Philosophy

Everyone Loves This Book But Who Has Actually Read it?

After years of avoiding Hayek’s Road to Serfdom, I have decided to dedicate the next sixteen days to liveblogging each chapter.
 

I have never actually completed F.A. Hayek’s, The Road to Serfdom. I am completely comfortable admitting that. Still, like many who are intrigued with Hayek’s ideas but lack the willpower to read the entire book, I alway list The Road to Serfdom as one of my most influential readings.

To be sure, I had read the few chapters that were assigned to me by my school’s token libertarian political science professor. I assumed I had accurately interpreted its message. The three chapters I read were full of highlights and great quotes about the importance of the individual. But with all the other books out there in the world, why was finishing this one book so important?

Hayek makes it clear that this path refers to society’s “progressive” rejection of individualism.

It was not until my current mentor called me out on my inability to follow through on one of the most economically relevant books of all time, that I realized that I had robbed myself of an education by not finishing Hayek’s important work.

As a matter of millennial pride and also wanting to reclaim the knowledge I foolishly pushed aside as an undergrad student, I decided to dedicate the next sixteen days to both reading and liveblogging The Road to Serfdom.

The Individual Built the Modern World

Proponents of laissez faire capitalism and libertarian thinkers alike constantly throw around the phrase,” the road to serfdom.” And while most understand its general negativity towards socialism, the phrase is so ingrained in liberty speak that few often take the time to really explore what Hayek was trying to tell us.

In the book’s opening chapter, “The Abandoned Road,” Hayek makes it clear that this path refers to society’s “progressive” rejection of individualism. More importantly, he goes on to describe how this rejection of the sanctity of the individual has, and will continue to have, negative impacts on the society.

For a period of time, the western world had flourished under the 19th-century ideals of free market capitalism. For the first time in history, an individual was allowed to follow his own desired path without the status of his birth holding him back. All he needed was an idea and the ambition needed to make that idea a reality.

As a result we saw a revolution in thought and an industrial revolution incomparable to anything the world had ever experienced. In fact, even with the advent of the internet, the world has still never progressed quite as dramatically as it did during this laissez faire revolution.

And while this period brought the world the wisdom of Adam Smith and the rebellion of the American Revolution, it did not maintain its momentum of popularity as the 20th century approached.

As Hayek points out:

“We still believe that until quite recently we were governed by what are vaguely called nineteenth-century ideas or the principle of laissez faire…But although until 1931 England and America had followed only slowly on the path which others had led, even by then they had moved so far that only those whose memory goes back to the years before the last war know what a liberal world has been like.”

If in 1944, Hayek thought the world had already forsaken and forgotten true liberalism, I can scarcely imagine what he might say today. And it’s true that he was writing about a period of wartime economic planning both in the US and the UK. Prices and wages were controlled. Censorship was in place. Rationing and quotas governed the production and distribution of all essential goods and services. But even given all this, government consumed a far smaller degree of overall national production than today.

So far removed are we in 2017, that the individual is not even a consideration when contemplating economic policy. In fact, the “greedy” “selfish” individual is often the villain in modern economics, as he seems to always operate contrary to the whims of the collective. Now, terms like “individual mandates” are used to convey each person’s “social responsibility” to care for the collective.

As common as this anti-individualist sentiment has become, it wasn’t always this way. As Hayek reminds us in this opening chapter, the most tremendous strides towards human and economic progress were taken during a time when the individual was allowed to innovate and create without worrying about interference from the state on the grounds of protecting the greater good. But even though the positive implications of a pro-individualist society were proven by the innovations created during that time, society had still been steadily moving away from it.

“We are rapidly abandoning not the views merely of Cobden and Bright, of Adam Smith and Hume, or even of Locke and Milton, but one of salient characteristics of Western civilizations…Not merely the nineteenth- and eighteenth- century liberalism, but the basic individualism inherited by us from Erasmus and Montaigne, from Cicero and Tacitus, Pericles and Thucydides, is progressively relinquished.”

So far removed are we in 2017, that the individual is not even a consideration when contemplating economic policy.

Again, I have to wonder what Hayek might say if he were alive today and around to see how groupthink and collectivism have shaped our modern policies.

This chapter, then, sets the stage. He names liberalism as the system that gave birth to the greatest of human achievements ever seen in history. It was individualism that caused the most spectacular effect. If you understand that–and vast numbers today do not understand this–you are prepared to see how the abandonment of this system and idea leads to not only the unraveling of liberty but even what we call civilization.

So, yes, this book is a warning, not just against one party but all ideological positions that reject individualism for one or another version of the planning state.

Now onward to chapter two!

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World Youth Day: The Concept of Youth Investment, Peace and Security

By Ugbabe Adagboyi Damian

Every year since 1999, the United Nations has continued to celebrate the youths all over the world. Eighteen years after, the youths have continued to gain increasing recognition as agents of change in the society – since they have very important roles to play in deterring and resolving conflicts, and are key constituents in ensuring the success of both peacekeeping and peace building efforts. Hence, their inclusion in the peace and security agenda of the Sustainable Development Goals (SDGs) of the United Nations. The 2030 Agenda for Sustainable Development committed to fostering peaceful and inclusive societies and affirmed “Sustainable development cannot be realised without peace and security”. Goal 16 aims to ensure responsive, inclusive, participatory and representative decision-making at all levels. The World Programme of Action for Youth, which provides a policy framework and practical guidelines to improve the situation of young people, also encourages “promoting the active involvement of youth in maintaining peace and security”.

For the purpose of achieving the 2030 Sustainable Development agenda, it is considerable to adopt a conventional definition of youth; assess the concept of youth investment and how it can ensure the success of both peacekeeping and peace building; as well as suggest ways the incentives tailored towards youth investment can make meaningful impact on them.

According to Wikipedia, The terms youth, teenager, kid, and young person are interchanged, often meaning the same thing, but they are occasionally differentiated. Youth can be referred to as the time of life when one is young. This involves childhood, and the time of life which is neither childhood nor adulthood, but rather somewhere in between fourteen and twenty-one years of age.

The UN Convention on the Rights of the Child of 1989 defines a child as any human person who has not reached the age of eighteen years.

To bring home the definition, we shall adopt the definition of the African Youth Charter; that a youth is any human person who falls in the age bracket of fifteen and thirty-five. However, the task that lies before us should make us think in line with Robert Kennedy that, “the world demands the qualities of youth: not a time of life but a state of mind, a temper of the will, a quality of imagination, a predominance of courage over timidity, of the appetite for adventure over the life of ease”.

The concept of youth empowerment and youth investment are interchanged, often implying the same thing. On the contrary, youth empowerment is a form of political heart-buy of youths for continuity. Most African politicians and their governments have bastardized the concept and have used it to manoeuvre their immediate social environment. Many of them believe that empowerment mean to purchase and distribute either of, motorcycles, tricycles (popularly called “Keke” in Nigeria), wheelbarrows, hairdryers, Knapsack sprayers, and stipends in form of social transfer benefits, etc. In as much as this is a plus to the society, there are little or no evidence that the beneficiaries expressed any form of predominance of courage over timidity; developed a superior state of mind or have any quality imagination that can spur innovation to permanently lift them out of poverty. It is evident that many of the beneficiaries have no appetite for adventure as they are limited to what they know and do, and are hardly proud of their skills since they remain restless and agitated. They also develop high sense of entitlement and feel marginalized; believing that what they have received can only keep them surviving each moment and not living in each moment.

The concept of youth investment sees beyond tenure. It is a concept that seeks to improve young people’s outcomes through better funding opportunities, programmes and initiatives that build the capability and resilience of young people so they have the skills and confidence to engage positively in, and contribute to, their societies. These outcomes support increased educational achievement, greater employability, improved health and less state intervention. The economic and social landscape of the world is rapidly changing with the developments in technology affecting the way we think, live and work, the young people forming about 70% of the African population need to acquire the digital, entrepreneurial and enterprise skills to be participate and contribute to the social and economic growth of their societies.

 This concept has three key strategies: leadership development, volunteering and mentoring. These can be achieved little or no stress but with the political will power to grow the economy and sustain peace and security.

The following key components of the strategies includes; maximising scarce resources through collaborating with corporate, non-governmental, and other government organization, improving data collection and analysis to enable funding based on knowledge of what works and for which group of young people, a clear mission statement and continuous appraisal of outcomes, and targeting investment to where it will have the most impact.

Therefore, if we intentionally adopt these strategies, guided by its component; and ensuring accountability, integrity, and inclusiveness we can build and shape a peaceful and secured Africa.

 

This piece was originally published in AfricanLiberty.org

Ugbabe Adagboyi Damian

Twitter @ugbabeD

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Corruption Rises as Economic Freedom Falls

By Richard M. Ebeling

The corruption of government officials seems to be as old as recorded history. For example, the ancient Roman senate passed laws against such political corruption in the first century, B.C. They defined a corrupt act as “whenever money is taken and a publicly-conferred duty is violated.”

Local magistrates in the Roman Empire were permitted to legally receive cash gifts of up to 100 gold pieces a year, but anything beyond this amount was considered “filth.” There was also a separate criminal category against what was called concussio, or the “shakedown” and “extortion.” A Roman official might claim to have a legal order against someone and demand a bribe not to enforce it against the individual’s person or property.

Emperor Constantine issued one of the strongest decrees against corruption during this time in A.D. 331. Those found guilty of such crimes might be exiled to an isolated island or a far-off rural area, while others might even be condemned to death. A judge, for example, might be executed if he had acquitted someone guilty of murder for the right price.

Ranking Corruption

Today, high levels of political corruption remain one of the major problems people confront around the world. While most of us think of such corruption as primarily impacting the hundreds of millions who live in the underdeveloped and developing parts of the globe, it touches those of us fortunate enough to live in the industrially developed Western democracies.

The Berlin-based non-profit organization, Transparency International (TI), annually surveys various forms of corruption around the world by various measures and types. A score of 100 in their 2016 Corruption Perception Index means the absence of any political corruption. A score approaching zero suggests a society in which little happens or gets done without layers of governmentally corrupt processes for people to get through in their daily lives. TI points out that “No country gets close to a perfect score” on the index.

However, according to Transparency International many of the least corrupt nations around the world are in the European Union and North America. In fact, Denmark ranks the least corrupt worldwide, followed by New Zealand. Among the remaining top ten of least corrupt countries are: Finland, Sweden, Switzerland, Norway, Singapore, the Netherlands, Canada and Germany. All of them have scores of 80 or better on TI’s scale of 100 having zero corruption.

The United States, however, is only ranked 18 with a score of 74. That placed America just below Belgium, Hong Kong and Austria. But the U.S. did rank above Ireland, Japan and Uruguay. And, happy to report, America is above France, which had a score of only 69.  

The most corrupt nations of the EU, perhaps not surprisingly, are in Eastern Europe, in those countries that had been part of the former Soviet bloc. Poland only scored 62, followed by Slovenia (61), Lithuania (59), Latvia (57), Czech Republic (55), Slovakia (51), and Hungary and Romania (58).  On the other hand, Greece, a longtime member of the EU, only earned a score of 44.

Former Soviet republics further to the east are even worse. The Russian Federation and Ukraine only scored 29, with the former Soviet republics in central Asia – Kazakhstan, Turkmenistan, Uzbekistan, for instance – barely making it above the low 20s range on the scale.

Africa, Asia, and Latin America

The lowest TI scores are generally earned in Africa and parts of the Middle East and Asia, with some other very corrupt countries in Latin America. The most corrupt countries on the planet, according to TI, are Somalia (10), South Sudan (11), North Korea (12), Syria (13), Yemen (14), Sudan (14), Libya (14), and Afghanistan (15). But in corruption depravity, Venezuela, Iraq, and Haiti are not far behind them.

In fact, on the Transparency International scale there are hardly any countries in Asia, the Middle East, Africa or Latin America that make it even to the 40s mark on their political corruption scale. The vast majority of the countries in these parts of the world are in the 30s and 20s, or less levels under TI’s scale.

As part of their annual survey on global corruption a few years ago, TI also asked people the frequency with which they had to pay bribes to government officials of one type or another in attempts to get by in their daily lives. In North America, one percent of Canadians surveyed said they bribed someone in government. In the United States that reply was given by two percent of the people asked.

But even in countries that have long been members of the EU bribery was reported. The worst occurred in Greece, where 27 percent of the people said they paid bribes during the preceding year. In most of Western Europe the bribery level was around 2-3 percent of the population, though the number was 6 percent in Luxembourg. (The bribery question was not asked in Germany and Italy.)

Bribery is far more endemic in the rest of the world. Africa suffers from political bribery the most, with 42 percent of all those in the countries surveyed saying they had paid bribes. The most extreme case was found by TI in Cameroon, where 79 percent – almost four out of every five people – admitted paying bribes, with the number being 40 percent of the people in neighboring Nigeria.

Bribing the Police

In Asia, the overall rate of bribe giving was reported to be 22 percent of the population. The highest rates were found in Cambodia (72 percent), Pakistan (44 percent), the Philippines (32 percent), Indonesia (31 percent), India (25 per- cent), and Vietnam (14 percent).

Finally, in Latin America, the average bribery rate was recorded at 13 percent of the people. But as in the rest of the world, it varies from country to country. Among the handful of Latin American countries surveyed, the highest rate was in the Dominican Republic with 28 percent. Bolivia followed with 27 percent.

Around the globe, the most bribes are paid to the police. In Africa, 47 percent of the respondents said they bribed the police; in Asia, 33 percent; in Latin America, 23 percent; and in Eastern Europe, almost 20 percent. Worldwide, about 17 percent of the people in the survey paid bribes to the members of law enforcement.

Bribing people in the judicial system came next, with the global response being about 8 percent of all those surveyed. About the same percentage around the world said they bribed government agents for business licenses and permits, though again the highest rates were in Africa (23 percent) and Asia (17 percent). But even in the United States and Canada, around 3 percent admitted paying such bribes.

Medical care is also a major area for such corruption. In Africa, 24 percent of the respondents said they paid bribes for access to medical services; in Asia, the response was 10 percent; in Russia and Ukraine, 13 percent; in Eastern Europe, 8 percent; in the EU, almost 5 percent; and in North America, 2 percent.

The Cause of Corruption

Political corruption, clearly, is found everywhere around the world and people, regardless of where they live, do not expect it to go away anytime soon. Yet, in spite of its global dimension, corruption pervades some parts of the world more than others and permeates certain corners of society to a greater degree. Why?

Part of the answer certainly relates to issues surrounding ethics and culture. The higher the degree of personal honesty and allegiance to ethical codes of conduct, the more we might expect people to resist the temptations of offering or taking bribes. However, economic and business analyst, Ian Senior, in his, Corruption – the World’s Big C: Cases, Causes, Consequences, Cures (2006), concluded that there were no significant correlations between high degrees of personal honesty and religious practice and less bribe-taking around the world.

A far stronger explanation can be found in the relationship between the level of corruption in society and the degree of government intervention in the marketplace. In a generally free market society, government is limited to the protection of the citizenry’s life, liberty, and honestly acquired property. The rule of law is transparent and assures impartial justice for all. Any other functions taken on by the government are few in number, such as a variety of public works projects.

Under these circumstances, government officials have few regulatory or redistributive responsibilities, and therefore they have few special favors, privileges, benefits, or dispensations to “sell” to some in the private sector at the expense of others in society.

The smaller the range of government activities, therefore, the less politicians or bureaucrats have to sell to voters and special interest groups. And the smaller the incentive or need for citizens to have to bribe government officials to allow them to peacefully go about their private business and personal affairs.

Influencing Market Outcomes

On the other hand, the very nature of the regulated economy in the interventionist state is to short-circuit the free market. The interventionist state goes beyond protecting people’s lives and property. Those in power in the interventionist state intervene by using government authority to influence the outcomes of the market through the application of political force.

The government taxes the public and has huge sums of money to disburse to various programs and projects. It imposes licensing and regulatory restrictions on free and open competition. It transfers great amounts of income and wealth to different groups through sundry “redistributive” schemes. It controls how and for what purpose people may use and dispose of their own property. It paternalistically imposes legal standards influencing the ways we may live, learn, associate, and interact with others around us.

Those in the government who wield these powers hold the fate of virtually everyone in their decision-making hands. It is inevitable that those drawn to employment in the political arena often will see the potential for personal gain in how and for whose benefit or harm they apply their vast life-determining decrees and decisions. Some will be attracted to such “public service” because they are motivated by ideological visions they dream of imposing for the “good of humanity.”

Some will see that bribing those holding this political power is the only means to attain their ends. This may be to restrict or prohibit competition in their own corner of the market or to acquire other people’s money through coercive redistribution. For others, however, bribing those who hold the regulatory reins may be the only way to get around restrictions that prevent them from competing on the market and earning a living.

The business of the interventionist state, therefore, is the buying and selling of favors and privileges. It must lead to corruption because by necessity it uses political power to harm some for the benefit of others, and those expecting to be either harmed or benefited will inevitably try to influence what those holding power do with it.

The Correlation between Freedom and Corruption

For 23 years the Heritage Foundation in Washington, D.C., has sponsored an annual Index of Economic Freedom (IEF). The IEF tracks a series of 10 measured indicators that include the following:

(1) business freedom; (2) trade freedom; (3) level of fiscal burden; (4) size of government; (5) degree of monetary stability; (6) investment freedom; (7) financial freedom; (8) protected private property rights and the general rule of law; (9) flexible labor markets; and (10) freedom from corruption.

The premise is that the greater the degree of individual freedom, the more secure property rights, the smaller the size and intrusiveness of government in the marketplace, and the greater the open competitive market environment at home and in foreign trade, then the more likely a society will experience rising prosperity and higher standards of living over time.

No country in the world is free from some degree of government intervention and regulation. Unfortunately, the nineteenth-century era of relative laissez-faire is long gone. But the extent to which governments intrude into the economic, social, and personal activities of their citizens does vary significantly around the globe. This includes the extent to which citizens are protected by an impartial enforcement of the rule of law, have the freedoms of association, the press, and religion, and the right to democratically participate in the selection of those who hold political office.

The Index of Economic Freedom, in its 2017 edition, estimates that based on composite scores of all ten indicators, the greatest amount of economic freedom can be found in the following parts of the world: Hong Kong, Singapore, New Zealand, Switzerland, Australia, Estonia, Canada, the United Arab Emirates, Ireland, and Chile. The United States ranks only 17 in the world by the Index of Economic Freedom benchmarks. Ten years ago, before the Barack Obama presidency, America ranked fourth in the world.

Regionally, North America, Western Europe, and Australia/New Zealand are estimated by Transparency International to be the areas of the world in which the lowest rates of corruption are to be found. The Index of Economic Freedom also ranks these parts of the globe as generally having the greatest amount of economic freedom or the least intrusion of government intervention (broadly defined) within the marketplace.

On the other hand, Africa, Asia, and Latin America are the parts of the globe with the highest reported amounts of bribery, and are also the areas that IEF estimates as far lower in the global rankings for degrees of economic freedom. Among the 180 countries included in the Index of Economic Freedom, many (though certainly not all) of the ones that Transparency International estimates as having particularly high levels of corruption are ranked at the bottom one-third in terms of economic freedom from government intrusion.

The correlation between a global low ranking in terms of economic freedom and a high reported rate of political corruption is certainly not one-to-one. There are many variables at work, including the extent to which different types of freedom used in the IEF surveys are restricted in the respective countries. Thus, domestic property rights might be legally more secure in one country compared to others, but that country may have a higher rate of price inflation and more restricted labor markets, resulting in it having a lower economic freedom ranking in the index compared to other nations.

But the assertion can be safely made that the wider and more intrusive the degree of government intervention, the greater the likelihood of a higher level of experienced and perceived corruption. The more the government interferes with marketplace transactions (e.g., through price and production controls, or import and export restrictions and quotas, or business licensing and permit rules, or high, complex, and arbitrary taxation), the more need and incentive for people to bribe those in political power to free or reduce the heavy hand of government over their lives.

Ending global political corruption in its various “petty” and “grand” forms, therefore, will only come with the removal of government from social and economic life. When government is limited to protecting our lives and property, there will be little left to buy and sell politically. Corruption then will be an infrequent annoyance and occasional scandal, rather than an inescapable aspect of today’s social and economic life around the world.

This piece was culled from FEE.org

Richard M. Ebeling

Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.

 

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A Liberty Reading List to Finish Up Your Summer

Summer is the perfect time to settle into a slower pace of life and savor a great book, whether it’s an old favorite that you continue to enjoy or an unfamiliar one with new ideas to ponder. And so before the summer ends, I have a challenge for you: I’m going to share five of my favorite books and essays with you, and I’m hoping you’ll read at least one before the beginning of the semester.

Not only are these fun summer reads, they are classic works that were foundational to my intellectual journey as an economist. They will shape the way you think about society while helping you articulate your beliefs about how to effect human prosperity and liberty across the world.

  1. “I, Pencil” by Leonard Read. This essay changed not only my views about the economy but my classroom teaching as well. It is timeless and action-packed. This short essay is written from the perspective of a pencil about how it came into being. There is so much economic thinking in this little story. It turns out that the ordinary pencil, which we take for granted and is seemingly so simple, is actually quite sophisticated: so much so that no one person, not even the CEO of the pencil company, knows how to make it. It is a story of the coordination of millions of strangers who come together to serve each other. If you haven’t read this essay, put it at the top of your list, and if you have, it’s a great one to read again!
  2. We the Living by Ayn Rand. Can you imagine the atrocities of living under Communist rule? This book takes us there, and it’s a great introduction to Rand if you are new to her work. We the Living remains my favorite Rand novel. It’s not a book about economics per say, but about economic systems and how they are so critical to whether we thrive or perish — both personally and socially.
  3. Economics in One Lesson by Henry Hazlitt. I love this short, pithy book written in 1946 by American journalist Henry Hazlitt because of how easy it is to understand — it’s both accessible and timeless. Hazlitt begins by encouraging us to think like economists by seeing the unseen and forcing us to take the long-term perspective so that we fully account for the costs of our actions. I come back to this book every year and am reminded of the power of the economic way of thinking.
  4. Basic Economics by Thomas Sowell. This book does not disappoint and is loaded with stories and evidence to help elucidate the economic way of thinking. Economist and author Thomas Sowell takes us through the market system of prices, property rights, profits and losses, and the mechanisms for increasing human productivity and prosperity. Using stories and evidence throughout, he helps us see the follies of policies that don’t properly incorporate the fundamental economic realities of the world in which we live. I not only love reading this book time and again, but it makes a great holiday gift as well!
  5. “The Law” by Frederic Bastiat. What if the law becomes a method of theft and plunder instead of an instrument of protection? In this compelling essay, Bastiat helps us see the importance of the rule of law as the foundation of a productive society. He tears down the old notions of political theorists who thought that elected officials could disavow themselves of their self-interest and greed and put on the cloak of the people to serve the common good. Bastiat shows us that the law is a force for good only when political leaders must also submit to it. Otherwise, it is a source of plunder. Originally published in 1850, Bastiat foreshadows the rent-seeking culture and special interests who distort lawmaking today.

Summer is a great time to catch up on the classics – and to reread your favorites with a new perspective. These readings will help you get a jump on the school year and engage in articulate discussion about these issues with your professors and peers.

I hope you find this list to be a helpful starting place in understanding economics and liberty. Which books and essays would make your top 5 list? And if you’ve already read the ones I’ve listed here, why do you think others should read them?

Reprinted from Learn Liberty.

 

Anne Rathbone Bradley

Dr. Bradley is Vice President of Economic Initiatives at the Institute for Faith, Work and Economics.

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Lawrence Reed: Thoughts on a Free Market

On Tuesday, March 28, Dr. Lawrence W. Reed, president of the Foundation for Economic Education (FEE), was invited by Young Americans for Liberty to speak about free trade and protectionism at the Miller Learning Center. Reed began his talk by explaining some fundamental definitions concerning economics and followed by making arguments in favor of free trade over protectionism, tariffs, and quotas.

In the past year, the question of how the United States should approach international trade has become an increasingly divisive topic, especially among conservatives. Many in the Trump camp favor his retreat from trade deals such as the Trans-Pacific Partnership (TPP) and his push to renegotiate the North American Free-Trade-Agreement (NAFTA). Concurrently, Dr. Reed and many other conservatives believe that Trump’s approach is ultimately regressive.

In his talk on the University of Georgia campus, Dr. Reed puts forth the question that was asked centuries ago by famous author and economist Adam Smith: “What makes a nation wealthy?” Reed’s answer is goods and services. He asserts that more and better choices in the market, not full employment, make a nation truly wealthy. “This is the general argument against protectionism,” says Reed. “Tariffs and quotas do not necessarily improve goods and services.”

Dr. Reed presents three arguments in favor of freer markets, confidently noting that he would say the same to a Detroit auto workers union.


THE LIBERTY ARGUMENT

He refers to his first argument as the “liberty argument.” This one is more principled than pragmatic. It declares that all potential traders have the right to voluntary exchange and that tariffs and quotas handed down by the government obstruct this right. This line of thinking is consistent with many libertarian and conservative positions dealing with individual and property rights.


THE PEACE ARGUMENT

The second argument is dubbed the “peace argument.” Here, Reed references French economist Frédéric Bastiat:

“If goods don’t cross borders, armies will.”

Many wars and conflicts in history have been catalyzed by trade disagreements, and Reed contends that diplomacy is a much preferable and more effective alternative. This argument has a basis among other free market thinkers, as well as national security theorists. Austrian economist Ludwig von Mises touted a similar theory to debunk the Marxist-Leninist contention that capitalism was a catalyst for war. Where Lenin saw the spread of worldwide capitalism as the internationalization of the eternal conflict between labor and capital, Mises posited that the interconnectedness of international trade established strong, mutually-beneficial commercial networks between countries that often served as a countervailing force against calls for martial conflict among trading nations. Ironically, though perhaps not surprisingly, a World Socialist website seemed to confirm Mises’ point back in 1999 when it noted: “The pledge to restart the talks [with China] came after a barrage of lobbying pressure by U.S. companies alarmed over the prospect of losing the billions of dollars in trade and investment opportunities.”


THE ULTIMATE ARGUMENT

Dr. Reed appropriately calls his final argument the “ultimate argument,” in which he takes a more economic look at the effects of protectionism. This argument claims that tariffs and quotas harm consumers by giving them inferior products, fewer options, and higher prices. Other trading parties also have the ability to retaliate to protectionist action. Dr. Reed closes this argument by saying, “You cannot close the door to imports without closing the door on exports.” Dr. Reed’s economic point has historical basis in our hemisphere, where “import substitution,” a much more drastic variant of protectionism, took Argentina from one of the top ten wealthiest countries at the dawn of the 20th century to an economic also-ran today. Chile, on the other hand, drastically reduced tariffs and opened its economy to the world, and has become the model economy for the region.


Dr. Reed is clearly wary of President Trump’s rhetorical tendency towards isolationism, and with good reason. It is imperative to maintain a free market for the nation’s continued prosperity. However, various conservatives believe that some countries have taken advantage of the U.S. due to its recent trade policy and that certain tariffs would put a stop to that. Our unwavering commitment to free trade is little solace to an entrepreneur whose intellectual property has been stolen by a state-owned Chinese manufacturer. To combat this, Joanne Butler, a former staffer of the House Means and Ways Committee, offers some enforcement tools that, she believes, can curb the violation of American property and intellectual rights. Butler references a law nicknamed “Special 301” as a means to punish countries that regularly engage in piracy of software, technology, high-end designer goods and other products by imposing tariffs on imported goods.

Former House Foreign Affairs Committee member Dan Burton claims that Trump was absolutely right to pull the U.S. from the TPP and renegotiate NAFTA. Burton opposes massive multilateral trade agreements that, he argues, “ceded our constitutional authority and economic autonomy to international organizations such as the World Trade Organization.” Burton goes on to stress the danger of the shift in manufacturing from domestic to globalized production has made the nation more vulnerable to international crises.

The key word in most conservative arguments for increased protectionism seems to be “fairness.” Dan Burton is not anti-trade, but he emphasizes the fact that trade only benefits the U.S. if it is free and fair. Finding a compromise in this discussion can be tricky, especially when dealing with a new president whose capacity for compromise is, at the very least, unproven. The United States has the world’s largest economy, and should not subject itself to unfair and harmful deals. However, those who argue for and orchestrate this pullback must not forget the principles of the free market and the benefits of free trade that allowed America to become great in the first place.

Republished from Archconuga.com

— J. Thomas Perdue is a sophomore studying journalism. He is a regular contributor to The Arch Conservative

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George Ayittey in TED: Dead Aid

Culled from TED Blog

Economist George Ayittey gave a blistering talk at TEDGlobal 2007, laying out his case that not only has Western aid not helped in most African countries — it’s actually hurting.

We asked Ayittey for his thoughts on the new book Dead Aid, which has lately been burning up the talk shows and opinion columns with a message similar to Ayittey’s. Author Dambisa Moyo says that aid is killing the very countries it’s supposed to help. She singles out for criticism the celebrity crusades to “save Africa,” and the skewing view they present of African life.

(You can also download the unedited notes for this interview, including reading list, sources and more.)

Dambisa Moyo’s new book is drawing new attention to the question of aid in Africa, and her thesis is quite like yours, but aimed at a mass-market audience (as she said on Charlie Rose). Do you think it is risky to sensationalize the issue?

I don’t think Dambisa is sensationalizing the issue strong enough. Americans were justifiably outraged when AIG, which received billions in U.S. taxpayer money in bailouts, paid out hefty bonuses to its executives. So where is the outrage when African leaders, who receive U.S. taxpayers’ money in foreign aid, build palaces for themselves while their people wallow in abject poverty?

More important, the presumption that Africans don’t know what is good for them and that Americans or other foreigners know what is best for Africans is extremely offensive. If you want to help American farmers, you ask them what sort of help they need and whether such assistance is working. Why don’t Americans ask Africans what type of aid they need and whether the aid Americans have provided is working? So what is wrong with an African, Dambisa, telling Americans that the foreign aid they are providing isn’t working and it is “Dead Aid”?

It’s clear that Moyo’s thesis draws from your work. How would you respond to those who assert that her views and yours are idealistic and ideological?

Our critics have not been paying attention to the literature on foreign aid. Our views are neither idealistic nor ideological but rather factual. There are three types of foreign aid: humanitarian relief aid, given to victims of natural disasters such as earthquakes, cyclones and floods; military aid; and economic development assistance. We have no qualms with humanitarian aid, and I am sure our critics would agree that military aid to tyrannical regimes in Africa is the least desirable. Much confusion, however, surrounds the third, also known as official development assistance or ODA. Contrary to popular misconceptions, ODA is not “free.” It is essentially a “soft loan,” or loan granted on extremely generous or “concessionary” terms.

The consensus that emerged decades ago was that foreign aid had not been effective in reversing Africa’s economic decline. Dambisa and I are simply restating a fact. And it is not just Africa. That foreign aid has failed to accelerate economic development in the Third World generally was also accepted. In 1999, the United Nations declared that 70 countries — aid recipients all — are now poorer than they were in 1980. An incredible 43 were worse off than in 1970. “Chaos, slaughter, poverty and ruin stalked Third World states, irrespective of how much foreign assistance they received,” wrote the Washington Post, on Nov. 25, 1999. Except for Haiti, all of the 13 foreign aid failures cited — Somalia, Sierra Leone, Liberia, Angola, Chad, Burundi, Rwanda, Uganda, Zaire, Mozambique, Ethiopia and Sudan — were in Sub-Saharan Africa. The African countries that received the most aid — Somalia, Liberia and Zaire — slid into virtual anarchy.

Is there a fundamental place where you diverge from Moyo?

Though we are both on point regarding the failure of aid programs in Africa, we diverge in two respects.

First, Dambisa wants all aid to Africa stopped in five years, which won’t happen. Over the decades, various African civic groups and persons, including myself, have called for a cutoff of aid to Africa. In a report drafted during a five-day forum hosted by UNESCO in Paris in 1995, more than 500 African political and civic leaders urged donor nations to cut off funds to African dictatorships and called for free elections in such nations within two years. If the West could impose sanctions against Libya and South Africa, then Africans could also call for sanctions against their own illegal regimes.

Second, I believe that the foreign aid resources Africa desperately needs to launch into self-sustaining growth and prosperity can be found in Africa itself, not in China as Dambisa believes.

Moyo’s work speaks to that deep urge among Westerners to “do something” — even something that may be deeply unproductive. What’s a more productive way to “do something”?

I think Westerners should resist that urge to “do something,” because the worst type of help one can receive is that which doesn’t solve your problem but compounds it. If Westerners want to help, they must carefully scrutinize and reform current aid policies to make them more effective. Both the Clinton and Bush administrations tried to but failed. Business as usual is no longer an option, which is what both Dambisa and I are against.

Foreign aid should be tied not on promises of African leaders but to the establishment of a few critical institutions:

+ An independent central bank: to assure monetary and economic stability, as well as stanch capital flight out of Africa. If possible, governors of central banks in a region, say West Africa, may be rotated to achieve such independence. The importance of this institution resides in the fact that the ruling bandits not only plunder the central bank but also use its facilities to transfer the loot abroad.

+ An independent judiciary — essential for the rule of law. Supreme Court judges may also be rotated within a region.

+ A free and independent media to ensure free flow of information. The first step is solving a social problem is to expose it, which is the business of news practitioners. The state-controlled or state-owned media would not expose corruption, repression, human rights violations and other crimes against humanity. In fact, it is far easier to plunder and repress people when they are kept in the dark. The media needs to be taken out of the hands of government.

+ An independent Electoral Commission to avoid situations where African despots write electoral rules, appoint a fawning coterie of sycophants as electoral commissioners, throw opposition leaders in jail and hold coconut elections to return themselves to power.

+ An efficient and professional civil service, which will deliver essential social services to the people on the basis of need and not on the basis of ethnicity or political affiliation.

+ The establishment of a neutral and professional armed and security forces.

The establishment of these institutions would empower Africans to instigate change from within. For example, the two great antidotes against corruption are an independent media and an independent judiciary. But only 8 African countries have a free media in 2003, according Freedom House. These institutions cannot be established by the leaders or the ruling elites (conflict of interest); they must be established by civil society. Each professional body has a “code of ethics,” which should be re-written by the members themselves to eschew politics and uphold professionalism. Start with the “military code,” and then the “bar code,” the “civil service code” and so on. These reforms, in turn, will help establish in Africa an environment conductive to investment and economic activity. But the leadership is not interested. Period.

Effective foreign aid programs are those that are “institution-based.” Give Africa the above 6 critical institutions and the people will do the rest of the job.

Africa is poor because it is not free.

George Ayittey responded to emailed questions from TEDAfrica Director Emeka Okafor and TED.com editor Emily McManus. Download the unedited notes from this interview, an 11-page PDF with reading lists, noted sources, and much more. TED intern Mischa Nachtigal prepared this edited blog post.

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Aristotle: Politics

Aristotle was an ancient Greek philosopherand scientist born in the city of StagiraChalkidice, on the northern periphery of Classical Greece. His father, Nicomachus, died when Aristotle was a child, whereafter Proxenus of Atarneus became his guardian.[3] At seventeen or eighteen years of age, he joined Plato’sAcademy in Athens[4] and remained there until the age of thirty-seven (c. 347 BC). His writings cover many subjects – including physicsbiologyzoologymetaphysicslogic, ethics, aestheticspoetry, theater, music, rhetoriclinguistics, politics and government – and constitute the first comprehensive system of Western philosophy. Shortly after Plato died, Aristotle left Athens and, at the request of Philip II of Macedon, tutored Alexander the Great beginning in 343 BC.

Our purpose is to consider what form of political community is best of all for those who are most able to realize their ideal of life. We must therefore examine not only this but other constitutions, both such as actually exist in well-governed states, and any theoretical forms which are held in esteem; that what is good and useful may be brought to light. And let no one suppose that in seeking for something beyond them we are anxious to make a sophistical display at any cost; we only undertake this inquiry because all the constitutions with which we are acquainted are faulty.

We will begin with the natural beginning of the subject. Three alternatives are conceivable: The members of a state must either have (1) all things or (2) nothing in common, or (3) some things in common and some not. That they should have nothing in common is clearly impossible, for the constitution is a community, and must at any rate have a common place- one city will be in one place, and the citizens are those who share in that one city. But should a well ordered state have all things, as far as may be, in common, or some only and not others? For the citizens might conceivably have wives and children and property in common, as Socrates proposes in the Republic of Plato. Which is better, our present condition, or the proposed new order of society.

Part V
Next let us consider what should be our arrangements about property: should the citizens of the perfect state have their possessions in common or not? This question may be discussed separately from the enactments about women and children. Even supposing that the women and children belong to individuals, according to the custom which is at present universal, may there not be an advantage in having and using possessions in common?

Three cases are possible: (1) the soil may be appropriated, but the produce may be thrown for consumption into the common stock; and this is the practice of some nations. Or (2), the soil may be common, and may be cultivated in common, but the produce divided among individuals for their private use; this is a form of common property which is said to exist among certain barbarians. Or (3), the soil and the produce may be alike common.
When the husbandmen are not the owners, the case will be different and easier to deal with; but when they till the ground for themselves the question of ownership will give a world of trouble.

If they do not share equally enjoyments and toils, those who labor much and get little will necessarily complain of those who labor little and receive or consume much. But indeed there is always a difficulty in men living together and having all human relations in common, but especially in their having common property. The partnerships of fellow-travelers are an example to the point; for they generally fall out over everyday matters and quarrel about any trifle which turns up.

These are only some of the disadvantages which attend the community of property; the present arrangement, if improved as it might be by good customs and laws, would be far better, and would have the advantages of both systems. Property should be in a certain sense common, but, as a general rule, private; for, when everyone has a distinct interest, men will not complain of one another, and they will make more progress, because every one will be attending to his own business.”

How immeasurably greater is the pleasure, when a man feels a thing to be his own; for surely the love of self is a feeling implanted by nature and not given in vain, although selfishness is rightly censured; this, however, is not the mere love of self, but the love of self in excess, like the miser’s love of money; for all, or almost all, men love money and other such objects in a measure. And further, there is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property. These advantages are lost by excessive unification of the state. ………. No one, when men have all things in common, will any longer set an example of liberality, or do any liberal action; for liberality consists in the use which is made of property.

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James Madison: The Federalist No. 10 (1787)

James Madison was an American statesman and Founding Father who served as the fourth President of the United States from 1809 to 1817. He is hailed as the “Father of the Constitution” for his pivotal role in drafting and promoting the United States Constitution and the Bill of Rights.

To the People of the State of New York:

AMONG the numerous advantages promised by a well constructed Union, none deserves to be more accurately developed than its tendency to break and control the violence of faction. The friend of popular governments never finds himself so much alarmed for their character and fate, as when he contemplates their propensity to this dangerous vice. He will not fail, therefore, to set a due value on any plan which, without violating the principles to which he is attached, provides a proper cure for it.

The instability, injustice, and confusion introduced into the public councils, have, in truth, been the mortal diseases under which popular governments have everywhere perished; as they continue to be the favorite and fruitful topics from which the adversaries to liberty derive their most specious declamations.

The valuable improvements made by the American constitutions on the popular models, both ancient and modern, cannot certainly be too much admired; but it would be an unwarrantable partiality, to contend that they have as effectually obviated the danger on this side, as was wished and expected. Complaints are everywhere heard from our most considerate and virtuous citizens, equally the friends of public and private faith, and of public and personal liberty, that our governments are too unstable, that the public good is disregarded in the conflicts of rival parties, and that measures are too often decided, not according to the rules of justice and the rights of the minor party, but by the superior force of an interested and overbearing majority.

However anxiously we may wish that these complaints had no foundation, the evidence, of known facts will not permit us to deny that they are in some degree true. It will be found, indeed, on a candid review of our situation, that some of the distresses under which we labor have been erroneously charged on the operation of our governments; but it will be found, at the same time, that other causes will not alone account for many of our heaviest misfortunes; and, particularly, for that prevailing and increasing distrust of public engagements, and alarm for private rights, which are echoed from one end of the continent to the other. These must be chiefly, if not wholly, effects of the unsteadiness and injustice with which a factious spirit has tainted our public administrations.

By a faction, I understand a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community. There are two methods of curing the mischiefs of faction: the one, by removing its causes; the other, by controlling its effects.

There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests. It could never be more truly said than of the first remedy, that it was worse than the disease. Liberty is to faction what air is to fire, an aliment without which it instantly expires. But it could not be less folly to abolish liberty, which is essential to political life, because it nourishes faction, than it would be to wish the annihilation of air, which is essential to animal life, because it imparts to fire its destructive agency.

The second expedient is as impracticable as the first would be unwise. As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed. As long as the connection subsists between his reason and his self-love, his opinions and his passions will have a reciprocal influence on each other; and the former will be objects to which the latter will attach themselves.

The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

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Voltaire Philosophical Letters: On Commerce

Voltaire (real name François-Marie Arouet) (1694 – 1778) was a Frenchphilosopher and writer of the Age of Enlightenment. His intelligence, wit and style made him one of France’s greatest writers and philosophers, despite the controversy he attracted.

He was an outspoken supporter of social reform (including the des, freedom of religion and free trade), despite the strict censorship lawsand harsh penalties of the period, and made use of his satirical works to criticize Catholic dogma and the French institutions of his day. Along with John LockeThomas Hobbes and Jean-Jacques Rousseau, his works and ideas influenced important thinkers of both the American and French Revolutions.

Commerce, which has brought wealth to the citizenry of England, has helped to make them free, and freedom has developed commerce in its turn. By means of it the nation has grown great; it is commerce that little by little has strengthened the naval forces that make the English the masters of the seas. At present they have nearly two hundred warships.%3have nearly two hundred warships.

 Posterity may learn with some surprise that a little island with nothing of its own but a bit of lead, tin, fuller’s earth, and coarse wool, became, by means of its commerce, powerful enough by 1723 to send three fleets at one time to three different ends of the earth – one to guard Gibraltar, conquered and kept by its arms; another to Portobello to dispossess the King of Spain of the treasures of the Indies; and the third to the Baltic Sea to prevent the Northern Powers from fighting.   

When Louis XIV was shaking Italy, and his armies, already in possession of Savoy and Piedmont, were ready to capture Turin, it was up to Prince Eugene to march from the depths of Germany to aid the duke of Savoy. He had no money at all, a thing without which towns are neither taken nor defended. He appealed to some English merchants. In half an hour he had a loan of fifty million; whereupon he delivered Turin, beat the French, and wrote this little note to those who had loaned him that sum: “Gentlemen, I have received your money, and I flatter myself that I have employed it to your satisfaction.”  

All this makes an English merchant justly proud, and allows him boldly to compare himself, not without some reason, to a Roman citizen; moreover, the younger brother of a peer of the realm does not scorn to enter into trade. Lord Townshend, Minister of State, has a brother who is content to be a merchant in the City. When Lord Oxford was governing England, his younger brother was a factor at Aleppo; he did not want to return home, and died there. 

This custom, which unfortunately is beginning to go out of fashion, appears monstrous to Germans infatuated with their quarterings. They are unable to imagine how the son of a peer of England could be only a rich and powerful bourgeois, whereas Germany is all Prince: there have been at one time as many as thirty Highnesses of the same name, with nothing to show for it but their pride and a coat of arms.   

In France anybody who wants to can be a marquis; and whoever arrives in Paris from the remotest part of some province with money to spend and an ac or an ille at the end of his name, may indulge in such phrases as “a man of my sort,” “a man of my rank and quality,” and with sovereign eye look down upon a wholesaler. The merchant himself so often hears his profession spoken of disdainfully that he is fool enough to blush.

Yet I don’t know which is the more useful to a state, a wellpowdered lord who knows precisely what time the king gets up in the morning and what time he goes to bed, and who gives himself airs of grandeur while playing the role of slave in a minister’s antechamber, or a great merchant who enriches his country, send order from his office to Surat and to Cairo, and contributes to the wellbeing of the world.  

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Friedrich Hayek: The Use of Knowledge in Society (II)

It will at once be evident that on this point the position will be different with respect to different kinds of knowledge; and the answer to our question will therefore largely turn on the relative importance of the different kinds of knowledge; those more likely to be at the disposal of particular individuals and those which we should with greater confidence expect to find in the possession of an authority made up of suitably chosen experts.

 If it is today so widely assumed that the latter will be in a better position, this is because one kind of knowledge, namely, scientific knowledge, occupies now so prominent a place in public imagination that we tend to forget that it is not the only kind that is relevant. It may be admitted that, as far as scientific knowledge is concerned, a body of suitably chosen experts may be in the best position to command all the best knowledge available—though this is of course merely shifting the difficulty to the problem of selecting the experts. What I wish to point out is that, even assuming that this problem can be readily solved, it is only a small part of the wider problem.

Today it is almost heresy to suggest that scientific knowledge is not the sum of all knowledge. But a little reflection will show that there is beyond question a body of very important but unorganized knowledge which cannot possibly be called scientific in the sense of knowledge of general rules: the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.

We need to remember only how much we have to learn in any occupation after we have completed our theoretical training, how big a part of our working life we spend learning particular jobs, and how valuable an asset in all walks of life is knowledge of people, of local conditions, and of special circumstances. To know of and put to use a machine not fully employed, or somebody’s skill which could be better utilized, or to be aware of a surplus stock which can be drawn upon during an interruption of supplies, is socially quite as useful as the knowledge of better alternative techniques.

And the shipper who earns his living from using otherwise empty or half-filled journeys of tramp-steamers, or the estate agent whose whole knowledge is almost exclusively one of temporary opportunities, or the arbitrageur who gains from local differences of commodity prices, are all performing eminently useful functions based on special knowledge of circumstances of the fleeting moment not known to others.

It is a curious fact that this sort of knowledge should today be generally regarded with a kind of contempt and that anyone who by such knowledge gains an advantage over somebody better equipped with theoretical or technical knowledge is thought to have acted almost disreputably. To gain an advantage from better knowledge of facilities of communication or transport is sometimes regarded as almost dishonest, although it is quite as important that society make use of the best opportunities in this respect as in using the latest scientific discoveries.

This prejudice has in a considerable measure affected the attitude toward commerce in general compared with that toward production. Even economists who regard themselves as definitely immune to the crude materialist fallacies of the past constantly commit the same mistake where activities directed toward the acquisition of such practical knowledge are concerned—apparently because in their scheme of things all such knowledge is supposed to be “given.” The common idea now seems to be that all such knowledge should as a matter of course be readily at the command of everybody, and the reproach of irrationality leveled against the existing economic order is frequently based on the fact that it is not so available. This view disregards the fact that the method by which such knowledge can be made as widely available as possible is precisely the problem to which we have to find an answer.

If it is fashionable today to minimize the importance of the knowledge of the particular circumstances of time and place, this is closely connected with the smaller importance which is now attached to change as such. Indeed, there are few points on which the assumptions made (usually only implicitly) by the “planners” differ from those of their opponents as much as with regard to the significance and frequency of changes which will make substantial alterations of production plans necessary. Of course, if detailed economic plans could be laid down for fairly long periods in advance and then closely adhered to, so that no further economic decisions of importance would be required, the task of drawing up a comprehensive plan governing all economic activity would be much less formidable.

It is, perhaps, worth stressing that economic problems arise always and only in consequence of change. So long as things continue as before, or at least as they were expected to, there arise no new problems requiring a decision, no need to form a new plan. The belief that changes, or at least day-to-day adjustments, have become less important in modern times implies the contention that economic problems also have become less important. This belief in the decreasing importance of change is, for that reason, usually held by the same people who argue that the importance of economic considerations has been driven into the background by the growing importance of technological knowledge.

Is it true that, with the elaborate apparatus of modern production, economic decisions are required only at long intervals, as when a new factory is to be erected or a new process to be introduced? Is it true that, once a plant has been built, the rest is all more or less mechanical, determined by the character of the plant, and leaving little to be changed in adapting to the ever-changing circumstances of the moment?

The fairly widespread belief in the affirmative is not, as far as I can ascertain, borne out by the practical experience of the businessman. In a competitive industry at any rate—and such an industry alone can serve as a test—the task of keeping cost from rising requires constant struggle, absorbing a great part of the energy of the manager. How easy it is for an inefficient manager to dissipate the differentials on which profitability rests, and that it is possible, with the same technical facilities, to produce with a great variety of costs, are among the commonplaces of business experience which do not seem to be equally familiar in the study of the economist. The very strength of the desire, constantly voiced by producers and engineers, to be allowed to proceed untrammeled by considerations of money costs, is eloquent testimony to the extent to which these factors enter into their daily work.

One reason why economists are increasingly apt to forget about the constant small changes which make up the whole economic picture is probably their growing preoccupation with statistical aggregates, which show a very much greater stability than the movements of the detail. The comparative stability of the aggregates cannot, however, be accounted for—as the statisticians occasionally seem to be inclined to do—by the “law of large numbers” or the mutual compensation of random changes. The number of elements with which we have to deal is not large enough for such accidental forces to produce stability.

The continuous flow of goods and services is maintained by constant deliberate adjustments, by new dispositions made every day in the light of circumstances not known the day before, by B stepping in at once when A fails to deliver. Even the large and highly mechanized plant keeps going largely because of an environment upon which it can draw for all sorts of unexpected needs; tiles for its roof, stationery for its forms, and all the thousand and one kinds of equipment in which it cannot be self-contained and which the plans for the operation of the plant require to be readily available in the market.

This is, perhaps, also the point where I should briefly mention the fact that the sort of knowledge with which I have been concerned is knowledge of the kind which by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form. The statistics which such a central authority would have to use would have to be arrived at precisely by abstracting from minor differences between the things, by lumping together, as resources of one kind, items which differ as regards location, quality, and other particulars, in a way which may be very significant for the specific decision. It follows from this that central planning based on statistical information by its nature cannot take direct account of these circumstances of time and place and that the central planner will have to find some way or other in which the decisions depending on them can be left to the “man on the spot.”

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