I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Tuesday, March 20, 2012

Why Is the Story About Malia Obama Vacationing in Mexico Disappearing from the Web?

UPDATE: The Administration has just responded to the disappearing stories.
Read it here.

Have you heard that Malia Obama, the president’s daughter, is reportedly spending her spring break in Oaxaca, Mexico? Allegedly, she’s jetting off with some of her classmates and 25 Secret Service agents to a country that the State Department has said all Americans should avoid. But something is different about the latest “Obama vacation controversy:” references to it are disappearing from the Internet — and fast.
Around 3:00 EST, a Telegraph story reporting on the event was the first to vanish (note how the url remains the same in the “before” and “after”):
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
Before
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
After
Then, the related Huffington Post article was found to be linking back to a completely unrelated Yahoo News page titled “Senegal Music Star Youssou Ndour Hits Campaign Trail.”
The Huffington Post article:
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
Links to this site:
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
The Yahoo News story that HuffPo links to makes no mention of Malia Obama or her Mexican vacation. This raises two possibilities: either HuffPo has made an error in its link, or Yahoo has also removed its “Malia in Mexico” story. The latter more likely considering that the “-obamas-daughter-spends-springbreak-in-Mexico” url is still present in the Yahoo story.
And now, the link to the Huffington Post article on Google redirects to the site’s main page; the page itself is gone.
In addition to larger news organizations, smaller sites are also removing their stories.
Click here to find out more!

Free Republic removed a related discussion thread:
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
And “Global Grind” removed its related article:
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
Of these sites, the only one to state a reason for the change was “Free Republic,“ where the Admin wrote ”Leave the kids alone.”
So that raises the question: Why were all of these sites taken down? Is the story false? Were they removed for security reasons?
Consider that the story still lives (as of this publication)* on the site of The Australian, which uses a story from the well-respected AFP (a sort of Associated Press for France):
Malia Obama Oaxaca, Mexico Vacation Story Disappearing from the Web
So far, no outlets have explained why the stories have been removed. It will be interesting to see if they do.
The Blaze’s Jonathon M. Seidl contributed to this report.
*The Australian has since removed its article.
UPDATE:
Buzzfeed is now reporting that it is a “long tradition” not to report on presidential kids’ vacation plans, citing this as the possible reason for the many unexplained retractions.
If this is the case, it still raises questions as to why Malia was allowed to vacation in a country that the State Department recommends no American travels to.
Neither AFP nor the White House responded to Buzzfeed’s request for comment.
UPDATE II:
The Montreal Gazette has now posted the story of the vacation. It’s one of the only sites that is reporting on it. Interestingly, the story is actually attributed to the AFP (mentioned above). You can read it here.

Thursday, March 15, 2012

The Skeptics Case

We check the main predictions of the climate models against the best and latest data. Fortunately the climate models got all their major predictions wrong. Why? Every serious skeptical scientist has been consistently saying essentially the same thing for over 20 years, yet most people have never heard the message. Here it is, put simply enough for any lay reader willing to pay attention.

What the Government Climate Scientists Say

Figure 1
Figure 1
The climate models. If the CO2 level doubles (as it is on course to do by about 2070 to 2100), the climate models estimate the temperature increase due to that extra CO2 will be about 1.1°C × 3 = 3.3°C.[1]
The direct effect of CO2 is well-established physics, based on laboratory results, and known for over a century.[2]
Feedbacks are due to the ways the Earth reacts to the direct warming effect of the CO2. The threefold amplification by feedbacks is based on the assumption, or guess, made around 1980, that more warming due to CO2 will cause more evaporation from the oceans and that this extra water vapor will in turn lead to even more heat trapping because water vapor is the main greenhouse gas. And extra heat will cause even more evaporation, and so on. This amplification is built into all the climate models.[3] The amount of amplification is estimated by assuming that nearly all the industrial-age warming is due to our CO2.
The government climate scientists and the media often tell us about the direct effect of the CO2, but rarely admit that two-thirds of their projected temperature increases are due to amplification by feedbacks.

What the Skeptics Say

Figure 2
Figure 2
The skeptic's view. If the CO2 level doubles, skeptics estimates that the temperature increase due to that extra CO2 will be about 1.1°C × 0.5 ≈ 0.6°C.[4]
The serious skeptical scientists have always agreed with the government climate scientists about the direct effect of CO2. The argument is entirely about the feedbacks.
The feedbacks dampen or reduce the direct effect of the extra CO2, cutting it roughly in half.[5] The main feedbacks involve evaporation, water vapor, and clouds. In particular, water vapor condenses into clouds, so extra water vapor due to the direct warming effect of extra CO2 will cause extra clouds, which reflect sunlight back out to space and cool the earth, thereby reducing the overall warming.
There are literally thousands of feedbacks, each of which either reinforces or opposes the direct-warming effect of the extra CO2. Almost every long-lived system is governed by net feedback that dampens its response to a perturbation. If a system instead reacts to a perturbation by amplifying it, the system is likely to reach a tipping point and become unstable (like the electronic squeal that erupts when a microphone gets too close to its speakers). The earth's climate is long-lived and stable — it has never gone into runaway greenhouse, unlike Venus — which strongly suggests that the feedbacks dampen temperature perturbations such as that from extra CO2.

What the Data Says

The climate models have been essentially the same for 30 years now, maintaining roughly the same sensitivity to extra CO2 even while they got more detailed with more computer power.
· How well have the climate models predicted the temperature?
· Does the data better support the climate models or the skeptic's view?

Air Temperatures

One of the earliest and most important predictions was presented to the US Congress in 1988 by Dr James Hansen, the "father of global warming":
Figure 3
Figure 3
Hansen's predictions to the US Congress in 1988,[6] compared to the subsequent temperatures as measured by NASA satellites.[7]
Hansen's climate model clearly exaggerated future temperature rises.
In particular, his climate model predicted that if human CO2 emissions were cut back drastically starting in 1988, such that by year 2000 the CO2 level was not rising at all, we would get his scenario C. But in reality the temperature did not even rise this much, even though our CO2 emissions strongly increased — which suggests that the climate models greatly overestimate the effect of CO2 emissions.
A more considered prediction by the climate models was made in 1990 in the IPCC's First Assessment Report:[8]
Figure 4
Figure 4
Predictions of the IPCC's First Assessment Report in 1990, compared to the subsequent temperatures as measured by NASA satellites.
It's 20 years now, and the average rate of increase in reality is below the lowest trend in the range predicted by the IPCC.

Ocean Temperatures

The oceans hold the vast bulk of the heat in the climate system. We've only been measuring ocean temperature properly since mid-2003, when the Argo system became operational.[9][10] In Argo, a buoy duck dives down to a depth of 2,000 meters, measures temperatures as it very slowly ascends, then radios the results back to headquarters via satellite. Over 3,000 Argo buoys constantly patrol all the oceans of the world.
Figure 5
Figure 5
Climate model predictions of ocean temperature,[11] versus the measurements by Argo.[12] The unit of the vertical axis is 10^22 Joules (about 0.01°C).
The ocean temperature has been basically flat since we started measuring it properly, and not warming as quickly as the climate models predict.

Atmospheric Hotspot

The climate models predict a particular pattern of atmospheric warming during periods of global warming; the most prominent change they predict is a warming in the tropics about 10 km up, the "hotspot."
The hotspot is the sign of the amplification in their theory (see figure 1). The theory says the hotspot is caused by extra evaporation, and by extra water vapor pushing the warmer, wetter lower troposphere up into volume previously occupied by cool dry air. The presence of a hotspot would indicate amplification is occurring, and vice versa.
We have been measuring atmospheric temperatures with weather balloons since the 1960s. Millions of weather balloons have built up a good picture of atmospheric temperatures over the last few decades, including the warming period from the late 1970s to the late '90s. This important and pivotal data was not released publicly by the climate establishment until 2006, and then in an obscure place.[13] Here it is:
Figure 6
Figure 6
On the left is the data collected by millions of weather balloons.[14] On the right is what the climate models say was happening.[15] The theory (as per the climate models) is incompatible with the observations. In both diagrams the horizontal axis shows latitude, and the right vertical axis shows height in kilometers.
In reality there was no hotspot, not even a small one. So in reality there is no amplification — the amplification shown in figure 1 does not exist.[16]

Outgoing Radiation

The climate models predict that when the surface of the earth warms, less heat is radiated from the earth into space (on a weekly or monthly time scale). This is because, according to the theory, the warmer surface causes more evaporation and thus there is more heat-trapping water vapor. This is the heat-trapping mechanism that is responsible for the assumed amplification in figure 1.
Satellites have been measuring the radiation emitted from the earth for the last two decades. A major study has linked the changes in temperature on the earth's surface with the changes in the outgoing radiation. Here are the results:
Figure 7
Outgoing radiation from earth (vertical axis) against sea-surface temperature (horizontal), as measured by the ERBE satellites (upper-left graph) and as "predicted" by 11 climate models (the other graphs).[17] Notice that the slopes of the graphs for the climate models are opposite to the slope of the graph for the observed data.
This shows that in reality the earth gives off more heat when its surface is warmer. This is the opposite of what the climate models predict. This shows that the climate models trap heat too aggressively, and that their assumed amplification shown in figure 1 does not exist.

Conclusions

All the data here is impeccably sourced — satellites, Argo, and weather balloons.[18]
The air and ocean temperature data shows that the climate models overestimate temperature rises. The climate establishment suggest that cooling due to undetected aerosols might be responsible for the failure of the models to date, but this excuse is wearing thin — it continues not to warm as much as they said it would, or in the way they said it would. On the other hand, the rise in air temperature has been greater than the skeptics say could be due to CO2. The skeptic's excuse is that the rise is mainly due to other forces — and they point out that the world has been in a fairly steady warming trend of 0.5°C per century since 1680 (with alternating ~30 year periods of warming and mild cooling) where as the vast bulk of all human CO2 emissions have been after 1945.
We've checked all the main predictions of the climate models against the best data:
Test Climate Models
Air temperatures from 1988Overestimated rise, even if CO2 is drastically cut
Air temperatures from 1990Overestimated trend rise
Ocean temperatures from 2003Overestimated trend rise greatly
Atmospheric hotspotCompletely missing → no amplification
Outgoing radiationOpposite to reality → no amplification
The climate models get them all wrong. The missing hotspot and outgoing radiation data both, independently, prove that the amplification in the climate models is not present. Without the amplification, the climate model temperature predictions would be cut by at least two-thirds, which would explain why they overestimated the recent air and ocean temperature increases. Therefore,
  1. The climate models are fundamentally flawed. Their assumed threefold amplification by feedbacks does not in fact exist.
  2. The climate models overestimate temperature rises due to CO2 by at least a factor of three.
The skeptical view is compatible with the data.

Some Political Points

The data presented here is impeccably sourced, very relevant, publicly available, and from our best instruments. Yet it never appears in the mainstream media — have you ever seen anything like any of the figures here in the mainstream media? That alone tells you that the "debate" is about politics and power, and not about science or truth.
This is an unusual political issue, because there is a right and a wrong answer, and everyone will know which it is eventually. People are going ahead and emitting CO2 anyway, so we are doing the experiment: either the world heats up by several degrees by 2050 or so, or it doesn't.
Notice that the skeptics agree with the government climate scientists about the direct effect of CO2; they just disagree about the feedbacks. The climate debate is all about the feedbacks; everything else is merely a sideshow. Yet hardly anyone knows that. The government climate scientists and the mainstream media have framed the debate in terms of the direct effect of CO2 and sideshows such as arctic ice, bad weather, or psychology. They almost never mention the feedbacks. Why is that? Who has the power to make that happen?
Notes
[1] More generally, if the CO2 level is x (in parts per million) then the climate models estimate the temperature increase due to the extra CO2 over the preindustrial level of 280 ppm as 4.33 ln(x / 280). For example, this model attributes a temperature rise of 4.33 ln(392/280) = 1.46°C to the increase from preindustrial to the current CO2 level of 392 ppm.
[2] The direct effect of CO2 is the same for each doubling of the CO2 level (that is, logarithmic). Calculations of the increased surface temperature due to of a doubling of the CO2 level vary from 1.0°C to 1.2°C. In this document we use the midpoint value 1.1°C; which value you use does not affect the arguments made here.
[3] The IPCC, in their last Assessment Report in 2007, project a temperature increase for a doubling of CO2 (called the climate sensitivity) in the range 2.0°C to 4.5°C. The central point of their model estimates is 3.3°C, which is 3.0 times the direct CO2 effect of 1.1°C, so we simply say their amplification is threefold. To be more precise, each climate model has a slightly different effective amplification, but they are generally around 3.0.
[4] More generally, if the CO2 level is x (in parts per million) then skeptics estimate the temperature increase due to the extra CO2 over the preindustrial level of 280 ppm as 0.72 ln(x / 280). For example, skeptics attribute a temperature rise of 0.72 ln(392/280) = 0.24°C to the increase from preindustrial to the current CO2 level of 392 ppm.
[5] The effect of feedbacks is hard to pin down with empirical evidence because there are more forces affecting the temperature than just changes in CO2 level, but seems to be multiplication by something between 0.25 and 0.9. We have used 0.5 here for simplicity.
[6] Hansen's predictions were made in Hansen et al, Journal of Geophysical Research, vol. 93, no. D8 (August 20, 1988), fig. 3a, p. 9,347: pubs.giss.nasa.gov/docs/1988/1988_Hansen_etal.pdfDownload PDF. In the graph here, Hansen's three scenarios are graphed to start from the same point in mid-1987 — we are only interested in changes (anomalies).
[7] The earth's temperature shown here is as measured by the NASA satellites that have been measuring the earth's temperature since 1979, managed at the University of Alabama, Hunstville (UAH). Satellites measure the temperature 24/7 over broad swathes of land and ocean, across the whole world except the poles. While satellites had some initial calibration problems, those have long since been fully fixed to everyone's satisfaction. Satellites are mankind's most reliable, extensive, and unbiased method for measuring the earth's air temperature temperatures since 1979. This is an impeccable source of data, and you can download the data yourself from vortex.nsstc.uah.edu/data/msu/t2lt/uahncdc.lt (save it as .txt file then open it in Microsoft Excel; the numbers in the "Globe" column are the changes in MSU Global Monthly Mean Lower Troposphere Temperatures in °C).
[8] IPCC First Assessment Report, 1990, page xxii (www.ipcc.ch/ipccreports/far/wg_I/ipcc_far_wg_I_full_report.pdfDownload PDF) in the Policymakers Summary, figure 8 and surrounding text, for the business-as-usual scenario (which is what in fact occurred, there being no significant controls or decrease in the rate of increase of emissions to date). "Under the IPCC Business-as-Usual (Scenario A) emissions of greenhouse gases, the average rate of increase of global mean temperature during the next century is estimated to be about 0.3°C per decade (with an uncertainty range of 0.2°C to 0.5°C)."
[9] "Argo," MetOffice.uk.gov.
[10] Ocean temperature measurements before Argo are nearly worthless. Before Argo, ocean temperature was measured with buckets or with bathythermographs (XBTs) — which are expendable probes lowered into the water, transmitting temperature and pressure data back along a pair of thin wires. Nearly all measurements were from ships along the main commercial shipping lanes, so geographical coverage of the world's oceans was poor — for example the huge southern oceans were not monitored. XBTs do not go as deep as Argo floats, and their data is much less precise and much less accurate (for one thing, they move too quickly through the water to come to thermal equilibrium with the water they are trying to measure).
[11] The climate models project ocean heat content increasing at about 0.7 × 10^22 Joules per year. See Hansen et al., 2005: "Earth's Energy Imbalance: Confirmation and Implications," Science, 308, 1431–1435, p. 1432, where the increase in ocean heat content per square meter of surface, in the upper 750m, according to typical models, is 6.0 Watt·year/m2 per year, which converts to 0.7 × 10^22 Joules per year for the entire ocean as explained at here.
[12] The ocean heat content down to 700m as measured by Argo is now available; you can download it from here as a CSV file. The numbers are the changes in average heat for the three months, in units of 10^22 Joules, seasonally adjusted. The Argo system started in mid-2003, so we started the data at 2003–6.
[13] The weather-balloon data showing the atmospheric warming pattern was finally released in 2006, in the US Climate Change Science Program, 2006, part E of figure 5.7, on page 116.Download PDF
There is no other data for this period, and we cannot collect more data on atmospheric warming during global warming until global warming resumes. This is the only data there is. By the way, isn't this an obscure place to release such important and pivotal data — you don't suppose they are trying to hide something, do you?
[14] See previous note.
[15] Any climate model, for example, IPCC Assessment Report 4, 2007, ch. 9, p. 675, which is also on the web (figure 9.1, parts c and f). There was little warming 1959–1977, so the commonly available 1959–1999 simulations work as well.
[16] So the multiplier in the second box in figures 1 and 2 is at most 1.0.
[17] Lindzen and Choi 2009, Geophysical Research Letters, vol. 36.Download PDF
The paper was corrected after some criticism, coming to essentially the same result again in 2011.Download PDF[18] In particular, we have not quoted results from land thermometers, or from sparse sampling by buckets and XBTs at sea. Land thermometers are notoriously susceptible to localized effects — see Is the Western Climate Establishment Corrupt? by the same author.Download PDF

Tuesday, March 13, 2012

Bud Abbot and Lou  Costello were one of the most popular comedy teams of the 1940's and 1950's.



COSTELLO: I want to talk about the unemployment rate in America .

ABBOTT: Good subject. Terrible times. It's about 9%.

COSTELLO: That many people are out of work?

ABBOTT: No, that's 16%.

COSTELLO: You just said 9%.

ABBOTT: 9% Unemployed.

COSTELLO: Right 9% out of work.

ABBOTT: No, that's 16%.

COSTELLO: Okay, so it's 16% unemployed.

ABBOTT: No, that's 9%...

COSTELLO: WAIT A MINUTE. Is it 9% or 16%?

ABBOTT: 9% are unemployed. 16% are out of work.

COSTELLO: If you are out of work you are
unemployed.

ABBOTT: No, you can't count the "Out of Work" as the unemployed.  You have to look for work to be unemployed.

COSTELLO: But ... they are out of work!

ABBOTT: No, you miss my point.

COSTELLO: What point?

ABBOTT: Someone
who doesn't look for work, can't be counted with those who look for work.It wouldn't be fair.

COSTELLO: To who?

ABBOTT: The unemployed.

COSTELLO: But they are ALL out of work.

ABBOTT:  No, the unemployed are actively looking for work... Those who are out of
work stopped looking. They gave up. And, if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you're off the
unemployment rolls, that would count as less unemployment?

ABBOTT:
Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don't look for work?

ABBOTT: Absolutely
it goes down. That's how you get to 9%. Otherwise it would be 16%. You don't want to read about 16% unemployment do ya?

COSTELLO: That would be frightening.

ABBOTT: Absolutely.

COSTELLO: Wait, I got a question for you. That means there are two ways to bring down
the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO:  So there are two ways to bring unemployment down, and the easier of the two is to just stop looking for work.

ABBOTT: Now you're thinking like an economist.

COSTELLO: I don't even know what the hell I just said!
And now you know why Obama's unemployment figures are improving!

Monday, March 12, 2012

Just War

Mises Daily: Monday, March 12, 2012 by
Much of "classical international law" theory, developed by the Catholic Scholastics, notably the 16th-century Spanish Scholastics such as Vitoria and Suarez, and then the Dutch Protestant Scholastic Grotius and by 18th- and 19th-century jurists, was an explanation of the criteria for a just war. For war, as a grave act of killing, needs to be justified.
My own view of war can be put simply: a just war exists when a people tries to ward off the threat of coercive domination by another people, or to overthrow an already-existing domination. A war is unjust, on the other hand, when a people try to impose domination on another people, or try to retain an already existing coercive rule over them.
During my lifetime, my ideological and political activism has focused on opposition to America's wars, first because I have believed our waging them to be unjust, and, second, because war, in the penetrating phrase of the libertarian Randolph Bourne in World War I, has always been "the health of the State," an instrument for the aggrandizement of State power over the health, the lives, and the prosperity, of their subject citizens and social institutions. Even a just war cannot be entered into lightly; an unjust one must therefore be anathema.
There have been only two wars in American history that were, in my view, assuredly and unquestionably proper and just; not only that, the opposing side waged a war that was clearly and notably unjust. Why? Because we did not have to question whether a threat against our liberty and property was clear or present; in both of these wars, Americans were trying to rid themselves of an unwanted domination by another people. And in both cases, the other side ferociously tried to maintain their coercive rule over Americans. In each case, one side — "our side" if you will — was notably just, the other side — "their side" — unjust.
To be specific, the two just wars in American history were the American Revolution and the War for Southern Independence.
I would like to mention a few vital features of the treatment of war by the classical international natural lawyers, and to contrast this great tradition with the very different "international law" that has been dominant since 1914, by the dominant partisans of the League of Nations and the United Nations.
The classical international lawyers from the 16th through the 19th centuries were trying to cope with the implications of the rise and dominance of the modern nation-state. They did not seek to "abolish war," the very notion of which they would have considered absurd and utopian. Wars will always exist among groups, peoples, nations; the desideratum, in addition to trying to persuade them to stay within the compass of "just wars," was to curb and limit the impact of existing wars as much as possible. Not to try to "abolish war," but to constrain war with limitations imposed by civilization.
Specifically, the classical international lawyers developed two ideas, which they were broadly successful in getting nations to adopt:
  1. Above all, don't target civilians. If you must fight, let the rulers and their loyal or hired retainers slug it out, but keep civilians on both sides out of it, as much as possible. The growth of democracy, the identification of citizens with the State, conscription, and the idea of a "nation in arms," all whittled away this excellent tenet of international law.
  2. Preserve the rights of neutral states and nations. In the modern corruption of international law that has prevailed since 1914, "neutrality" has been treated as somehow deeply immoral. Nowadays, if countries A and B get into a fight, it becomes every nation's moral obligation to figure out, quickly, which country is the "bad guy," and then if, say, A is condemned as the bad guy, to rush in and pummel A in defense of the alleged good guy B.
Classical international law, which should be brought back as quickly as possible, was virtually the opposite. In a theory which tried to limit war, neutrality was considered not only justifiable but a positive virtue. In the old days, "he kept us out of war" was high tribute to a president or political leader; but now, all the pundits and professors condemn any president who "stands idly by" while "people are being killed" in Bosnia, Somalia, Rwanda, or the hot spot of the day. In the old days, "standing idly by" was considered a mark of high statesmanship. Not only that: neutral states had "rights" which were mainly upheld, since every warring country knew that someday it too would be neutral. A warring state could not interfere with neutral shipping to an enemy state; neutrals could ship to such an enemy with impunity all goods except "contraband," which was strictly defined as arms and ammunition, period. Wars were kept limited in those days, and neutrality was extolled.
In modern international law, where "bad-guy" nations must be identified quickly and then fought by all, there are two rationales for such worldwide action, both developed by Woodrow Wilson, whose foreign policy and vision of international affairs has been adopted by every president since. The first is "collective security against aggression." The notion is that every war, no matter what, must have one "aggressor" and one or more "victims," so that naming the aggressor becomes a prelude to a defense of "heroic little" victims. The analogy is with the cop-on-the-corner. A policeman sees A mugging B; he rushes after the aggressor, and the rest of the citizens join in the pursuit. In the same way, supposedly, nations, as they band together in "collective security" arrangements, whether they be the League, the United Nations, or NATO, identify the "aggressor" nation and then join together as an "international police force," like the cop-on-the-corner, to zap the criminal.
In real life, however, it's not so easy to identify one warring "aggressor." Causes become tangled, and history intervenes. Above all, a nation's current border cannot be considered as evidently just as a person's life and property. Therein lies the problem. How about the very different borders 10 years, 20 years, or even centuries ago? How about wars where claims of all sides are plausible? But any complication of this sort messes up the plans of our professional war crowd. To get Americans stirred up about intervening in a war thousands of miles away about which they know nothing and care less, one side must be depicted as the clear-cut bad guy, and the other side pure and good; otherwise, Americans will not be moved to intervene in a war that is really none of their business. Thus, feverish attempts by American pundits and alleged foreign-policy "experts" to get us to intervene against the demonized Serbs ran aground when the public began to realize that all three sides in the Bosnian war were engaging in "ethnic cleansing" whenever they got the chance. This is even forgetting the fatuity of the propaganda about the "territorial integrity" of a so-called Bosnian state which has never existed even formally until a year or two ago, and of course in actuality does not exist at all.
If classical international law limited and checked warfare, and kept it from spreading, modern international law, in an attempt to stamp out "aggression" and to abolish war, only insures, as the great historian Charles Beard put it, a futile policy of "perpetual war for perpetual peace."
The second Wilsonian excuse for perpetual war, particularly relevant to the "Civil War," is even more utopian: the idea that it is the moral obligation of America and of all other nations to impose "democracy" and "human rights" throughout the globe. In short, in a world where "democracy" is generally meaningless, and "human rights" of any genuine sort virtually nonexistent, that we are obligated to take up the sword and wage a perpetual war to force topia on the entire world by guns, tanks, and bombs.
The Somalian intervention was a perfect case study in the workings of this Wilsonian dream. We began the intervention by extolling a "new kind of army" (a new model army if you will) engaged in a new kind of high moral intervention: the US soldier with a CARE package in one hand, and a gun in the other. The new "humanitarian" army, bringing food, peace, democracy, and human rights to the benighted peoples of Somalia, and doing it all the more nobly and altruistically because there was not a scrap of national interest in it for Americans. It was this prospect of a purely altruistic intervention — of universal love imposed by the bayonet — that swung almost the entire "antiwar" Left into the military intervention camp. Well, it did not take long for our actions to have consequences, and the end of the brief Somalian intervention provided a great lesson if we only heed it: the objects of our "humanitarianism" being shot down by American guns, and striking back by highly effective guerrilla war against American troops, culminating in savaging the bodies of American soldiers. So much for "humanitarianism," for a war to impose democracy and human rights; so much for the new model army.
In both of these cases, the modern interventionists have won by seizing the moral high ground; theirs is the cosmic "humanitarian" path of moral principle; those of us who favor American neutrality are now derided as "selfish," "narrow," and "immoral." In the old days, however, interventionists were more correctly considered propagandists for despotism, mass murder, and perpetual war, if not spokesmen for special interest groups, or agents of the "merchants of death." Scarcely a high ground.
The cause of "human rights" is precisely the critical argument by which, in retrospect, Abraham Lincoln's War of Northern Aggression against the South is justified and even glorified. The "humanitarian" goes forth and rights the wrong of slavery, doing so through mass murder, the destruction of institutions and property, and the wreaking of havoc which has still not disappeared.
Isabel Paterson, in The God of the Machine, one of the great books on political philosophy of this century, zeroed in on what she aptly called "the humanitarian with the guillotine." "The humanitarian," Mrs. Paterson wrote, "wishes to be a prime mover in the lives of others. He cannot admit either the divine or the natural order, by which men have the power to help themselves. The humanitarian puts himself in the place of God." But Mrs. Paterson notes, the humanitarian is "confronted by two awkward facts: first that the competent do not need his assistance; and second, that the majority of people, if unperverted, positively do not want to be 'done good' by the humanitarian." Having considered what the "good" of others might be, and who is to decide on the good and on what to do about it, Mrs. Paterson points out, "Of course what the humanitarian actually proposes is that he shall do what he thinks is good for everybody. It is at this point that the humanitarian sets up the guillotine." Hence, she concludes, "the humanitarian in theory is the terrorist in action."
There is an important point about old-fashioned, or classical, international law which applies to any sort of war, even a just one:
Even if country A is waging a clearly just war against country B, and B's cause is unjust, this fact by no means imposes any sort of moral obligation on any other nation, including those who wish to abide by just policies, to intervene in that war. On the contrary, in the old days neutrality was always considered a more noble course, if a nation had no overriding interest of its own in the fray, there was no moral obligation whatever to intervene. A nation's highest and most moral course was to remain neutral; its citizens might cheer in their heart for A's just cause, or, if someone were overcome by passion for A's cause he could rush off on his own to the front to fight, but generally citizens of nation C were expected to cleave to their own nation's interests over the cause of a more abstract justice. Certainly, they were expected not to form a propaganda pressure group to try to bulldoze their nation into intervening; if champions of country A were sufficiently ardent, they could go off on their own to fight, but they could not commit their fellow countrymen to do the same.
Many of my friends and colleagues are hesitant to concede the existence of universal natural rights, lest they find themselves forced to support American, or worldwide intervention, to try to enforce them. But for classical natural-law international jurists, that consequence did not follow at all. If, for example, Tutsis are slaughtering Hutus in Rwanda or Burundi, or vice versa, these natural lawyers would indeed consider such acts as violations of the natural rights of the slaughtered; but that fact in no way implies any moral or natural-law obligation for any other people in the world to rush in to try to enforce such rights. We might encapsulate this position into a slogan: "Rights may be universal, but their enforcement must be local," or, to adopt the motto of the Irish rebels: Sinn Fein, "ourselves alone." A group of people may have rights, but it is their responsibility, and theirs alone, to defend or safeguard such rights.
To put it another way, I have always believed that when the Left claims that all sorts of entities — animals, alligators, trees, plants, rocks, beaches, the earth, or "the ecology" — have "rights," the proper response is this: when those entities act like the Americans who set forth their declaration of rights, when they speak for themselves and take up arms to enforce them, then and only then can we take such claims seriously.
I want to now return to America's two just wars. It is plainly evident that the American Revolution, using my definition, was a just war, a war of peoples forming an independent nation and casting off the bonds of another people insisting on perpetuating their rule over them. Obviously, the Americans, while welcoming French or other support, were prepared to take on the daunting task of overthrowing the rule of the most powerful empire on earth, and to do it alone if necessary.
What I want to focus on here is not the grievances that led the American rebels to the view that it had become "necessary for One People to dissolve the political bonds which have connected them with another." What I want to stress here is the ground on which the Americans stood for this solemn and fateful act of separation. The Americans were steeped in the natural-law philosophy of John Locke and the Scholastics, and in the classical republicanism of Greece and Rome. There were two major political theories in Britain and in Europe during this time. One was the older, but by this time obsolete, absolutist view: the king was the father of his nation, and absolute obedience was owed to the king by the lesser orders; any rebellion against the king was equivalent to Satan's rebellion against God.
The other, natural-law, view countered that sovereignty originated not in the king but in the people, but that the people had delegated their powers and rights to the king. Hugo Grotius and conservative natural lawyers believed that the delegation of sovereignty, once transferred, was irrevocable, so that sovereignty must reside permanently in the king. The more radical libertarian theorists, such as Father Mariana, and John Locke and his followers, believed, quite sensibly, that since the original delegation was voluntary and contractual, the people had the right to take back that sovereignty should the king grossly violate his trust.
The American revolutionaries, in separating themselves from Great Britain and forming their new nation, adopted the Lockean doctrine. In fact, if they hadn't done so, they would not have been able to form their new nation. It is well known that the biggest moral and psychological problem the Americans had, and could only bring themselves to overcome after a full year of bloody war, was to violate their oaths of allegiance to the British king. Breaking with the British Parliament, their de facto ruler, posed no problem; Parliament they didn't care about. But the king was their inherited sovereign lord, the person to whom they had all sworn fealty. It was the king to whom they owed allegiance; thus, the list of grievances in the Declaration of Independence mentioned only the king, even though Parliament was in reality the major culprit.
Hence, the crucial psychological importance, to the American revolutionaries, of Thomas Paine's Common Sense, which not only adopted the Lockean view of a justified reclaiming of sovereignty by the American people but also particularly zeroed in on the office of the king. In the words of the New Left, Paine delegitimized and desanctified the king in American eyes. The king of Great Britain, Paine wrote, is only the descendent of "nothing better than the principal ruffian of some restless gang; whose savage manner or preeminence in subtlety obtained him the title of chief among plunderers." And now the kings, including the "Royal Brute of Great Britain," are but "crowned ruffians."
In making their revolution, then, the Americans cast their lot, permanently, with a contractual theory or justification for government. Government is not something imposed from above, by some divine act of conferring sovereignty; but contractual, from below, by "consent of the governed." That means that American polities inevitably become republics, not monarchies. What happened, in fact, is that the American Revolution resulted in something new on earth. The people of each of the 13 colonies formed new, separate, contractual, republican governments. Based on libertarian doctrines and on republican models, the people of the 13 colonies each set up independent sovereign states: with powers of each government strictly limited, with most rights and powers reserved to the people, and with checks, balances, and written constitutions severely limiting state power.
These 13 separate republics, in order to wage their common war against the British Empire, each sent representatives to the Continental Congress, and then later formed a Confederation, again with severely limited central powers, to help fight the British. The hotly contested decision to scrap the Articles of Confederation and to craft a new Constitution demonstrates conclusively that the central government was not supposed to be perpetual, not to be the sort of permanent one-way trap that Grotius had claimed turned popular sovereignty over to the king forevermore. In fact, it would be very peculiar to hold that the American Revolutionaries had repudiated the idea that a pledge of allegiance to the king was contractual and revocable, and break their vows to the king, only to turn around a few short years later to enter a compact that turned out to be an irrevocable one-way ticket for a permanent central government power. Revocable and contractual to a king, but irrevocable to some piece of paper!
And finally, does anyone seriously believe for one minute that any of the 13 states would have ratified the Constitution had they believed that it was a perpetual one-way Venus fly trap — a one-way ticket to sovereign suicide? The Constitution was barely ratified as it is!
So, if the Articles of Confederation could be treated as a scrap of paper, if delegation to the confederate government in the 1780s was revocable, how could the central government set up under the Constitution, less than a decade later, claim that its powers were permanent and irrevocable? Sheer logic insists that: if a state could enter a confederation it could later withdraw from it; the same must be true for a state adopting the Constitution.
And yet of course, that monstrous illogic is precisely the doctrine proclaimed by the North, by the Union, during the War Between the States.
In 1861, the Southern states, believing correctly that their cherished institutions were under grave threat and assault from the federal government, decided to exercise their natural, contractual, and constitutional right to withdraw, to "secede" from that Union. The separate Southern states then exercised their contractual right as sovereign republics to come together in another confederation, the Confederate States of America. If the American Revolutionary War was just, then it follows as the night the day that the Southern cause, the War for Southern Independence, was just, and for the same reason: casting off the "political bonds" that connected the two peoples. In neither case was this decision made for "light or transient causes." And in both cases, the courageous seceders pledged to each other "their lives, their fortunes, and their sacred honor."
What of the grievances of the two sets of seceders? Were they comparable? The central grievance of the American rebels was the taxing power: the systematic plunder of their property by the British government. Whether it was the tax on stamps, or the tax on imports, or finally the tax on imported tea, taxation was central. The slogan "no taxation without representation" was misleading; in the last analysis, we didn't want "representation" in Parliament; we wanted not to be taxed by Great Britain. The other grievances, such as opposition to general search warrants, or to overriding of the ancient Anglo-Saxon principle of trial by jury, were critical because they involved the power to search merchants' properties for goods that had avoided payment of the customs taxes, that is for "smuggled" goods, and trial by jury was vital because no American jury would ever convict such smugglers.
One of the central grievances of the South, too, was the tariff that Northerners imposed on Southerners whose major income came from exporting cotton abroad. The tariff at one and the same time drove up prices of manufactured goods, forced Southerners and other Americans to pay more for such goods, and threatened to cut down Southern exports. The first great constitutional crisis with the South came when South Carolina battled against the well named Tariff of Abomination of 1828. As a result of South Carolina's resistance, the North was forced to reduce the tariff, and finally, the Polk administration adopted a two-decade long policy of virtual free trade.
John C. Calhoun, the great intellectual leader of South Carolina, and indeed of the entire South, pointed out the importance of a very low level of taxation. All taxes, by their very nature, are paid, on net, by one set of people, the "taxpayers," and the proceeds go to another set of people, what Calhoun justly called the "tax-consumers." Among the net tax-consumers, of course, are the politicians and bureaucrats who live full-time off the proceeds. The higher the level of taxation, the higher the percentage which the country's producers have to give the parasitic ruling class that enforces and lives off of taxes. In zeroing in on the tariff, Calhoun pointed out that "the North has adopted a system of revenue and disbursements, in which an undue proportion of the burden of taxation has been imposed on the South, and an undue proportion appropriated to the North, and for the monopolization of Northern industry."
What of the opposition to these two just wars? Both were unjust since in both the case of the British and of the North, they were waging fierce war to maintain their coercive and unwanted rule over another people. But if the British wanted to hold on and expand their empire, what were the motivations of the North? Why, in the famous words of the abolitionist William Lloyd Garrison, at least early in the struggle, didn't the North "let their erring sisters go in peace?"
The North, in particular the North's driving force, the "Yankees" — that ethnocultural group who either lived in New England or migrated from there to upstate New York, northern and eastern Ohio, northern Indiana, and northern Illinois — had been swept by a new form of Protestantism. This was a fanatical and emotional neo-Puritanism driven by a fervent "postmillenialism" which held that as a precondition for the Second Advent of Jesus Christ, man must set up a thousand-year Kingdom of God on Earth.
The Kingdom is to be a perfect society. In order to be perfect, of course, this Kingdom must be free of sin; sin, therefore, must be stamped out, and as quickly as possible. Moreover, if you didn't try your darndest to stamp out sin by force you yourself would not be saved. It was very clear to these neo-Puritans that in order to stamp out sin, government, in the service of the saints, is the essential coercive instrument to perform this purgative task. As historians have summed up the views of all the most prominent of these millennialists, "government is God's major instrument of salvation."
Sin was very broadly defined by the Yankee neo-Puritans as anything which might interfere with a person's free will to embrace salvation, anything which, in the words of the old Shadow radio serial, could "cloud men's minds." The particular cloud-forming occasions of sin, for these millennialists, were liquor ("demon rum"), any activity on the Sabbath except reading the Bible and going to church, slavery, and the Roman Catholic Church.
If antislavery, prohibitionism, and anti-Catholicism were grounded in fanatical postmillennial Protestantism, the paternalistic big government required for this social program on the state and local levels led logically to a big-government paternalism in national economic affairs. Whereas the Democratic Party in the 19th century was known as the "party of personal liberty," of states' rights, of minimal government, of free markets and free trade, the Republican Party was known as the "party of great moral ideas," which amounted to the stamping-out of sin. On the economic level, the Republicans adopted the Whig program of statism and big government: protective tariffs, subsidies to big business, strong central government, large-scale public works, and cheap credit spurred by government.
The Northern war against slavery partook of fanatical millennialist fervor, of a cheerful willingness to uproot institutions, to commit mayhem and mass murder, to plunder and loot and destroy, all in the name of high moral principle and the birth of a perfect world. The Yankee fanatics were veritable Patersonian humanitarians with the guillotine: the Anabaptists, the Jacobins, the Bolsheviks of their era. This fanatical spirit of Northern aggression for an allegedly redeeming cause is summed up in the pseudo-Biblical and truly blasphemous verses of that quintessential Yankee Julia Ward Howe, in her so-called "Battle Hymn of the Republic."
Modern left-liberal historians of course put this case in a slightly different way. Take for example, the eminent abolitionist historian of the Civil War James McPherson. Here's the way McPherson revealingly puts it: "Negative liberty [he means "liberty"] was the dominant theme in early American history — freedom from constraints on individual rights imposed by a powerful state." "The Bill of Rights," McPherson goes on, "is the classic expression of negative liberty, or Jeffersonian humanistic liberalism. These first ten amendments to the Constitution protect individual liberties by placing a straitjacket of 'shall not' on the federal government." "In 1861," McPherson continues, "Southern states invoked the negative liberties of state sovereignty and individual rights of property [i.e., slaves] to break up the United States."
What was McPherson's hero Abraham Lincoln's response? Lincoln, he writes, "thereby gained an opportunity to invoke the positive liberty [he means "statist tyranny"] of reform liberalism, exercised through the power of the army and the state, to overthrow the negative liberties of disunion and ownership of slaves." Another New Model Army at work! McPherson calls for a "blend" of positive and negative liberties, but as we have seen, any such "blend" is nonsense, for statism and liberty are always at odds. The more that "reform liberalism" "empowers" one set of people, the less "negative liberty" there is for everyone else. It should be mentioned that the southern United States was the only place in the 19th century where slavery was abolished by fire and by "terrible swift sword." In every other part of the New World, slavery was peacefully bought out by agreement with the slaveholders. But in these other countries, in the West Indies or Brazil, for example, there were no Puritan millennialists to do their bloody work, armed with gun in one hand and hymn book in the other.
In the Republican Party, the "party of great moral ideas," different men and different factions emphasized different aspects of this integrated despotic world-outlook. In the fateful Republican convention of 1860, the major candidates for president were two veteran abolitionists: William Seward, of New York, and Salmon P. Chase of Ohio. Seward, however, was distrusted by the anti-Catholic hotheads because he somehow did not care about the alleged Catholic menace; on the other hand, while Chase was happy to play along with the former Know-Nothings, who stressed the anti-Catholic pant of the coalition, he was distrusted by Sewardites and others who were indifferent to the Catholic question. Abraham Lincoln of Illinois was a dark horse who was able to successfully finesse the Catholic question. His major emphasis was on Whig economic statism: high tariffs, huge subsidies to railroads, public works. As one of the nation's leading lawyers for Illinois Central and other big railroads, indeed, Lincoln was virtually the candidate from Illinois Central and the other large railroads.
One reason for Lincoln's victory at the convention was that Iowa railroad entrepreneur Grenville M. Dodge helped swing the Iowa delegation to Lincoln. In return, early in the Civil War, Lincoln appointed Dodge to army general. Dodge's task was to clear the Indians from the designated path of the country's first heavily subsidized federally chartered transcontinental railroad, the Union Pacific. In this way, conscripted Union troops and hapless taxpayers were coerced into socializing the costs on constructing and operating the Union Pacific. This sort of action is now called euphemistically "the cooperation of government and industry."
But Lincoln's major focus was on raising taxes, in particular raising and enforcing the tariff. His convention victory was particularly made possible by support from the Pennsylvania delegation. Pennsylvania had long been the home and the political focus of the nation's iron and steel industry which, ever since its inception during the War of 1812, had been chronically inefficient, and had therefore constantly been bawling for high tariffs and, later, import quotas. Virtually the first act of the Lincoln administration was to pass the Morrill protective tariff act, doubling existing tariff rates, and creating the highest tariff rates in American history.
In his first inaugural address, Lincoln was conciliatory about maintaining slavery; what he was hard-line about toward the South was insistence on collecting all the customs tariffs in that region. As Lincoln put it, the federal government would "collect the duties and imposts, but beyond what may be necessary for these objects, there will be no invasion, no using of force against … people anywhere." The significance of the federal forts is that they provided the soldiers to enforce the customs tariffs; thus, Fort Sumter was at the entrance to Charleston Harbor, the major port, apart from New Orleans, in the entire South. The federal troops at Sumter were needed to enforce the tariffs that were supposed to be levied at Charleston Harbor.
Of course, Abraham Lincoln's conciliatory words on slavery cannot be taken at face value. Lincoln was a master politician, which means that he was a consummate conniver, manipulator, and liar. The federal forts were the key to his successful prosecution of the war. Lying to South Carolina, Abraham Lincoln managed to do what Franklin D. Roosevelt and Henry Stimson did at Pearl Harbor 80 years later — maneuvered the Southerners into firing the first shot. In this way, by manipulating the South into firing first against a federal fort, Lincoln made the South appear to be "aggressors" in the eyes of the numerous waverers and moderates in the North.
Outside of New England and territories populated by transplanted New Englanders, the idea of forcing the South to stay in the Union was highly unpopular. In many middle-tier states, including Maryland, New Jersey, and Pennsylvania, there was a considerable sentiment to mimic the South by forming a middle Confederacy to isolate the pesky and fanatical Yankees. Even after the war began, the mayor of New York City and many other dignitaries of the city proposed that the city secede from the Union and make peace and engage in free trade with the South. Indeed, Jefferson Davis's lawyer after the war was what we would now call the "paleo-libertarian" leader of the New York City bar, Irish-Catholic Charles O'Conor, who ran for president in 1878 on the Straight Democrat ticket, in protest that his beloved Democratic Party's nominee for president was the abolitionist, protectionist, socialist, and fool Horace Greeley.
The Lincoln administration and the Republican Party took advantage of the overwhelmingly Republican Congress after the secession of the South to push through almost the entire Whig economic program. Lincoln signed no less than ten tariff-raising bills during his administration. Heavy "sin" taxes were levied on alcohol and tobacco, the income tax was levied for the first time in American history, huge land grants and monetary subsidies were handed out to transcontinental railroads (accompanied by a vast amount of attendant corruption), and the government went off the gold standard and virtually nationalized the banking system to establish a machine for printing new money and to provide cheap credit for the business elite. And furthermore, the New Model Army and the war effort rested on a vast and unprecedented amount of federal coercion against Northerners as well as the South; a huge army was conscripted, dissenters and advocates of a negotiated peace with the South were jailed, and the precious Anglo-Saxon right of habeas corpus was abolished for the duration.
While it is true that Lincoln himself was not particularly religious, that did not really matter because he adopted all the attitudes and temperament of his evangelical allies. He was stern and sober, he was personally opposed to alcohol and tobacco, and he was opposed to the private carrying of guns. An ambitious seeker of the main chance from early adulthood, Lincoln acted viciously toward his own humble frontier family in Kentucky. He abandoned his fiancée in order to marry a wealthier Mary Todd, whose family were friends of the eminent Henry Clay, he repudiated his brother, and he refused to attend his dying father or his father's funeral, monstrously declaring that such an experience "would be more painful than pleasant." No doubt!
Lincoln, too, was a typical example of a humanitarian with the guillotine in another dimension: a familiar modern "reform liberal" type whose heart bleeds for and yearns to "uplift" remote mankind, while he lies to and treats abominably actual people whom he knew. And so Abraham Lincoln, in a phrase prefiguring our own beloved Mario Cuomo, declared that the Union was really "a family, bound indissolubly together by the most intimate organic bonds." Kick your own family, and then transmute familial spiritual feelings toward a hypostatized and mythical entity, "The Union," which then must be kept intact regardless of concrete human cost or sacrifice.
Indeed, there is a vital critical difference between the two unjust causes we have described: the British and the North. The British, at least, were fighting on behalf of a cause which, even if wrong and unjust, was coherent and intelligible: that is, the sovereignty of a hereditary monarch. What was the North's excuse for their monstrous war of plunder and mass murder against their fellow Americans? Not allegiance to an actual, real person, the king, but allegiance to a nonexistent, mystical, quasi-divine alleged entity, "the Union." The King was at least a real person, and the merits or demerits of a particular king or the monarchy in general can be argued. But where is "the Union" located? How are we to gauge the Union's deeds? To whom is this Union accountable?
The Union was taken, by its Northern worshipers, from a contractual institution that can either be cleaved to or scrapped, and turned into a divinized entity, which must be worshipped, and which must be permanent, unquestioned, all-powerful. There is no heresy greater, nor political theory more pernicious, than sacralizing the secular. But this monstrous process is precisely what happened when Abraham Lincoln and his northern colleagues made a god out of the Union. If the British forces fought for bad King George, the Union armies pillaged and murdered on behalf of this pagan idol, this "Union," this Moloch that demanded terrible human sacrifice to sustain its power and its glory.
For in this War Between the States, the South may have fought for its sacred honor, but the Northern war was the very opposite of honorable. We remember the care with which the civilized nations had developed classical international law. Above all, civilians must not be targeted; wars must be limited. But the North insisted on creating a conscript army, a nation in arms, and broke the 19th-century rules of war by specifically plundering and slaughtering civilians, by destroying civilian life and institutions so as to reduce the South to submission. Sherman's infamous March through Georgia was one of the great war crimes, and crimes against humanity, of the past century-and-a-half. Because by targeting and butchering civilians, Lincoln and Grant and Sherman paved the way for all the genocidal honors of the monstrous 20th century. There has been a lot of talk in recent years about memory, about never forgetting about history as retroactive punishment for crimes of war and mass murder. As Lord Acton, the great libertarian historian, put it, the historian, in the last analysis, must be a moral judge. The muse of the historian, he wrote, is not Clio, but Rhadamanthus, the legendary avenger of innocent blood. In that spirit, we must always remember, we must never forget, we must put in the dock and hang higher than Haman, those who, in modern times, opened the Pandora's Box of genocide and the extermination of civilians: Sherman, Grant, and Lincoln.
Perhaps, some day, their statues, like Lenin's in Russia, will be toppled and melted down; their insignias and battle flags will be desecrated, their war songs tossed into the fire. And then Davis and Lee and Jackson and Forrest, and all the heroes of the South, "Dixie" and the Stars and Bars, will once again be truly honored and remembered. The classic comment on that meretricious TV series The Civil War was made by that marvelous and feisty Southern writer Florence King. Asked her views on the series, she replied, "I didn't have time to watch The Civil War. I'm too busy getting ready for the next one." In that spirit, I am sure that one day, aided and abetted by Northerners like myself in the glorious "copperhead" tradition, the South shall rise again.

Thursday, March 1, 2012

It's Not Really about the Debt

Mises Daily: Thursday, March 01, 2012 by
In his Outside the Box e-letter, February 13, 2012, respected economic commentator John Mauldin presents an interview with Dr. Lacy Hunt, a highly regarded US financial economist. According to Hunt the key factor behind the current world economic crisis — in Europe and the United States in particular — is a very high level of debt relative to gross domestic product (GDP). For instance in the United States, as a percentage of GDP, both public- and private-sector debt is currently at around 400 percent, while in the eurozone it is 450 percent.
This way of thinking follows in the footsteps of the famous American economist Irving Fisher who held that a very high level of debt relative to GDP runs the risk of setting in motion deflation and in turn a severe economic slump.[1] According to Fisher the high level of debt sets in motion the following sequence of events that culminate in a severe economic slump:
  1. The debt liquidation process is set in motion because of some random shock, for instance, a sudden large fall in the stock market. The act of debt liquidation forces individuals into distressed selling of assets.
  2. As a result of the debt liquidation the money stock starts shrinking, and this in turn slows down the velocity of money.
  3. A fall in money leads to a decline in the price level.
  4. The value of people's assets falls while the value of their liabilities remains intact. This results in a fall in the net worth, which precipitates bankruptcies.
  5. Profits start to decline, and losses emerge.
  6. Production, trade, and employment are curtailed.
  7. All this leads to growing pessimism and a loss of confidence.
  8. This in turn leads to the hoarding of money and a further slowing in the velocity of money.
  9. Nominal interest rates fall, however; but because of a fall in prices, real interest rates rise.
Note that the critical stage in this story is the stage 2, that is, debt liquidation results in a decline in the money stock. But why should debt liquidation cause a decline in the money stock?
Take a producer of consumer goods who consumes part of his produce and saves the rest. In the market economy our producer can exchange the saved goods for money. The money that he receives can be seen as a receipt as it were for the goods he produced and saved. The money is his claim on these goods.
He can then make a decision to lend his money to another producer through the mediation of a bank. By lending his money, the original saver — i.e., lender — transfers his claims on real savings to the borrower. The borrower can now exercise the money — i.e., the claims — and secure consumer goods that will support him while he is engaged in the production of other goods, let us say the production of tools and machinery.
Observe that once a lender lends his money he relinquishes his claims on real goods for the duration of the loan. Can the liquidation of credit, which is fully backed by savings, cause a decline in the money stock? Once the contract expires on the date of maturity the borrower returns the money to the original lender. As one can see, the repayment of the debt, or debt liquidation, doesn't have any effect on the stock of money.
Things are, however, different when a bank uses some of the deposited money and lends it out. Remember that the owner of deposited money continues to exercise demand for money — he didn't relinquish his claims on real savings in favor of a borrower. Therefore, when a bank uses some of the deposited money, the bank effectively creates another claim on real savings. This claim is just empty stuff. While in the case of fully backed credit the borrower, so to speak, secures goods that were produced and saved for him.
This is however, not so with respect to unbacked credit. No goods were produced and saved here. Consequently, once the borrower exercises the unbacked claims, this must be at the expense of the holders of fully backed claims. The bank here creates money "out of thin air." On the date of maturity of the loan, once the money is repaid to the bank, this type of money must disappear, because it never existed as such and never had a proper owner.

The Money Supply and the Pool of Funding

The point that must be emphasized here is that the fall in the money stock that precedes price deflation and an economic slump is actually triggered by the previous loose monetary policies of the central bank and not the liquidation of debt. It is loose monetary policy that provides support for the creation of unbacked credit. (Without this support, banks would have difficulty practicing fractional-reserve lending.) The unbacked credit in turn leads to the reshuffling of real funding from wealth generators to non–wealth generators. This in turn weakens the ability to grow the pool of real funding and in turn weakens the economic growth. Note that the heart of the economic growth is the pool of real funding, or the pool of real savings, or the "subsistence fund."
According to Böhm-Bawerk,
The entire wealth of the economical community serves as a subsistence fund, or advances fund, from this, society draws its subsistence during the period of production customary in the community.[2]
Similarly von Strigl wrote,
Let us assume that in some country production must be completely rebuilt. The only factors of production available to the population besides labourers are those factors of production provided by nature. Now, if production is to be carried out by a roundabout method, let us assume of one year's duration, then it is self-evident that production can only begin if, in addition to these originary factors of production, a subsistence fund is available to the population which will secure their nourishment and any other needs for a period of one year.… The greater this fund, the longer is the roundabout factor of production that can be undertaken, and the greater the output will be. It is clear that under these conditions the "correct" length of the roundabout method of production is determined by the size of the subsistence fund or the period of time for which this fund suffices.[3]
Because of prolonged and aggressive loose monetary and fiscal policies, a situation can emerge in which the pool of real funding starts shrinking. In short, there are now more activities that consume real wealth than activities that produce real wealth. Once the pool of funding starts falling then anything can trigger the so-called economic collapse.
Obviously, when things are starting to fall apart, banks try to get their money back. Once banks get their money (credit that was created out of thin air) and don't renew loans, the stock of money must fall. Note however that the consequent price deflation and the fall in the economy is not caused by the liquidation of debt as such, nor by the fall of the money supply, but by the fall in the pool of real funding on account of previous loose monetary and fiscal policies.

The Size of the Debt and the Severity of the Economic Slump

In his writings, Fisher argued that the size of the debt determines the severity of an economic slump. He observed that the deflation following the stock market crash of October 1929 had a greater effect on real spending than the deflation of 1921 had because nominal debt was much greater in 1929.
We, however, maintain that it is not the size of the debt as such that determines the severity of a recession but rather the state of the pool of real funding. Again, it is not the debt but loose monetary and fiscal policies that cause the misallocation of real funding. (The level of debt is just a symptom, as it were; it doesn't cause damage as such.)
By putting the blame on debt as the cause of economic recessions, one in fact absolves the Fed and the banking system it maintains from any responsibility for setting the whole thing in motion. Additionally, once it is accepted that debt can set in motion a monetary implosion and in turn an economic depression, it appears to justify the idea that the Fed must step in and lift monetary pumping in order to offset the disappearing money supply.
However, rather than countering the emerging depression, what monetary pumping in fact does here is to further weaken the pool of real funding and thereby deepen the economic crisis. (Note that many commentators are of the view that, because of price deflation, the debt burden intensifies. Consequently, it is held that, by means of monetary printing, this burden can be eased, thereby arresting the economic plunge. Again we suggest that pumping more money only dilutes the pool of real funding and makes things much worse.) Additionally, the emergence of monetary deflation is a positive development for wealth generators, because it slows down the diversion of real funding toward nonproductive activities.

The Fallacy of Insufficient Aggregate Demand

Now, both Keynes and Friedman felt that the Great Depression was due to an insufficiency of aggregate demand, and so the way to fix the problem was to boost the aggregate demand. For Keynes, this was to be done by having the federal government borrow more money and spend it when the private sector wouldn't. Friedman advocated that the Federal Reserve pump more money to revive the demand. Fisher, while agreeing that the problem was with insufficient demand, held that insufficiency of aggregate demand was a symptom of excessive indebtedness. Therefore, what was needed to contain a major debt depression was to prevent it ahead of time. You have to prevent the buildup of debt.
Again we suggest that Fisher deals here with symptoms and not the true cause, which is the declining pool of real funding that results from loose fiscal and monetary policies. Additionally, there is never such a thing as insufficient aggregate demand, as such.
We suggest that an individual's effective demand is constrained by his ability to produce goods. Demand cannot stand by itself and be independent — it is limited by production. Hence what drives the economy is not demand as such but the production of goods and services. The more goods an individual produces, the more of other goods he can secure for himself.
In short, an individual's effective demand is constrained by his production of goods. Demand, therefore, cannot stand by itself and be an independent driving force.
According to James Mill,
When goods are carried to market what is wanted is somebody to buy. But to buy, one must have the wherewithal to pay. It is obviously therefore the collective means of payment which exist in the whole nation constitute the entire market of the nation. But wherein consist the collective means of payment of the whole nation? Do they not consist in its annual produce, in the annual revenue of the general mass of inhabitants? But if a nation's power of purchasing is exactly measured by its annual produce, as it undoubtedly is; the more you increase the annual produce, the more by that very act you extend the national market, the power of purchasing and the actual purchases of the nation.… Thus it appears that the demand of a nation is always equal to the produce of a nation. This indeed must be so; for what is the demand of a nation? The demand of a nation is exactly its power of purchasing. But what is its power of purchasing? The extent undoubtedly of its annual produce. The extent of its demand therefore and the extent of its supply are always exactly commensurate.[4]
If a population of five individuals produces ten potatoes and five tomatoes — this is all that they can demand and consume. No government or central-bank tricks can make it possible to increase effective demand. The only way to raise the ability to consume more is to raise the ability to produce more.
The dependence of demand on the production of goods cannot be removed by means of loose-interest-rate policy, monetary pumping, or government spending.
On the contrary, loose fiscal and monetary policies will only impoverish real wealth generators and weaken their ability to produce goods and services. It will weaken effective demand.
What is required to revive the economy is not boosting aggregate demand but sealing off all the loopholes for the creation of money out of thin air and curbing government spending. This will enable true wealth generators to revive the economy by allowing them to move ahead with the business of wealth generation.

Conclusions

Contrary to the popular way of thinking, the threat to the US economy is not the high level of debt as such but loose fiscal and monetary policies that undermine the pool of real funding. Also, the fall in the money stock that precedes price deflation and an economic slump is actually triggered by the previous loose monetary and fiscal policies and not the liquidation of debt as such. Also, once the pool of funding becomes stagnant or begins to shrink, economic growth follows suit and the myth that government and central-bank policies can grow the economy is shattered.
According to Mises,
An essential point in the social philosophy of interventionism is the existence of an inexhaustible fund which can be squeezed forever. The whole system of interventionism collapses when this fountain is drained off: The Santa Claus principle liquidates itself.[5]