The whole development of modern society has tended mightily toward the limitation of the realm of freedom for the individual man. The tendency is most clearly seen in socialism; a socialistic state would mean the reduction to a minimum of the sphere of individual choice. Labor and recreation, under a socialistic government, would both be prescribed, and individual liberty would be gone. But the same tendency exhibits itself to-day even in those communities where the name of socialism is most abhorred. When once the majority has determined that a certain regime is beneficial, that regime without further hesitation is forced ruthlessly upon the individual man. It never seems to occur to modern legislatures that although “welfare” is good, forced welfare may be bad. In other words, utilitarianism is being carried out to its logical conclusions; in the interests of physical well-being the great principles of liberty are being thrown ruthlessly to the winds. – J. Gresham Machen, Christianity and Liberalism, (Grand Rapids, MI: Eerdmans, 1923), 11.

It’s an interesting question how Machen comes to discuss liberty in a book written to defend orthodox Christian theology against the claims of theological liberalism. But the subject does arise organically. What’s more interesting to me, however, is to read a Christian (a fundamentalist, in the original sense of the term) express such concern for liberty. Let’s face it: Christians have not for a long time been known as defenders of liberty.

Some of that is due to bad press, put out by people for whom "liberty" means what most of us prefer to call "libertinism". But, in fact, some Christians (of both Left and Right) do have their own version of welfare, under which they’d like to put everyone.

Of course, it’s difficult to talk liberty these days. Most people who use the term now-days seem to refer only to sexual liberty. In all other matters, they seem to prefer “welfare”.

Curtis Schweitzer responds to this post:

[E]ven granting that fiat currency is a proposition that uses language to define value..., doesn't this mean that the overall system is itself a kind of experiment? .... In other words, if in a fiat currency system, language constructs economic reality, then can't we "test" such a belief from a rational standpoint by seeing how well it works in whatever "reality" it is we're disputing? If rationalism and science aren't valid ontologies, but the deconstructionist post-modernist framework is, shouldn't we be able to define our own reality in words? And if we've been doing that with money, doesn't that strengthen, rather than weaken, the argument that the current economic crisis is evidence...that post-modernism simply doesn't explain reality (whatever we take that to mean) sufficiently?

In fact, no the overall system itself is not a kind of experiment; it's a kind of fraud. Frauds don't set out to test; they set out to get something of value in exchange for nothing of value. Besides, to be precise, you can't have an experiment of something you didn't set out to to test. The fiat money system was not set up as a test of anything. And there is no point in testing the belief that in a fiat money system language constructs economic reality: we know this to be the case from the simple observation that we trade worthless pieces of paper back and forth in exchange for goods and services. The case is prima facie. Moreover, imperative-mood sentences are not subject to verification or falsification. When the government commands us to exchange these worthless pieces of paper, there is nothing to test, except what happens if we refuse to comply. "You shall exchange this note for x amount of goods and services," is not a proposition; it has no truth-value. It is not an empirical claim; there is no probablility to calculate.

I think the post-modernist will likely look at the situation and see the role of the government here as one of strong-poet. The government, as strong-poet, says of worthless pieces of paper, "This is money" and the worthless pieces of paper are treated like money. The economic crisis, your argument that it's a test notwithstanding, is still discussed in terms of how much (in pieces of worthless paper) has been lost, and by whom.

You want to say, in reply to post-modernist assertions that reality is language-constructed, that it is falsified by the market's failure. I think a post-modernist would say that claiming that reality is a construct is not the same as saying the construct will "work". The post-modernist does not assert that it is, or would be, a great idea with limitless salutary benefits, if we constructed reality with language; he asserts that we do so, whether it's a good idea, or a successful one.

(The problem with seeing the present crisis as a falsification of post-modernism is that looking at it that way diverts our attention from the real failure. Post-modernism is small potatoes compared to the real problem. But I'm getting ahead of myself.)

The post-modernist claim is not that we should be able to define our own reality in words; neither is it that these constructs are successful. The claim is simply that we do. Not only that, but in order to have a test against reality there must be a reality to test against. You have not overcome post-modernism: you're begging the question. In asserting that post-modernism has been submitted to a test which it has failed, you have begun by assuming the falsity of post-modernist claims. You have been assuming throughout that reality is not language-constructed.

But more importantly, especially as it regards the post-modernist preoccupation with coercion, the claim is not that we've been constructing reality with words by the fiat money system. The claim is that the government has done. And the market failure is irrelevant because, again, we continue to discuss the crisis in terms of money lost -- fiat money lost.

The fact is, post-modernism will fall not because it will be, or has been, empirically weighed in the balance and found wanting. Post-modernism is a speculative and interpretive act of the mind, not a set of testable empirical claims. Post-modernism should be rejected because of its internal contradictions. It is untenable on its own terms.

The real failure is not the failure of post-modernist claims about the nature of reality. The real failure is the failure of command economics. Our economy is a failure for the same reason the Soviet economy was a failure: government interference in the market obscures price, which makes calculation difficult, if not impossible. Because price cannot properly be taken into account capital is mis-allocated. Interest is the price of borrowed money. Artificially low interest rates tell entrepreneurs there is much money to borrow; it also tells them consumers are saving more, putting off consumption today with the idea of consuming later on down the road. But what will they be consuming down the road? In fact, it doesn't really matter: that artificially low interest rate is lying to the entrepreneur. People aren't saving, they're spending like crazy. There isn't a lot of money to borrow; it looks that way only because the rate was lowered. And why was the rate lowered? To "spur" the economy, which means to "spur" market participants. Spur them to do what? Spend, of course, but on what? And why?

The 'why' is the easy part: to achieve full employment. Now to the 'what'.

Enter the government. The government has all sorts of objectives, depending upon the administration. But we can use a recent example: housing. The government wants to increase home-ownership. To do this it needs people who want to own homes (as opposed to renting or leasing). It also needs people to build homes. Builders don't build for free, so the people who want homes will need money for those homes, which they don't have because they're poor. And because they're poor they won't be seeking home loans which with to pay builders to build these homes. Also, because they are poor, they are settling for renting or leasing. But we don't want them renting and leasing; we want them owning.

If the government is going to increase home-ownership it must increase the amount of money available for borrowing, specifically, for new homes. It can lower the interest rate, and artificially increase the amount of available money. But banks aren't going to lend to high-risk (i.e., poor) creditors (and if they do, they will do so at a higher interest rate, given the risk involved), so that newly-available money will go to the less-risky (i.e., the rich and upper-middle class), unless, of course, the government can somehow motivate (i.e., coerce) banks into loaning that money to someone else, like the poor. Now, how might they do that?

We know how the government really works. It commands businesses to do various things, not in pursuit of commercial ends, but in pursuit of political ends. The government commanded banks to loan money by requiring them to make a certain percentage of loans to certain percentages of certain classes of people.

We have had yet another test of the command economy. It doesn't work. And what is our government's response? More command economics. Preoccupation with post-modernism diverts attention from this important fact.

Besides, post-modernism is an attack on modernism. I'm a Christian, working intellectually on the basis of Christian pre-suppositions. I'm not a modernist; so post-modernism can attack away. Modernism needs a bucket of cold water thrown at its face.

Indeed, one could say that our current market system, which has never been laissez-faire, is a product of modernism. And since that is what a post-modernist would say, I don't think we have here a test of post-modernism. Post-modernism doesn't assert that we can define reality for ourselves successfully; it claims, simply, that we do. We create interpretations of reality and then pursuade (or coerce) others into accepting these interpretations of reality. Furthermore, postmodernism asserts these acts of creation and pursuasion are acts of the will, not of the mind.

When it comes to our "free" market, and the undeniably coercive role our government plays in the market, I'll give post-modernism that argument.

We make our way, deliberately,
From east to west desperately seeking
A tree under which to place our gifts –
Gold, frankincense, myrrh—
For a child born and living
In a land once flowing
With milk and honey, following
A wandering star, westward, leading
To that land whose inhabitants arrived
Long ages ago on eagles’ wings
And now is trampled under strangers’ feet
(like salt without savor),
By a nation foreign to every covenant.
And we ponder, still we ponder
The meaning of it all—
One people, out of thousands,
This land of all lands,
and the strange legends
Of a Lawgiver, divinely inspired prophets—
Persecuted—
God-selected kings—
Faithless and disloyal,
And of this child
And his star,
Dancing in the sky,
Signing with the constellations,
For those with eyes to hear.

Weary of singing, “A thousand jars
Of wine on the wall”
We debate the importance of it all:
The selection of this land and people,
(stiff-necked and stubborn – could not
God have done better?).
The cause eludes us
Why the land was granted
And a nation created --
Just to raise up a people
Out of rocks and stones
(like pulling a rabbit
From an old silk hat
In a cosmic magic show)?
Surely, we think, no.
These supposed events
Were not without some significance,
However mysterious, incomprehensible.

Bearing gifts we traverse afar
Searching for a little fat man
In a little red suit, driving
A miniature sleigh pulled
By eight tiny reindeer.
Certainly, we think,
This man must know what it’s all about –
This child born king of the Jews.
“Perhaps we shall find him,”
The little fat man, “before the child
In humble adoration, devoutly kneeling."
Seeking, like we, a better country,
With a better king, not like the usual
Administration – devouring his people,
(The people are his;
The livestock are his;
The land is his)
Claiming divinity for himself,
Copulating madly to perpetuate
His godly line—

O King may you live forever and
Et cetera,
Et cetera,
Et cetera.

Over field and flood
And moor and mountain
We listen to a tedious tale
Told by a magic snowman
With a button nose,
A corn cob pipe,
And two eyes made of coal,
And who knows all about it—
The buying and selling,
The deadly stampeding
For what thieves can steal,
And moth and rust destroy;
The children, screaming,
Clutching cubit-long lists;
The hoping, tragic and ironic,
For a little peace on the earth,
Goodwill to men;
Some manifestation of the spirit
Of the true
And obscure
Meaning of the season
For which generic greetings
Are exchanged,
The tidings of comfort and joy
(Let nothing dismay you,
Somehow);
And as always, the not-comprehending
Why peace and goodwill
Are not forthcoming.
“Can you truly hope,”
I ask our hitch-hiking snowman,
“To find such things where men say,
‘Let us make bricks
And construct
An everlasting city
And establish for ourselves
An everlasting Name’?”

“We have seen his star in the east,”
We explain upon our arrival,
“And have come to worship him.
“Where shall we find
“Your new-born king and ours?”
And no one seems to know or care
About anything but eating and drinking
And marrying and giving in marriage,
The typical power – now troubled
By the thought, “The party may soon be ending.”
Scrolls untouched perhaps for decades
are sought and dusted and searched;
An answer is forthcoming.
And we continue as we set out:
Alone, to see and worship
Their new-born king.

In Bethlehem we find him,
Thanks to certain poor shepherds
To whom the first Noel was said,
A snot-nosed toddler, prancing about
In soiled diapers.

Is this what we came all this way for?
What? A king with no palace, no crown,
No purple robes, no servants attending?

“What sort of king,”
I say to my companions with me,
“Can this be?”

It seemed, long ago,
An uncommonly silly way
To save the world,
A stupid way to make the crooked straight,
To justify the ungodly
And redeem the abandoned.

The eldest among us cautions:
Recall the star. Can it have misguided?
It points to this place and to this child.
Recall the scrolls. Can they have deceived?
If star and scroll say, ‘Behold’
Then shall we not behold?
Shall we now abandon star and scroll
In favor of some self-flattering ordinary regime,
With its palaces and crowns and robes,
Fawning court-scholars serving
Ravenous wolves on thrones?
I saw fear and loathing in Jerusalem:
Better this child, in such mean estate,
Than that monstrosity.

I had just then a vision:
A thorn-stuck brow,
Nails through hands and feet,
A spear in the side,
Blood and water—
Will this one die, slain by wolves,
For nothing?

So many long years later,
My companions both gone,
Again to see the child
(who prepares a place),
And I await another journey,
Or another advent, coming
Like lightning from the east,
Flashing even to the west,
A coming in clouds,
A blowing trumpet,
And the gathering together
From the four winds.
I would be happy
Just now indeed to see
A second coming.

James Frank Solís

As I was fueling my car over the weekend, I struck up a conversation with a young lady at the pump beside me, at the conclusion of which she wished me a Merry Christmas, rather than the now-popular, Happy Holidays.

Today I read Jeffrey Tucker take on the notion of a war on Christmas:

The idea that there is a "war on Christmas" has been promoted by Bill O'Reilly and other...talking heads for years, and they intend to fight back by demanding that private enterprise make Christmas overt and with legislation requiring governments to use the phrase "Christmas tree."

To the extent that business has taken up the "Happy Holidays" cause, Tucker argues that it is not opposition to Christmas, or even Christianity itself:

This isn't a conspiracy, but just good customer relations. True, it makes some people angry, but you have to appreciate the difficulty that this conundrum presents for business. They want to contribute to the spirit of the season, if only to make a buck. But no matter what they do, there is trouble waiting. I promise you this: the instant it turns up that they are losing more revenue by saying "Happy Holidays" than by saying "Merry Christmas," the policy will change.

[...]

[I]f you aren't satisfied with this argument on capitalism's behalf, there is something you can do. There are many vendors that specialize in Christmas and appeal to every conceivable sensibility. They sell cards, trees, ornaments, icons, books, and a million other items. There is nothing wrong with favoring them over the mass market. Capitalism has provided room for them, too, so you can do your part by buying from them.

A final word: Christmas is the worst time of the year to enter a holy war. Make your peace with religious diversity. Come to understand the driving forces behind a free economy and thank God for it. Christ was born into a world that did not yet celebrate Christmas, and the kings from the East had to lie to the magistrate about the recipient of their gifts. Christmas can survive and thrive even if it is not culturally dominant. To be free to practice our faith should be our prayer.

Christians don't really need non-Christians to care about Christmas. I'm always shocked and amazed that Christians and shocked and amazed when non-Christians act like they are not Christians.

They have commercialized Christmas. Wow. What a shock.

(And no it's not, It's a Wonderful Life. Not that there's anything wrong with it.)

I have a confession: one of my favorite movies to watch this of time year is Ernest Saves Christmas, starring Jim Varney (the voice of "Slinky Dog" in Toy Story). (I know it has nothing to do with the "reason for the season". I don't watch movies when I want to reflect upon the reason for the season. It's one of my favorites only because Varney, a Shakespearean actor, by the way, was one of my favorites, just so we're clear.)

There are two scenes in it I particulary enjoy. In the following, he and a young girl disguise themselves, go into a jail in order to break Santa Claus out of it.




Here's another one, in which he's helping Santa Claus break onto a movie lot:



My wife and I watched it (as we do every year at this time) on Friday. That's how it comes to be on my mind. It's great for stupid lines, and obscure references for all occasions, such as, "Would anyone else like some cranberry sauce shaped like a can?"

As long as we're thinking about Jim Varney, he's an interview he did on Good Morning American:




People who don't know me well always ask how a guy like me can enjoy stupid movies. Well, as Roald Dahl wrote: A little nonsense now and then is relished by the wisest men.

Note: I'm not a wise man, but play one on the internet.

In his little book, Reason within the Bounds of Religion (Grand Rapids, MI: Eerdmans, 1976) Nicholas Wolterstorff discusses, among other things, the role of the Christian scholar’s religious commitment. Briefly, his commitments provide “control beliefs.”

[T]he religious beliefs of the Christian scholar ought to function as control beliefs within his devising and weighing of theories…. The Christian scholar ought to allow the belief-content of his authentic Christian commitment to function as control within his devising and weighing of theories. For he like everyone else ought to seek consistency, wholeness, and integrity in the body of his beliefs and commitments. Since his fundamental commitment to following Christ ought to be decisively ultimate in his life, the rest of his life ought to be brought into harmony with it. As control, the belief-content of his authentic commitment ought to function both negatively and positively. Negatively, the Christian scholar ought to reject certain theories on the ground that they conflict or do not comport well with the belief-content of his authentic commitment. And positively he ought to devise theories which comport as well as possible with, or are at least consistent with, the belief-content of his authentic commitment (76).

This notion is, of course, objectionable to some. Rejecting a theory because it does not comport well with one’s ultimate commitments is illegitimate in science.

Is it? Wolterstorff goes on to discuss an unquestioned “conformism with respect to science.

[T]he person who exhibits authentic Christian commitment cannot take for granted that the data, beliefs and theories of contemporary scientists are true. The most obvious reason is that contemporary scientists as scientists disagree. One has to choose. But even if that were not the case within some branch of contemporary science, if all the “experts” in that field agreed, why should the Christian (or anyone else) surrender all his critical faculties in the face of it? The “experts,” after all, will have practiced their science with their control beliefs. There is no reason for me to assume that mine are theirs, or that a science in accord with theirs will be in accord with mine (82).

Non-Christian scientists and scholars practice their craft with their control beliefs intact. On Wolterstorff’s view, the Christian scientist and scholar should freely do the same.

Reader JK asks, regarding this posting, "Why is 'the government'...repeatedly blamed? From what I've read and what I've been told, it's the market players who merrily took part in a reality renaming game. The government is not innocent of course: It deregulated the market in the first place."

In brief, government gets repeatedly blamed because it is a major player in the market, and, for some of us, improperly so. The question is what specific role it played in the present mess. With specific reference to the housing bubble and its burst, I think there is some merit to claims The Community Reinvestment Act played a role in that it requires (or can be, and has been interpreted to require) lending instutitions to make loans to sometimes-risky borrowers with the idea of increasing home-ownership among the poor. I'm getting ahead of myself, however.

But even if that isn't the case, that doesn't take the government out of the picture. There is still the role played in the housing bubble by Fannie Mae.

Mortgages originate in institutions such as banks. Fannie Mae purchased mortgages from originators and then either held the mortgages or packaged them together as securities, called mortgage-backed securities (or agency debt) and sold those mortgage-backed securities on credit markets. A great number of these mortgage-backed securities were purchased by money market funds, and felt safe in doing so because the seller was, well, Fannie Mae.

In a real free-market economy with a sound monetary system (as opposed to our quasi-mercantilist economy, with its fiat money system ), all funds loaned to borrowers would have been saved by savers somewhere else in the economy. To save is to defer consumption from the present to the future. Since money loaned to borrowers is money saved by savers, when money is borrowed, savers require an interest payment for their sacrifice. Borrowers take on the obligation to pay interest because they value the opportunity to fund present consumption more highly. Interest is a sort of rental payment on the borrowed funds, if you will.

In these sorts of credit transactions, there is a risk that the borrower may not have sufficient income to fund his debt obligations. This risk of default must be borne by someone. Generally, it is borne by some combination of the two parties in the transaction, the saver (lender) and the borrowers. The borrower can put up collateral, or the lender can charge a higher interest rate to compensate for the risk. (The higher interest rate may induce the would-be borrower not to borrow, in which case the saver runs no risk. Or, he may take on the higher interest rate and exercise more due diligence than he might otherwise have done.) Private lenders that are risking their own capital have a natural caution about the level of risk that they are willing to assume.

But Fannie Mae isn't a private lender. Fannie is a financial intermediary: It borrows from some and lends to others; but it's regulatory status(there's your government involvement) gives it a number of special privileges which private firms operating in the credit markets do not have. In a free market, financial intermediation is a good. Intermediaries perform the valuable service of bridging potential buyers and sellers. (It's like a financial hook-up service, helping people find each other for a really good time.)

As a government-sponsored-enterprise, Fannie Mae is not a free-market intermediary. So, unlike private transactions, in which risk is shared by the parties to the transaction, Fannie Mae just transferred the default risk (beyond their capital reserves) to the taxpayer through an implied government (i.e., taxpayer!) guarantee.

But that’s not all, of course. On credit markets, agency debt is quite attractive, more attractive than debt issued by private corporations. (Private corporations don't have a government guarantee, implied or otherwise.) Because it transferred some of the default risk to third parties, Fannie was, demonstrably, less cautious in evaluating the default risk of borrowers than a private firm, risking its own capital, would have been. Furthermore, government-sponsored-enterprise securities are accorded preferential treatment in the calculation of bank reserves, so they can be purchased in many cases where private mortgage-backed securities, or other forms of debt, can not. And finally, the government-sponsored-enterprise are exempt from federal and state income taxes.

Now, when Fannie Mae purchased these risky mortgages, it sent (false!) signals to more and more lenders that there was a market for these sorts of loans, and, further down the line, to more and more builders, who, naturally, responded to this (false) demand by building houses. The markets did what markets do: they responded to a perceived demand. Home prices went up because that's what demand does to price. But this demand was created by Fannie Mae's purchasing, retaining, or guaranteeing more than 70 percent of the mortgage market. Fannie Mae's avowed goal, under Franklin Raines, was to increase home ownership. When you're in the business of purchasing, retaining, or guaranteeing mortgages, you have to have mortgages to purchase, retain, or guarantee. And that means you must somehow induce lenders to lend money they might not otherwise have done. In consequence, builders build houses they might not otherwise have done.

This is where legislation such as the Community Reinvestment Act comes into play. CRA required banks, among other things, to have a certain percentage of their loans to minorities, just like that, apart from assessment of risk. (The CRA required financial institutions to serve communities by extension of credit.) (See also and compare the Wikipedia article on CRA, accessed 17 December 2008.) Periodically, and especially in cases where one financial institution wanted to purchase another, the purchasing institution would have to demonstrate compliance with this provision of CRA. Additionally, such institutions have been opened to charges of racism by pillars of the national community like Jesse Jackson. In order to conduct business (as businesses rather than philanthropic organizations) some lending institutions have given what can justly be described as shake-down money to racial -- but certainly not special -- interests. For example, Chase Manhattan and J.P. Morgan donated hundred of thousands of dollars to ACORN at about the same time they were to apply for permission to merge and needed to comply with CRA regulations. (Michelle Minton, "The Community Reinvestment Act’s Harmful Legacy, How It Hampers Access to Credit," Competitive Enterprise Institute, No. 132, March 20, 2008, accessed 17 December 2008.)

Conveniently, the market, which has had terms dictated to it, is now blamed for a mess which it would hardly, operating on it own, have gotten itself into by some of its players making bad loans. When one is instructed to ignore risk, the risk doesn't just go away. Your notion, that "the market players...merrily took part in a reality renaming game," is incorrect (emphasis added). There was no merriment to it. The market did exactly what the market does when it is forced to make decisions which fly in the face of risk: it found ways to mitigate risks it was forced (by our benevolent government) to take on. Reality, to any extent to which is was renamed, was renamed by the government. The market simply responded to its perception of this reality.

On top of that, we should, as Robert Murphy argues, consider the role that the Fed played in creating the housing boom. (See also this, clarifying, post.) Briefly, Murphy argues that the Fed, created the necessary and sufficient causes of the housing boom by virtue of Greenspan allowing "the monetary base to grow quite rapidly precisely when the housing boom shifted into high gear, and precisely when interest rates collapsed."

As an Austrian (in economics) I just happen to think that the credit expansion period (or "boom" period, if you will) produced an unsustainable misallocation of resources based on an incorrect interest rate, in this case a misallocation of all those resources associated with the housing market. The "bust" is nothing more than the (rather catastrophic) end to an artificially created bubble (a government-activity created bubble ). The market didn't self-organize to expand the credit availability. It could not have done.

Clearly, that does not absolve private players of any wrong-doing. But the private players, if you listen to some, are limited to unscrupulous lenders, who, we must believe, tied people up and made them sign loans they wouldn't have done but for this coercion. There were, ostensibly, no unscrupulous borrowers, no people who lied about or inflated incomes, resulting in inaccurate risk-assessment by lenders (to the extent that they were able to take risk into account and who, as lenders, don't have as much to gain by mis-assessing risk as borrowers do in giving false reports of financial strength).

Finally, regarding JK's assertion that government "deregulated" the market -- he must surely be joking. Granted, Glass-Steagal was repealed, but one should be able to list much more in the way of "deregulation". "Regulation" involves, at some point, legislative acts of Congress. So when I hear someone assert "deregulation" I want to hear all of the legislative acts which amount to this "deregulation". I also look for a physical decrease in the number of pages in the Federal Register.

The only "deregulatory" acts I can of are: The Depository Deregulation and Monetary Control Act of 1980 (which forced all banks to abide by the Fed's rules; allowed banks to merge; removed the power of the Federal Reserve Board of Governors under the Glass-Steagall Act and Regulation Q to set the interest rates of savings accounts; raised the deposit insurance of US banks and credit unions from $40,000 to $100,000; allowed credit unions and savings and loans to offer checkable deposits; allowed institutions to charge any interest rates they chose -- yeah, a lot of deregulation there); Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994 (which, repealing the Bank Holding Company Act, allows interstate mergers between adequately capitalized and managed banks, subject to concentration limits, state laws and Community Reinvestment Act (CRA) evaluations, other restrictions which prohibited bank holding companies from owning non-financial institutions having been repealed in 1999 by Gramm-Leach-Bliley Act but still prohibiting financial holding companies in the United States from owning non-financial corporations in contrast to Japan and continental Europe where this arrangement is common -- oh, yeah, big time deregulation); and Gramm-Leach-Bliley Act of 1999 (which allows banks to engage in previously prohibited activities such as lending, depositing, issuing insurance, and financial advising -- just awful). Oh, my goodness gracious! Will these heinous acts of deregulation never cease? I can see how it could be argued that these acts made the crisis possible: they allowed too much freedom of contract. Perhaps -- but these are not necessary and sufficient causes, only contributing factors which, but for the actions of the Fed under Greenspan (as Murphy argues in the above-linked article), would have had negligible effects.

Let me pause to take note of the fact that these horrendous acts of gross deregulation took place before Bush started running the economy, uh, I mean, country -- before he started running the country.

But even with all this putative deregulation, as of 2007, the last full year for which data are available, the Federal Register contained seventy-three thousand pages (that's 73,000 pages) of detailed government regulations. This is an increase of more than ten thousand pages since 1978, the very years during which our system, was supposedly "tilted in favor of business deregulation and against new rules" (according to the New York Times). Go figure. If that's degulation, then I suppose a man who gets his hair trimmed can justly be called bald.

One might argue that surely the market shares some of the blame, even if deregulation is a net good. In point of fact I don't think the market is to blame in the same sense in which the government is to blame. The market isn't because the market didn't do anything wrong; certain players in the market may have done (e.g., unscrupulous lenders, lying borrowers, or ignorant borrowers, who can't tell whether they can afford a loan, weak borrowers, who can't say no to an unscrupulous lender), but not the market. The entire government is to blame because the entire government makes, executes, and adjudicates the laws which forces the market to operate politically, rather than economically.

The government is repeatedly blamed because it repeatedly did -- and does -- things for which it is blame-worthy. (Then it conveniently points the finger at the market, which many people are all too ready to accuse in the first place.) The government is like that kid we all knew in high school, you know the one. He could start a food fight in the cafeteria then quietly, and cleanly, walk out, and on his way out the door look at a teacher, point to a random student and say, "He started it." I was once a victim of that student, on the last day of school, my senior year, no less. There are times when I still think he needs his butt kicked -- better late than never.

Some of us feel the same way about the un-federal government. It's time for it to receive its come-uppance and be forced to get the heck out of the market. The government is not comprised of dis-interested bystanders and has no business, therefore, regulating the market. There is no reason, now, for supposing that anyone in government can make the market work better than those whose daily task it is, and don't perform the task to curry favor with dis-informed, mal-educated, prehensile voters.

One of the most memorable passages in the James Clavell novel, Noble House is one in which Quillan Gornt starts a run on a bank with a simple phone call. The notion of the contrived crisis came readily to mind when reading the Celent report, "Flawed Assumptions about the Credit Crisis: A Critical Examination of US Policymakers" (Table of Contents available here ).

In many cases, it appears that these policymakers’ assumptions regarding the credit crisis are incorrect. Far from seeing a tightening of credit, a number of measures show that credit has expanded, and Celent finds that the lending markets are in surprisingly good health. Data published (in most cases by the Federal Reserve itself) show that:

Overall lending by US banks is at a record high and has increased during the credit crisis.
Interbank lending is at record highs and has increased during the credit crisis.
Consumer credit is at record highs and has increased during the credit crisis.
Commercial paper markets are operating within their historical norms.
Lending by banks to businesses is at record highs and has been growing rapidly.
Municipal bond markets are operating within their historical norms.
Deposits at banks have shown a substantial increase since the start of the credit crisis.

“It appears that policymakers are making a variety of mistakes regarding the current financial crisis. If that is the case, the policy tools that they are employing may very well be the wrong ones,” Octavio Marenzi, head of Celent and author of the report. -- From the Press Release.

The report does not suggest that Bernanke and Paulson lied. They probably didn't. At best, they simply made what Doug French, called "Ben Bernanke's Pretense of Knowledge," (here):

[T]here is the belief that there exists a simple positive correlation between total employment and the size of the aggregate demand for goods and services; it leads to the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level.

So while Bernanke, Treasury Secretary Hank Paulson, and soon-to-be Treasury Secretary Tim Geithner think they can crunch the data, make a diagnosis, concoct the right monetary witch's brew, and inject lots of it to make us all employed and living happily ever after, the fact is that's impossible. In the physical sciences, that may work; but...such complex phenomena as the market, which depends on the actions of many individuals, all the circumstances which will determine the outcome of a process … will hardly ever be fully known or measurable.

The wise ones at the Fed and Treasury are only looking at factors that can be quantitatively measured and disregard any factors that can't. Thus, they thereupon happily proceed on the fiction that the factors which they can measure are the only ones that are relevant.

No single observer could know all the factors determining prices and wages in a well-functioning marketplace. But because policy makers think they know, an almost exclusive concentration on quantitative measurable surface phenomena has produced a policy which has made matters worse. -- French, "Ben Bernanke's Pretense of Knowledge", internal quotation marks removed.

The French article mentions F.A. Hayek's Nobel Lecture, "The Pretence of Knowledge," here. There's a very relevant passage in that speech:

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the overconfident because their experiments may after all produce some new insights. But in the social field, the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous-ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based — a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants. There is danger in the exuberant feeling of ever-growing power which the advance of the physical sciences has engendered and which tempts man to try, "dizzy with success," to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society — a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.-- Hayek, "The Pretence of Knowledge".

One would be well-served by reading the whole speech, as well as the entire French article.

Apparently change in which we can really believe includes continued rule by mandarins.

Whatever else changes, rule by what Herbert Schlossberg calls "scholars-on-pension" shall continue unmolested:

While Obama's picks have been lauded for their ethnic and ideological mix, they lack diversity in one regard: They are almost exclusively products of the nation's elite institutions and generally share a more intellectual outlook than is often the norm in government. Their erudition has already begun to set a new tone in the capital, cheering Obama's supporters and serving as a clarion call to other academics. Yale law professor Dan Kahan said several of his colleagues are for the first time considering leaving their perches for Washington.

"You know how Obama always said, 'This is our moment; this is our time?' " Kahan said. "Well, academics and smart people think, 'Hey, when he says this is our time, he's talking about us.'"

Rule by expert in this country began in the late nineteenth century, the particular element of it which I presently have in mind is associated with The Wisconsin Idea, Plato's dream of the philosopher-king come true (well, philosopher-bureaucrat, anyway). Henceforth the university would be put to work for the purposes of the state. Effectively, we are talking about rule by "disinterested experts," rule by bureaucrats. (This sort of thinking, naturally, wasn't original with us. Just over a hundred years after freeing ourselves from the political domination of a European power, the elites couldn't wait to put us under the dominion of state-models formulated in Europe, particularly Prussia. But I digress.)

Being somewhat fond of Plato, I might be expected to be a fan of central planning, but I'm not. I prefer liberty to dreams of an ideal state. If his Republic is revelatory of his own view of the state, then Plato was a statist. I'm not. My fondness for Plato is really a keep-your-friends-close-and-your-enemies-closer sort of thing.

That what Colorado newsman, Chuck Green has to say. (The man should have a nationally syndicated column, so I can follow it more easily.) Apparently, the UAW believes that the way for employees to thrive is to drive their employers into bankruptcy:

The union single-handedly told the Democrat Party and the rest of the nation to stuff it Thursday night, refusing to agree to any concessions in its lucrative contracts with the Big Three auto makers - General Motors, Chrysler and Ford. Without the union’s willingness to accept a cut in their wages before their contracts expire in 2011, two of the companies could be in bankruptcy next month. In a case of great irony, Democrat leaders Nancy Pelosi and Harry Reid, whose party rode to a sweeping victory in last month’s elections with strong support of labor unions, last week ended up with all their hopes for an early auto bailout resting in President Bush’s hands.

[...]

Most experts estimate that the average UAW worker is compensated about $74 an hour in the total package of wages and benefits, compared to a comparable $45 hourly package earned by employees of domestic manufacturing competitors. Without paring down that $74 figure, it’s unlikely that the Big Three could survive, despite a federal bailout.Although it is politically incorrect to describe the union as greedy, there is no denying that for every union worker who wants to protect his or her $74 package, there are two or three other people - making far less than $150,000 a year - who might lose their jobs.It’s interesting to note that, even after the bailout failure Thursday night, none of the Democrats - not Pelosi, not Reid, not Obama and not Biden - was willing to criticize the UAW directly. It’s as if they are genetically incapable of making that leap.They can shout to the rooftops when making a partisan claim against Republican policy, but when it comes to placing any blame on the UAW, they suddenly have a severe case of laryngitis.

Silence, rather than negative statements about unions? There's a lot of that going around.

One of the things I occasionally miss about being a Roman Catholic is all the art which is part of that history. Protestants in general, and evangelicals in particular, have not been known for their contributions to the arts. And such meager contributions as there have been amount to every more sophisticated (and mediocre) religious tracts. One gets the idea that art, if it’s not somehow “evangelistic,” is a waste of time.

Can there be such a thing, for Christians, as art for art’s sake? Well, perhaps not for art’s sake, but for God’s sake.

The ancients were afraid that if they went to the end of the earth, they would fall off and be consumed by dragons. But once we understand that Christianity is true to what is there, including true to the ultimate environment—the infinite, personal God who is really there—then our minds are freed. We can pursue any question and be sure that we will not fall off the end of the earth. Such an attitude will give our Christianity a strength that it often does not seem to have at the present time.

[T]he Lordship of Christ…involves the total culture—including the area of creativity. [E]vangelical Christianity has been weak at this point. About all that we have produced is a very romantic Sunday school art. We do not seem to understand that the arts too are supposed to be under the Lordship of Christ.

[…]

The arts and the sciences do have a place in the Christian life—they are not peripheral. For a Christian, redeemed by the work of Christ and living within the norms of Scripture and under the leadership of the Holy Spirit, the Lordship of Christ should include an interest in the arts. A Christian should use these arts to the glory of God—not just as tracts, but as things of beauty to the praise of God. An art work can be a doxology in itself. – Francis Schaeffer, Art and the Bible, Complete Works of Francis Schaeffer, Vol. 2, 377, emphasis mine.

I’m glad I discovered Schaeffer within the first several years of leaving the Roman Catholic church. Protestantism had been like dry toast. Schaeffer showed me where the butter and jam were hid.

So here's Marie Cocco, again, explaining how unions are the solution to all society's ills, not the cause of them (*hurl*):

As Congress and the White House lurch toward possible approval of a loan package for the crippled auto industry, we are undoubtedly in store for more union-bashing. Note well that we did not hear any such tirades when vastly larger sums of taxpayer money -- with fewer strings attached -- were lavished upon the banks and financial industry wizards who created the credit crisis.

First, I have no idea where she could have been when people were launching tirades about the vast sums of money lavished on AIG and others. Heck Glenn Beck alone spent every hour of his show for, I think, two whole weeks -- maybe even more -- launching tirades about the bailouts. I don't know how she could have missed all that. Well, I do have an idea. She missed it because corporation-bashing is music to her ears; therefore, it's like music you have playing in the background while you do your work. It's there but you are not really attentive to it. Union-bashing, on the other hand, must be to her something like fingernails on a chalk-board. That, she can hear quite well indeed.

Second, there is so much blame to go round for this credit crisis, that I just don't know where she and her ilk get off narrowing it down to the "banks and financial industry wizards who created the credit crisis." Again, it's never any leftist policy, or any mixture of markets and government interventionism. Never. On the other hand, if by "banks and financial industry wizards" she wishes to include the founders and subsequent managers of the Federal Reserve System, I'll get all over that with her. But I don't think she does.

On Cocco's view, it's just wrong to "cast blame on workers who want nothing more than to maintain a middle-class life." You see, all the unions ever wanted is to build a "viable middle class." The poor dears: to misunderstood all these years. It breaks the heart. After all, we know that no "viable" middle class ever existed in any civilization; the unions changed all that. Of course, Cocco might remind me that it took unions to build the sort of middle class that could earn a pay-check for not working. Now, that really is something to be proud of. And it is quite clear that such a practice could never have any deleterious effects upon an economy. No, just poor management.

Besides, Cocco and I (a former socialist) both understand, I'm sure, that by "viable" middle class we meant "dictatorship of the proletariat." Oh, let the owners continue to enjoy the pretense of ownership, like Romans enjoyed the pretense of republican government in the early years of the empire. That ownership means nothing when workers strike. When workers strike owners have terms dictated to them, and what we settle for today.

One must give Cocco credit: she has really simplified this economic crisis. Now we can all understand it quite easily:

Strip away the financial mumbo jumbo and the credit crisis comes down to this: For decades, as wages and benefits for working and middle-class people stagnated or fell, the only way for them to purchase the goods that make the economy hum was through credit. This was true whether the item purchased was a home, a car -- or all the unnecessary gizmos that retailers have been more than happy to tell consumers were the must-haves of the day. Until we understand that we are in the midst of two crises -- one the short-term credit crisis and one the longer-term crisis in the failure to pay workers what they need to sustain themselves -- we are doomed to repeat this horror.

I have lived now through three or four increases in the minimum wage, which, among other things, puts people out of work. So, if you're wondering how she can assert that wages are stagnating or falling, I've an idea that what she's getting at is the failure of wages to keep pace with inflation. Fair enough, but who's fault is that? What causes inflation?

Due to this stagnation, she says, people have to rely upon credit to purchase the things that make the economy hum. No curiosity about where the notion comes from that spending makes the economy hum. (Hint: It's not, despite assertions to the contrary, a capitalist notion.) Note also that she blames retailers, not these dear middle class worker-consumers, for credit purchases of "all the unnecessary gizmos". Some of us think that others' lack of sales resistance is their own darn fault.

What's troubling is that Cocco isn't talking about purchases of necessities of life. She's talking about purchases of things that make the economy hum. Purchases of the necessities of life don't require much, if anything, in the way of credit. A purchased home isn't a necessity, a rented or leased home will do just as nicely if not better. (No, it's not throwing your money away.) And it doesn't require credit to purchase a car either. One of the autos I've purchased was purchased with cash, much to the dealer's grave disappointment. I had to save up that cash, but a little patience goes a long way. If these are the things Cocco really has mind as she discusses this "short-term credit crisis" then the people experiencing that crisis have only themselves -- and their lack of contentment -- to blame. And, therefore, there's certainly no defense of unions to be found in that (i.e., the short-term credit) crisis.

Moving on, Cocco refers to another "crisis" -- the "crisis in the failure to pay workers what they need to sustain themselves." I can think of at least two objections to the notion of this crisis. First, it continues the practice of overlooking just why workers' wages stagnate and fall, which is rooted in the fall in the purchasing power of those wages. (The people who have it harder than the workers are those on fixed incomes. And they have it harder for the same reason that workers' purchasing power falls.) This is so, because of increases in the money supply, not simply that employers are being nasty. Second, the notion that employers have an obligation to pay workers what they need to sustain themselves ultimately implies that there are people who have a duty to start and operate businesses; and this for the sole purpose of providing wages, not for any purposes an entrepreneur might identify. If workers have a right to wages which will sustain them, then they have a right that there should be people who exist to pay them these wages. (Not only that, but who decides what "sustain" means?) It also means that we have rights to other people's property. What you have in your bill-fold, purse, or wallet is something in which I have a share -- but only, of course, if I get my hands on it indirectly, from the government, rather than directly.

I don't care that Cocco likes unions and sees them as an unqualified good. I care that she seems a bit superficial in her approach to these issues. The credit crisis means nothing more or less than that workers make so little that they must purchase things on credit; and they can't afford to pay off these charges. Therefore, the obvious solution is just increase wages, which is what unions are all about. Problem solved.

There's more to it than that -- much, much more.

I don't know what it is with journalists' failure to ask certain questions. David Broder writes:

Of all the promises Barack Obama made during his campaign, none received more cheers and applause than his vow to make college more affordable and accessible for America's young people.

This was obviously appealing to youths themselves, many of whom now find themselves, such as Barack and Michelle Obama did, burdened with debt when they finish their educations. But equally, it was attractive to parents and grandparents who worry about how the next generations in their families can afford the education that is essential to their future well-being.

I, too, noticed His Beatitude's promise to make college affordable (by divine fiat, no doubt). He's going to make college more affordable because everyone, one supposes, should have a college education. And why not, considering the squat they won't be learning in twelve years of free public education?

However Obama Epiphanes forces college affordability upon us all, one question that doesn't get asked, much less answered is why are college costs so high? One notes the failure to ask a similar question about healthcare. That, osetensibly, is because people who know the things we all should know understand that greed explains the high cost of healthcare. Apparently, greed doesn't explain the high cost of college. Professors and adminstrators are not greedy, unlike doctors and, especially, pharmaceutical executives. We all know that.

It is the general tendency, depending upon the relation of supply to demand, for prices to go down, not up and up and up. When I was a kid, there was this VCR that I wanted; it came with a camera, so you could make your own movies. This was really something back then; now you can do it with a cell phone, a cell phone which does not cost the (are you ready for this?) $1,200.00 that VCR with camera would have cost me in 1980. Twelve hundred dollars. A normal VCR would have cost me, if I remember correctly, about $800.00. The same type of VCR today costs less than $100.00. I picked up a Blue Ray a couple of weeks ago for a fraction of what a VCR cost in 1980.

In fact, let's take a look at those prices in relation to inflation. That $1,200.00 VCR (in 1980 dollars) would cost $2980.00 in today's dollars (assuming inflation as the only relevant variable). But it doesn't. The contemporary equivalent costs just less than $1000.00, which would have been about $400.00 in 1980.

The same is true of the iPhone. The 4G model that shipped last year was something like $600.00. Now you can pick up an 8G for about $200.00 -- two hundred bucks, one-third the price for twice the storage!

This is true just about across the board. But not when it comes to healthcare. Not when it comes to college education. I wonder why?

But why ask, "Why?" when Barak Obama will simply make -- make -- college affordable? We don't need to know why it's unaffordable. We need to know only that he will, for his good pleasure and by the sheer force of his will, change this. This means price will irrelevant. But when price is irrelevant -- no object -- it aways goes up. So here, 10 December 2008, we know that whatever Obama Epiphanes does, the price of college education will rise. That's what happens when price is no object. The job can go to the highest or the lowest bidder; it just doesn't matter.

I wonder if this change will involve salary caps for professors and adminstrators. Those people make a lot more money than I do; and that's just not fair. No one should make more money than anyone else: we're all working equally as hard. Except for CEOs, who don't do anything -- they should work for free.

Obama should be sworn in already. Dan Rather would prefer 1 December. These people. They wouldn't be singing the same tune if their man's opponent had won.

And referring to the period between the election and the taking of office as an "interregnum" shows exactly how they view the Office of the President. In the republic which the Constitution created the President has only to execute the laws. He doesn't have and exercise magic economy-healing powers

The fact that it matters so much who the President is, that some crisis means the new guy needs to take office right away, ought to tell us something is wrong with our attitude towards the government. Well, not "our" attitude. But some people's. For some people, the State really is the march of God through the world (well, when their guys are running it, anyway). For some others, its just a necessary irritation. And for some others of us, the State is the march of Satan through the world.

You people can just wait. Republicans waited in 2000. It's your turn.

As I mentioned in this posting, my friend Curtis Schweitzer thinks the present economic crisis is evidence that the post-modernist claim, that reality is construct of language, is false. He writes (here):

The current economic crisis...is...the greatest argument against the idea that "reality" is merely a construct of language. After all, there has perhaps never been a greater and more expensive attempt to change reality through language than the unending insistence that subprime loans be given AAA status. Whether we meant to or not, we put postmodernism up to experiment.The results, I think, are fairly obvious.

I share his antipathy towards post-modernism, but I can't join him here. I don't think we have had a test of post-modernism here. If anything, a friutful post-modern critique is quite possible.

It is quite true that saying, "Everyone is special" is a way of saying no one is special. To call someone "special" is to compare them to some set of attributes, the possession of which is what makes them "special". Clearly those who do not possess this set of attributes are not special. The assertion that everyone is special really is a denial of the propostion that there is an objective set of criteria by which the judgement is made. Everyone is special because everyone can be compared to any set of arbitrarily selected attributes (values) and be found to possess that arbitrary set of attributes.

This is the heart of post-modernism, which is an assault on philosophy itself, especially the role which values play in philosophy. In describing reality, philosophy employs values. For example, in the Republic, is a long dialogue on the ideal state, how it should be founded, organized and ruled. The idea is that this ideal society should last forever. But note the arbitrary assignment of value to living in any city at all, ideal or not, to living in no city. That city-life is superior to any alternatives is simply assumed. All of the philosophy which is brought to bear, and which flows out of the dialogue, has this assumption in play. (There are other assumptions, other values assigned and employed, of course; and they are all equally arbitrary.) In the city-life versus non-city-life dyad, why is city-life to be valued over non-city-life? If we say that city-life is better for men, we find that we are, again, employing arbitrary values.

If we understand all values as arbitrarily selected and then employed, then (1) no one is special and (2) because no one is special all values are equal (what Neitzsche called the revaluation of all values, in e.g., The Will to Power).

This talk of value is quite relevant when we turn to discussion of the economy. On a post-modern view, there simply is no reason for not viewing all loans equally. There are quite a few places to go with this, but for the sake of time and space, let's just go straight to money, especially since we are talking about value. Money is what was borrowed; money is what is being lost. But let's think about the nature of this money. When we do, I think we can see how a postmodernist could assert that all this talk about an economy is a construct. That is to say, economic reality is a construct of language.

This money which has been loaned and is being lost is fabricated, almost out of nothing. The government takes perfectly good paper, and perfectly good ink, and turns it into worthless garbage. It then forces us, at gun-point, really, to accept this worthless garbage as legal tender for all debts public and private. Why? Because there is some fixed commodity (like gold, silver, latinum)? No. Because the government says so. The government arbitrarily assigns to pieces of paper a certain value; and this, despite the fact that these pieces of paper are made out of the same amount of paper and ink. We trade these pieces of paper for goods and services. But there is nothing behind them of value. We can trade these worthless pieces of paper for other pieces of paper, or for goods and services. But we cannot redeem them for gold or silver. And even if there were, that also would be an arbitrarily assigned value. Why should you and I accept gold in exchange for goods and services. Why not iron? We could say that, gold, being rarer and harder to come by than iron has a greater value. But it doesn't have a greater value per se. We give it value, by accepting it in exchange for goods and services.

So when we buy, say, a computer for some amount of money, say $700.00 (700 units of nothing) the one from whom we purchase this computer must accept this paper. Why? Because he, the one giving up his computer attaches value to this money? No. His unfederal government tells him he must. Fortunately, some of the bitterness is removed because he knows he can take that $700.00 (700 units of nothing) and trade it for goods and services he wants.

Now, if this government can, by simple fiat, command us to accept worthless paper as legal tender, then it really does stand to reason that, since loans are loans of worthless paper (even though, in "reality" no paper trades hands) the same government which can arbitrarily assign value to pieces of paper can assign value to loans. Think of it: The unfederal government can take pieces of paper all costing the same amount to print (say, $1.00 -- 1 unit of nothing) and assign different values to them. Nothing logically prevents that same government from arbitrarily assigning equal value to different loans. The face value of a loan is measured in terms of money, worthless pieces of paper to which worth has been arbitrarily assigned. So these loans are of arbitrary face value. If a piece of paper can be assigned a value of $20.00 dollars (20 units of nothing), then anything can be assigned any value, a house, a boat, whatever. What, then, is anything "worth"?

The concept of worth is a construct; and it is very much a construct of language. The entire economy rests upon the propositional assignment of value to pieces of paper: "This note is legal tender for all debts public and private." (A proposition whose truth value rests upon nothing more than the government's say-so, backed up with a club.) And every economic transaction rests upon that assertion because every economic transaction involves (at least in theory) the trading back and forth of these pieces of paper we have been commanded (there's your use of language) to trade them back and forth.

We'll just pass over the fact that this same unfederal government can, at its whim have printed up more of these pieces of paper, thus devaluing the pieces of paper already floating around the market, which in turn, because people want the same "value" for these pieces of paper, moves them to raise their prices. However, do let me pause here to point out that this operation of the government, among many, many others should be all the evidence needed to support the claim that ours is not a free market economy. In a free market economy the participants decide what to value, what to accept as tender for debts. The participants decide what to exchange, and for what goods and services. Real money originates in barter, not in the formation of governments and legislation by those governments. But I digress.

So, if the money being loaned has an arbitrary value, then the loans have arbitrary values. Money can be printed up by fiat, thus devaluing those loans; or, the government can, by the same fiat, command that loans of differing values be treated equally. This doesn't demonstrate that, as Curtis puts it, "The current economic crisis...is...the greatest argument against the idea that 'reality' is merely a construct of language." A post-modernist can, I think, justly say that economic reality really is a construct of language, and, by virtue of that, so is the current economic crisis.

Curtis asserts, "[T]here has perhaps never been a greater and more expensive attempt to change reality through language than the unending insistence that subprime loans be given AAA status." In actual point of fact, this reality was virtually created out of whole cloth, and through language, by the same entity which changed reality through language. In "reality" all loans, AAA or not, have the same "value" -- nothing, since that value is in terms of worthless pieces of paper. We haven't, as Curtis puts it, "[P]ut postmodernism up to experiment" and found it failing. The post-modernist can justly claim that language is exactly what he says it is: a means of coercion.

We have not put post-modernism to the test. Much of our economy results from the fiat power of the unfederal government, a non-player in the market, dictating value to market players and altering value with impunity. That coercion lines up nicely with the post-modern critique, I think.

What we have put to the test -- yet again -- is mercantilism, which is practiced by both parties and requires the use of force by government. I think the post-modernist is entitled to point to the way our economy works and say, "Q.E.D."

Note: I still think post-modernists are wrong. But I think the present crisis is not a demonstration of that.

And it is a test which post-modernism fails.

My friend Curtis Schwietzer, in a comment to this posting, says:

The current economic crisis, then, is perhaps the greatest argument against the idea that "reality" is merely a construct of language. After all, there has perhaps never been a greater and more expensive attempt to change reality through language than the unending insistence that subprime loans be given AAA status. Whether we meant to or not, we put postmodernism up to experiment.

It is an interesting argument. I think the post-modernist can offer a rebuttal. Several, in fact, but one sort of rebuttal comes to mind.

I'll have to post that rebuttal later. And, of course, I'll be somewhat at a loss, not being personally intellectually committed to pomo myself. If nothing else, it'll be fun.

When I said to celebrate Thanksgiving as the triumph of capitalism over collectivism by shopping victoriously, I must confess this isn't what I had in mind.

A Wal-Mart worker died early Friday after an "out-of-control" mob of frenzied shoppers smashed through the Long Island store's front doors and trampled him, police said.

The Black Friday stampede plunged the Valley Stream outlet into chaos, knocking several employees to the ground and sending others scurrying atop vending machines to avoid the horde.

When the madness ended, 34-year-old Jdimytai Damour was dead and four shoppers, including a woman eight months pregnant, were injured. -- H/T: Michelle Malkin

Everyone's heard the story. But I'm commenting because of what I said in the aforelinked post.

I shouldn't have been surprised by this, I suppose. People who aren't capitalists at heart, but, rather, something like civilized barbarians, can't be expected to behave like civilized people.

Roughly 2,000 people gathered outside the Wal-Mart's doors in the predawn darkness.

Chanting "push the doors in," the crowd pressed against the glass as the clock ticked down to the 5 a.m. opening.

Sensing catastrophe, nervous employees formed a human chain inside the entrance to slow down the mass of shoppers.

It didn't work.

The mob barreled in and overwhelmed workers.

Note how the story reports the behavior of the crowd -- the crowd. It kind of makes you think maybe the crowd were responsible for Damour's death. But no, a commentator on the story, one "Lucy Ricardo" explains it:

Hard to believe that people going shopping can behave in such an inhuman way. To do what, save a few dollars? I blame the stores that open their doors at these ungodly hours enticing all the shoppers to get there early so they can get the bargains. Like this is the "only" day a person can shop. It's disgraceful what businesses will do to make money. Once again we see greed at its finest. Shame on Walmart and all the other stores that do this, and shame on all those people who could not control themselves.

It's the stores, those darn greedy stores. It's not the darn greedy, truculent, barbarian shoppers. Sure, they're inhuman. But that inhumanity is the stores' fault. Marxist to the bone; and she probably doesn't know it.

And then there's this guy, "funksoul6":

This whole mess would never had started if it wernt for BUSH.

True dat, bro.

Yeah. Right.

Of course, blame President Dunsel. These people wouldn't be acting like savages if the economy weren't so bad. And who's responsible for the economy (well, when it's bad, anyway)?

This country exudes brilliance.

Reminds me of something Trotsky wrote, at the end of Literature and Revolution:

Man will become immeasurably stronger, wiser and subtler; his body will become more harmonized, his movements more rhythmic, his voice more musical. The forms of life will become dynamically dramatic. The average human type will rise to the heights of an Aristotle, a Goethe, or a Marx. And above this ridge new peaks will rise. -- (Here.)

Yes, that was sarcasm.

Yesterday, the Dow closed at 8149.09 (down -679.95 from its previous). I don't recall hearing any reports that it was related to some action His Beatitude. (I guess it's his inactivity. Wow. When he does something -- almost anything -- the market rallies. When he does nothing the market drops. Dude, that's power. He's like the Fisher-King!)

This really concerns me. Last week, when the market rallied a bit, we were told it was a response to selection and presentation of his economic team. (Thus demonstrating the superior thinking skills of the media: post hoc, ergo propter hoc.) So, the obvious question is this: What did Barak Obama Epiphanes fail to do yesterday to keep that market going up? The other question is, Why aren't the people in an uproar over his failed economic policies? (Seriously, if he's going to be credited with the good he should be saddled with the bad. He won't be, of course.)

I mean, we are not being asked to believe, are we, that when it's good it's to the credit of His Beatitude but when it's bad it's the fault of President Dunsel ? We're not being asked to believe that, right?

Right?

Never mind that in the first few days after the election, when there was a sell-off, the media were not blaming Him. (Note: I'm not blaming him either. But then I have a different view of the market, and of economics generally. That's why I don't blame President Dunsel either. Some are still trying to figure out what caused the 1987 crash. See also, here, for background. I seriously doubt this one's been figured out. It's still good political hay, though. And no one makes good hay out of bad economic times like Demogogues Democrats.)

Now today, the Dow closed at 8419.09 and it's because of some really big news about G.E. Well, at least they're not crediting His Beatitude. They're certainly not crediting Dunsel.

In all seriousness, now, it is interesting to note that in the midst of finger pointing and blame for these worst economic times in a thousand years (Oh, I said I would be serious. Sorry.) -- that no fingers, to speak of, have been pointed at the Federal Reserve System. Well, very few fingers, anyway. I'm inclined to blame them for everything. They've gotten away with too much for too long.

In Latvia, it is a crime to criticize the bank:

It is a crime to criticize the stability of the banking system in Latvia. Economists have been prominent among those rounded up recently in these uncertain times (that phrase would be about as far as you can go in Riga) for suggesting that one could lose money through exposure to the country's banking system.
Monday's Wall Street Journal explains on its front page how the now-51%-government-owned biggest bank in the country has become the beneficiary of such protection.Hayek's dictum that economic control entails the control of all rights and freedoms is once again demonstrated. -- Here.

One "Arend" offers this astute comment:

One should be really careful in calling the Latvian banking system fundamentally unstable, because just as criticizing the system will contribute to its collapse, just believing... BELIEVING the system is stable, and good, and wonderful will just make it a fact. That's how one beats reality, my dear friends. Government style.

Don't say, "Things are not all right" and things will be all right.

Think of what's going on. We all know, or suspect, that talk -- mere talk -- can affect the market. Mere talk could cause a run on a bank. If we have businesses too big, too important to fail then we certainly have banks too big to fail. And the biggest bank of all is the Federal Reserve system. Since the government has oversight of the economy and is empowered to regulate it, we shouldn't be surprised if someday, some pol makes the suggestion that speech having deleterious effects should also be regulated, as something very like hate speech.

Today, it's just Latvia.

In this column, Marie Cocco tells us the government (the not-so-federal government, naturally) must fix the social safety net. Then, we will be free from fear, in accordance with some provision of the Constitution. (I'm sure it's in there somewhere.)

There will be no freedom from want. The only thing we might now hope for is freedom from fear. Even that is a distant state of mind.

Yes, it is a distant state of mind. And just think: "And we aren’t deep into this recession yet. Economists believe that unemployment will climb to 8 percent or even 9 percent next year."

Goodness! That's near the Great Depression levels of, well, 25 percent in 1933, 17 percent in 1936, and 19 percent in 1938. (Admittedly, those figures are lower when adjusted for the fact that the they include those on works programs like the WPA.) When we're deep in this recession we'll have unemployment of 8 to 9 percent. Wow. That's deep.

We really do need a new New Deal.

Freedom from fear. She probably believes in freedom from fear. She also probably believes in a government which can deliver her from evil (the source of fear).

Mona Charen points out that when they lose elections, they ask why. They don't cry, "Foul" and blame people. (Here.) In the coming years, she says, conservatives need to defeat liberals on healthcare; and then shore up the traditional family. And right there is the problem with conservatives: they don' t mind employing the power of the state (by which we mean, of course, the un-federal government), whose power they want to limit, in advancing their agenda. I have a problem with that, even when the agenda is one I can get behind.

[M]any conservatives are genuinely concerned about family disintegration or dysfunction and cultural decline. I am thinking here in particular of the conservatism represented by Patrick Buchanan and his movement. Buchanan's conservatism is by no means as different from that of the conservative Republican party establishment as he and his followers fancy themselves. In one decisive respect their brand of conservatism is in full agreement with that of the conservative establishment: both are statists. They differ over what exactly needs to be done to restore normalcy to the U.S., but they agree that it must be done by the state. There is not a trace of principled antistatism in either. -- Hans-Herman Hoppe, "The Intellectual Incoherence of Conservatism," here(emphasis mine).

Krauthammer on the dangers of a politicized economy. Here. The importance of Krauthammer is that he explains, ever so briefly, how we do not have a free market economy:

Three political events: Paulson's weekend Citigroup bailout; the official rollout of Obama's economic team, Geithner and Larry Summers; and Paulson quietly walking back from his earlier de facto resignation by indicating he would be ready to use the remaining $350 billion (with Team Obama input) over the next two months.


That undid the market swoon -- and dramatically demonstrated how politically driven the economy has become.


We may one day go back to a market economy. Meanwhile, we need to face the two most important implications of our newly politicized economy: the vastly increased importance of lobbying and the massive market inefficiencies that political directives will introduce.

The only troubling thing is that Krauthammer seems to imply that this move from free market economy to political economy was rather recent.