Fake or Establishment Free-Market Groups/Individuals

[LastoftheMohicans]

I am tired of the fake free-market groups out there giving the free-market a bad name.

Here's my list:

Cato Institute- There are some good people there but Cato really went off the rails with the "Republican Revolution" of '94. They became too cozy with the Republican Establishment which is totally anti-freedom but uses libertarian rhetoric.

Libertarian Party- too much of a Republican Party-lite. Took in too many conservatives during the '90's and couldn't assimilate them all.

Club for Growth- supposedly an organization that target big-government conservatives in favor of pro-growth candidates (usually Republicans). The fact is the candidates that they support are also big-government conservatives. They just support a little less government that the "typical' big-government conservatives.

Rush Limbaugh- self-describe capitalist but supports big-government candidates all the time.

Thomas Sowell- some libertarians bring up Sowell's name in order to say, "see, we're not racists". I don't care what color Sowell is. On economics,he is a watered down Friedmanite( I liked Milton Friedman, but he ceded too much ground to statists), a law and order type, and a neocon on foreign policy.

I am sure I'll think of others, but that's enough for now.

[Gee]

Thomas Sowell- some libertarians bring up Sowell's name in order to say, "see, we're not racists". I don't care what color Sowell is. On economics,he is a watered down Friedmanite( I liked Milton Friedman, but he ceded too much ground to statists), a law and order type, and a neocon on foreign policy.
Friedman wanted a government even smaller than Ron Paul does (he didn't even seem to like state and local interference), he was just willing to cede ground in order to actually get his policies enacted. Nothing wrong with that, at least it would be a step in the right direction.

Its the same with all those groups, really... No one is going to agree on everything, the important thing is that the country moves in a direction which is economically sound.

[LastoftheMohicans]

Friedman wanted a government even smaller than Ron Paul does (he didn't even seem to like state and local interference), he was just willing to cede ground in order to actually get his policies enacted. Nothing wrong with that, at least it would be a step in the right direction.

Its the same with all those groups, really... No one is going to agree on everything, the important thing is that the country moves in a direction which is economically sound.

Friedman did state, in a Reason Magazine interview, that he would like to be a zero-governement libertarian. However, taking the sum total of what he advocated during his career, his record is pretty bad. Yes, he did oppose Drug Prohibition and the Draft, but he also supported a central bank and was awol on foreign interventionism.

Here is a free-market critique of Friedman: http://www.lewrockwell.com/rothbard/rothbard43.html


As far as the other groups go, I am suspicious of their motives. Cato is probably the best of the lot, but you should read this: http://antiwar.com/blog/?p=2394

[Gee]

He wanted to abolish the Fed and replace it with a computer. I guess he did like some sort of central bank which would allow fiat money, since he didn't think commodity-backed currency was worth the trouble, but thats pretty damn libertarian.

The great thing about Chicago (Milton) vs. Austrian economics is that they both started with totally different methods (empirical statistical evidence at a macro level vs. analytical individualism), and ended up at the same (or a very similar) conclusion. That alone should be a huge sign that they are on to something.

I don't know how accurate that linked article is. I know Friedman did not like welfare at all, but he conceded it was currently a political necessity. So he wanted to lessen its impact with a negative income tax. He also spoke out against anti-trust legislation in his later years, commenting on how it nearly always did more harm than good.

If the libertarian movement calls Friedman a statist, then thats a sure sign it will never attract the sort of numbers it needs to really do anything.

[ARealConservative]

I refuse to give CATO too hard of a time. I question them from time to time, but they actually do a great deal to increase the size of the liberty movement.

[LastoftheMohicans]

He wanted to abolish the Fed and replace it with a computer. I guess he did like some sort of central bank which would allow fiat money, since he didn't think commodity-backed currency was worth the trouble, but thats pretty damn libertarian.


Monetarists are still inflationists. Who would run the computer? The government?

[LastoftheMohicans]

I refuse to give CATO too hard of a time. I question them from time to time, but they actually do a great deal to increase the size of the liberty movement.

I agree. There are still some good people there. I like Roger Pilon, Ted Galen Carpenter and David Boaz. Their biggest mistake was moving from San Fran to Washington.

[Gee]

Monetarists are still inflationists. Who would run the computer? The government?
I believe he wanted an open-source algorithm in charge. He wanted near-constant inflation, so people could account for it (which would of course lessen or remove the "inflation tax" if it was dealt with wisely). After all, its not like commodity-backed currencies don't inflate or deflate over time. Nothing is perfect. If people chose to use fiat money with a constant low rate of inflation on an open market, they should be free to do so. In that respect, I'm not sure what Friedman's stance was on the legal tender laws requiring FRNs be used in payment of debts.

[LastoftheMohicans]

I believe he wanted an open-source algorithm in charge. He wanted near-constant inflation, so people could account for it (which would of course lessen or remove the "inflation tax" if it was dealt with wisely). After all, its not like commodity-backed currencies don't inflate or deflate over time. Nothing is perfect. If people chose to use fiat money with a constant low rate of inflation on an open market, they should be free to do so. In that respect, I'm not sure what Friedman's stance was on the legal tender laws requiring FRNs be used in payment of debts.

As the Austrian economist have pointed out, not everybody is going to get the "new money" at the same time. Wealth will be transferred from the last users of the new money to the first users (The politically connected banks, etc.) Having a fiat money in a free market is a contradiction. If the legal tender laws were repealed, FRN's would probably disappear as they have no backing.

[Brandybuck]

Here is a free-market critique of Friedman: http://www.lewrockwell.com/rothbard/rothbard43.html
Rothbard was an anarchist. He disagreed with people who wanted a municipal fire department, for Pete's sake!

Friedman was an anarchist too, but a pragmatic one. He knew we can never get a true anarcho-capitalist society, so he advocated stuff that was at least somewhat achievable. Such as an indexed monetary policy.


I believe he wanted an open-source algorithm in charge. He wanted near-constant inflation, so people could account for it (which would of course lessen or remove the "inflation tax" if it was dealt with wisely).
This is an indexed monetary policy. Instead of a Fed chairman sitting at the knobs of the money supply, Friedman suggested that indexing the monetary supply to specific economic statisitic would be better. EconTalk.org has a podcast interview with Milton Friedman, where he mentions this. It's a very good listen.

[Gee]

As the Austrian economist have pointed out, not everybody is going to get the "new money" at the same time. Wealth will be transferred from the last users of the new money to the first users (The politically connected banks, etc.) Having a fiat money in a free market is a contradiction. If the legal tender laws were repealed, FRN's would probably disappear as they have no backing.
If inflation is constant and expected, there doesn't necissarily have to be a transfer of wealth. Wages and prices can rise in a constant fashion, as is expected by inflation.

Anyways, its no different with gold. The people who dig it out of the ground or steal it from native central Americans get to use it first.

I would like to see a currency backed by a commodity index of goods linked to the cost of living. It seems to me that would make inflation or deflation damn near impossible.

[KingTheoden]

If inflation is constant and expected, there doesn't necissarily have to be a transfer of wealth. Wages and prices can rise in a constant fashion, as is expected by inflation.


I think the point others have brought up is that of distribution. If we are to retain a monetary system that is a state monopoly, there would have to be some means of distributing this fiat currency. Presently, the Federal Reserve and the top banks that control it get to set lending rates. In order to have this power, the Federal Reserve must have the right to order banks to buy or sell US Treasuries on demand.

In the hypothetical model Friedman appears to have endorsed, the computer program would replace the FOMC, but the general system would remain in tact. What we instead need to do is return to free banking; we need to roll things back to before the National Bank Act of Lincoln. Individual financial institutions should have the right to produce their own paper mediums of trade. The best forms will thrive in a free market.

Maintaining a fiat currency in any form whether actively managed by a group of elite power brokers or passively by a computer program (and the programmer's controllers), the end result is in either case state control over the means of trade.

[LastoftheMohicans]

If inflation is constant and expected, there doesn't necissarily have to be a transfer of wealth. Wages and prices can rise in a constant fashion, as is expected by inflation.

Anyways, its no different with gold. The people who dig it out of the ground or steal it from native central Americans get to use it first.

I would like to see a currency backed by a commodity index of goods linked to the cost of living. It seems to me that would make inflation or deflation damn near impossible.

This is Friedman's "helicopter effect", where each person would get a proportional increase in their supply of money. This ignores the redistributive effects of this increase in the supply of money. In the real world, the new money doesn't arrive to each person at the same time.


I highly recommend that you read Rothbard's, "The Case Against the Fed", "What has government done to our money" and "The Mystery of Banking"

[Gee]

This is Friedman's "helicopter effect", where each person would get a proportional increase in their supply of money. This ignores the redistributive effects of this increase in the supply of money. In the real world, the new money doesn't arrive to each person at the same time.

I highly recommend that you read Rothbard's, "The Case Against the Fed", "What has government done to our money" and "The Mystery of Banking"
I'm aware of how money is created in fractional reserve banking systems; I don't need to read any books on the subject. My point was that if inflation is expected and constant, the effects of it can be anticipated and greatly mitigated. Not that anything like that could occur with the way the Fed is run currently...

All types of currencies have problems. Gold standards haven't been without issues either.

[LastoftheMohicans]

I'm aware of how money is created in fractional reserve banking systems; I don't need to read any books on the subject. My point was that if inflation is expected and constant, the effects of it can be anticipated and greatly mitigated. Not that anything like that could occur with the way the Fed is run currently...

All types of currencies have problems. Gold standards haven't been without issues either.


The 19th Century gold standard wasn't a true gold standard. It was more of a bimetallic standard. The problem with that was the government was fixing prices between the 2 metals. For example, 16 oz silver/1 oz of gold. The problem with that was if the market price between gold and silver deviated from that ratio, one of the metals would be overvalued and the other undervalued in the market. The Bretton Woods agreement was a pseudo-gold standard with the dollar being the world's "gold". Everything went well until there was too much of a gold drain out of the country due to the inflation of the welfare/warfare 60's.

[Gee]

Yeah, I know. I was more referring to the fact that you have to go dig it out of the ground just to stick it back in a bank vault. Nowadays gold is used for industrial processes more than anything else, and going back on the gold standard could raise the price of gold for things like the manufacturing of printed circuit boards.

Fortunately, electronic currency should offer many options.

[LastoftheMohicans]

Any supply of money will do. Prices will adjust. There is no need to add to the stock of the money.