All this is useless talk. If libertarians are for the purpose of keeping “us” on our toes, then wouldnt the logical question be how a Libertarian President would function and interact in keeping Washington on its toes? We do have a government and not a dictatorship, correct? Great, so lets stop acting as if that would be the effect of a Libertarian in office.

#Jim K, January 15, 2008 at 7:51 pm :

Rich Paul – I’m not an economist or even close to it so this may be a stupid question. I just don’t get the whole gold standard fixation thing. I’ve not seen an explanation if it that seems to make sense. I have seen arguments that seem sensible that in fact claim small to moderate inflation is a good thing. You state it has “crippled” our economy. Do you have backup to that?

The first exmpale of how our economy has been crippled by fiat money are the Great Depression, which occurred just after the creation of the Federal Reserve, and was caused by the Federal Reserve. The Federal Reserve, throughout the ‘Roaring Twenties’ was printing money like madmen. This is what caused the insane runup in the stock market. Eventually, they had to stop, in order to avoid hyper-inflation. At that point, the stock market crashed, and the great depression began.

The same cause led to the ‘dot com bubble’, and the ‘housing bubble’ in the last couple of decades. The last one is interesting, because the Bush Morons have continued to print money like it was going out of style, but shipping it overseas, so we’re getting reduced economic growth as if they had stopped, but still having inflation. This is what’s causing the price of gold to explode, and the value of the dollar to drop.

Also, inflation has been a constant throughout history. Long before 1913.

Until 1913, there were periods of inflation and periods of deflation which more or less balanced eachother out. The inflation was caused by banks lending more than they had, in a practice called ‘fractional reserve banking’. The deflation was caused by the customers getting wise to the practice, and pulling their money out of insolvient banks. This caused a bumpy ride, but meant that prices always returned to a (more or less) normal level.

Fractional reserve should be considered to be fraud (since the bank promises to have your money ‘on demand’, but does not.) What would you do if you put your furniture into a warehouse, and when you returned, the owner said “sorry, you can’t have it now, I’ve lent it to somebody else”? You would call the police, if you have any sense.

On a basic level I have to ask if our population is growing and our productivity is increasing then how can our money supply not need to grow along with that? If you have 10 people who can never share more than $100 amongst them, then what happens when you have 11 people? Seems to me you end up with a smaller piece of the pie for everyone?

As Murry Rothbard showed, there is no reason, once a society has settled on a monetary commodity, that any given amount is better or worse than any other given amount. The value of the monetary commodity will adjuct if the amount does not. (in your example, there would be slow, steady deflation). What is disastrous is when a group of people have the ability to create new money at will … whether such people are a government or a gang of counterfeiters. In either case, they appear to be getting something for nothing, and it looks like nobody is getting hurt … until you realize that by creating the money, the are reducing the value of everybody elses money.

The same is true of gold miners where money is gold, except that they cannot just wish more gold into existence. They actually have to work to get it. Thus there is no ’something for nothing’, which the laws of economics never allow to go unpunished.

It just seem suspicious to me that there doesn’t even appear to be a single reputable economist who thinks the gold standard makes sense. They do argue about everything else so I don’t see why one group of them would not be arguing for the gold standard.

Have a look at the Ludwig von Mises institute (http://mises.org).

Also, pick up a book called ‘Capitalism: The Unknown Ideal’, and find an acticle on the gold standard by none other than Alan Greenspan, before he sold out.

And then keep looking around. We’re out there. Many people who support a gold standard do not bother to talk about because they think it’s impossible to sell it. That is not the same as being impossible to implement it.

Anyway, can you make a clear explanation as to why the gold standard is such a big deal along with links to back up any claims or at least provide a link you think is good that I can research? Usually I feel like all I get from gold standard fans are religious statements of faith in the power of gold.

There is no particular ‘power of gold’ except that it is a thing of real value. It is a nice monetary material because it’s value-to-weight ratio is high, because it is pretty much immune to chemical damage (being an inert metal). It does need to be alloyed with something (I prefer copper) in order to make durable coins. Keep in mind when you think of coins that a $900 coin is a bit bigger than a quarter. It’s very easy for me to put 4 one-ounce gold coins into the coin pocket on my Levis, which is much more money than I ever carry with me.

The nice thing about gold is that it’s value is pretty constant. In the Roman Empire, you could walk into a tailor shop and, for one ounce of gold, buy a nice toga, a leather belt, and a fine pair of sandals. In modern America, if I sold one of my Kruggerands, I could use the resulting $900 to buy a nice suit, a leather belt, and a fine pair of shoes.

There are voluntary, contractual ways to eliminate the specific performance portion of contract law. One possibility is social ostracism, “black-listing,” or some sort of ratings system like that employed on eBay. A n00b would have a hard time entering into his first several contracts without putting up some collateral, or without a guarantor or co-signer. Once “in the system,” if you will, his performance in existing contracts could be rated. Failure to perform one’s obligations per a contract would result in some sort of demerit. At the most local and informal level, we all know a friend to whom we refuse to lend money, because he has earned a reputation for not paying people back. At a more impersonal and macro-level, various rating systems, black-lists, etc., could be employed, and their accuracy, reliability, and integrity would also be subject to a market test.

Another idea which is currently in use is the escrow agreement. If I make an offer to buy real estate which is accepted by the seller, and then I decide to back out, there is no recourse to specific performance. The seller can’t force me to buy his house, for a number of reasons. But what he can do is keep my earnest money deposit, which was held in escrow as a safeguard against the small possibility that I’d back out of the deal. If I object, “Taking my EMD is force,” I am clearly incorrect. The money was explicitly escrowed for just such an event. And this is why sellers rarely accept an offer which does not come with an EMD as security against waffling buyers.

Neither of these suggestions are meant as the be-all, end-all of contracts. But they are far more than the theory you so flippantly besmirch. These are examples of “pragmatism” at its finest: in practice.

Let’s face it Democrats and Republicans are just as bad when it comes to one thing: you both sure love to tell other people what is best for them and try to force them to behave the way you think is best. The only difference between the two of you is each party has a different group of people they wish to oppress, sorry, I mean “help.”.

I am continuously amazed that stopping a Gang Of Pirates from using power for theft, fraud, and abuse is somehow abusing the Pirates. It is like Al Capone complaining about Eliot Ness interfering with his free enterprise, and business practices like the St. Valentines day massacre.

The only oppression a Socialist would institute is the sort of oppression an honest policeman reins on a thief. Having accountability is allowing those without power, to keep that person with power honest in his use of that power.

It is my own thinking that a simple oversight by a large government bureaucracy, by simple paths and rules, is bad on two points. A simple set of rules cannot account for nuances, and like rule beating in many sports, it leads to avoiding the rule in name with massive violation in spirit.

By contrast a very complex set of rules and spread out accountability, the only reasonable plan is to be honest, as dishonesty could bring retribution from an unwatched source. Wide transparency, such as having all public data accessible by anyone is a good example of this. With an intense discussion as to what should be private and what public, should clearly define which is which, and then the same rules should apply to everyone, rather than the multi tiered system we have now, that is the worst of both worlds.

There are many other ways to create that accountability as well and there is a lot of room for honorable people to suggest that one method of doing so might be better than another, but to say that there should be no accountability for the abuse of power, and that the victims of that abuse should be the one further abused for being a victim is not among the positions of honor.

Just because the inadvertent rise of free speech as found on the internet in the past couple of years has not taken the effect it needs to as yet is no cause to decide that we should revert to a Feudal warlord system to spite imperfect democracy.

Anyway, can you make a clear explanation as to why the gold standard is such a big deal along with links to back up any claims or at least provide a link you think is good that I can research? Usually I feel like all I get from gold standard fans are religious statements of faith in the power of gold.

I’m coming to this late First response, I’m not entirely certain Ron Paul is my type of libertarian. After all, he proposes the US going back onto the gold standard. If he’s the type of libertarian who assumes that there is such a thing as an objective measure of value, then he’s quite far out.

Ron Paul does NOT believe in an objective measure of value. His preferred school of economic theory is the Austrian theory, from which the Subjective Theory of Value originated. He does, however, prefer commodity based currency to fiat currency. This is because the arguments made by the fiat money people are true … when we have a commodity based currency, rather than pure paper, the government cannot manipulate the money supply. Neither can anybody else. That means that there would be little or no inflation. Gold (or insert your preferred commodity name) is still being produced (or mined), but the amount mined each year is tiny compared to the total aggregate supply currently in existence. This means that at worst, we would experience a tiny mild inflation.

This does not mean that prices would not change due to a change in the demand for the monetary material(s) for non-monetary purposes, and surely they would change due to changes in demand for consumer goods, changes in production costs, and other factors. But it would not be the constant inflation with which the Fed has crippled our economy since they were created in 1913.

A small federal government with limited powers would not have protected consumers from an AT&T monopoly,

A government created and enforced monopoly for decades.

or forced Microsoft into a consent decree,

Which was abandoned when Bush took office and had no effect. None the less, my favorite operating system, Linux, is doing better and better each year!

or broken up the rail monopolies,

Which raised the costs of transportation for everyone, since the railroads immediately and predictable “captured” the ICC, (Interstate Commerce Commission) and used it to cripple competition from trucks for years and years. Of course, once there were more trucking companies, they captured the ICC, and used it against the Airlines. I’m not sure who controls the ICC these days, but you can rest assured it is neither you nor me.

or been able to pull us out of the Great Depression, or….

The Great Depression was caused by the creation of the Federal Reserve in 1913. At first, they were pretty slow in their creation of new money. The WWI came along, and they started printing money like lunatics. The resulting inflation did cause illusery prosperity, and was continued throught the Roaring Twenties. This caused a huge runup in the stock market, but since it was a castle built on paper, it eventually blew up. The result of the blowup was the Great Depression. The is exactly the process through which the Federal Reserve caused, among other things, the dot.com bubble and the housing bubble.

That said I have no problem at all with you thinking it is currently a better program. I just disagree that Word took over because of monopolistic tactics. In my opinion those tactics came afterwards since Microsoft’s monopoly as such consists largely in equal parts of Windows and Office when it comes to their profit.

I have no opinion as whether Worperfect is a better program nowadays because I have not tried it in years. No incentive or reason for me to do so. Microsoft now has such a huge market share that unless a new technology comes along that totally shifts the paradigm, it doesn’t make sense to change even if another program were slightly better. (Wordperfect was in a similar position prior to Windows) The problem is sharing files with other people or companies. I could see Web based word processors dethroning Word but even then until Microsoft is forced to adopt an open and standard file format that other people can use to ensure 100% compatibility it is going to be tough to make headway against them.

I guess my opinion is that Microsoft abuses its current power but initially achieved that power fairly through their own hard work and the incompetence of their competitors.

An INDUSTRY doesn’t switch because PEOPLE like X better than Y. That happens when large market forces dictate the switch. And I think that’s my argument.

The problem to me seems to have been that Wordperfect software designers either did not want to or did not know how to take advantage of Windows. They tried at first to just slap a GUI front end on a dos product. In fact their initial GUI version wasn’t even windows compatible and that was the biggest problem. You couldn’t share data with other programs as easily or as well as you could between true Windows programs. Printer drivers were incompatible and so on. Wordperfect did not make the full change to Windows until it was too late. There was no bundling to speak of in the business market and that is where Word took over first. Wordeperfect semmed to have underestimated how much value users would place on Windows. Let’s face it, who wants to have to learn how to cut and paste differently for each program they used.

As has often happened in the computer industry, technology changed and the then domininent company for a variety of reasons was late making that change. Where the Microsoft abuse started is after this when they successfully prevented other companies such as Netscape and Real Audio from doing to them as they did to Wordperfect and Lotus. Microsoft may have a sinister side but Wordperfect dug their own grave without help from anyone else. Wordperfect just screwed up.

As for my preference for WP being nothing but a case of “I just like it,” there are two ways to evaluate things. On the one end, it’s ALL about opinion, so Truth is a direct function of market share. I guess that’s a clean and convenient way to think about things, but it’s not one I think an intelligent person ought to be comfortable with. The other way is to place some credence in things like informed opinions. I’m a rarity on that front because like I say, I use both every day and have for at least a decade. I think I know one person who uses WordPerfect. And I’m not impressed with the critical evaluations of people who, you know, have never used the product.

So maybe you’re right – maybe it’s just me feeling warm and fuzzy about WP. But I can also walk through both products in ridiculous detail and tell you WHY I think what I do.

Maybe I’m wrong, but mine is the only duly informed opinion in this conversation.

I don’t understand at all your argument on trains. Government gave them their initial monopolies in the first place. As far as human rights abuse I fail to see your point. All types of companies and people abused workers and anyone they could. Slavery was a constitutional institution.

The Great Depression? I’m not sure about that. Way before my time but from everything I’ve ever read the government did not pull us out of the depression. WWII did. The economy never really recovered until we had the war and the resulting lucrative and powerful position we found ourselves in afterwards. That and I think the Great Depression was really just a result of our economy changing and growing more complex and us not knowing how to manage it. I really don’t know enough to have an opinion as to whether the government helped mitigate the effects of the economic collapse or just lengthened the time it took us to recover. I lean towards thinking it helped at least by mitigating social collapse but…

Microsoft consent decree? You’re joking right? The government basically surrendered to Microsoft and settled the case with no real impact on Microsoft’s actions. The only even vaguely successful intervention when it comes to MS monopolistic practices has been that of the EU.

Sports franchises as economic development? If you believe that, I have a bridge you might be interested in buying.

I like your answer to Robert. Completely agreed.

Disagree with your answer to Novista. Yes, he or she is wrong but again I don’t understand the examples you pick. You’re saying federal pork is smart? Competition for the farmer??? In your example the government subsidizes the transportation of goods below cost that compete against the local farmer.

And lastly your statement: “And when libertarians ask why there should be regulations barring too much media consolidation in a single market, we’re forced to explain to them why monopolies are bad for them as much as everyone else.” I don’t know what to say. I guess I just have to compliment you on your audacity in making it. Mother knows what is best for you… I assume that statement was just tossed in on your part to stir up the trolls?

I guess in conclusion, to me you do not come across as near as pragmatic as you seem to think you are. You seem to be saying everything libertarians say is wrong and fundamentalist liberalism, (sorry, forgot the rebranding – progressivism), is right on everything, but gosh darn those libertarians are useful little people who prod you know and then to rethink and reaffirm why you are right and know best…

Personally, I like Linux.

Fundamentalisms of all stripes are bad because they’re a form of intentional blindness on the part of the fundamentalist – they’re no different from irrational, unchallenged religious beliefs, and we all know how destructive those can be. It’s the same with any fundamentalist belief. Even my most recent personal ideology of pragmatism needs to be challenged sometimes, because there are occasions when the raw logic of “the needs of the many outweigh the needs of the few or the one (Spock – StarTrek 2, The Wrath of Kahn)” isn’t any fairer than a libertarian free market would be.

Which is why, all snarkiness aside, I truly do appreciate libertarians, rabid conservatives, loony environmentalists, and even religious nutcases (like the Westboro Baptist Church). Being exposed to alternatives remind me that sometimes principles must outweigh logic, that religious moderates cannot be allowed to be defined by their nutcases, et al.

The libertarian in me simply asks the following series of questions when anyone asks anything of me: Am I being asked to contribute at my expense, for the other party’s benefit, while they are not expected to contribute? Is my ability to achieve a positive end treated as if I am victimising or exploiting the inability others to achieve the same end?

If these are true then my ability is being exploited. The simple response is this: I am not a slave.

As I contemplate the evil that is South Africa’s Black Economic Empowerment project, that would make slaves of everyone, I consider that all I have to say to prevent my exploitation is, “I don’t have to agree.”

Libertarianism is a personal choice. It seems peculiar to me that real libertarians would ever get angry with people who disagree. If one believes in individual choice then, even if I disagree with you, it is your choice. That doesn’t make you right. But I don’t feel the need to do more than state my case, and move on. Your mind is your own to change.

Microsoft beat WP because they bundled their inferior product with the OS, and as a result WP went from having over 70% of the market to being an afterthought nearly overnight. Without the anti-competitive bundling nobody would use Word today, just like the didn’t back before MS’ monopolistic strategy.

Oh – and right on cue.