When welfarism takes over, disaster will follow

THE Catholic principle of subsidiarity first articulated by Pope Leo XIII in his 1891 encyclical Rerum Novarum is probably the best available guide for determining the proper role of government in the lives of citizens.

The subsidiarity principle holds that the government's role should be limited to those matters that exceed the capacity of individuals and private groups acting independently.

Subsidiarity means that responsibility should be vested in those persons or institutions that are capable of carrying out the service, and those who are close to the issue at hand.

The defence of the realm is appropriately the responsibility of the nation state, but parents are the best holders of responsibility for the welfare of families.

My point in last weekend's article is that the misery of Aboriginal Australia is a testament to the social disaster that results when the welfare state colonises responsibilities that are best held by individuals, families and local communities.

Unhealthy societies or subgroups are those where the principle of subsidiarity is not reflected in their relationship with governments.

Healthy and functioning groups in society are those where governments occupy important but limited roles in their lives. It is worth thinking of the three spheres in people's lives: the public, private and voluntary. All of us move between these spheres.

We are more or less engaged in public life, in receiving services from governments and participating in public processes. A large part of our life is private: where we work, our homes, our education and health choices. While governments may play a large role in providing solutions for some of these things, we make our own private choices about those things that most affect us as individuals.

We would not feel free and would be very unsatisfied if many of the important matters that are central to our private selves were instead subject to public prescription. And then there is our participation in recreational, charitable and religious organisations and activities, which we engage in on an entirely voluntary basis.

The liberal tradition strongly prioritises the private sphere, whereas socialists strongly prioritise the public.

Notwithstanding these longstanding debates, it is enough to say that healthy societies are those where all three spheres are strong and vital.

It is important to keep in mind these three spheres. Because they are in their nature distinct, and the proper rules of individual behaviour within these spheres are distinct. Problems arise when we forget the distinctions between these spheres and blur the boundaries between them.

In the public sphere the fundamental principle is public service. Proper behaviour in the public sphere should be disinterested and the performance of one's public duties should be impartial. One is not supposed to pursue one's own personal or family interests in the public sphere.

In the private sphere the fundamental principle is self-interest. The pursuit of self-interest is proper behaviour in the private sphere. Preferencing the interests of one's own family is not nepotism, it is the key to individual progress and family success. Indeed, the very engine of development lies here.

In the voluntary sphere, the fundamental principle is voluntary contribution. It is improper behaviour to pursue one's self-interest in this sphere. Indeed, this is where social capital is built.

In functional communities each of these three spheres thrive and everyone moves between them knowing well what is expected of them in each.

The dysfunctional communities that I have seen in Aboriginal Australia and among disadvantaged white Australians are characterised by the dominance of the public sphere in the lives of people. Government almost monopolises the field, with its endless programs and service deliverers.

The private sphere in these communities is stunted. To the extent that people have the freedom to choose, it is in relation to lifestyle choices. Whereas for highly privileged people libertarianism may be the apex of liberalism, for the underprivileged it ends up being the very definition of dysfunction. Not only is the private sphere small in such communities, the voluntary sphere is also shrivelled.

It is in such places where the leviathan of the welfare state has spread its tentacles into almost every corner of people's lives. And no matter how many service deliverers and programs and budgets have been mobilised in pursuit of development, it has not happened. And it will not happen.

Development in such disadvantaged communities will only take place when the public sphere retreats to its appropriate size and governments perform only their subsidiary functions. Development requires an expansion of private life.

The liberals are probably correct when they say that a strong and healthy private sphere will occasion an expanded voluntary sphere: people who have secured their own interests will contribute to their wider communities.

Does this mean that governments should not ensure social support to the disadvantaged?

Of course not. Governments have a fundamental responsibility to guarantee social supports to all who stand in need of them and to spread opportunity to those who otherwise would not have access.

The $64 million question of social policy is this: in fulfilling its responsibility to provide support to the needy, how can governments distribute such support in a way that enables the needy to develop their own capabilities, rather than cultivating a learned helplessness and passivity?

We still do not have effective answers to this question in Australian social policy. Governments across the country continue to deliver passive welfare, and the bureaucratic industries that were the subject of my discussion last weekend, are the norm rather than the exception.

No matter how many times governments commit to Closing the Gap on indigenous disadvantage, it ain't going to happen until the principle of subsidiarity is reflected in the role that governments propose to play in this endeavour.

It is important to respond to a correspondent to this newspaper, Stuart Davidson, who wrote the following response to my article: "So now it's the public service that is to blame for the problems in isolated Aboriginal communities. Pull the other one, Noel. What other group of Australians have access to such a plethora of free service provision? Most people would be glad to have these services. And blaming over-provision of services for the lack of responsibility taken by most of the residents in these communities? It's the complete and utter lack of responsibility taken by many in these communities that has created the need for the services the government provides.

"Maybe it's time for the Aboriginal community to stop blaming others (and it is always someone else's fault) and take a look at themselves."

Well, actually Stuart, most people would not be glad to have government service provisioning dominating their lives in the way Aboriginal and other like disadvantaged people's lives are. There is no freedom of private choice and action when governments have assumed responsibilities that are normally undertaken by responsible parents and individuals. That government intervention has crowded out the responsibilities of individuals, families and communities is my point.

It is a misinterpretation of history to say that service provisioning followed a lack of responsibility. Aboriginal people never chose welfare as the basis of their inclusion in the country's citizenship. They wanted equal wages, not welfare. They wanted a hand-up, not a handout. They wanted freedom from discrimination and racism.

But the welfare state regarded Aboriginal people as helpless and hopeless. It has never had any expectations of Aboriginal people. Or disadvantaged people generally. That is why it has stepped into their lives to such an extraordinary degree.

If you treat people as hopeless and helpless, you then create a learned helplessness.

Davidson goes on: "Noel, do you know what the real rort is here? That the taxpayer is continually paying to prop up these isolated and unviable communities. If these people were to relocate to larger population areas, think of the money that would be saved and the employment and education opportunities that might exist."

If those on the left side of the political and cultural divide in Australia have had low expectations of Aboriginal people that resulted in disastrous welfare policies, then too many on the right side have harboured a miserable attitude to Aboriginal people truly taking their place in Australian society. Davidson's comment is symptomatic of too much glib thinking in Australian thinking about indigenous policy.

If Aboriginal people from remote areas relocated in the way suggested by Davidson, they would simply join the miserable urban underclasses in Macquarie Fields and other like places. Not to mention the history of governmental control over the movement of Aboriginal people in and out of these remote communities for most of the 20th century. It is far too late in the day for such people to be prescribing relocation policies for Aboriginal Australians: enough damage has been done over two centuries in pursuit of such arbitrary policies.

Noel Pearson is the director of the Cape York Institute for Policy and Leadership

Is the stolen generation true...

Flawed history keeps myth alive about the Stolen Generations

IN his 2008 parliamentary apology, Prime Minister Kevin Rudd endorsed the estimate by Peter Read, the university historian who first advanced the concept of the Stolen Generations, that 50,000 Aboriginal children were forcibly removed in the 20th century.

Read had written that governments removed children as young as possible and reared them in institutions isolated from any contact with Aboriginal culture. "Welfare officers, removing children solely because they were Aboriginal," he said, "intended and arranged that they should lose their Aboriginality, and that they never return home."

The majority were allegedly babies and infants. The SBS television series First Australians claimed most of the 50,000 were aged under five. Henry Reynolds explained the rationale: "The younger the child the better, before habits were formed, attachments made, language learned, traditions absorbed."

It is not difficult to prove these assertions are untrue. When you look at the surviving individual case records in NSW, as I did for the period 1907 to 1932, they reveal that 66 per cent of the 800 children then removed were teenagers aged 13 to 19 years. Some 23 per cent were aged six to 12, and only 10 per cent were babies to five-year-olds.

Most of them came from Aboriginal welfare stations and reserves. Two-thirds of the teenagers went not to institutions but into the workforce as apprentices.

For white children in welfare institutions, apprenticeship was then the standard destination too. At the time, for both white and black children, apprenticeship meant leaving home for four years and living with an employer. The principal occupations targeted by these job placement schemes, agriculture for boys and domestic service for girls, were the same for both black and white apprentices.

In Queensland, Western Australia, South Australia and the Northern Territory in the first half of the 20th century, laws and policies forbade the removal of full-blood children. The policy for segregated reserves across all of central and northern Australia, where full-blood populations still predominated, had been defined in Queensland in 1897.

One of its principal aims was to preserve the ethnic integrity of the full-blood population by prohibiting sexual relations with Europeans and Asians. For J. W. Bleakley, the Queensland chief protector who also wrote the commonwealth policy that prevailed in the 1920s and 1930s, this was a matter of great principle. "We have no right to attempt to destroy their national life. Like ourselves, they are entitled to retain their racial entity and racial pride."

Only half-caste children could be removed. However, in WA, half-castes could not be removed under the age of six. In the post-war Northern Territory, 80 per cent of children in the Retta Dixon Home in Darwin and almost all those at the St Mary's hostel in Alice Springs (the Territory's sole institutions for part-Aboriginal children) were of school age, between five and 15. This was not surprising since the main reason for these homes' existence was to provide board for children sent by their parents to go to school.

The idea that most children were removed permanently is also untrue. In NSW, 80 per cent of those sent to one of the three Aboriginal child welfare institutions stayed there less than five years. Those aged 12 to 15 typically remained for months rather than years. Long-term residents were limited to those who had no parents willing or able to care for them. Rather than attempting to destroy Aboriginal culture, institutions for these children performed a temporary care function for disadvantaged and dysfunctional families, the same as welfare institutions for white children.

Those made apprentices were away from home for four years but could return for annual holidays. Their case files show that once their apprenticeships were complete, a majority returned home.

Another falsehood is that parents were not allowed to visit children in institutions. In NSW, the Aborigines Protection Board not only permitted this but from 1919 onwards it gave parents the money for the rail fare plus "a sustenance allowance" to do so.

There is plenty of evidence of Aboriginal parents visiting their institutionalised children in NSW, SA and WA. As one inmate of the Cootamundra Girls' Home said, "my father, he always used to come over on pension day, and me birthday". At the Retta Dixon Home in Darwin, up to one quarter of those accommodated wereworking women, several of them single mothers with their children.

The notorious Moore River Settlement in WA was an institution for destitute Aborigines of all ages. Indeed, most children went there with their parents. Only a minority of children at Moore River, a total of 252 from 1915 to 1940, or 10 a year, were removed from their families. This was out of a state population of 29,000 Aboriginal people.

What support there was for the Stolen Generations thesis came from quotations taken out of context by politically motivated historians. Read claimed the files of individuals removed by the Aborigines Protection Board revealed the motives of those in charge. "The racial intention was obvious enough for all prepared to see, and some managers cut a long story short when they came to that part of the committal notice, `reason for board taking control of the child'. They simply wrote `for being Aboriginal'."

My examination of the 800 files in the same archive found only one official ever wrote a phrase like that. His actual words were "being an Aboriginal". But even this sole example did not confirm Read's thesis. The girl concerned was not a baby but 15 years old. Nor was she sent to an institution. She was placed in employment as a domestic servant in Moree, the closest town to the Euraba Aboriginal Station she came from. Three years later, in 1929, she married an Aboriginal man in Moree.

In short, she was not removed as young as possible, she was not removed permanently, and she retained enough contact with the local Aboriginal community to marry into it. The idea that she was the victim of some vast conspiracy to destroy Aboriginality is fanciful.

Rather than acting for racist or genocidal reasons, government officers and missionaries wanted to rescue children and teenagers from welfare settlements and makeshift camps riddled with alcoholism, domestic violence and sexual abuse. In NSW, WA and the Territory, public servants, doctors, teachers and missionaries were appalled to find Aboriginal girls between five and eight years of age suffering from sexual abuse and venereal disease. On the Kimberley coast from the 1900s to the 1920s they were dismayed to find girls of nine and 10 years old hired out by their own parents as prostitutes to Asian pearling crews. That was why the great majority of children removed by authorities were female.

The fringe camps where this occurred were early versions of today's remote communities of central and northern Australia. Indeed, there is a direct line of descent from one to the other: the culture of these camps has been reproducing itself across rural Australia for more than 100 years.

Government officials had a duty to rescue children from such settings, as much then as they do now. Indeed, the major problem was that state treasuries would not give the relevant departments and boards sufficient funds to accommodate all the neglected and abused Aboriginal children who should have been removed.

The other great myth about the Stolen Generations is that children were removed to "breed out the colour". It is certainly true that two public servants responsible for Aborigines in the 1930s -- Cecil Cook in the Northern Territory and A. O. Neville in WA -- subscribed to a proposal for radical assimilation. Cook said in 1933 that he was endeavouring "to breed out the colour by elevating female half-castes to white standard with a view to their absorption into the white population". Neville said in 1937 that if such a scheme were put into practice we could "eventually forget that there were any Aborigines in Australia".

There are two problems with this case. For a start, the proposal was, as its name said, about "breeding", not the removal of children. It was a plan to oversee the marriage of half-caste women to white men. In practice, it was a failure. Part-Aboriginal women preferred men of their own background and few wanted to marry white men. By 1937, Cook confessed he had overseen fewer than 50 such marriages in his time in office.

Second, those who proposed it were never given the legal authority by their ministers or parliaments to institute such a scheme. Nor were they given enough funding to do so. Neville constantly complained about the tiny budget he received, half that of NSW for an Aboriginal population three

times as great. He was never funded to undertake a program of inter-marriage and assimilation. Indeed, the Native Administration Act of 1936, now demonised by historians, inhibited his ability to breed out the colour by defining half-caste people as "natives" and forbidding their marriage to white people or those of lesser descent.

An earlier generation of historians support my interpretation. In his 1972 book Not Slaves, Not Citizens, Peter Biskup declared Neville's program "an unequivocal failure" that was "quietly dropped". Biskup said of the 1936 act: "Instead of being bred out, colour was being bred in." In Shades of Darkness, his history of Aboriginal affairs from 1925 to 1965, Paul Hasluck said the proposal was too unpopular with white voters and their elected representatives to ever have been implemented.

Yet recent historians and commentators have persisted in describing this proposal as "a massive exercise of social engineering" and an instrument of genocide. Robert Manne, professor of politics at La Trobe University, described it as commonwealth policy: "The officials in Canberra and the minister, J. A. Perkins, gave support to Cook's proposal for an extension of the Territory policy to Australia as a whole."

This is false. The truth is that Perkins, minister for the interior in the Joseph Lyons government, in a carefully worded statement to the House of Representatives on August 2, 1934, denounced the proposal. He said: "It can be stated definitely, that it is and always has been, contrary to policy to force half-caste women to marry anyone. The half-caste must be a perfectly free agent in the matter."

From 1932 to 1934, Cook had tried several times to get approval for his proposal from the Lyons cabinet. None of the letters and reports that circulated between Darwin and Canberra on this issue ever mentioned that it had anything to do with removing children. The whole discussion was about arranged marriages.

Once Lyons and his ministers learned about Cook's plan, and especially after being subjected to the embarrassing publicity it generated in both the Australian and English press, they wanted nothing to do with it. On September 19, 1933, cabinet sent the proposal back to the department unapproved. Bleakley's alternative recommendation for segregated reserves that retained the Aborigines' "racial entity and racial pride" remained commonwealth policy for the duration of both Cook's and Neville's tenures in office.

None of the historians of the Stolen Generations have ever reproduced Perkins's statement. Nor have they reported any of the other critical reactions made by Lyons to the press. On June 23, 1933, the Darwin newspaper, the Northern Standard, quoted Lyons government sources saying: "It is all a lot of rot." But you won't find that quoted in any of the academic literature on this topic.

Manne is not the only offender here but, as a professor of politics, he had the greater public duty to tell the full story. However, he

stopped short of revealing that the events concluded with cabinet throwing out the proposal and the minister denouncing it in parliament. To have told it all would have publicly disproved his case about the Stolen Generations and the allegedly racist and genocidal objectives of government policies in the 1930s.

Keith Windschuttle's The Fabrication of Aboriginal History, Volume Three, The Stolen Generations 1881-2008, was published in December by Macleay Press.

The mega list of 2010 predictions... ht to The Kirk Report.

Themes For 2010 

For the past month I have been collecting posts regarding what others think are themes that we're likely to see play out in the year ahead. While most of these will probably miss the mark (they always do), you may find it of interest to see what others think we should be watching for this year. Enjoy!

• 100 things to watch in 2010 (Open)
• An ultimate guide to 2010 investment predictions & outlooks (PragCap)
• The top trades of 2010 (TradingReport)
• Financial bloggers make their 2010 projections (FasterTimes)
• 10 questions for 2010 (GoldmanSachs)
• Five themes for 2010 (KevinDepew)
• Ten investment themes for 2010 (MarketFolly)
• Seven themes that will lead to maximum profits in 2010 (MoneyMorning)
• Top market timers give their 2010 outlooks (Barrons)
• Top three investment themes to watch in 2010 (TradingReport)
• Ten themes for 2010 (ToddHarrison)
• 10 investment themes for 2010 (USAToday)
• Byron Wien's top 10 surprise for 2010 (Big Picture)
• James Altucher's 10 predictions for 2010 (WSJ)
• John Mauldin's 2010 outlook (PragCap)
• Leuthold sees volatility in 2010 (GuruInvestor)
• Jim Cramer's themes for 2010 (TheStreet)
• Doug Kass' predictions for 2010 (MarketFolly)
• Richard Bernstein's 10 predictions for 2010 (BusinessInsider)
• Ray Barro's offers themes for 2010 (GreenFaucet)
• Final 2010 strategist predictions (Bespoke)
• Billionaire predictions for 2010 (Forbes)
• 5 reasons to buy bullish or bearish on the market (Globe&Mail)
• Finance executives' top 10 risk hot spots for 2010 (CFO)
• 10 themes for 2010 (Roubini)
• Areas of interest for 2010 (VC)
• Stock market outlook for 2010 (TradersNarrative)
• 15 professors give their take on what to expect in 2010 (Minyanville)
• Three economic forces that will determine market direction (SeekingAlpha)
• 5 economic predictions to bank on (CharlieGasparino)
• 4 pros on what's ahead in the next decade (CNN)
• Strong U.S. dollar and stocks the new tandem for 2010? (CSTS)
• What's ahead in 2010? (BloggingStocks)
• What Obama's second year could mean for stocks (Jutia)
• What's ahead for the economy and politics in 2010 (RobertReich)
• Why the Fed will be sidelined in 2010 (SafeHaven)
• The end of 2009's ultra-low interest rates is coming (MarketWatch)
• Fed tightening? Give us a break! (MerkFunds)
• According to Geithner, there will be no second wave crisis (CNBC)
• We will need much more stimulus in 2010 (BusinessInsider)
• By the time all the data confirming an economic recovery comes in, most of the easy profits have been made (Morningstar)
• NIA's top 10 predictions for 2010 (MyValleyNews)
• Why deflation remains the greater risk (PragCap)
• In 2010, demand for U.S. fixed income has to increase elevenfold or else (ZeroHedge)
• Which sector will step up and lead bulls in 2010? (MoneyMorning)
• Grains are the preferred commoidity of 2010 (SeekingAlpha)
• A promising future for alternative fuel trucks? (BloggingStocks)
• Ten green energy gambles for 2010 (TradingReport)
• Best alternative energy stocks for 2010 (IntelligentSpeculator)
• Goldman Sachs bets on global warming (NewRepublic)
• Tech themes for 2010 (Minyanville)
• Ten tech predictions for 2010 (DailyFinance)
• Freight trains make big comeback in nation's transportation network (LATimes)
• Five retail stocks to watch in 2010 (TheStreet)
• Casino stocks to watch (TheStreet)
• Commodity investment expected to remain strong in early 2010 (WSJ)
• Commodities: the comeback kid of 2010? (TheStreet)
• Solar stocks to watch in 2010 (TheStreet)
• Dry bulk stocks to watch (TheStreet)
• Go long cloud computing (Barrons)
• Quest for 10-baggers in bioheath in 2010 (BioHealthInvestor)
• We find ourselves at one of those relatively rare moments in history when major power shifts become visible to all (Huffington)
• This decade will tip the economy to the east (TimesOnline)
• Six surging countries you must pay attention to this decade (BusinessInsider)
• Latin America will have killer growth in 2010 (BusinessInsider)
• The best contrarian bet for 2010 could be Japan (PragCap)
• Byron Wien says growth makes Japanese stocks best investment (Bloomberg)
• BlackRock's doll favors emerging economies (Bloomberg)
• 2010: the year to focus on sovereign debt (BigPicture)
• Grandmasters & global growth (ProjectSyndicate)
• 2010: the year of the dividend? (Fox)
• The Dogs of the Dow to make a comeback in 2010 (Barrons)
• Eight Predictions for 2010 (DailyOptionsReport)
• Higher taxes ahead for some (MarketWatch)
• Volatility to stablize in 2010? (Reuters)
• 9 mutual fund and ETF predictions for 2010 (ETFTrends)
• Bad news ahead for mutual fund investors (MarketWatch)
• More and more traders will switch to trading nothing but ETFs (VIX&More)
• 10 predictions in online finance for 2010 (NewRulesOfInvesting)
• Global financial regulation overhaul expected in 2010 (CNBC)
• The need for speed is going to be one of the big themes of the year (FT)
• 5 entrepreneurship trends to watch out for in 2010 (Open)
• 20 unpredictions for 2010 (ReformedBroker)
• 7 things we hope will come true in 2010 (GigaOm)
• Investment forecasts: known unknowns (The Psy-Fi Blog)
• Predictions & resolutions For 2010 (FinancialSamurai)
• Here's 20 things that definitely won't happen in 2010 (BusinessInsider)
• Spoof predictions for 2010 and beyond (Huffington)

Hayek versus Keynes rap video

This is both cool and unusual...



The words...

We’ve been going back and forth for a century

[Keynes] I want to steer markets,

[Hayek] I want them set free

There’s a boom and bust cycle and good reason to fear it

[Hayek] Blame low interest rates.

[Keynes] No… it’s the animal spirits

[Keynes Sings:]

John Maynard Keynes, wrote the book on modern macro

The man you need when the economy’s off track, [whoa]

Depression, recession now your question’s in session

Have a seat and I’ll school you in one simple lesson

BOOM, 1929 the big crash

We didn’t bounce back—economy’s in the trash

Persistent unemployment, the result of sticky wages

Waiting for recovery? Seriously? That’s outrageous!

I had a real plan any fool can understand

The advice, real simple—boost aggregate demand!

C, I, G, all together gets to Y

Make sure the total’s growing, watch the economy fly

We’ve been going back and forth for a century

[Keynes] I want to steer markets,

[Hayek] I want them set free

There’s a boom and bust cycle and good reason to fear it

[Hayek] Blame low interest rates.

[Keynes] No… it’s the animal spirits

You see it’s all about spending, hear the register cha-ching

Circular flow, the dough is everything

So if that flow is getting low, doesn’t matter the reason

We need more government spending, now it’s stimulus season

So forget about saving, get it straight out of your head

Like I said, in the long run—we’re all dead

Savings is destruction, that’s the paradox of thrift

Don’t keep money in your pocket, or that growth will never lift…

because…

Business is driven by the animal spirits

The bull and the bear, and there’s reason to fear its

Effects on capital investment, income and growth

That’s why the state should fill the gap with stimulus both…

The monetary and the fiscal, they’re equally correct

Public works, digging ditches, war has the same effect

Even a broken window helps the glass man have some wealth

The multiplier driving higher the economy’s health

And if the Central Bank’s interest rate policy tanks

A liquidity trap, that new money’s stuck in the banks!

Deficits could be the cure, you been looking for

Let the spending soar, now that you know the score

My General Theory’s made quite an impression

[a revolution] I transformed the econ profession

You know me, modesty, still I’m taking a bow

Say it loud, say it proud, we’re all Keynesians now

We’ve been goin’ back n forth for a century

[Keynes] I want to steer markets,

[Hayek] I want them set free

There’s a boom and bust cycle and good reason to fear it

[Keynes] I made my case, Freddie H

Listen up , Can you hear it?

Hayek sings:

I’ll begin in broad strokes, just like my friend Keynes

His theory conceals the mechanics of change,

That simple equation, too much aggregation

Ignores human action and motivation

And yet it continues as a justification

For bailouts and payoffs by pols with machinations

You provide them with cover to sell us a free lunch

Then all that we’re left with is debt, and a bunch

If you’re living high on that cheap credit hog

Don’t look for cure from the hair of the dog

Real savings come first if you want to invest

The market coordinates time with interest

Your focus on spending is pushing on thread

In the long run, my friend, it’s your theory that’s dead

So sorry there, buddy, if that sounds like invective

Prepared to get schooled in my Austrian perspective

We’ve been going back and forth for a century

[Keynes] I want to steer markets,

[Hayek] I want them set free

There’s a boom and bust cycle and good reason to fear it

[Hayek] Blame low interest rates.

[Keynes] No… it’s the animal spirits

The place you should study isn’t the bust

It’s the boom that should make you feel leery, that’s the thrust

Of my theory, the capital structure is key.

Malinvestments wreck the economy

The boom gets started with an expansion of credit

The Fed sets rates low, are you starting to get it?

That new money is confused for real loanable funds

But it’s just inflation that’s driving the ones

Who invest in new projects like housing construction

The boom plants the seeds for its future destruction

The savings aren’t real, consumption’s up too

And the grasping for resources reveals there’s too few

So the boom turns to bust as the interest rates rise

With the costs of production, price signals were lies

The boom was a binge that’s a matter of fact

Now its devalued capital that makes up the slack.

Whether it’s the late twenties or two thousand and five

Booming bad investments, seems like they’d thrive

You must save to invest, don’t use the printing press

Or a bust will surely follow, an economy depressed

Your so-called “stimulus” will make things even worse

It’s just more of the same, more incentives perversed

And that credit crunch ain’t a liquidity trap

Just a broke banking system, I’m done, that’s a wrap.

We’ve been goin’ back n forth for a century

[Keynes] I want to steer markets,

[Hayek] I want them set free

There’s a boom and bust cycle and good reason to fear it

[Hayek] Blame low interest rates.

[Keynes] No it’s the animal spirits

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

John Maynard Keynes

The General Theory of Employment, Interest and Money

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

F A Hayek

The Fatal Conceit

Top US Hayekian thinkers

Taking Hayek Seriously has a piece on the top 30 US Hayekian thinkers. Why is this important? Hayekian economics emphasises the importance of production, innovation, investment and individual responsibility over consumption, welfare, corporatism and state control/intervention. Simply, you need to generate wealth, to be a wealthy nation. You need a wealthy nation in order to be a prosperous one.

Just ask China and Poland. The outstanding improvements in the standard of living for these countries owes much to Hayekian theories of social economy.

Here's the list.

The top Hayekian public intellectuals in America are:

1. Thomas Sowell — book author, syndicated columnist.  Introduced to Hayek by Milton Friedman at the U. of Chicago, but mostly self taught.

2. John Stossel — TV personality, syndicated columnist, book author.  Self taught.

3. Walter Williams — book author, radio personality, syndicated columnist.  Learned Hayek at UCLA.

4. George Will — syndicated columnist, TV personality, book author.  Introduced to Hayek at Oxford & through the IEA in London, but mostly self taught.

5. Mark Levin — book author, radio personality & legal foundation president.   Self taught.

6. Russ Roberts — podcaster, book author & blogger.  U. of Chicago and self taught.

7. Rush Limbaugh — radio personality, magazine publisher, book author.  Self taught.

8. Thomas Woods, Jr. — book author.   Self taught.

9. Robert Higgs — book author, blogger, journal editor.  Self taught.

10. Ed Feulner — think tank president, book author, newspaper commentary.

11. Peter Schiff — podcaster, TV personality, YouTube sensation, book author.   Self taught.

12. Jeffrey Tucker — web site guru.  Self taught.

13. Steve Forbes — magazine publisher, book author.   Self taught.

14. Gerald O’Driscoll, Jr. — think tank economist.  Learned Hayek at UCLA.

15. Robert Murphy — book author, think tank economist, blogger.  Learned Hayek at Hillsdale College and NY University.

16. Don Boudreaux — blogger, newspaper columnist.  Learned Hayek at Auburn University.

17. Newt Gingrich — political activist, TV personality, book author.  Self taught.

18. Richard Ebeling — columnist, book editor.

19. Lawrence White — think tank economist, blogger.  Learned Hayek at UCLA.  Self taught.

20. Stacy McCain — blogger, book author, magazine writer.  Self taught.

21. Jonah Goldberg — book author, blogger, syndicated columnist.  Self taught.

22. Virginia Postrel — book author, blogger.  Self taught.

23. Richard Eptstein — book author, commentary.

24. Mike Shedlock — blogger.

25. Steve Horwitz — blogger.  Learned Hayek at George Mason University.

26. Frank Shostak — think tank economist.

27. Mario Rizzo — blogger.  Learned Hayek at the U. of Chicago.

28. David Boaz — book author, think tank official, commentary.  Self taught.

29. Peter Boettke — journal editor, blogger.  Learned Hayek at Grove City College and George Mason University.

30. George Selgin — book author, commentary.  Learned Hayek at NY University.

So that’s my top 30.  My rankings are based on an intuitive weighting of all sorts of different factors:  breadth of reach, depth of understanding, soundness of thought, common touch, ability to engage other intellectuals, intellectual creativity, mastery of the ideas at hand, etc.