Volume 13, Number 17 | October 17, 2008
The Liberator Online: Special Issue on the Economic Crisis
Contents
Dear friend, Welcome to this special "Bailout Crisis Resources" issue of the Liberator Online. We'll be returning to our regular format, with our regular columnists, next issue. In this special issue we want to share with you some articles, videos, and books online to help you understand and deal with the current economic crisis. The economic mess we're in is nothing less than the greatest threat to free market ideas since the 1930s. Every friend of freedom now faces new challenges in advancing our great cause. Libertarians are entering a new era, where we will have to refight battles we thought we had already won. We will have to dust off old arguments -- and craft new ones. This special issue of the Liberator Online contains links to numerous resources to help you do this. There is a wealth of information below. We have included short excerpts from each, so you can pick and choose those articles that seem to best answer your questions and needs. First, however, I'd like to point out that three premiere libertarian resources -- the Cato Institute, the Mises Institute, and Reason magazine -- have collected the best of their writings on the subject. We highly recommend these collections:
* REASON MAGAZINE's Following are additional articles we've found helpful. Most are short, non-technical, and from sources you know and respect. As always, the Advocates' primary focus is libertarian communication. We hope this information will help you explain to your friends, neighbors, and opinion leaders that the crisis wasn't caused by the free market and that there are sensible alternatives to the Big Government proposals we're being bombarded with. Remember, with crisis comes opportunity. Millions of Americans are outraged by the bailout. Many are making their voices heard. They are looking for answers and leadership. The fair-weather friends of the market are turning their backs on it. As a result, libertarians have the chance to make new allies and build our movement on this very issue during the coming months. We will continue to address this crucial topic of our times in future issues of the Liberator Online as well. Finally, don't forget -- laughter is great medicine. See the end of this issue for a collection of bailout humor from America's funniest late night talk hosts. We'll see you next issue in our regular format. Thank you for your good work for liberty! Sharon Harris PS: The economic crisis is hitting the Advocates hard. At the very time our services are so badly needed, the economic downturn is cutting into our donations. If you appreciate the unique and vital work we're doing, please consider making a donation now. Please consider, too, becoming a monthly donor. Just a few dollars a month makes a huge difference for liberty! We have some outstanding thank-you gifts for your help -- which, again, is especially appreciated during this time when some of our longtime supporters are having difficulty giving as they would like. The Advocates work has never been more important. Please help us keep it going and moving forward. Please make donations securely here: Thank you!
RON PAUL: Short Videos on the Economic Crisis Ron Paul recorded a series of short videos on October 10th that offer analysis on the current financial problems. Each is only a couple of minutes long. It's a great first stop. Topics: * On
See them at: Bingeing and Purging The bailout passed! Too bad.
Everybody talked about the 'freeze' in the credit markets, but why, I wonder, were the cable news programs that repeated the credit-freeze mantra pausing for commercials from companies trying to lend me money? Ditech and LendingTree still hawk mortgages at under 6 percent. Some credit freeze. http://www.ocregister.com/articles/credit-bailout-money-2191556-government-politicians Don't Blame Capitalism by Peter
Schiff [ Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow -- until it could grow no more. http://www.washingtonpost.com/wp-dyn/content/article/2008/10/15/AR2008101503166.html Bailouts will lead to rough
economic ride
The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum. It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place. http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html What Would Mises Do? Confessions of
a free-market, anti-bailout operator I We are talking about legislation that will fundamentally alter the face of American capitalism for at least a generation. Allowing investment banks to go to the government for a $700 billion line of credit is akin to inviting a vampire into the house. If you live, you certainly won't be the same person when you wake up the next morning. http://reason.com/news/show/129218.html Henry Hazlitt on the Bailout
Commentary: Bankruptcy, not
bailout, is the right answer Highlights: * Gover Jeffrey A. Miron is senior lecturer in economics at Harvard University. A libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan. http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview The Free Market Didn't Fail
"Isn't the current economic crisis a failure of the free market? Doesn't it show the need for additional regulation and government control?" The answer: Not at all. The crisis has absolutely nothing to do with the free market. In fact, the opposite is true. This crisis was *created* by massive government regulation and government interference with the market. The government actually over-rode the market, and removed the protections the market normally provides. http://www.theadvocates.org/liberator/vol-13-num-16.html An Open Letter to my Friends on the
Left Consider instead that the problems of this mess were caused by the very kinds of government regulation that you now propose.
Consider instead that the regulations that may have been the cause were supported by, as they have often been throughout US history, the very firms being regulated, mostly because they worked to said firms' benefit, even as they screwed the rest of us. Consider all of this as you ask for more of the same in the name of fixing the problem. And finally, consider why you would ever imagine that those with wealth and power wouldn't rig a new regulatory process in their favor. http://myslu.stlawu.edu/~shorwitz/open_letter.htm SUPPORT the world-changing work of How Government Stoked the Mania:
Housing prices would never have risen so high without multiple
Washington mistakes. Many believe that wild greed and market failure led us into this sorry mess. What's missing is the role politicians and policy makers played in creating artificially high housing prices, and artificially reducing the danger of extremely risky assets... http://online.wsj.com/article/SB122298982558700341.html
My Vote: NO
http://www.freedomworks.org/newsroom/media_template.php?issue_id=4100
HARD EVIDENCE FOR LIBERTY
Bailout Brakes "Well, if you're so opposed to a bailout of Wall Street, what would you do?" I get this question all the time from advocates of the proposed $700
billion Wall Street bailout here inside the Beltway. ...
If I had any confidence in the ability of the political process to produce a rational, bold response, my answer would be: "I would do plenty." Start by unwinding the many government mistakes that created the housing bubble, repealing the various laws and regulations specifically designed to put people into homes that they could not afford. I would scrap the Community Reinvestment Act, break up Fannie and Freddie, and put the pieces back in the private sector. If "liquidity" and the availability of capital is the immediate problem, I would also repeal the tax on capital gains and other tax provisions that punish savings and capital accumulation. The Flat Tax does all of this in one fell swoop. And, finally, I would repeal the various distortions in corporate accounting hurriedly drafted during previous legislative panics, starting with Sarbanes-Oxley. An even bigger, but essential, legislative lift would take a serious look at the destructive role the Federal Reserve has played in this financial crisis. Rep. Ron Paul, Texas Republican, was arguing this before it was cool. http://www.freedomworks.org/newsroom/media_template.php?issue_id=4101 VIDEO: Austrian Economics and the
Present Crisis I Peter J. Boettke is the BB&T Professor for the Study of Capitalism, Mercatus Center at George Mason University, and University professor in the economics department at George Mason University. He is the author of several major books and is editor of the Review of Austrian Economics. http://www.fff.org/comment/com0810j.asp An Echo, Not a Choice [This is an excellent brief look at the politics of the bailout.-- Ed.]
Free markets are free of more than regulation; they are also free of subsidies, privileges, and guarantees. Lightening up on regulation may please business, but if it is done while keeping the subsidies, privileges, and the guarantees in place, it is not a move toward the free market. To see this point, imagine that you offer to cover someone's losses during a gambling junket to Las Vegas and as a measure of protection, you impose some restrictions on the size of the bets, the games played, and the total loss during an evening. If you were to remove those restrictions later while keeping the guarantee in place, we'd hardly describe it as a move toward self-responsibility. Quite the opposite, in fact. This is analogous to what has happened in the American economy... http://www.fff.org/comment/com0810i.asp At Moment of Truth, Where Was Dagny
Taggart?
A long train of government policy mistakes led to the financial crisis, but the capitulation by business leaders to the demands and claims of government officials has turned what could have been a contained and short-term economic problem into a genuine threat to the very survival of capitalism, and with it, of democracy. http://www.heartland.org/article.html?articleid=23982 Take a break and laugh with America's most popular late-night hosts: "The United States have developed a new weapon that destroys people but it leaves buildings standing. It's called the stock market." -- Jay Leno "This economy is crazy. I saw a Lehman Brothers executive walking around town wearing a sign that read, 'Will work for a seven-figure bonus.'" -- David Letterman "President Bush announced today he is going to have the Federal government put $250 billion into US banks. Yeah. Bush also said if he's putting that much money into a bank, they'd better give him a big-ass toaster." -- Conan O'Brien "You know, do you think President Bush really understands any of this stuff? Like today, he was asked about General Motors. And he said, 'I think he's doing a fine job in Iraq.'" -- Jay Leno "The average price of a gallon of gas has had its biggest drop ever this week also. It's now down to $3.30 a gallon. Remember $3.30 a gallon? That's the price you used to get outraged about a year ago." -- Jay Leno "So let's see, the country is broke. Listen to this: 60 percent of the people in America now say we are headed toward a depression, not a recession, a depression. We are in desperate needs of profitable industries we can tax. Um, now can we legalize pot?" -- Bill Maher "Ladies and gentlemen, the Bush administration is taking over the banks. So, hey, crisis over." -- David Letterman "Congress keeps saying that not only are taxpayers going to get back the $800 billion, oh, they're going to make money on the deal too. Yeah, yeah. See, now you know where the 'con' in congressman comes from. That's where it comes from." -- Jay Leno "The bailout plan has been passed. Here's the deal. It went from $700 billion to $800 billion. Now the reason for that, it costs the taxpayers more. If it costs the taxpayers more, the better chance that Congress will vote for it." -- David Letterman "The House on Friday passed the $700 billion Wall Street bailout package. President Bush then signed the bill into law after consulting with his economic advisers, M.C. Hammer, Ed McMahon and Willie Nelson" -- Seth Meyers THE LIBERATOR ONLINE is the official newsletter of the Advocates for Self-Government. Visit us on the Web at: http://www.TheAdvocates.org THE LIBERATOR ONLINE is edited by James W. Harris and was created by Paul Schmidt and James W. Harris. •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
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Restoring Confidence in the Markets
When
so many politicians speak with one voice in support of the biggest act
of government intervention in the economy in generations, I cringe. 
Excellent short summary of the crisis and the false claim that the
free market is to blame, by the economic adviser for Ron Paul's 2008
presidential campaign,] 
Highlights
t seems to me, during times of economic crisis, that there is an
obligation to first do no harm. Should we rush to pass legislation
written by tired, 25-year-old legislative staffers in the middle of the
night in offices littered with Domino's boxes and empty vente Starbucks
cups? What are the inevitable unintended consequences? My biggest fear
is that the plan will do far more harm than good, even in the short run,
by propping up poorly performing banks at the expense of well-run
institutions ready and able to come in and clean up the mess. And, yes,
as Warren Buffet could tell you, they hope to make a healthy profit
doing it. 
Treasury Secretary Henry Paulson needs to change his reading list.
Instead of reading the balance sheets and income statements of the
failing banking industry, he needs to read Henry Hazlitt's classic book
Economics in One Lesson. It will cost Paulson far less than the $700
billion that he is spending on the bailout, and he might just learn a
little economics in the process. 
nment encouraged lenders to relax their standards
The questions we're all hearing right now go something like this: 
Consider instead that effects of the profit motive that you decry
depend upon the incentives that institutions, regulations, and policies
create, which in this case led profit-seekers to do great damage. 
ssell Roberts,
Wall Street Journal, October 3, 2008 
The difficult question each member of Congress faces today is simply
this: Do you believe that the political process, having produced many of
the perverse incentives that resulted in our economy's current
predicament, can solve these underlying distortions by essentially doing
more of the same? I believe the answer to this question is unequivocally
NO. 
n this video distinguished Austrian free market economist Peter Boettke analyzes the current credit crisis from an Austrian perspective.
It's part of a lecture series by our friends at the Future of Freedom
Foundation. 
Both major presidential candidates support the taxpayer bailout of
Wall Street. They are just arguing over how to do it. ... 
The front page of today's Wall Street Journal carries a story titled
"At Moment of Truth, U.S. Forced Big Bankers to Blink." In the
quarter-century I've been reading the Journal, I've never read a news
story that was more disturbing. ... 