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Reformed Libertarian Blog Posts

H.L. Mencken on Envy and Democracy

Mencken:

No doubt my distaste for democracy as a political theory is, like every other human prejudice, due to an inner lack-to a defect that is a good deal less in the theory than in myself. In this case it is very probably my incapacity for envy.

That emotion, or weakness, or whatever you choose to call it, is quite absent from my make-up; where it ought to be there is a vacuum. In the face of another man’s good fortune I am as inert as a curb broker before Johann Sebastian Bach. It gives me neither pleasure or distress. The fact, for example, that John D. Rockefeller had more money than I have is as uninteresting to me as the fact that he believed in total immersion and wore detachable cuffs. And the fact that some half-anonymous ass or other has been elected President of the United States, or appointed a professor at Harvard, or married to a rich wife, or even to a beautiful and amiable one: this fact is as meaningless to me as the latest piece of bogus news from eastern Europe.

The reason for this does not lie in any native nobility or acquired virtue. Far from it, indeed. It lies in the accidental circumstance that the business I pursue in the world seldom brings me into very active competition with other men. I have, of course, rivals but they do not rival me directly and exactly, as one delicatessen dealer or or clergyman or lawyer or politician rivals another.

It is only rarely that their success costs me anything, and even then the fact is usually concealed. I have always had enough money to meet my modest needs and have always found it easy to get more than I actually want. A skeptic as to all ideas, including especially my own, I have never suffered a pang when the ideas of some other imbecile prevailed. […]

And there is only one sound argument for democracy, and that is the argument that it is a crime for any man to hold himself out as better than other men, and, above all, a most heinous offense for him to prove it.

What I admire most in any man is a serene spirit, a steady freedom from moral indignation, an all-embracing tolerance-in short, what is commonly called good sportsmanship. Such a man is not to be mistaken for one who shirks the hard knocks of life. On the contrary, he is frequently an eager gladiator, vastly enjoying opposition. But when he fights, he fights in the manner of a gentleman fighting a duel, not in that of a longshoreman cleaning out a waterfront saloon. That is to say, he carefully guards his amour propre by assuming that his opponent is as decent a man he is, and just as honest-and perhaps, after all, right. Such an attitude is palpably impossible to a democrat. His distinguishing mark is the fact that he always attacks his opponents, not only with all arms, but also with snorts and objurgations-that he is always filled with moral indignation-that he is incapable of imaging honor in an antagonist, and hence incapable of honor himself.

Such fellows I do not like. I do not share their emotion. I cannot understand their indignation, their choler. In particular, I can’t fathom their envy.

And so I am against them.

Taken from A Blind Spot from the Smart Set, 1920, pp.43-44

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A Wealthy Zuckerberg’s Sly Move

In our wealth management practice, there is an important reminder that we help some of our extremely wealthy clients to remember: it is better to be in control and not be an owner than to be an owner and have limited control.

What we mean by this is that there are certain legal disadvantages to personally owning something, including tax and inheritance implications. Among these “somethings” that can be owned is stock of a given company.

This is how we should view the recent hoopla surrounding Mark Zuckerberg’s announcement that he will be “giving away” 99% of his ownership in Facebook. The progressive left when berserk. “This is what the wealthy SHOULD be doing! Good for Mark!”

Here’s the deal: this is exactly what the wealthy should be doing indeed, and it is what I might advise (some) people to do (if their situation calls for it). Why? Because what he just did was to transfer the wealth from his own taxable control (ownership) to a new foundation that is controlled by– you guessed it– him. Now he still controls the wealth, but he does not own it; therefore, he will not be taxed on it. That’s right: capital gains tax on the transfer? Nope. Future estate taxes for his heirs? Nada. But what about a tax deduction for the donation? You bet!

Am I saying he shouldn’t be allowed to do this? On the contrary! He should indeed! We need these strategies to protect our wealth!

What should the wealthy person do to protect wealth from the state and from the masses who demand its redistribution? What should the wealth do as a strategy to preserve the long term integrity of his wealth? He should do what Zuckerberg just did. But won’t the media and the Progressive Left be super angry?? Not if you do it under the guise of giving away your wealth for future generations. Like Zuckerberg just did. Then they lavish praise on you!

Robert Wenzel comments on the matter:

Zuckerberg Announces He Is Going To Take His Money Out Of His Left Taxable Pocket and Put It Into His Right Non-Taxable Pocket

We may have our first full-fledged billionaire couple with child, who can most aptly be described as slogan Marxists. It doesn’t appear they have any deep knowledge of Marxism, or any other social theories, they are just sloganeers: “equality for all, especially future generations.”

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Interest Rates and the Strength of the Economy

Janet Yellen’s explanation for continuing the absurd trend of ZIRP (Zero Interest Rate Policy) was essentially that, while the Fed had hit its official unemployment level goals (for clarification, the reason for this is that the labor participation rate is at historically low levels and also because we are in a boom phase of the business cycle due to the expansion of the money supply, per the Austrian Business Cycle Theory.), the economy itself was not yet strong enough to withstand the beginnings of a raise in the Federal Funds rate.  The economy is still holistically too weak for the Fed to be comfortable with a 25 basis point uptick in the price of credit.

Richmond Fed President Jeffrey Lacker was the lone dissenting voice from this position. In his estimation, the economy is actually strong enough to take on the early stages of what must eventually be a long haul toward historically normal interest rate levels.

CONTINUE READING

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Matt McCaffrey Defends Misesian Economics

Matt McCaffrey defended Austrian economics against John Mueller’s odd claim (in the Quarterly Journal of Austrian Economics!) that there’s a missing element in Austrian economics; namely, that it cannot account for things like love because Austrian economics (especially Misesian economics), centered on the methodology of praxeology, which sees all human action as a result of self-interest. Stated differently, all human beings have ends that need to be satisfied and therefore they act; this action constitutes employing means to accomplish that end.

Mueller then, presupposing that love itself must not be self-interested, states that there is a missing element in Austrian economics. For in his eyes Austrian economics is limited to action stemming from self-interest.

I think Mueller’s claim is remarkably silly.  McCaffrey easily overcomes Mueller’s observation, first by stating Mueller’s example:

For example, a mother who feeds her child is not acting out of self-interest, but of love for her infant, which explains why she feeds her child rather than consuming all her food herself. According to Mueller, standard economic assumptions cannot account for either the mother’s loving behavior or her distribution of food to her child. Likewise, there are an enormous number of similar non-exchange behaviors that fall outside economic analysis. What is needed then is a thorough revision of theory to incorporate these missing actions, and this is what Mueller sets out to do.

Nevertheless, readers of Mises will perhaps see the difficulty with Mueller’s argument: praxeology suggests that all action is self-interested in that it tries to substitute a more for a less satisfactory state of affairs, from the point of view of the actor. Action is thus a kind of exchange, though not necessarily an exchange of goods and services. Rather, when a loving mother feeds her child, she exchanges the less desirable state of the child’s hunger for the more desirable state of the child’s nourishment. Taken this way, selflessness, or love, does not pose much of a problem for economic theory.

And actually, I think there is a much stronger defense of Mises’ praxeology than McCaffrey himself gives.  Beyond McCaffrey’s point, the fact remains that the mother actually is acting in self-interest (properly understood) in feeding her child.  And this is proven by the action itself! Every single act is a revelation of the value placed on a given means/ends relationship as considered by the human actor.  The mother does not feed her child even though she would rather feed herself; she actually feeds her child because she sees the act of feeding her child as bring her more satisfaction than the act of feeding herself.  In other words, she weighs the value, mentally, of the satisfaction that would be brought about in her mind by feeding herself, against the value of the satisfaction that would be brought about by feeding her child.  Praxeology explains why she acted in that way: her self-interest made her choose the option that would satisfy her more.

In a previous post, I quoted Jonathan Edwards:

A man never, in any instance, wills any thing contrary to his desires, or desires any thing contrary to his will.

…but yet his Will and Desire do not run counter all: the thing which he wills, the very same he desires; and he does not will a thing, and desire the contrary, in any particular.

[…]

And therefore I observe, that the Will (without any metaphysical refining) is, That by which the mind chooses any thing. The faculty of the will, is that power, or principle of mind, by which it is capable of choosing: an act of the will is the same as an act of choosing or choice.

[…]It is sufficient to my present purpose to say, It is that motive, which, as it stands in view of the mind, is the strongest, that determines the will. But may be necessary that I should a little explain my meaning. By motive I mean the whole of that which moves, excites, or invites the mind to volition, whether that be one thing singly, or many things conjunctly. Many particular things may concur, and unite their strength, to induce the mind; and when it is so, all together are as one complex motive. And when I speak of the strongest motive, I have respect to the strength of the whole that operates to induce a particular act of volition, whether that be the strength of one thing alone, or of many together.

And then I commented on Edwards:

If the will is the faculty that chooses, and the will cannot choose anything contrary to the desires, then it is impossible to conceive of a situation in which we don’t choose that which satisfies the chief desires of our heart.  Thus, to obey God without our minds considering this activity the most satisfying thing at the moment is an idea that runs contrary to the entire nature of man himself.  This is an anthropological consideration; can man distance himself from his desires?  Can he act contrarily to his own will?  Piper and Edwards say no, and to disagree seems to fly in the face of reason and consistency.

Indeed, Mises economic theory does not overlook the role of love in praxeology, it merely incorporates it into the system. Mueller should understand this.

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Mises on American Prosperity

(from p.37-39 of Ludwig von Mises, Profit and Loss)

“The tycoons are too powerful, too rich, and too big. They abuse their power for their own enrichment. They are irresponsible tyrants. Bigness of an enterprise is in itself an evil. There is no reason why some men should own millions while others are poor. The wealth of the few is the cause of the poverty of the masses.”

Each word of these passionate denunciations is false. The businessmen are not irresponsible tyrants. It is precisely the necessity of making profits and avoiding losses that gives to the consumers a firm hold over the entrepreneurs and forces them to comply with the wishes of the people. What makes a firm big is its success in best filling the demands of the buyers. If the bigger enterprise did not better serve the people than a smaller one, it would long since have been reduced to smallness. There is no harm in a businessman’s endeavors to enrich himself by increasing his profits. The businessman has in his capacity as a businessman only one task: to strive after the highest possible profit. Huge profits are the proof of good service rendered in supplying the consumers. Losses are the proof of blunders committed, of failure to perform satisfactorily the tasks incumbent upon an entrepreneur. The riches of successful entrepreneurs are not the cause of anybody’s poverty; it is the consequence of the fact that the consumers are better supplied than they would have been in the absence of the entrepreneur’s effort. The penury of millions in the backward countries is not caused by anybody’s opulence; it is the correlative of the fact that their country lacks entrepreneurs who have acquired riches. The standard of living of the common man is highest in those countries which have the greatest number of wealthy entrepreneurs. It is to the foremost material interest of everybody that control of the factors of production should be concentrated in the hands of those who know how to utilize them in the most efficient way.

It is the avowed objective of the policies of all present-day governments and political parties to prevent the emergence of new millionaires. If this policy had been adopted in the United States fifty years ago the growth of the industries producing new articles would have been stunted. Motorcars, refrigerators, radio sets, and a hundred other less spectacular but even more useful innovations would not have become standard equipment in most of the American family households.

The average wage earner thinks that nothing else is needed to keep the social apparatus of production running and to improve and to increase output than the comparatively simple routine work assigned to him. He does not realize that the mere toil and trouble of the routinist is not sufficient. Sedulousness and skill are spent in vain if they are not directed toward the most important goal by the entrepreneur’s foresight and are not aided by the capital accumulated by capitalists. The American worker is badly mistaken when he believes that his high standard of living is due to his own excellence. He is neither more industrious nor more skillful than the workers of Western Europe. He owes his superior income to the fact that his country clung to “rugged individualism” much longer than Europe. It was his luck that the United States turned to an anticapitalistic policy as much as forty or fifty years later than Germany. His wages are higher than those of the workers of the rest of the world because the capital equipment per head of the employee is highest in America and because the American entrepreneur was not so much restricted by crippling regimentation as his colleagues in other areas. The comparatively greater prosperity of the United States is an outcome of the fact that the New Deal did not come in 1900 or
1910, but only in 1933.

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Rothbard on inflation and interest rates; their connection

Rothbard’s “myth 4” out of the 10 myths he refuted here has to do with the relationship between inflation and interest rates:

Every time the Fed tightens the money supply, interest ratesrise (or fall); every time the Fed expands the money supply, interestrates rise (or fall).

The financial press now knows enough economics to watch weekly money supply figures like hawks; but they inevitably interpret these figures in a chaotic fashion. If the money supply rises, this is interpreted as lowering interest rates and inflationary; it is also interpreted, often inthe very same article, as raising interest rates. And vice versa. If the Fed tightens the growth of money, it is interpreted as both raising interest rates and lowering them. Sometimes it seems that all Fed actions, no matter how contradictory, must result in raising interest rates. Clearly something is very wrong here.

The problem is that, as in the case of price levels, there are several causal factors operating on interest rates and in different directions. If the Fed expands the money supply, it does so by generating more bank reserves and thereby expanding the supply of bank credit and bank deposits. The expansion of credit necessarily means an increased supply in the credit market and hence a lowering of the price of credit, or the rate of interest. On the other hand, if the Fed restricts the supply of credit and the growth of the money supply, this means that the supply in the credit market declines, and this should mean a rise in interest rates.

And this is precisely what happens in the first decade or two of chronicinflation. Fed expansion lowers interest rates; Fed tightening raises them. But after this period, the public and the market begin to catch on to what is happening. They begin to realize that inflation is chronic because of the systemic expansion of the money supply. When they realize this fact of life, they will also realize that inflation wipes out the creditor for the benefit of the debtor. Thus, if someone grants a loan at five percent for one year, andthere is seven percent inflation for that year, the creditor loses, not gains. He loses two percent, since he gets paid back in dollars that are now worth seven percent less in purchasing power. Correspondingly, the debtor gains by inflation. As creditors begin to catch on, they place an inflation premium on the interest rate, and debtors will be willing to pay it. Hence, in the long run anything which fuels the expectations of inflation will raise inflation premiums on interest rates; and anything which dampens those expectations will lower those premiums. Therefore, a Fed tightening will now tend to dampen inflationary expectations and lower interest rates; a Fed expansion will whip up those expectations again and raise them. There are two, opposite causal chains at work. And so Fed expansion or contraction can either raise or lower interest rates, depending on which causal chain is stronger.

Which will be stronger? There is no way to know for sure. In the early decades of inflation, there is no inflation premium; in the later decades,such as we are now in, there is. The relative strength and reaction times depend on the subjective expectations of the public, and these cannot be forecast with certainty. And this is one reason why economic forecasts can never be made with certainty.

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Guido Hulsmann on Religion and Liberty

A little glimpse of the personal perspective held by Jorg Guido Hulsmann on religion and liberty, as written in the forward to Ralph Raico’s book The Place of Religion in the Liberal Philosophy of Constant, Tocqueville, and Lord Acton.  It’s always neat to read little things like this from economists that have greatly impacted you.

Religion and liberty—few issues are more controversial among current-day libertarians. At least four positions can be distinguished. One well-known position holds that religion and liberty are separate spheres that are almost hermetically sealed from one another, while any historical point of contact is purely accidental or contingent. According to another wide-spread position, religion and liberty are outright antagonistic. These advocates see in religion the most deadly foe of individual liberty, an even greater enemy of mankind than the state. A third position contends that religion and liberty are complementary: on the one hand, pious men facilitate the workings of a society with minimal or no government and, on the other hand, political liberty facilitates religious life as each one sees fit. Finally, some thinkers defend a fourth position, namely, that religion—and in particular the Christian faith—is fundamental for individual liberty, both as far as the historical record is concerned and on the conceptual level.

In our thoroughly secularised culture, the third position is held to be daring and the fourth insolent. Yet today, I do believe that they are both true and that the third is a skin-deep statement of the truth, while the fourth goes to the root of the matter. Once a pagan interventionist, I first saw the truths of libertarian political theory, and eventually I started to realize that the light of these truths was but a reflection of the encompassing and eternal light that radiates from God through His Son and the Holy Spirit.

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Bloomberg: Help! Prices May Fall!

An article at Bloomberg expresses deep concern over the fact that, recently, the United States has experienced a strong dollar, relative of course to the world’s other fiat currencies.

While the steel industry has been fading in the U.S. for decades, things have gotten worse recently. A strong U.S. dollar, combined with a slowing Chinese economy, is bringing unprecedented amounts of cheap, foreign steel to the U.S., swamping domestic producers.

Stop. Reflect.

>”Things are getting worse.”

>”unprecedented amounts of cheap, foreign steel to the U.S.”

For real? Consider:

Jones: “Things are getting worse in my household financial situation”

Smith: “Oh yeah? What’s going on?”

Jones: “Well everytime I go to the store things are getting cheaper and now I am able to purchase unprecedented levels of goods.”

Smith: “Yikes. I’ll keep you in my prayers.”

The doctrine of mercantilism weighs economic success by the ability of the domestic producers to lead the industry worldwide.  Thus, when foreign producers are able to produce things cheaper, the mercantilist panics.  For this means that the domestic producers are not able to compete.  But why is it inherently better for economic progress is the domestic producers in one industry maintain control of the industry?  There is no reason for this.

Economic prosperity and progress depends on the division of labor.  It depends on the fact that some people are better, more efficient, at producing some things than others.  And it is good for the economy that those who are best at something specialize in it and those who are not as good at something find another role in society.  While Bloomberg panics that the Chinese are able to produce more cheaply, they should be thrilled: for now the American consumer of steel can save money, invest what he would have spent, and thereby direct scarce resources into productive activities in the domestic area.

Bloomberg complains: “The recent devaluation of the yuan could make Chinese steel even more attractive to U.S. buyers.”  This is exactly right. And this is the lesson that the entire mainstream economic commentator profession needs to understand: Chinese devaluation is not a boon for China… it is a boon for the US consumer!  China, far from “cheating” by devaluing, are merely hurting themselves and their own consumers.  The US citizen is the primary beneficiary!

Bloomberg:

“U.S. producers have had no choice but to pull back. Andrew Lane, an analyst at Morningstar, expects U.S. steel production to come in at around 85 million metric tons this year, down from 98 million in 2007. “I don’t think we’ll get back to that level until 2020,” Lane says.”

There is nothing wrong with this. Obviously those employed in the steel industry will be negatively affected. But those in the importing industries, as well as those in the industries that will suddenly receive more money from the savings of the American consumers who will no longer be spending as much money on steel, will be positively affected.  Economics, as Bastiat and Hazlitt taught, is a matter of considering the bigger picture; not just the immediate and obvious consequences.

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Nice Email from Lawrence Reed of FEE

Lawrence Reed, President of the Foundation for Economic Education (FEE), sent along a nice email thanking us for sharing his article on Presbyterian stalwart J. Gresham Machen.  He basically said that he was previously unaware of the site but is excited to look around and even stated that he may become one of our biggest fans “based on the name itself!”

It’s always such a pleasure to receive supportive emails from people like Reed and Walter Block.  If you haven’t yet read the Machen article, make sure you do. And look around FEE’s site for some great resources in the free market economics tradition.  FEE is one of the older libertarian foundations and was founded in 1946 with money from the Volker Fund, which was instrumental in funding important books that are now cornerstones of the modern libertarian movement.

Many very important players in the early development of the modern libertarian movement went through FEE, including people like Henry Hazlitt, Hans Sennholz, and FA “Baldy” Harper.  Murray Rothbard, in “The Private Volker Fund Memos,” wrote the following:

With the formation of the Foundation for Economic Education in 1946, the libertarian movement turned a corner and began its postwar renaissance. […]

[FEE] gathered together the many isolated and loose strands of the libertarians, and created that crucial open center for a libertarian movement. It not only disseminated libertarian literature; it provided a gateway, a welcoming place, for all hitherto isolated and neophyte libertarians. It launched the movement.

This great feat of FEE in launching the libertarian movement is testimony to the enormous need for a functioning “open center” for libertarians. For not only did this open center provide a channel and gateway for people to enter the libertarian ranks; not only did its agitation convert some and find others; it also, by providing an atmosphere and a “center” for like-minded students of liberty, pro- vided the atmospheric spark for rapid advance from old-fashioned laissez-faire to 100 percent liberty on the part of much of its staff and friends. In short, FEE, by its very existence, exerted an enormous multiple leverage in creating and advancing and weaving together the strands and people in the libertarian cause. For this may it always be honored!

Thanks Lawrence Reed for the email!

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Patrick Barron on Cash Elimination

I thought Patrick Barron’s response to the Financial Times on cash was especially fantastic.  He wrote:

Dear Sirs:

I was appalled at your supposed “case” for eliminating cash, which you yourselves describe as the peoples’ “go-to safe asset”. And what IS your case?

One, “cash…limits the central banks’ ability to stimulate a depressed economy.” Really? Although I am not in favor of debasing money as a path to prosperity, I see no limit to the central banks’ ability to hit the “enter” key on their computer screens in order to manufacture out of thin air as much money as they dare. Two, banks cannot impose a negative interest rate–what we common folk call stealing–on the cash in one’s pocket. Your preposterous goobledygook that a negative interest rate is required by central banks in order to have sufficient “ammunition” when tightening from a “lower band” is as vacuous a statement, although often heard, that one can imagine. Three, that unlike electronic money, cash cannot be tracked…to which I answer “so what?” and “thank God for that!” Four, that former chief economist of the International Monetary Fund, Kenneth Rogoff, thinks eliminating cash is a wonderful idea. Let’s set the record straight. The IMF gets its money from sovereign states, who tax their people against their will in order to give the money to the IMF to squander and give bad advice around the world. Any self-respecting economist would try to hide the fact that he had anything to do with such an institution; therefore, I find little comfort in Mr. Rogoff’s endorsement of the cash-confiscation scheme. Four, the state can more easily levy a Value added tax in order to make tax collection easy. Oh, how nice! Here…let me put my cash in the bank in order to make it easier for government to tax it away. Ah, but then you conclude your support of the cashless society with the caveat that we minions might, just might, be allowed to carry some cash…but at a cost. Our cash could carry an expiration date, for example. As you state: “The benefits of cash are significant–but they need not be offered for free.” A more Orwellian statement would be hard to find.

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My Favorite H.L Mencken Quotes

H.L. Mencken (1880-1956) was one of the most important social critics and columnists in American history. His prose and ability to craft remarkable sentences are now of legend.  He was well known for covering the Scopes trial (it is popularly known as the “monkey trial” –this was Mencken’s doing). Here is Murray Rothbard’s essay on Mencken: “H.L. Mencken: The Joyous Libertarian.”  While Mencken was well known as an agnostic and for his harsh words against religion (which, if applied to the right religious groups –the moralist Progressives and the anti-philosophy Arminian fundamentalists– are entirely agreeable), he had much respect for a hero of this website: J. Gresham Machen. Here is a quote from Mencken’s obituary of Machen. Keep in mind that this is coming from someone who generally despised religion:

What caused [Machen] to quit the Princeton Theological Seminary and found a seminary of his own was his complete inability, as a theologian, to square the disingenuous evasions of Modernism with the fundamentals of Christian doctrine. He saw clearly that the only effects that could follow diluting and polluting Christianity in the Modernist manner would be its complete abandonment and ruin. Either it was true or it was not true. If, as he believed, it was true, then there could be no compromise with persons who sought to whittle away its essential postulates, however respectable their motives.

Thus he fell out with the reformers who have been trying, in late years, to convert the Presbyterian Church into a kind of literary and social club, devoted vaguely to good works. Most of the other Protestant churches have gone the same way, but Dr. Machen’s attention, as a Presbyterian, was naturally concentrated upon his own connection. His one and only purpose was to hold it [the Church] resolutely to what he conceived to be the true faith. When that enterprise met with opposition he fought vigorously, and though he lost in the end and was forced out of Princeton it must be manifest that he marched off to Philadelphia with all the honors of war.

And finally, here are my favorite quotes of Mencken’s:

  • “A professional politician is a professionally dishonorable man. In order to get anywhere near high office he has to make so many compromises and submit to so many humiliations that he becomes indistinguishable from a streetwalker.”urgetosavemencken1
  • “Democracy is an art of governing the circus from the monkey’s cage.”
  • “The men the American people admire most extravagantly are the most daring liars; the men they detest most violently are those who try to tell them the truth.”
  • “The most dangerous man, to any government, is the man who is able to think things out for himself… Almost inevitably, he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable.”
  • “The urge to save humanity is almost always a false front for the urge to rule.”
  • “I believe that it is better to be free than to be not free, even when the former is dangerous and the latter safe. I believe that the finest qualities of man can flourish only in free air– that progress made under the shadow of the policeman’s club is also progress, and of no permanent value. I believe that any man who takes the liberty of another into his keeping is bound to become a tyrant, and that any man who yields up his liberty, in however slight measure, is bound to become a slave.”
  • “The truth, indeed, is something that mankind, for some mysterious reason, instinctively dislikes. Every man who tries to tell it is unpopular, and even when, by the sheer strength of his case, he prevails, he is put down as a scoundrel.”
  • “When a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental — men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand. So confronted, the candidate must either bark with the pack or be lost… All the odds are on the man who is, intrinsically, the most devious and mediocre….”
  • “As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”
  • “The aim of public education is not to spread enlightenment at all; it is simply to reduce as many individuals as possible to the same safe level, to breed a standard citizenry, to put down dissent and originality.”mencken-dressed-up1024x675
  • “The typical lawmaker of today is a man wholly devoid of principle — a mere counter in a grotesque and knavish game. If the right pressure could be applied to him, he would be cheerfully in favor of polygamy, astrology or cannibalism.”
  • “It is [a politician’s] business to get and hold his job at all costs. If he can hold it by lying, he will hold it by lying; if lying peters out, he will try to hold it by embracing new truths. His ear is ever close to the ground.”
  • “Public opinion, in its raw state, gushes out in the immemorial form of the mob’s fear. It is piped into central factories, and there it is flavoured and coloured and put into cans.”
  • “I believe that all government is evil, and that trying to improve it is largely a waste of time.”
  • “The state… consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get, and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time it is made good by looting ‘A’ to satisfy ‘B’. In other words, [the state] is a broker in pillage, and every election is a sort of advanced auction on stolen goods.”
  • “Democracy is a pathetic belief in the collective wisdom of individual ignorance.”
  • “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins.”
  • “The notion that a radical is one who hates his country is naive and usually idiotic. He is, more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime; he is a good citizen driven to despair.”
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Hans-Hermann Hoppe on the Long-Term Capital Effects of Taxation

From The Economics and Ethics of Private Property

Taxation is a coercive, non-contractual transfer of definite physical assets (nowadays mostly, but not exclusively money), and the value embodied in them, from a person or group of persons who first held these assets and who could have derived an income from further holding them, to another, who now possesses them and now derives an income from so doing. How did these assets come into the hands of their original owners? Ruling out that this was the outcome of another previous act of taxation, and noting that only those assets can be taxed that have not yet been consumed or whose value has not yet been exhausted through acts of consumption (a tax-gatherer does not take away another man’s garbage but rather his still valuable assets!), three and only three possibilities exist: They come into one’s possession either by one’s having perceived certain nature-given goods as scarce and having actively brought them into one’s possession before anyone else had seen and done so; by having produced them by means of one’s labor out of such previously appropriated goods; or through voluntary, contractual acquisition from a previous appropriator or producer. Only through these types of activities is one capable of acquiring and increasing valuable—and hence taxable—assets. Acts of original appropriation turn something which no one had previously perceived as a possible source of income into an income-providing asset; acts of production are by their very nature aimed at the transformation of a less valuable asset into a more valuable one; and every contractual exchange concerns the change and redirection of specific assets from the hands of those who value their possession less to those who value them more.

From this it follows that any form of taxation implies a reduction of income a person can expect to receive from original appropriation, from production, or from contracting. Since these activities require the employment of scarce means—at least time and the use of one’s body—which could be used for consumption and/or leisure, the opportunity cost of performing them is raised. The marginal utility of appropriating, producing, and contracting is decreased, and the marginal utility of consumption and leisure increased. Accordingly, there will be a tendency to shift out of the former roles and into the latter ones.

Thus, by coercively transferring valuable, not yet consumed assets from their producers (in the wider sense of the term including appropriators and contractors) to people who have not produced them, taxation reduces producers’ present income and their presently possible level of consumption. Moreover, it reduces the present incentive for future production of valuable assets and thereby also lowers future income and the future level of available consumption. Taxation is not just a punishment of consumption without any effect on productive efforts; it is also an assault on production as the only means of providing for and possibly increasing future income and consumption expenditure. By lowering the present value associated with future-directed, value-productive efforts, taxation raises the effective rate of time preference, i.e., the rate of originary interest and, accordingly, leads to a shortening of the period of production and provision and so exerts an inexorable influence of pushing mankind into the direction of an existence of living from hand to mouth. Just increase taxation enough, and you will have mankind reduced to the level of barbaric animal beasts.

Hans-Hermann Hoppe (0101-01-01T00:00:00+00:00). The Economics and Ethics of Private Property (Kindle Locations 438-463). Ludwig von Mises Institute. Kindle Edition.

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New Murray Rothbard Book Emerges

Writes Bob Wenzel:

A new book by the great economist and social philosopher Murray Rothbard has emerged, Science, Technology, and Government.

From the blurb:

In this previously unpublished manuscript, found in the Rothbard Archives, Rothbard deftly turns the tables on the supporters of big government and their mandate for control of research and development in all areas of the hard sciences. What R&D should be encouraged and funded, what inventions should be supported, and what areas should be given research grants, etc.? These decisions can only be decided by markets unburdened by government meddling and intervention. Rothbard shows that science best advances under the free market: the claims to the contrary of the centralizers are spurious. The best course of action for government is to get out of the way.

Here’s the preface to the book written by David Gordon:

When Murray Rothbard wrote “Science, Technology, and Government” in 1959, supporters of the free market needed to confront a challenge that remains relevant today. In 1957, the Soviet Union launched its “Sputnik” satellite, thereby defeating the United States in the race between the two countries to be first into space. Did this victory show, or at least suggest, the superiority of Soviet centrally-planned science to the American market economy? Critics of the free enterprise system like John Kenneth Galbraith (one of Rothbard’s least favorite economists) claimed that scientific research and development required government planning and control. The free market, these critics claimed, could not carry out the vast efforts research now required. Could private enterprise have built the atomic bomb? The Soviets have long since departed, but the fallacies in the arguments for centrally-controlled science live on today. Government spending on science and technology has increased far beyond its level in 1959.

In this brilliant monograph, Rothbard deftly turns the tables on the supporters of big government. In doing so, he displays his unique combination of mastery of theoretical principles and commanding knowledge of the empirical evidence and scholarly literature on every subject he addresses. He shows that science best advances under the free market: the claims to the contrary of the centralizers are spurious.

Here is the Amazon Link.

On a related note, there is even another Rothbard book in the works and Justin Raimondo is currently editing it. This book is a collection of old newspaper columns from the 1960s:

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Quote from Guido Hulsmann’s Mises Biography

I’ve read bits and pieces of it, but now I’ve committed myself to reading in whole, Guido Hulsmann’s massive biography of Ludwig von Mises, entitled “Mises: The Last Knight of Liberalism.”  Liberalism, of course, referring to the Old Liberalism, or classical liberalism, (pre-American Progressivist/socialist “liberalism.”) which taught the freedom of the individual against statism and political power– and more importantly at a historical level, developed the economic case for free trade and the market system.

The following was pulled from the very beginning of the Preface.  I enjoyed it because it succinctly captures the difficult political context in which Mises developed his socio-economic thought.  The end of the quote makes mention of Mises’ audacious stance on epistemology, which was quite unacceptable during his time with the rise of logical positivism.  And today too, embracing logic to the extent Mises had done is considered “old fashioned” and un-“scientific.”41v+FKNfYyL._SX322_BO1,204,203,200_

In the summer of 1940, with Hitler’s troops moving through France to encircle Switzerland, Ludwig von Mises sat beside his wife Margit on a bus filled with Jews fleeing Europe. To avoid capture, the bus driver took back roads through the French country- side, stopping to ask locals if the Germans had been spotted ahead—reversing and finding alternative routes if they had been.

Mises was two months shy of his fifty-ninth birthday. He was on the invaders’ list of wanted men. Two years earlier, they had ransacked his Vienna apartment, confiscating his records, and freezing his assets. Mises then hoped to be safe in Geneva. Now nowhere in Europe seemed safe. Not only was he a prominent intellectual of Jewish descent; he was widely known to be an arch- enemy of National Socialism and of every other form of socialism. Some called him “the last knight of liberalism.”

He had personally steered Austria away from Bolshevism, saved his country from the level of hyperinflation that destroyed inter- war Germany, and convinced a generation of young socialist intellectuals to embrace the market. Now he was a political refugee headed for a foreign continent.

The couple arrived in the United States with barely any money and no prospects for income. Mises’s former students and disciples had found prestigious positions in British and American universities (often with his help), but Mises himself was considered an anachronism. In an age of growing government and central planning, he was a defender of private property and an opponent of all government intervention in the economy. Perhaps worst of all, he was a proponent of verbal logic and realism in the beginning heyday of positivism and mathematical modeling.

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Crime is in Terms of the Individual

Crimes are those actions which have as their victims actual individual human beings. There is no abstract “crime against society” as the Progressives want you to think; nor is there a “crime against the state” as fascists want you to think. Rather, a crime is something which actually aggresses the person or property of one’s neighbor.

In this way, actual justice has to do with crimes and there is no such thing as “social justice,” much to the disdain of the socialist or liberal Christian. Any crime which aggresses hundreds of people is a “crime against many individuals,” not a “social crime.” Society has no rights, for society is not a thing in itself. We must speak in terms of the individual, lest collectivism creep in unannounced.

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Ryan McMaken on Non-state Civil Governance

In pursuit of precision, I have time and again aimed to differentiate between civil government and the state.  Unfortunately, many in the Austro-libertarian tradition have not been quite as precise but Hans Hoppe (and his disciple Stephen Kinsella) is an exception, and so is the later Rothbard.  In summary, the state is an institution that has, over the course of modern times, monopolized the role of civil governance. There has been civil governance without states historically but there has never been a state that did not first take up the role of a civil government.  Some might dismiss this as a meaningless distinction. But in fact, without this distinction, one easily forgets that there is indeed civil laws and civil order without the state.  That this is a historical observation, not merely a linguistic one, is vital.

In as succinct a blogpost as possible, I attempted to move beyond the anarcho-capitalist/minarchist problem by pointing out that the former does not reject law and order as the latter claims it does; but rather, ancapism merely claims that law and order must logically be handled by “civil government” agencies that are specifically not states.  Of course, one should read the previous linked article to understand why I am completely dogmatic about my rejection of the word “anarchism;” primarily because it falls on ears that have not considered a difference between state and civil governance.

Well, Ryan McMaken uses this same distinction in a recent blogpost when he comments on a historical book on the development of the “competitors” of the state. First, McMaken writes:

While many writers on the state have noted the coercive nature of states, few have taken the time to really explore the distinctions between the type of civil government known as “a state” and other types of civil government. Critics of anarcho-capitalism often wrongly assume that the absence of a state would mean the absence of civil government, but serious proponents of anarchism have never claimed that civil government can or should disappear. Opponents of the state merely assert that a civil government that relies on a monopoly on coercion is illegitimate. This is of course different from asserting that all types of civil government are illegitimate.

Indeed, every society has had some type of civil government, but not every society has used states as part of its system of civil government. Law can exist in an anarchic system, and we see this everyday in the international sphere which is anarchic and yet also governed, however imperfectly, by law and third-party arbitration.

In reading Martin van Creveld’s magnificent history of the institution of the state, I was intrigued by all the examples that are used to explain non-state justice and court systems.  But Creveld mainly focuses on tracing the rise and decline of the state itself, per the book’s title. However, Ryan McMaken cites another book which has at its focus all the civil governance “competitors” with the state, and traces their developments.  This book The Sovereign State and Its Competitors by Hendryk Spruyt, argues that:

Those who are unfamiliar with the literature on the middle ages rely primarily on what they see in movies to lead them to the conclusion that everything about the middle ages must have been awful. But, we know at least that the lack of sovereign states did not prevent economic growth since, as Spruyt notes, “in the later stages of the eleventh century, the economy began to expand dramatically” and that towns and trade began to expand quickly as well.

Spruyt notes that states were not necessary to protect these new sources of capital, and the Hanseatic League, for example, which was non-territorial, had no system of centralized hierarchy, and was based on a defense-for-members model that led to a high degree of prosperity and economic success for its members. Conflict between members were not decided by any state that enjoyed a monopoly on coercion, but on negotiation and arbitration.

The Feudal system was similar in that power was decentralized, and conflicts were resolved through complex systems of contracts and arbitration. Warfare was expensive and depended on valuable and highly-specialized knights whose terms of service were restricted by private agreements.

Of course, we aren’t trying to “bring back feudalism” (can’t wait until the New York Times gets ahold of this one); the point is that not all civil governments and civil orders rely on the state.  That is, there really is a difference between governance/law/order and the state as an specific type of institution.

I will try to get to this book sometime this year.

__________________________

By way of historical interest for my Reformed readership, one of the things I have noticed in learning the history of the state is the mistake that some of the Protestants made in their positive goal of removing civil duties from the Church’s jurisdiction.  While it is completely understandable given the context of persecution against the religious dissenters from the Roman Church’s iron fist, the Protestants took refuge in the –at the time– young state which promised protection against the Church.  There was a mighty battle for power between the Roman Church and the various states, as Rome still at the time considered it her role to exercise authority over both the ecclesiastical and civil needs.  The states, desirous of power as is always the case, reached out to the Protestants– that is, they sought more support from a then powerless group.  This is how states tend to grow and permeate throughout society.

The Protestants, very rightly claiming that the Church should not oversee civil affairs, clung to the state for protection. This is why John Calvin wrote his forward in the Institutes as a letter to the Prince.  While they were right to reject the church as the proper agency of overseeing civil affairs, they did not foresee the dangers of statism– of embracing an agency with the monopoly use of coercion.  It was not until much later with the rise of separatism and the English Independents and the particular Baptist dissenters, that the context was ready for the American experiment of complete individual liberty.

And here we are 500 years later in our post-“Moral Majority” and “Religious Right” years, still learning about the dangers for the church when we get too cozy with the state.  The temptation is always before us.

While Charles Hodge was not familiar with the more modern expressions of precise libertarian formulations of political theory (and therefore does not make a distinction between civil government and state), his historical insights on the development from Constantine to the American experiment are interesting and helpful.  And Sam Waldron’s history of the development of a Christian political theory is relevant here as well. Especially in comparing Calvin’s understanding of the relationship to church and state with the much later advocates of the separation of church and state (which is the Reformed Libertarian view, dissenting from Calvin’s).

For more on the nature of the state, please consider Murray Rothbard’s Anatomy of the State.

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David Stockman on Pearl Harbor

It brings me immense pleasure that David Stockman doesn’t buy the textbook version of Pearl Harbor, which is that FDR and the American Government were sitting back twiddling their thumbs and then all of a sudden Japan bombed.  Stockman (this excerpt is from an article having mostly to do with the markets, I just thought this was a neat portion):

This was another tumultuous week to nowhere in the stock market. In fact, two days of robo trader enthusiasm based on headlines that Greece and China are fixed got us all the way back, well, to exactly where the market was last December 7th.

That was seven months ago, and come to think of it that was also Pearl Harbor Day. Perhaps the metaphor is a tad more than apt.

After all, FDR and his advisors claimed they didn’t see the great Japanese fleet’s 12-day steam to Hawaii. According to the textbooks it was a dastardly “sneak attack” without warning.

Not exactly. While the Japanese fleet was enroute, the Roosevelt Administration tightened its embargo on Japan and cut off oil supplies for even civilian use. The Japanese archives make clear that it was the final straw. The attack was executed because war hawks in the Japanese government were finally able to prove that negotiations aimed a lifting a two-year US embargo on oil, scrap steel and other crucial industrial commodities were futile.

So FDR wasn’t surprised by the Pearl Harbor attack. He knowingly brought it on.

Sacred Cows now slaughtered.

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Greece Should Repudiate!

The debate exists even amongst libertarians: should Greece try to get out of their debt obligations to the IMF? Some say yes, because the centralized banking system in which they participate has led to economic destruction in Greece (this is true); others say no, because “they” chose to borrow the money, and therefore “they” should pay it back. I am in the yes camp, and I think that the flaw in the “no” reasoning is that it conflates public and private debt. Murray Rothbard explains:

Most people, unfortunately, apply the same analysis to public debt as they do to private. If sanctity of contracts should rule in the world of private debt, shouldn’t they be equally as sacrosanct in public debt? Shouldn’t public debt be governed by the same principles as private? The answer is no, even though such an answer may shock the sensibilities of most people. The reason is that the two forms of debt-transaction are totally different. If I borrow money from a mortgage bank, I have made a contract to transfer my money to a creditor at a future date; in a deep sense, he is the true owner of the money at that point, and if I don’t pay I am robbing him of his just property. But when government borrows money, it does not pledge its own money; its own resources are not liable. Government commits not its own life, fortune, and sacred honor to repay the debt, but ours. This is a horse, and a transaction, of a very different color.

For unlike the rest of us, government sells no productive good or service and therefore earns nothing. It can only get money by looting our resources through taxes, or through the hidden tax of legalized counterfeiting known as “inflation.” There are some exceptions, of course, such as when the government sells stamps to collectors or carries our mail with gross inefficiency, but the overwhelming bulk of government revenues is acquired through taxation or its monetary equivalent. Actually, in the days of monarchy, and especially in the medieval period before the rise of the modern state, kings got the bulk of their income from their private estates — such as forests and agricultural lands. Their debt, in other words, was more private than public, and as a result, their debt amounted to next to nothing compared to the public debt that began with a flourish in the late 17th century.RothbardRepudiates

The public debt transaction, then, is very different from private debt. Instead of a low-time-preference creditor exchanging money for an IOU from a high-time-preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state. The government gets the money by tax-coercion; and the public creditors, far from being innocents, know full well that their proceeds will come out of that selfsame coercion. In short, public creditors are willing to hand over money to the government now in order to receive a share of tax loot in the future. This is the opposite of a free market, or a genuinely voluntary transaction. Both parties are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people’s property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract.

Any melding of public debt into a private transaction must rest on the common but absurd notion that taxation is really “voluntary,” and that whenever the government does anything, “we” are willingly doing it. This convenient myth was wittily and trenchantly disposed of by the great economist Joseph Schumpeter: “The theory which construes taxes on the analogy of club dues or of the purchases of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind.” Morality and economic utility generally go hand in hand. Contrary to Alexander Hamilton, who spoke for a small but powerful clique of New York and Philadelphia public creditors, the national debt is not a “national blessing.” The annual government deficit, plus the annual interest payment that keeps rising as the total debt accumulates, increasingly channels scarce and precious private savings into wasteful government boondoggles, which “crowd out” productive investments. Establishment economists, including Reaganomists, cleverly fudge the issue by arbitrarily labeling virtually all government spending as “investments,” making it sound as if everything is fine and dandy because savings are being productively “invested.” In reality, however, government spending only qualifies as “investment” in an Orwellian sense; government actually spends on behalf of the “consumer goods” and desires of bureaucrats, politicians, and their dependent client groups. Government spending, therefore, rather than being “investment,” is consumer spending of a peculiarly wasteful and unproductive sort, since it is indulged not by producers but by a parasitic class that is living off, and increasingly weakening, the productive private sector. Thus, we see that statistics are not in the least “scientific” or “value-free”; how data are classified — whether, for example, government spending is “consumption” or “investment” — depends upon the political philosophy and insights of the classifier.

And while we’re at it, the solution to the US sovereign debt crises is, again, repudiate. “We” didn’t agree to this.

The State did.

Repudiate!

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J. Gresham Machen on Jaywalking Laws

J. Gresham Machen on Jaywalking laws:

“These anti-pedestrian laws are intended either for the protection of the pedestrian, or for the convenience of the motorist. In either case . . . they are wrong. If they are intended to protect the pedestrian from himself, they are paternalistic. I am opposed to paternalism.”

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Fan Mail from Walter Block

Writes Walter Block to me last night:

Dear Jay (if I may):

This is one of THE best defenses of libertarianism I have ever read. Really magnificent. And, it is so necessary in this day and age of Cato, Boaz, Charles Murray, Sheldon Richman, Roderick Long, Charles Johnson, John Tomasi, Zwolinski, dozens of Bleeding Heart “Libertarians” and others who wish to hijack our beloved philosophy. Magnificent work on your part:

Engel, C. Jay. 2015. “What Libertarianism is Not: A Case Study.” May 15;
http://reformedlibertarian.com/blog/what-libertarianism-is-not-a-case-study/

I only have a slight reservation about this excellent article of yours; you say:

“Okay, but this has nothing whatsoever to do with libertarianism and so to push themes such as that under a title that reads “Libertarian Perspectives” leads one to the conclusion that either our author misunderstands what libertarianism is, or else is being purposefully deceitful.  My guess is the former..”

My guess would be the latter. But this is only a slight cavil. I suspect you would agree with me, but are just too nice to take the alternative view.

Have you written more along these lines? If so, would you please, Please, PLEASE share these publications of yours with me?

I have written dozens, no, scores of articles along these lines over the years, trying to defend libertarianism against those who would water it down, or misunderstand it or hijack it. I won’t bore you with all of them, but I can’t resist sharing this one with you:

Block, Walter E. 1994. “Libertarianism and Libertinism,” The Journal of Libertarian Studies: An Interdisciplinary Review, Vol. 11, No. 1, pp. 117-128; http://www.mises.org/journals/jls/11_1/11_1_7.pdf

Are you aware of the really wonderful work the Bionic Mosquito has done along these lines? See:

http://bionicmosquito.blogspot.com/2015/05/bleeding-heart-thick-milquetoast-left.html

Best regards,

Walter

I responded with a thank you, some previous blogposts I had written on these themes (1, 2, 3, 4), and an affirmation that I had of course heard of Bionic Mosquito, who graciously lets me republish his blogposts. It is always encouraging to see such big names in the libertarian movement reading what I write. I enjoy Dr. Block, especially his continual emphasis that libertarianism is solely about aggression, and not all these popular “libertine” trends that seem to have invaded the libertarian doctrine.  Thanks for the fan mail Dr. Block (hope you eventually come around on the abortion issue 😛 )!  I surely appreciate it.

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