” issue of material abundance with the “negative freedom” issue of ordered liberty. Yup. But I bet those same folks would say, “Like Koppl said.” I don’t think they were really suggesting we give up our negative freedoms birthright for a mess of positive freedoms porridge.

If we fast-forward to October 2008, I don't quite know what to say. I'm pretty freaked out by the events of the Bush years. But we may enjoy salvation by our native liberal traditions. The "liberal" (in the leftish sense) Naomi Wolf invokes the Federalists. Think about that! Our history itself is a great bulwark of liberty. So we will have to see how it all plays out. This goes to Steve’s point about controlling the narrative. (Maybe “control” is not the right word, BTW?) But I am fully alive to the possibility that we really are seeing the closing of American society.

[joey]

Have a look at the coming results of all the
government bailouts:

http://djomama.blogspot.com/2006/12/first-world-government-junk-bonds-on.html