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 George Reisman's Blog on Economics, Politics, Society, and Culture

April 2007  

This blog is a commentary on contemporary business, politics, economics, society, and culture, based on the values of Reason, Rational Self-Interest, and Laissez-Faire Capitalism. Its intellectual foundations are Ayn Rand's philosophy of Objectivism and the theory of the Austrian and British Classical schools of economics as expressed in the writings of Mises, Böhm-Bawerk, Menger, Ricardo, Smith, James and John Stuart Mill, Bastiat, and Hazlitt, and in my own writings.

The contents of the blog are copyright © 2007 by George Reisman. All rights reserved. Permission is hereby granted to reproduce and distribute individual articles below electronically and/or in print, other than as part of a book. (Email notification is requested). All other rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

 

Monday, April 23, 2007

It’s About Energy, Not Climate

The environmental movement has been doing its utmost to sabotage energy production since the 1960s, long before it was able to latch onto the prospect of global warming. Its opposition to atomic power has nothing to do with global warming, nor does its opposition to the construction of dams to provide hydro-electric power. Indeed, if global warming and the consumption of fossil fuels, which it alleges is the cause of global warming, were really its concern, it would be a leading advocate of atomic power and of the construction of new and additional dams to provide hydro-electric power. Instead, however, the environmental movement opposes atomic power even more adamantly than it opposes power derived from fossil fuels, and it also urges the actual tearing down of existing dams, even though they provide substantial electric power. (On this last, see, for example, the article in today’s New York Times “Climate Change Adds Twist to Debate Over Dams.”)

The only sources of power that the environmental movement is willing to allow are wind and sunlight. The first is subject to the proviso that birds are not killed by flying into the propellers of the windmills. The second makes no allowance for all of the times when sunlight is blocked, i.e., in cloudy weather and at night, when the sun has gone down.

Environmentalists like to say that there is a third alternative source of energy: conservation.

“Conservation” as a source of energy is a contradiction in terms. It is not a source of energy. Its actual meaning is simply using less energy. It is a source of energy for one use only at the price of deprivation somewhere else. Moreover, the logic of conservationism is not consistent with using energy saved in one part of the economic system to expand energy use in other parts. Those other parts are also supposed to conserve, i.e., to use less energy rather than more.

The objective of the environmental movement is and always has been simply the destruction of energy production. Its further goal is the undoing of the Industrial Revolution and the return of the modern world to the poverty and misery of the pre-Industrial era.

This goal is not hidden. It is stated openly. In the words of Maurice Strong, Founder of the UN Eco-summits and Undersecretary General of the UN: “Isn't the only hope for the planet that the industrialized civilizations collapse? Isn't it our responsibility to bring [that] about?” —as quoted in The Politically Incorrect Guide to Global Warming and Environmentalism (Washington, D. C.: Regnery Publishing, Inc., 2007), p. 6.

Destruction of industrial civilization, by means of destroying its foundation in man-made power. That, not the avoidance of global warming, is what environmentalism seeks.

The question is, are enough people stupid enough to let it succeed and allow themselves to be destroyed?


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Labels: destruction of energy production and of industrial civilization, Environmentalism and impoverishment, Maurice Strong

 

Friday, April 20, 2007

No Representation for Taxation

A bill has passed the House of Representatives giving a seat in Congress to the nation’s capital, the District of Columbia.

According to The New York Times,

For supporters, the House vote was a victory for democracy, potentially righting a historical wrong and ending a situation of “taxation without representation” for 600,000 residents of the District of Columbia.

“This vote fulfills a promise of our democracy,” Representative Nancy Pelosi of California, the House speaker, said in her floor speech. “It reflects what we stand for at home and preach around the world.”

Opposition to the bill appears to be based merely on the fact that the US Constitution says that “The House of Representatives shall be composed of members chosen every second year by the people of the several states.” (Italics added.) Thus, it is argued, since Washington, D. C. is not a state, it should have no representative. Fears are also expressed that enactment of the bill into law would open the way for the various federal territories, such as Puerto Rico and Guam, to seek representation.

According to The Times, opponents of the bill say that a better solution “would be a constitutional amendment or for Washington to be ceded back to Maryland, so residents could vote for representatives and senators.”

It’s a sad commentary on the state of our Republic that no one seems to be pointing out that what is involved here is the nature of the proper relationship between the citizens of a country and its government. The United States was founded on the principle that individuals possess unalienable rights that governments are instituted to protect, and that among these rights is the right to keep the property one has earned.

The principle of “no taxation without representation” applies to the context in which those who have earned property strive to keep it by means of securing the subsidiary right to elect, and thus control, the members of the legislature that can impose taxes on them.

The overwhelming majority of the citizens of Washington, D. C. are employees of the federal government or their family members, or are otherwise supported by the federal government. As such, they are not taxpayers, but rather the recipients of taxes paid by other people. Whatever taxes they nominally pay are merely a deduction from the tax proceeds they have received. All of the income they obtain and keep is from the proceeds of taxation.

Denial of the right to vote to citizens of Washington, D. C., serves in some measure to protect the taxpaying citizens of the United States from the depredations of those who live off their taxes and who would like to tax them still more.

Of course, the historical reason that Washington, D. C. does not have representation in Congress was not in order to deprive government employees of the right to vote. Such protection was not deemed necessary in an environment in which the only sources of federal revenue were tariffs and the sale of land. The historical reason was that the federal government was viewed in important respects as subsidiary to the states and not as their equal.

Nevertheless, it is certainly a good thing for the rest of the country that the citizens of Washington, D. C. do not have the vote. It implicitly serves to support the fundamental principle that the disposition of an individual’s property should be decided by him, not jointly by him and thieves who want to rob him.

The possession of the right to vote by government employees and by anyone else who receives a substantial portion of his wealth or income from the government is in fact giving legal power to those who receive the wealth of others to proceed to take that wealth. It is literally giving the vote to thieves.

That may be Nancy Pelosi’s conception of democracy and of what the United States stands for. But it is the kind of democracy that is present in a lynch mob. And what the United States actually stands for, and should stand for, is the rights of the individual against the mob—against the entire rest of the world if need be.

Hopefully, the Senate will prevent the House’s bill from becoming law. Representation in the House of Representatives for Washington, D. C. and its mass of tax recipients would not end a situation of “taxation without representation.” This is because, as we've seen, the citizens of Washington, D.C., do not pay taxes; they receive them. All that giving them representation would do would be to provide additional representation for advocates of additional taxation and thus further weaken the power of taxpayers to defend their right to keep their own property. As such, it would be directly contrary to the principle of no taxation without representation—that is, of course, representation for those who have earned the wealth being taxed, not those who want to tax it.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site http://www.capitalism.net/ is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Labels: No Representation for Taxation, No Taxation Without Representation

 

Wednesday, April 18, 2007

Keeping Up With the Party Line at The New York Times/Pravda

From the movie review “Casualties of China’s Transformed Economy” by Jeannette Catsoulis, in today’s Times:

Bracketed by stunning long shots taken from the front of a moving freight train, Wang Bing’s epic, three-part documentary, “Tie Xi Qu: West of Tracks,” is an astonishingly intimate record of China’s painful transition from state-run industry to a free market. Filming between 1999 and 2001, Mr. Wang and his sound engineer, Lin Xudong, painstakingly document the death throes of the Tie Xi industrial district in the city of Shenyang, in northeast China, a once-vibrant symbol of a thriving socialist economy.

How foolish of China to abandon its “thriving socialist economy” of perpetual mass starvation for a rapidly progressing market economy of soaring skyscrapers and rising living standards for hundreds of millions.

From the book review by William Grimes
“Looking Back in Anger at the Gilded Age’s Excesses” in today’s Times:

Again and again, surveying the post-Civil War landscape, Mr. Beatty throws up his hands in despair. “The people supported the government, and the government supported the corporations and the rentiers with the people’s money,” he writes. “And the people did not seem to object, at least not enough of them.”
Maybe that’s because of wheeler-dealers like Jay Gould, who once boasted, “I can hire one half of the working class to kill the other half.” They just don’t make them like that anymore.

Or maybe it’s because the reviewer and author (Jack Beatty, a senior editor at The Atlantic Monthly) are 180 degrees wrong. Instead of the “robber barons” stealing the industries that did not exist before they created them, and impoverishing those who had next to nothing in the first place, the vast new wealth that the great industrialists employed as capital served radically and progressively to increase the supply of goods available to the common man to buy and increased the demand for the labor that he sold. That’s the actual nature and significance of the fact that, in the reviewer’s words, “The richest 1 percent owned 26 percent of the wealth, and the richest 10 percent owned 72 percent.” The hated rich created that new and additional wealth and were led by the nature of the profit motive, capital, and free markets to employ it for the progressive benefit of the masses.

Such is the intellectual and moral state of The New York Times, a veritable cesspool of wrong and vicious ideas serving day in and day out to poison the minds of its readers against the capitalist economic system and economic freedom.

This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Labels: capital, capitalist economic system, economic freedom, free market, New York Times, profit motive, robber barons

 

Tuesday, April 17, 2007

An Update to Henry Hazlitt’s “Uruguay: Welfare State Gone Wild”

Back in 1969, Henry Hazlitt’s Man Versus the Welfare State appeared. It was a valuable collection of essays, one of which was “Uruguay: Welfare State Gone Wild.”

This essay consisted largely of a series of verbal “snapshots” of Uruguay, as Hazlitt called them, in the form of quotations drawn from a variety of sources over the years 1956 to 1968. What Hazlitt described by means of the quotations was an economic system plunged into ruin by unrestrained welfare-state spending.

Having taken a tour of Montevideo, Uruguay’s capital, last month, I’d like to offer a “snapshot” as of the present year, 2007.

What I saw was a city of almost unrelieved drabness and ruin. Graffiti filled walls within a hundred yards of the seat of the country’s Congress. The city’s public parks, presented as an attraction to tourists, were overgrown with weeds; the wrought-iron fences they contained were in a state of collapse. Building after building, in neighborhood after neighborhood, was in a state disrepair. Often, only a burnt-out concrete shell was left. Hardly anything, anywhere, looked new. Much of the city was reminiscent of the South Bronx, an area devastated by more than two generations of rent controls. Only one, small area of the city, near the River Plate, appeared to be at all prosperous.

Uruguay no longer has trains. “They don’t work anymore,” our tour-guide announced. “Uruguay has been resting for the last 50 years and has made no progress in that time,” she said. The population of Montevideo and of the country as a whole are both declining. A large proportion of university graduates in particular leave, in search of better opportunities elsewhere.

From what I saw, if there are another 50 years of such “rest,” there may be nothing much left of Montevideo beyond an impoverished village.

Copyright © 2007 by George Reisman.

Labels: Uruguay an impoverished welfare state

 

 

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