Friday, March 18, 2011

Libya Crisis: Implications of the Cease-Fire

Libya Declares Immediate Cease-Fire


Libya’s government announced an immediate cease-fire on March 18, a day after the U.N. Security Council approved a no-fly zone over the North African country. The move complicates European efforts to spearhead a campaign against Libyan government troops. Assuming Tripoli follows through on its declaration, the affect on operations against the Libyan rebels remains in question.

Libyan Deputy Foreign Minister Khaled Kaim said March 18 that Libya would positively respond to the U.N. Security Council resolution calling for a no-fly zone over Libya. The statement was soon followed by a declaration by Libyan Foreign Minister Moussa Koussa of an immediate unilateral cease-fire and halt to all military operations. Tripoli added that it was ready to open “all dialogue channels with everyone interested in the territorial unity of Libya,” that it wanted to protect Libyan civilians, and that it was inviting the international community to send government and nongovernmental organization representatives “to check the facts on the ground by sending fact-finding missions so that they can take the right decision.”

The Libyan declaration comes as members of the NATO military alliance were ramping up for airstrikes authorized by the United Nations against troops loyal to Moammar Gadhafi. French diplomatic sources have been quoted as saying airstrikes could start “within hours.” Libya’s move potentially throws a wrench in plans to establish and enforce a no-fly zone — and take additional military action — against the Gadhafi government.

France and the United Kingdom have led the international community in its push to intervene in Libya. Washington had signaled that it would let the European nations lead. Italy, formerly a strong Gadhafi supporter, announced March 18 that it would consider supplying aircraft to the intervention, as did Norway, Denmark and Belgium.

By offering a cease-fire and inviting nongovernmental groups to conduct fact-finding missions, however, Gadhafi is betting that the European nations will lose the political justification for an attack and that political disagreements over military action within European nations can further weaken their already weak resolve. Europeans in general are war-weary from their involvement in NATO’s operations in Afghanistan. They only will support an intervention in Libya if Gadhafi clearly is committing gross violations of human rights. It will be difficult for Paris and London to prove that Gadhafi is indeed committing such acts or to ignore the cease-fire announcement or the invitation to verify it. The immediate reply from France was that it would deal with the cease-fire declaration with caution and that the threat on the ground was unchanged. But the backlash at home against an intervention in light of Gadhafi’s comments is not something European governments can overlook easily, especially since the most powerful EU member state, Germany, already has buckled under the domestic political strain and expressed skepticism toward a military operation.

Assuming Gadhafi follows through with the cease-fire, how it will affect his operations against the rebels remains in question. Gadhafi may feel the rebels have been suppressed such that he can mop up the remainder through police actions in urban settings. Alternatively, he may feel the rebels are so thoroughly entrenched in their stronghold of Benghazi that he cannot dislodge them under the threat of Western airstrikes — and is therefore cutting his losses and preserving the integrity of his forces from potential Franco-British-American air attacks. Ultimately, the cease-fire could be a delaying action while Gadhafi builds a stronger position around Benghazi. This would not be without risks, however, as it will give French and British air assets time to deploy in air bases in the Mediterranean, better positioning them to enforce a no-fly zone.

That said, the Security Council has authorized a no-fly zone, which means that while assaulting Gadhafi’s ground forces directly may be stalled by the cease-fire statement, establishing a no-fly zone is not. It is also likely that Europeans will respond to the statement with further demands on Gadhafi, such as that he must resign as leader of the country or that he must withdraw his troops from eastern Libya and possibly even other cities in the west that have seen fierce resistance, like Misurata and Zawiya. Both of these demands would be difficult for Gadhafi to accept. The establishment and enforcement of the no-fly zone may still go ahead, but attacking Gadhafi’s forces directly will become difficult in the immediate term.

Nuclear No-go: Geiger counter key device in Japan

Ron Paul talks about gold

The Stimulus Fantasy

The G-7 Forex Intervention Is A Perfect Example Of How Manipulated

The G-7 Forex Intervention Is A Perfect Example Of How Manipulated The Global Currency Market Really Is

What do governments and central banks do when they don't like what is happening in the financial markets? They directly intervene and they manipulate the financial markets of course. On Friday, the central banks of the G-7 acted in concert to drive down the value of the surging yen. So why did they do this? Well, the fear was that a rising yen would hurt Japanese exports at a time when the economy of Japan needs all of the help that it can get. So, as central banks have been doing with increasing frequency, they directly intervened in the Forex market in order to bring about the result that they desired. Unfortunately, this is not an isolated incident. The truth is that foreign governments, central banks and large financial institutions are constantly manipulating the Forex, precious metals and stock markets all over the globe. You see, in today's global economy the "stakes are so high" that the free market cannot be trusted.

The reality of the matter is that none of the financial markets are really "free markets" anymore. Not that they are completely rigged, but to say that they are very highly manipulated would not be a stretch.

At least this time the manipulation was made public. Of course it would have been really hard to hide the fact that all G-7 central banks intervened in the Forex on the same day.

The last time there was such a coordinated intervention in the global currency market was back in 2000 when central banks intervened to boost the struggling euro.

But the truth is that individual central banks attempt to manipulate the Forex all the time.

Some of these interventions become public. In September 2010, a bold 12 billion dollar move by the Bank of Japan to push down the value of the yen made headlines around the globe but had only limited success.

Another example of this from last year was when the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc.

Many nations around the world have become extremely sensitive to currency movements.

In particular, there are several Asian nations that are known to be constant currency manipulators. For example, Singapore is very well known for intervening in the foreign exchange market in order to benefit exporters.

And that is what this most recent intervention on behalf of the yen was all about. It was about making Japanese exports cheaper.

But who is going to say no to Japan right now? It is believed that Japan asked the G-7 to do this, and so they did.

Japanese Finance Minister Yoshihiko Noda told the media the following about this massive intervention in the marketplace by the G-7....

"Given yen moves after the tragic events that hit Japan, the United States, Britain, Canada and the European Central Bank have agreed with Japan to jointly intervene in the currency market."

So isn't the Forex supposed to be a free market?

If you still believe that, I have a bridge to sell you.

According to Kathleen Brooks, the research director at a major Forex trading firm, it looks like there is a certain level that global authorities simply will not allow the yen to rise to....

"It looks as though global authorities are willing to pull out all of the stops to defend the 80.00 level in dollar/yen."

The following is the full statement released by the G-7 defending their currency intervention....

Statement of G-7 Finance Ministers and Central Bank Governors

March 18, 2011

We, the G-7 Finance Ministers and Central Bank Governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.

We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector.

In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the United States, the United Kingdom, Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets. As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will monitor exchange markets closely and will cooperate as appropriate.

But it is not just foreign governments and central banks that manipulate financial markets.

If you want to try to make money on the Forex, you had really better know what you are doing, because most "little fish" get swallowed up and spit out.

A number of years ago I actually invested in the Forex and I rapidly learned that it is not a "clean game". I discovered that there are industry insiders that openly confess that several of the "big fish" in the industry brazenly "stop hunt" and regularly trade against the positions of their clients.

Not that stock markets around the globe are much better. It would take thousands of pages just to document the well known cases of stock manipulation and insider trading.

And don't get me started on the precious metals markets. As I have written about previously, very compelling evidence of manipulation in those markets has been handed to the U.S. government and they have essentially done next to nothing with that evidence.

Not that people don't make money in the financial markets. Some people make a ton of money. But those people are experts and they know how to survive in a "dirty game".

If you are an amateur, you really need to think twice before diving too deeply into the financial markets. If you think that you can jump into the Forex or the U.S. stock market and "get rich quick" you are in for a rude awakening.

The financial markets have become a game that is designed to funnel money to the "sharks" and to the "big boys". Once you put your money into the game, the odds are that "the house" is going to win.

For those that still do believe that the financial markets are a good way to build wealth, at least be prudent enough to get some sound financial advice. There is no shame in having a financial professional invest your money for you.

But it is no guarantee of success either. The truth is that millions of Americans have experienced a lot of pain in the financial markets over the last few years.

As the global economy becomes even more unstable, the manipulation of the financial markets by governments and by central banks is going to become even more dramatic.

As financial markets around the world crash and rise and crash again a whole lot of people are going to be wiped out financially.

You don't have to be one of them.

Who In The World Is Going To Buy The Billions Of Dollars Of Debt The U.S. Government

Debt Problem: Who In The World Is Going To Buy The Billions Of Dollars Of Debt The U.S. Government Is Constantly Pumping Out Now?

Is the U.S. government on the verge of a massive debt problem? For years, the U.S. government has been able to borrow all the money that it has wanted to at extremely low interest rates. But now many of the lending sources that the U.S. government has been depending on are drying up. Even before this recent crisis in Japan, a number of big players were moving away from U.S. Treasuries and the U.S. Federal Reserve was having to step in to pick up the slack. But now this debt crunch is about to get a whole lot worse. For years, many had feared that it would be China that would start dumping U.S. government debt, but now it turns out that Japan is going to be the real problem. Right now, Japan is the second largest foreign holder of U.S. government debt. Japan currently holds about $882 billion in U.S. Treasury bonds and they are likely going to have to liquidate much of that in order to fund the rebuilding of their nation. So needless to say they won't be accumulating any more U.S. government debt. But the U.S. government still needs to borrow a trillion and a half dollars from someone every single year. So where in the world are they going to get it?

This is called a debt problem. Have you ever gotten to the point where you are in debt up to your eyeballs and nobody wants to lend you any more money?

Well, the U.S. government is rapidly reaching that point.

Even before the crisis in Japan, several of the big boys had starting moving away from U.S. government debt.

PIMCO, the biggest bond fund on the entire globe, recently acknowledged that they are dumping all of their U.S. Treasuries.

So if foreign nations like Japan are not gobbling up U.S. government debt and big bond funds like PIMCO are not buying any of it, then who in the world is going to be purchasing the massive amounts of debt that the U.S. government is constantly pumping out?

Well, many of you already know that answer.

The Federal Reserve is going to step in of course. The Federal Reserve knows that if the U.S. government cannot borrow gigantic quantities of money at super low interest rates it will go broke. So the Federal Reserve is just going to keep buying up most new U.S. government debt. It is just that simple.

But isn't that a Ponzi scheme?

Of course it is. Let's not mince words here. It is a total scam.

And it is a scam that cannot go on indefinitely.

The truth is that the Ponzi Scheme of the U.S. Treasury issuing bonds and the Federal Reserve buying them up cannot last forever as PIMCO's Bill Gross noted in his March newsletter....

"Basically, the recent game plan is as simple as the Ohio State Buckeyes’ “three yards and a cloud of dust” in the 1960s. When applied to the Treasury market it translates to this: The Treasury issues bonds and the Fed buys them. What could be simpler, and who’s to worry? This Sammy Scheme as I’ve described it in recent Outlooks is as foolproof as Ponzi and Madoff until… until… well, until it isn’t."

Gross also noted in his recent newsletter that the Federal Reserve is currently buying up about 70 percent of all new U.S. government debt.

So now that Japan is out of the picture, how high will that figure go now?

80 percent?

90 percent?

Over the past several weeks there has been all kinds of speculation about whether "quantitative easing" will be extended past June or not.

Well, whether they call it "quantitative easing" or not, the truth is that the Federal Reserve is going to have to continue to "buy" most new U.S. government debt or the system will crash.

We have gotten to the point where the U.S. federal government cannot continue to function without Federal Reserve monetization of the debt.

This is a sign that we are rapidly approaching the financial endgame.

So why doesn't the U.S. government just stop spending so much stinking money and stop getting us all into so much debt?

Well, because there isn't enough political will in Washington D.C. to do any real budget cuts, and if our politicians did balance the budget at this point it would crash the economy.

Just the other day, the U.S. House of Representatives passed a continuing resolution to fund the federal government that would cut 6 billion dollars from U.S. government spending.

On that exact same day, the official U.S. national debt figure rose by 72 billion dollars.

Now the debt normally does not go up that much on a typical day. But what this example does show is the losing battle that our politicians are fighting.

On Wednesday, U.S. Treasury Secretary Timothy Geithner warned a House of Representatives appropriations subcommittee that they should not even think about not raising the debt ceiling....

"Congress has to do it. There's no alternative."

The truth is that the U.S. government has to keep going into more debt. Under the current system the alternative would be to collapse the economy.

But the debt that we have already piled on to the backs of future generations is absolutely criminal.

How mad do you think future generations are going to be with us for heaping 14 trillion dollars of debt on to their shoulders?

Talk about a debt problem!

But this is what we get for allowing a private central bank to run our financial system. This debt-based system was designed to fail from its very inception.

The man supposedly "in charge" over at the Federal Reserve, Ben Bernanke, has a track of record of incompetence that is absolutely staggering. It is a mystery why our representatives in Washington D.C. are not howling for his resignation.

Instead, most of our politicians continue to express blind faith in our current financial system and they continue to insist that everything is going to be okay.

Well, everything is not going to be okay. The Obama administration is projecting that the federal budget deficit for this fiscal year will be an all-time record 1.65 trillion dollars.

Of course they are also trying to convince us that budget deficits will go down in future years, but by now we should all know not to trust the rosy future projections of government officials.

After all, it was only a few short years ago that Bush administration officials were promising that we would be swimming in huge budget surpluses by now.

The truth is that the government has been lying about all of this for a long time. For now, the Federal Reserve is just going to keep monetizing U.S. government debt for as long as it can.

This Ponzi scheme will keep on working and working and working until someday it simply doesn't anymore.

When that day arrives, the U.S. government debt problem is going to unleash hell on world financial markets.

Global Financial Markets Plunge

Global Financial Markets Plunge As The World Watches Japan Descend Into A Nuclear Nightmare

Global financial markets are in turmoil as the situation in Japan continues to deteriorate. Stock markets are plunging all over the world as investors flock to investments that are considered to be safer. The 9.0 earthquake and the unprecedented tsunami in Japan would have been more than enough to spook investors and unleash chaos on world financial markets, but now the unfolding nightmare at the Fukushima Dai-ichi nuclear facility is really starting to cause panic. Right now there is a mass exodus out of the city of Tokyo. But not everyone can leave the city. There are over 30 million people living in and around Tokyo. So where in the world could you possibly put 30 million refugees? Sadly, the truth is that millions of Japanese are going to stay in Tokyo no matter how high the radiation gets. Let us hope that Japanese authorities can get the situation at the Fukushima Dai-ichi nuclear facility under control, but the fact that they have resorted to dropping water from helicopters and shooting water cannons at these nuclear reactors is not comforting.

World financial markets are certainly not expressing a lot of confidence right now. This week alone, $300 billion in U.S. stock values have been wiped out. The Dow Jones industrial average lost about 2 percent of its total value on Wednesday. The Nikkei 225 stock index has lost about 10 percent of its total value since the beginning of this crisis. At one point it was down more than 16 percent, but a gigantic monetary injection from the Bank of Japan has helped to stabilize things at least for now. There are also some that believe that the Japanese government is now directly buying up stocks to keep them from falling even further.

Stock markets across Europe have been plunging as well. An article posted on the USA Today website described some of the carnage on Wednesday....

In Europe, the FTSE 100 index of leading British shares closed down 97.05 points, or 1.7% at 5,598.23 while France’s CAC-40 fell 84.29 points, or 2.2%, to 3,696.56. Germany’s DAX ended 133.82 points, or 2%, lower at 6,513.84.

The financial ripples from this crisis are going to be felt for a long, long time.

In order to rebuild Japan, the Japanese government is somehow going to have to borrow massive amounts of money. But the Japanese national debt was already projected to reach 228 percent of GDP this year.

The Japanese government has become an incredibly bad credit risk, but lowering their credit rating right now would seem to be in very bad taste. So far, all three major credit rating agencies are taking a "wait and see" approach when it comes to Japan.

Unfortunately, the crisis in Japan is far from over.

The situation at the Fukushima Dai-ichi nuclear facility just seems to grow more dire with each passing day. Right now, the primary concern is the 40 years of spent fuel rods that are stored throughout the complex.

Ed Lyman, a physicist at the Union of Concerned Scientists, recently explained why the pools that store the spent fuel rods are the biggest problem at this point....

"For the time being, the greatest concern is the spent fuel pools because there is a clear pathway for release of radioactivity from the pools into the environment."

The phrase "spent fuel rods" may make it sound like they should no longer be a threat, but the truth is that these fuel rods remain extremely hot and extremely radioactive for years after they are done being used. For some reason, someone thought that it would be a good idea to store these spent fuel rods in huge pools of water near the top of each of the nuclear reactor buildings at the Fukushima Dai-ichi complex.

These spent fuel rod pools are not housed in the same kind of containment vessels that the nuclear reactors are. Therefore there is a much greater danger that radiation from these spent fuel rods could be released into the surrounding environment.

A recent article by Paul Joseph Watson did a great job of explaining just how big of a problem these spent fuel rods represent....

The Fukushima Daiichi plant has seven pools dedicated to spent fuel rods. These are located at the top of six reactor buildings – or were until explosions and fires ravaged the plant. On the ground level there is a common pool in a separate building that was critically damaged by the tsunami. Each reactor building pool holds 3,450 fuel rod assemblies and the common pool holds 6,291 fuel rod assemblies. Each assembly holds sixty-three fuel rods. In short, the Fukushima Daiichi plant contains over 600,000 spent fuel rods – a massive amount of radiation that will soon be released into the atmosphere.

Each of these 600,000 spent fuel rods is a potential "dirty bomb".

Are you starting to grasp just how serious this all is?

It is absolutely critical that all of these spent fuel rods remain submerged in water.

If the water drops in the spent fuel pools there will be nothing to keep the spent fuel rods cool and they will start to degrade very, very quickly.

Unfortunately, things don't look good right now. U.S. authorities today expressed their belief that the spent fuel rods in unit 4 are now exposed and that a great deal of radiation is being released. In fact, Gregory Jaczko, the chairman of the Nuclear Regulatory Commission, stated during Congressional testimony today that he believes that an extremely high level of radiation is being released by exposed spent fuel rods at the Fukushima Dai-ichi nuclear facility at this point....

We believe that radiation levels are extremely high, which could possibly impact the ability to take corrective measures.

It would be hard to understate the courage of those that are working inside the Fukushima Dai-ichi nuclear facility right now. They all likely realize that they are all going to die very quickly. They are laying down their lives in an effort to save their countrymen. According to a recent report from CBS News these workers say that they are not afraid to die....

Although communication with the workers inside the nuclear plant is nearly impossible, a CBS News consultant spoke to a Japanese official who made contact with one of the workers inside the control center.

The official said that his friend told him that he was not afraid to die, that that was his job.

Would all of us respond the same way?

Even the media that are reporting on this disaster in Japan are starting to be affected by this radiation. Lester Holt revealed this morning that his entire crew had tested positive for radiation after returning from an assignment.

Meanwhile, Barack Obama is acting as if all of this stuff going on in Japan is no big deal. In fact, as Keith Koffler recently observed, Obama seems to be really enjoying himself in the midst of this crisis....

This morning, as Japan’s nuclear crisis enters a potentially catastrophic phase, we are told that Obama is videotaping his NCAA tournament picks and that we’ll be able to tune into ESPN Wednesday to find out who he likes.

Saturday, he made his 61st outing to the golf course as president, and got back to the White House with just enough time for a quick shower before heading out to party with Washington’s elite journalists at the annual Gridiron Dinner.

If you are curious about Obama's picks for the NCAA tourney, they are posted on the official White House website.

This weekend, the Obamas are headed down to Brazil. According to an article in Forbes, the Obama plan to do a good bit of sightseeing while they are there....

The Obama family will also take in the sights in Rio. A trip to Corcovado mountain, where the Christ the Redeemer statue stands (France gave us Lady Liberty, gave Brazil Jesus) is supposedly on the itinerary. What trip to Rio would be complete without it?

Isn't it great to see Obama acting like a true leader in the midst of one of the greatest moments of crisis that the world has seen since World War 2?

What in the world is Obama possibly thinking?

One thing about a major crisis is that it reveals the true character of those affected by it. Many are responding to this crisis in Japan with great acts of courage and heroism.

Others are not rising to the occasion.

Let us just hope and pray that the Japanese figure out a way to get the situation at the Fukushima Dai-ichi nuclear complex under control. If a "worst case scenario" happens we could soon be facing an unprecedented nuclear nightmare.

Cato Founder Ed Crane on Cutting Big Government (02/09/11)

Cato's Dan Mitchell Debates Inflation on CNBC's The Kudlow Report (3/8/11)

Cato 'Spending Cuts in Perspective' Video Featured on 'Stossel' (03/17/11)

The Greatest Rip-Off

Stealing From Social Security to Pay for Wars and Bailouts

The Greatest Rip-Off


The American Empire is failing. A number of its puppet rulers are being overthrown by popular protests, and the almighty dollar will not even buy one Swiss franc, one Canadian dollar, or one Australian dollar. Despite the sovereign debt problem that threatens EU members Greece, Ireland, Spain, and Portugal, it requires $1.38 dollars to buy one euro, a new currency that was issued at parity with the US dollar.

The US dollar's value is likely to fall further in terms of other currencies, because nothing is being done about the US budget and trade deficits. Obama's budget, if passed, doesn't reduce the deficit over the next ten years by enough to cover the projected deficit in the FY 2012 budget.

Indeed, the deficits are likely to be substantially larger than forecast. The military/security complex, about which President Eisenhower warned Americans a half century ago, is more powerful than ever and shows no inclination to halt the wars for US hegemony.

The cost of these wars is enormous. The US media, being good servants for the government, only reports the out-of-pocket or current cost of the wars, which is only about one-third of the real cost. The current cost leaves out the cost of life-long care for the wounded and maimed, the cost of life-long military pensions of those who fought in the wars, the replacement costs of the destroyed equipment, the opportunity cost of the resources wasted in war, and other costs. The true cost of America's illegal Iraq invasion, which was based entirely on lies, fabrications and deceptions, is at least $3,000 billion according to economist Joseph Stiglitz and budget expert Linda Bilmes.

The same for the Afghan war, which is ongoing. If the Afghan war lasts as long as the Pentagon says it needs to, the cost will be a multiple of the cost of the Iraq war.

There is not enough non-military discretionary spending in the budget to cover the cost of the wars even if every dollar is cut. As long as the $1,200 billion ($1.2 trillion) annual budget for the military/security complex is off limits, nothing can be done about the U.S. budget deficit except to renege on obligations to the elderly, confiscate private assets, or print enough money to inflate away all debts.

The other great contribution to the US deficit is the offshoring of production for US markets. This practice has enriched corporate management, large shareholders, and Wall Street, but it has eroded the tax base, and thereby tax collections, of local, state, and federal government, halted the growth of real income for everyone but the rich, and disrupted the lives of those Americans whose jobs were sent abroad. When short-term and long-term discouraged workers are added to the U.3 measure of unemployment, the U.S. has an unemployment rate of 22%. A country with more than one-fourth of its work force unemployed has a shrunken tax base and feeble consumer purchasing power.

To put it bluntly, the $3 trillion cost of the Iraq war, as computed by Joseph Stiglitz and Linda Bilmes, is 20% of the size of the U.S. economy in 2010. In other words, the Iraq war alone cost Americans one-fifth of the year's gross domestic product. Instead of investing the resources, which would have produced income and jobs growth and solvency for state and local governments, the US government wasted the equivalent of 20% of the production of the economy in 2010 in blowing up infrastructure and people in foreign lands. The US government spent a huge sum of money committing war crimes, while millions of Americans were thrown out of their jobs and foreclosed out of their homes.

The bought-and-paid-for Congress had no qualms about unlimited funding for war, but used the resulting "debt crisis" to refuse help to American citizens who were out of work and out of their homes.

The obvious conclusion is that "our" government does not represent us.

The US government remains a champion of offshoring, which it calls "globalism." According to the US government and its shills among "free market" economists, destroying American manufacturing and the tax bases of cities, states, and the federal government by moving US jobs and GDP offshore is "good for the economy." It is "free trade."

It is the same sort of "good" that the US government brings to Iraq and Afghanistan by invading those countries and destroying lives, homes and infrastructures. Destruction is good. That's the way our government and its shills see things. In America destruction is done with jobs offshoring, financial deregulation, and fraudulent financial instruments. In Iraq and Afghanistan (and now Pakistan) is it done with bombs and drones.

Where is all this leading?

It is leading to the destruction of Social Security and Medicare.

Republicans have convinced a large percentage of voters that America is in trouble, not because it wastes 20% of the annual budget on wars of aggression and Homeland Security porn-scanners, but because of the poor and retirees.

Pundits scapegoat the middle class and blame the struggling middle along with the poor and retirees. Fareed Zakaria, for example, sees no extravagance in a trillion dollar military budget. The real money, he says, is in programs for the middle class, and the middle class "will immediately punish any [politician] who proposes spending cuts in any middle class program." What does Zakaria think the military/security complex will do to any politician who cuts the military budget? As a well-paid shill he had rather not say.

Andrew Sullivan also has no concept of reductions in military/security subsidies: "they're big babies I mean, people keep saying they don't want any tax increases, but they don't want to have their Medicare cut, they don't want to have their Medicaid [cut] or they don't want to have their Social Security touched one inch. Well, it's about time someone tells them,you can't have it, baby."

Niall Ferguson thinks that Americans are so addicted to wars that the U.S. government will default on Social Security and Medicare.

Republicans tell us that our grandchildren are being saddled with impossible debt burdens because of handouts to retirees and the poor. $3 trillion wars are necessary and have nothing to do with the growth of the public debt. The public debt is due to unnecessary "welfare" that workers paid for with a 15% payroll tax.

When you hear a Republican sneer "entitlement," he or she is referring to Social Security and Medicare, for which people have paid 15% of their wages for their working lifetime. But when a Republican sneers, he or she is saying "welfare." To the distorted mind of a Republican, Social Security and Medicare are undeserved welfare payments to people who over-consumed for a lifetime and did not save for their old age needs.

America can be strong again once we get rid of these welfare leeches.

Once we are rid of these leeches, we can really fight wars. And show people who is boss.

Republicans regard Social Security as an "unfunded liability," that is, a giveaway that is interfering with our war-making ability.

Alas, Social Security is an unfunded liability, because all the money working people put into it was stolen by Republicans and Democrats in order to pay for wars and bailouts for mega-rich bankers like Goldman Sachs.

What I am about to tell you might come as a shock, but it is the absolute truth, which you can verify for yourself by going online to the government's annual OASDI and HI reports. According to the official 2010 Social Security reports, between 1984 and 2009 the American people contributed $2 trillion, that is $2,000 billion, more to Social Security and Medicare in payroll taxes than was paid out in benefits.

What happened to the surplus $2,000 billion, or $2,000,000,000,000.

The government spent it.

Over the past quarter century, $2 trillion in Social Security and Medicare revenues have been used to finance wars and pork-barrel projects of the US government.

Depending on assumptions about population growth, income growth and other factors, Social Security continues to be in the black until after 2025 or 2035 under the "high cost" and "intermediate" assumptions and the current payroll tax rate of 15.3% based on the revenues paid in and the interest on those surplus revenues. Under the low cost scenario, Social Security (OASDI) will have produced surplus revenues of $31.6 trillion by 2085.

When I was Assistant Secretary of the US Treasury, Deputy Assistant Secretary Steve Entin worked out a way to put Social Security on a sound basis with the current rate of payroll tax without requiring one cent of general revenues. You can read about it in chapter 9 of my book, The Supply-Side Revolution, which Harvard University Press has kept in print for more than a quarter century. Entin's solution, or a variation of it, would still work, so Social Security can easily be saved within the current payroll tax rate. Instead of acknowledging this incontrovertible fact, the right-wing wants to terminate the program.

Treasury was blocked from putting Entin's plan into effect by the fact that other parts of the government and the Greenspan Social Security Commission had agendas different from ensuring a sound Social Security system.

Wall Street insisted that the Reagan tax rate reductions would explode consumer spending, cause inflation and destroy the values of stock and bond portfolios. When inflation collapsed instead of exploding, Wall Street said that the deficits, which resulted from inflation's collapse, would cause inflation and destroy the values of stock and bond portfolios. This didn't happen either.

Nevertheless, the Greenspan commission played to these mistaken fears. The "Reagan deficits" could not cause inflation, because they were the result of the unanticipated collapse of inflation (anticipated only by supply-side economists). As I demonstrated in a paper published in the 1980s in the US, UK, Japan, Germany, Italy, and other countries, tax revenues were below the forecast amounts because inflation, and thus nominal GNP, were below forecast. The collapse of inflation also made real government spending higher than intended as the spending figures in the five-year budget were based on higher inflation than was realized.

The subsidy to the US government from the payroll tax is larger than the $2 trillion in excess revenue collections over payouts. The subsidy of the Social Security payroll tax to the government also includes the fact that $2.8 trillion of US government debt obligations are not in the market. If the national debt held by the public were $2.8 trillion larger, so would be the debt service costs and most likely also the interest rate.

The money left over for war would be even smaller. More would have to be borrowed or printed.

The difference between the $2 trillion in excess Social Security revenues and the $2.8 trillion figure is the $0.8 trillion that is the accumulated interest over the years on the mounting $2 trillion in debt, if the Treasury had had to issue bonds, instead of non-marketable IOUs, to the Social Security Trust Fund. When the budget is in deficit, the Treasury pays interest by issuing new bonds in the amount of the interest due. In other words, the interest on the debt adds to the debt outstanding.

The robbed Social Security Trust Fund can only be made good by the US Treasury issuing another $2.8 trillion in US government debt to pay off its IOUs to the fund.

When a government is faced with a $14 trillion public debt growing by trillion dollar deficits as far as the eye can see, how does it add another $2.8 trillion to the mix?

Only with great difficulty.

Therefore, to avoid repaying the $2.8 trillion that the government has stolen for its wars and bailouts for mega-rich bankers, the right-wing has selected entitlements as the sacrificial lamb.

A government that runs a deficit too large to finance by borrowing will print money as long as it can. When the printing press begins to push up inflation and push down the exchange value of the dollar, the government will be tempted to reduce its debt by reneging on entitlements or by confiscating private assets such as pension funds. When it has confiscated private assets and reneged on public obligations, nothing is left but the printing press.

We owe the end-time situation that we face to open-ended wars and to an unregulated financial system concentrated in a few hands that produces financial crises by leveraging debt to irresponsible levels.

The government of the United States does not represent the American people. It represents the oligarchs. The way campaign finance and elections are structured, the American people cannot take back their government by voting. A once proud and free people have been reduced to serfdom.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press. He can be reached at:

Is Obama Even Worse Than Bush?

A Call for Resistance

Is Obama Even Worse Than Bush?


When I advocated the impeachment of George W. Bush, I did so despite, not because of, all the animosity it fueled among impeachment supporters. I didn't want retribution. I wanted to deter the continuation and repetition of Bush's crimes and abuses. Specifically, and by far most importantly -- and I said this thousands of times -- I wanted to deny all future presidents the powers Bush had grabbed. One-time abuses can be catastrophic, but establishing the power to repeat them can multiply the damage many fold, especially when one of the powers claimed is the power to create new powers.

There's a common tendency to confuse politics with reality television shows or to imagine that politicians are, even more than fictional heroes, your own personal friends. This tendency is only compounded by the partisan framework in which we are instructed to imagine half the politicians as purely evil and the other half as essentially good. So, let's be clear. There's very little question that Barack Obama speaks more eloquently than Bush, and that Obama at times (and more so as a candidate than as a president) expresses far kinder and wiser sentiments than Bush. It seems quite likely to me that had Obama been made president in 2000 he would have done far less damage than Bush by 2008. Obama is probably a fun guy to play basketball with, while Bush might be expected to throw elbows, kick opponents, and pull your shorts down. But I'm interested in something more important than the spectacle of personality here. I think Obama would make a wonderful powerless figurehead, and I dearly wish that were what he was. I think Americans clearly need one.

Three rough ways of looking at a president might be as follows. First, in the unimaginable circumstance in which a president encountered a homeless person on the street, would he invite him to live in the White House, or help him find a home, be nice and give him $1, ignore him, shout at him to get a job, kick him in the guts, or help him into a van and take him off to be tortured? I don't care about that way of looking at presidents. Second, do the policies the president pursues lead to massive numbers of people becoming homeless or worse? Third, do the policies the president pursues empower all future presidents to make unfathomable numbers of people suffer horribly? My contention is that Obama has not yet done as much damage as Bush in the second view but has, in a certain sense, done worse in the third view.

Richard Nixon's White House Counsel John Dean, while Bush was president, predicted that Bush's successor would be one of two things, either the best or the worst president in history. He, or she, would either undo the damage and prosecute the crimes, or protect the criminals and continue the abuses. Obama has protected the criminals, continued many of the abuses, more firmly established the power to commit those abuses, and expanded abusive powers beyond what Bush ever attempted. I'm not trying to quantify and determine whether Obama has grabbed "more" new abusive powers than Bush did. I'm simply pointing out that, as with previous presidents, Obama has retained the powers bequeathed him and added some.

Whether the third way of looking at presidents (the powers they leave their successors) is more important, and how much more important, than the second way (the immediate damage they do to the world) involves speculation. When William McKinley sent troops abroad without congressional approval, people died. But a lot more people died when later presidents did the same thing. Most of the killing and torturing done by the CIA has occurred long after Harry Truman left office. The pattern is that powers, once established, are augmented, not curtailed; and they are used, not neglected. A pattern doesn't predict the future, but it can establish potential dangers.

U.S. political debate, chattering, organizing, activism, and campaigning focuses most heavily on domestic issues -- even in discussions of a federal budget that devotes more than half our money to the military. And it is on domestic issues that the biggest differences can be found between the two parties and their leading members (which is why the debate tends to stay there). Obama appears to have appointed less crazy justices than Bush to the Supreme Court, more sane individuals to the National Labor Relations Board, etc. Obama's healthcare bill may have been disappointing, but at least there was one. However, that's a very charitable view. Presidents controlling the drafting of legislation in accordance with their secret negotiations with corporate cartels is a bad precedent to be entrenching, the health insurance reform bill arguably does more damage than good (including through the requirement to purchase a corporate product), and the bill makes it very difficult for states to put serious healthcare solutions in place as Vermont is attempting to do -- and the impediments were insisted upon by Obama.

The Education Department pushes corporatization, privatization, and testing. The trade agreements are all corporate. Obama has promoted the development of nuclear energy and "clean coal." The damage of Hurricane Katrina has been left in place, but been compounded by the BP oil gusher, during which disaster the White House's priority seems to have been deceiving the public about the extent of the damage. The environment may be more than a domestic issue, but it is also one where disaster looms. As we march forward into worse weather and more frequent "natural" disasters, one might reasonably place ever greater blame on each successive president who declines to make any attempt at survival (much less one who goes to international conferences and sabotages possible global accords, as Obama did in Copenhagen). And this is all before we look at the budget.

President Obama is taking the budget from the Bush years, adding to the military, and cutting or freezing everything else. The budgetary crisis in state governments and in people's homes continues to worsen. The Wall Street and corporate bailouts that Obama helped Bush impose on us have only escalated since Obama moved to the White House. But Obama wants everything non-military that might divert money anywhere other than the richest of the overlords to be frozen, cut, or eliminated. When Bush tried to cut off poor people's heat in the winter, ACORN raised hell and stopped him. When Obama did the same, ACORN had already been eliminated. Obama now wants to eliminate what's left of taxes on corporations.

Obama has not added as much to the military budget as Bush did, but he has added to Bush's largest military budget, enlarging it further each year -- and with activist groups and news reports tending to falsely report that he's cutting it. This leads to more money for wars, less money for people, and less activism protesting these policies at the very moment when much of what remains of the peace movement has chosen to focus on budgetary issues rather than on ending wars. Bush's budgets were worse than they appeared because he used off-the-books supplemental bills to add more money to wars. Obama campaigned against that practice. Since becoming president, Obama has done just as Bush did, establishing off-the-books war spending as a normal practice favored by both parties, and establishing campaign lying as the norm as well.

For a time, Obama had more troops and mercenaries in the field than Bush had ever had. Now he doesn't, as a result of a partial withdrawal from Iraq. But Obama has embraced the myth that a 2007 escalation in Iraq caused a reduction in violence there, and he has applied that myth to Afghanistan with escalations in each of the past two years leading predictably to increased violence. Obama has taken a low-scale war in Afghanistan and dramatically worsened it. He has ignored, covered-up, and passed the buck on endless war crimes. He has radically expanded the use of drones, including into Pakistan. He has sent troops into Pakistan and at one point, according to news reports, into 75 nations, 15 more than Bush. Whether you count small-scale death squads as "wars" or not, the drone bombing of Pakistan certainly looks warlike, and that has happened without even the pretense of congressional authorization, and in the face of United Nations condemnation of illegality. Obama has added more U.S. military bases in more foreign nations, boosted weapons sales to nations we may some day have the opportunity to fight wars against, and continued the privatization of the military and the employment of the most notorious corporations of the Bush era -- helping to establish their immunity.

"Well, well, yeah, but he closed Guantanamo!"

Obama never intended to free prisoners or put them on trial. He always intended to keep people in prison without any due process. He just thought he might do some of it in Illinois instead of Cuba. He's been unable to make that move, but frankly who cares? The question is not how many people we're lawlessly imprisoning in Afghanistan and how many in Virginia. The question is whether we will lawlessly imprison people. Apparently we will. Secret abuses under Bush have become public formal policies under Obama. Whether to lock someone up, and even whether to torture them, has become a matter of policy preference, not of law. Even the power to assassinate anyone, including Americans, has now become -- by Obama's decree -- a matter purely of presidential whim, with no authorization from any other person or court or legislature required.

Obama announced the end of torture, not its prosecution in court. But he continued to claim the privilege to torture if he chose to, as Leon Panetta and David Axelrod made clear. And he openly claimed the power of extraordinary rendition, that is, the power to kidnap people and send them off to be secretly tortured in other countries. We don't know if this has happened. But we wouldn't. We do know that torture has continued in Guantanamo, in Bagram, and in the US-backed Iraqi government. Warrentless spying, likewise, continues and grows, while Obama has assured corporate co-conspirators of immunity.

In fact, Obama has publicly instructed the Justice Department not to prosecute torturers at the CIA, and his Justice Department has worked night and day to protect the architects of countless war crimes, including through the establishing of privileges of secrecy and immunity that Bush never even sought. This Justice Department and our courts are establishing the right of powerful officials to immunity from criminal or civil suits that might expose what they have done while employed by our government. Obama has also pressured a number of European nations not to prosecute the crimes of his predecessor. And much of this has gone almost unremarked. The outrage at crimes committed by Bush becomes vague disinterest upon learning that Obama has badgered Spain not to prosecute those very crimes.

This is the magic, the disastrous magic, of having a president of the other political party pick up the baton. Obama gave a Nobel Peace Prize acceptance speech in which he glorified war. He gave a speech on wars from the Oval Office in which he embraced a whole series of lies about Iraq. He stood in front of the U.S. Constitution in the National Archives and tossed habeas corpus into the trash bin. Can you imagine the raging inferno of outrage had Bush done any of those things? The process of normalizing crimes is not purely one of repetition and expansion. It's also one of fading the crimes into the background, making them part of the national furniture, forgetting collectively that we ever got along without them.

I mentioned the power to create new powers. This is where we risk exponentially worse damage -- to our system of government and to the world -- in the coming years. We don't guarantee it, but we do risk it. Avoiding it would require unprecedented steps of restraint and reversal. Obama came into office advertising himself as the president of sunshine, transparency, and openness. The age of secrecy was at an end! I'm not measuring Obama against the standard of his campaign promises, although it seems fair to do so. I'm measuring Obama against the standard of Bush, and noting that part of how Obama operates is through deceptive propaganda. Obama has refused to release White House visitor logs from the period when he met with health insurance corporations, has maintained the right to hide any others he chooses, but released some and announced this as a breakthrough. Meanwhile, he sends staff to meet with lobbyists just off the White House grounds in order to avoid writing anything in the visitors' logs.

This is Bush-Cheney-level secrecy with the pretense that it isn't. And it's worse. Obama has set records for rejecting Freedom of Information Act requests and for prosecutions of whistle blowers -- not to mention the lawless imprisonment and torture of alleged whistleblower Bradley Manning, a policy Obama has defended by reference to unnamed secret standards set by the military. Just as Obama escalates wars when and how the military publicly tells him to, he takes responsibility for torturing a prisoner on the military's say-so. This rhetoric is not just rhetoric. It threatens civilian rule.

Obama campaigned on the constitutional idea that the legislature makes laws. He denounced Bush's practice of altering laws with signing statements. As president, Obama, for a while, used signing statements just as Bush had, to claim more powers for the president (and every future president), including this power to claim more powers. Then Obama established the practice of assuming that prior signing statements or executive orders or secret legal memos could be used in place of new signing statements. This is even worse and more secretive than Bush's practice of announcing which laws he would violate. Obama announced that he would review Bush's signing statements and decide which ones to keep, but not whether those decisions would be public, and with no explanation of how that process was any more constitutional than Bush's. Obama also began making law, including "law" on lawless imprisonment by executive order. Congressional Republicans like Buck McKeon want that particular law to be even worse, and so have objected to its imperial announcement. But they won't push that balance-of-powers fight very far.

Both parties have now established as flawless heroes people who engage in some of the same abuses. And whoever's next will be hard pressed to even call those abuses abuses, should he or she miraculously want to. The U.S. Supreme Court accepts powers used without opposition by multiple presidents as established presidential powers. Signing-statementing laws is now one of those powers.

So is secret and imperial war-making. John Kerry and John McCain want Libya bombed. John Yoo, not yet prosecuted for having "legalized" aggressive war, agrees with them. Obama, to his great credit, has not yet taken that step. But the debate is over policy choices, not laws. The fact that bombing another country is illegal is no longer considered a fact in Washington, D.C. It's a fringe opinion. And that is what scares me.

So why not impeach Obama? I clamored for the impeachment of Bush. I say Obama is as bad or worse. Why am I such a corrupt hypocrite that I haven't built a movement to impeach Obama? Well, I'll tell you, as I've told people more times than I can count. Obama should be impeached and convicted and removed from office. Obama should be prosecuted for his crimes. So should his subordinates. So should his predecessor, his subordinates, and all corporate co-conspirators. The reason I can't get 20 people into the streets to demand Obama's impeachment (and if I did, they'd want him impeached for being born in Africa to aliens from Planet Socialism) is that nobody in Congress is even pretending to give a damn. We were able to produce a sizeable movement for impeachment when Bush was in office, because a lot of Democrats in Congress, especially in 2005 and 2006, pretended they were on our side. I say "pretended" as a way to indicate not that they didn't agree with us, but that they were not committed to trying very hard.

The abolition of slavery started with one person saying it was wrong and demanding change. We have to do that when it comes to the matter of ending the imperial presidency and establishing a representative republic. I want anyone who engages in the abuses discussed above impeached, prosecuted, voted out of office, and shamed. We have to pursue justice for 4 or 8 years with liberals resenting us and 4 or 8 years with rightwingers resenting us, and so on, back and forth. That means pushing where we spot a little bit of give in the machinery. It means exposing the torture of Bradley Manning and supporting anything Congressman Dennis Kucinich does to expose it and anything any other congress members do if any ever join him. It means demanding a complete end to the wars in Iraq and Afghanistan and Pakistan. And it means building viable movements of resistance at the state level as Wisconsin is doing. Join us at the White House at noon on March 19th. Get involved here:

The Two Faces of Ben Bernanke

The Two Faces of Ben Bernanke

It is this type of attitude from our top monetary policy maker - to either deny inflation or to lay blame elsewhere - that will accelerate the day of reckoning for the dollar.

Based on his recent public comments, Fed Chairman Bernanke seems determined to give the U.S. dollar the reputation of Egypt's Hosni Mubarak: an unwanted relic of the past that everyone agrees must go, but stubbornly clings to a privileged position. The dollar is currently the world's ruling currency, but, as with Mubarak, I believe that growing public discontent will spur regime change quicker than most pundits expect.

Clearly, the most significant problem facing central bankers around the world is the recent eruption of inflation, which is sparking unrest in Asia and the Middle East. With respect to this issue, Bernanke is alternating his responses through two different personas.

Sometimes he chooses to act like Baghdad Bob, the Iraqi Information Minister who, in the opening days of the 2003 invasion of Iraq, continued to deny the presence of American troops even as U.S. tanks rumbled behind him. The parallel to Bernanke's testimony to Congress today is striking.

Speaking to the House Budget Committee, Baghdad Ben not only claimed that there is no evidence of overall inflation in the U.S., but that even food and energy prices are rising less than 1% annually. This is simply not true. He then claimed that the Fed's massive QE purchases of U.S. Treasuries do not distort the yield curve, despite the fact that he has stated repeatedly that the program was specifically designed to lower long-term rates.

The reason behind these lies should be evident. Acknowledging inflationary threats would force him to raise rates. But Baghdad Ben knows that the current economic "expansion" is a lie built on a weak foundation of ultra-low interest rates. He knows that even marginally higher rates will trigger a savage return to recession. In his view, the only choice is to sell us an elaborate fiction - even when it obviously conflicts with the facts.

At other times, Chairman Bernanke assumes the persona of Marie Antoinette by professing regal indifference to how his own actions negatively impact the great unwashed. In a rare Fed press conference last week, Bennie Antoinette showcased this "let them eat cake" attitude by declaring that U.S. monetary policy is solely designed to benefit the U.S., and that any adverse consequences in other countries are not his problem. As a result, he broadly absolved the Fed of any blame for global inflation, putting it instead on foreign governments for not allowing their currencies to appreciate and for keeping their interest rates too low.

It is this type of attitude from our top monetary policy maker - to either deny inflation or to lay blame elsewhere - that will accelerate the day of reckoning for the dollar.

Amazingly, for all its flaws, the buck remains the world's reserve currency. So, for now, the U.S. continues to enjoy all the rights and privileges that come from that status, including lower consumer prices and lower interest rates. But along with those benefits comes the great responsibility of not conducting monetary policy in a vacuum. Since the dollar is the benchmark currency, when it is debased, other currencies must follow suit. Because of the massive printing effort underway for some time now, the dollar has gone from an instrument of stability to an instrument of inflation.

A reserve currency must not go on in perpetual decline. Since abandoning the dollar as a reserve implies radical change with unknown consequences, governments have been very reluctant to take the chance. So, they are acting to preserve the status quo. But, in so doing, they're creating inflation in their own countries. Unfortunately, this strategy may prove more risky in the end.

Other factors are also influencing foreign central bankers to stick with the devil they know. For one, as emerging markets compete to export to the United States, no one wants to surrender what it perceives to be its competitive advantage. None of these governments yet understand that if the dollar were to collapse, new customers would be instantly created in those countries whose currencies appreciate against the dollar.

Emerging markets also feel obligated to protect the value of the trillions of dollars that they already hold in reserve. Like traders throwing good money after bad, their instinct is to average down their cost of their position. The reality is that the more dollars they buy, the more they will ultimately lose. Once they realize that the rise in their own currency will more than offset their dollar losses, they will cut their losses and run.

When emerging-market governments decide they do not want to eat Bennie's cake, but rather keep their own bread prices from rising, they will have to pursue the tighter monetary policies. When that happens, the dollar will lose its reserve status.

When the rest of the world no longer links their currencies to ours, the Fed will truly not have to worry about fueling global inflation. Instead, all of its inflation will burn through our banks accounts right here at home. And that blaze, so concentrated, will burn a lot hotter than the fires we see abroad.

Austrolibertarianism as a Starfish

Austrolibertarianism as a Starfish

Mises Daily: by

[The 2011 Ludwig von Mises Memorial Lecture, given on March 10 at the Austrian Scholar's Conference. An MP3 audio file of that lecture is available for download.]

It's the most privileged honor to be here at the Austrian Scholar's Conference and deliver the Mises lecture. It's carnival in Brazil this week, but to me the real feast is happening right here!

Professor Salerno wanted me to speak about how Misesian ideas can change Brazil and Latin America; I'll say a few words about that, but also I'll talk about Austrolibertarianism, our particular freedom philosophy, whose pillars are the non-initiation of force and private property. And I will relate it to two aspects:

  1. My experience as an executive of a performance-based organization, the one founded by Brazilian partners led by Jorge Paulo Lehman, who now are the controlling shareholders of Anheuser-Busch Inbev, whose present CEO is Carlos Brito. I'll draw from that experience and from the lessons those great people continue to provide.

  2. The book The Starfish and the Spider.

Let me start with a flavor of the book. It is a five-year-old business book that talks about what exactly is a decentralized organization — its strengths and weaknesses — by comparing it to two animals whose structures superficially look similar: a starfish (it is actually a sea star, not a "fish," but I will henceforth use the term adopted by the authors), and a spider.

The spider has a central body and eight legs. The starfish has a central body and five arms. Internally, however, their biology is completely different.

If you cut a leg of the spider, well, you have a crippled seven-legged spider; but if you cut the head, what happens? It dies. It can't live without its command center. We are familiar with spider organizations: corporations, governments, and traditional think tanks with CEOs, hierarchies, headquarters, etc.

If you would cut an arm off a starfish, however, another one will grow. And if you would cut it in half, an amazing thing happens: two starfish, two organisms survive.

There is a species of starfish, the Linckia, that if one were to cut all five arms off of, it would grow five separate organisms. Each arm generates an autonomous creature. There is no central organ, and each arm has its own organs, stomach, muscles, and way of feeding itself; except for a nerve ring that connects the arms. That's a decentralized organization.

When you look at the world today, more and more starfish organizations are sprouting, and in our Austrolibertarian intellectual movement, I would argue that we are starting to behave like an adaptable, hard to combat, starfish; with each institute or organized initiative behaving as an arm of the starfish, and the nerve ring being the Austrolibertarian doctrine. I'll get back to that.

"Brazilians place more trust in the death certificate than in the presence of the dead body."

First of all, a few words on Brazil. Brazil has always had a statist mentality. For example, while in the United States you would ask "How much money do you make?" we Brazilians ask "how much do you receive?" — as if it were a grant or gift — as opposed to a get-what-you-give mentality in the United States.

My father used to say that Brazil is "an island of initiative completely surrounded by government."

Brazil also has an ingrained red-tape mentality. He also said that "Brazilians place more trust in the death certificate than in the presence of the dead body."

We were famous back in the 1980s for holding a world record! The record for inflation — and even between 1990 and 1994, less than 20 years ago, the average annual inflation was above 1000 percent. At the peak, prices would rise 1 percent per day. Every price was indexed daily to the official daily-inflation index. Prices rose daily, investments rose daily, even deposits in your current account and assets rose daily, but wages rose only monthly or by fortnight. Workers and middle class would get their wages by fortnight and rush to the very large supermarkets to buy nonperishables.

By 1994, the Brazilian people had had enough of corrosive inflation, exchange-rate superdevaluations, and government surprise plans and packages (which were usually accompanied by week-long bank holidays) and demanded a halt. Politicians finally decided to act because they were suffering: presidents were being impeached; central-bank presidents and ministers changed every six months or so, etc. Therefore, the government increased taxes (which is bad), balanced the budget, drastically decreased money creation, and floated the currency.

Since then, we are now a normal country, that is, a social democracy, with a big government. We are "normal" because we took care of the most pressing problems: spiraling government debt, inflation, and balance of payment deficits. We are now reaping the benefits of that commitment to stability, while the rest of the world is going in the opposite direction, with huge deficits and out-of-control money printing.

The first organized effort to promote the ideas of liberty started by the Instituto Liberal (IL) — founded in Rio in 1982. Its objective is basically to translate and publish books of the Austrolibertarian tradition. Its founder, Donald Stewart, a construction businessman, translated Human Action and Interventionism. The IL expanded in an autonomous and decentralized fashion to other capitals by the initiative of local businesspeople. Most of those funders had a special-interest agenda, and didn't stick to the same libertarian line adopted by Donald.

The substantial money was spent on lavish headquarters and bad books.

The pseudo network of ILs didn't have the libertarian nerve ring connecting the cells, and it capitulated to special interests. They shared the same name, but segregated into quite different creatures, losing their status as a network. The IL in Rio is still around; it was always small, but has shrunk further, and is only a shadow of what it was in its early years.

At about the same time, in 1983, a group of people from Porto Alegre started an elite leadership study-group for entrepreneurs (the IEE) with a free-market doctrine. They also set up an annual conference that now is the largest in Brazil, the Forum da Liberdade, with about 6,000 people attending last year.

MisesBrasil officially launched with a Conference right before the Forum. It was a success with 200 people per day attending, mostly young people and students that were already following our work online. Lew Rockwell, Joseph Salerno, Tom Woods, and Mark Thornton were there. We had very positive coverage by the two main weekly magazines in Brazil (which have in excess of 1,500,000 copies of combined circulation), and had two full pages in each of them.

In the liberal-libertarian spectrum we have arguably the largest following base, in Portuguese, in the world, with more than 3,000 people per day visiting our site. We have published or republished 17 books.

The Forum da Liberdade had as its theme Mises and his Six Lessons, as his Economic Policy is known in Brazil. Each of the 6,000 participants got a copy of six lessons. Tom spoke at the Forum, and each panel was based on one of the six lessons. They had a wonderful exhibit quoting Mises, heralding panels with pictures and stories about his life, etc.

We are hosting our second conference next month, where we will have as speakers Hans-Hermann Hoppe, Guido Hülsmann, Bob Murphy, Peter Klein, and others. We expect a larger public than last year. The mainstream media is also beginning to pay attention to us. In summary, there are huge challenges, and we are just starting, but we are on a roll.

So much for MisesBrasil.

Let's get back to Austrolibertarianism and our big challenges. In my opinion, we have the some of the best ideas and the best people developing ideas — why are we still a marginal, fringe, school of economics?

We are standing on the shoulders of the scholastics, Bastiat, Menger, Mises, Hayek, Rothbard, and the present-day stars. Our ideas have better explanatory power of the consequences of government interventions than competing theories. Our ideas are consolidated, tested through more than 100 years, some even centuries. Ideas are not holding us back.

So, which barriers that are making us drag?

What's more, we are small, bottom-up, voluntary, and flexible, while the statists' organizations, starting with the government itself, but also other organizations such as the UN and the IMF, are big, coercive and centralized. Governments are inefficient, slow, corrupt: the Katrina governmental disaster, the war on drugs, and countless other examples come to mind.

How come we do not dominate the mainstream, as we once did 100 years ago?

Let me first differentiate how we behave as individuals and how we behave as teams. What is the actual role played by organizations? I mean organizations such as the Mises Institute, or MisesBrasil, and other organized efforts to promote ideas? Do we need them?

Can we have a starfish system made only by individuals? Or in order to be a well-functioning starfish must we work as organizations, or teams, or cells, behaving as the arms? Can individuals behave as cells?

I would argue that it is very difficult to do so, and it's an uphill battle for individuals.

Freedom lovers and freedom-fighting individuals, i.e., ourselves, participate in the ongoing battle of ideas, and there are those who discuss and write every day — they are very important.

However, individuals alone are not equipped with what's necessary to pursue objective goals in a systematic, organized, and effective way. What we need is a team, of great people, working together.

A great organization, company, or institute is formed by great people, working together. Period. Not ideas, not books. It's formed by people that understand the social environment, that have insights, know how to market them, have the best connections (which helps to raise funds), and that drive all of the execution capacity to achieve the objectives. Great people are those that may be better than each one of us, if we give them a few years. Those make a great team, and we need to attract and retain them.

A team of great people needs to filter, translate and transmit the ideas, to journalists, writers, editors, and other opinion leaders. I call opinion leaders those 20 percent or so of the population that can grasp and act on an idea. Those are our most obvious customers.

Think about John Papola and the Hayek versus Keynes video, and other short materials we see from time to time on the Internet, for example, and that inspire us. These are wonderful exceptions, of individuals working without the support of a great team, and doing the almost impossible, guided only by their dreams and passions. But, a team of good people could do even more, and systematically. For every Papola, unfortunately there are thousands that act individually, but are not able to effect change.

Good organizations are systematic and effective; they avoid floating ideas in a disorganized way, through channels and forms that might not work. That happens because they are goal-based, they have metrics, goals, they measure them, they benchmark. They are slim, adaptable, and "localize," or as we say at MisesBrasil, "tropicalize," the product and strategy. In some places and times, a natural-rights approach may be effective; in others a value-free approach might be more appropriate. In some occasions articles might work better than books, in others radio shows may get more results.

"Our product cannot be one that advocates the initiation of force, or an attack on property rights, but it may have different flavors for different consumers."

Imagine a beer company; its product is beer; our product is Austrolibertarianism. The beer company may have different labels of beer, with different flavors, and it's the same with us — provided, however, there is no toxic substance. They have their quality standards, and so do we. Our product cannot be one that advocates the initiation of force, or an attack on property rights, but it may have different flavors for different consumers. That's tropicalization.

And tropicalization does not only affect the ideas and the way we market them, but also how you attract talents and funding. Brazil, for instance, is much different from the United States. We don't have, for instance, a culture of donations by individuals, and we don't get tax breaks — so we opted for sponsorships by big business and stay close to the mainstream media.

The Brazilian controlling shareholders of most of our mainstream media are very sympathetic to libertarian ideas. Veja, the main weekly magazine, for example, has recently announced they will always write "state" with a small "s". They wrote a marvelous editorial justifying that decision. That really took us by surprise. That's an editorial policy we also have at MisesBrasil.

But whatever we choose do in terms of marketing or funding, we must always keep the quality standard of our product, as does the beer company. Otherwise we will fail like the network of ILs in Brazil did back in the 1980s.

Ok, so we have ideas, different flavors, and a team of great people working together. How do we manage the team?

An organization, in the same way as individuals, needs dreams.

Dreams are natural, they keep us going — being with a person, traveling to some remote place, being employed by some company, doing well at school, buying that car, etc.

In addition, thinking big takes the same work as thinking small. Therefore, we should think big.

But we need to set realistic dreams and goals; one must know 80 percent how to get there and learn the other 20 percent along the way. People must buy into it, commit to it — passion, energy. If we know only 20 percent how to get to the goal, and must learn 80 percent along the way, it's an adventure, not a realistic goal.

Some individuals do have some goals such as "end the state." If this were a goal for a real-life organization, it would be an adventure. But it is ok, because it is personal, doesn't involve others or a team. The only downside is that this individual gets frustrated, because there is a good chance it will not happen in his lifetime. For organizations, though, it cannot be an "adventure-type" goal.

For MisesBrasil we use metrics: those may be the reach of our ideas in the media (mainstream and Internet), book sales, fundraising for new projects, or any other performance indicator that correlates reasonably well with the efforts of the team.

What kind of pressure should we put in the future? We have to constantly aim to raise the bar.

Too much pressure is bad, because people may panic, but too little is bad as well. We are at our best when under pressure and have deadlines. Think about it: in the days before this very event, I presume that everyone that made it perfect like it is was totally focused, making sure everything would work right. Everyone turned their Facebooks off, spent less time in petty conversations, etc.

As catalysts — managers, or team leaders, we need to apply that same pressure, with deadlines, all year round.

It's like the high jump. If you set it low, people would jump only enough to clear the hurdle, because we are rational and minimize energy.

Additionally, there should be an environment of meritocracy, candor, and informality.

  1. Meritocracy

    We should reward the best! The best should be promoted, to have more space, more responsibility, regardless of seniority and even the strict adherence to our ideology. If a person is young, and does not agrees 100 percent with our doctrine, but is very talented, he or she must be promoted. We can train him or her. That's not a problem, as long as he or she helps us achieve our goals.

    The risk is that we don't have to courage to promote the best without regard to seniority or strict adherence to our ideology; the talented people would see through it, and leave or stay away, and we may be stuck with a mediocre team.

  2. Candor

    People must know where they stand. The team needs constructive and respectful feedback, of the type "here you are doing well; this you need to improve." In the company I used to work for, Jorge Paulo Lehman's Banco Garantia, we used to do this two times a year. Talented people are high maintenance, and need a continual feedback process to grow. Besides, we know the status quo is not our friend, especially if we want to achieve our dreams.

    Sometimes you might have a person that is not delivering. You might feel pity, you might delay a decision to let him or her go. You would say, "well he studied under Rothbard, he is such a nice guy," "let's wait some more time to see if she improves and delivers." It's not going to happen. Don't waste his or her time.

    As a professor in a classroom, you would never do that. Grades are grades, there can be no rationalizations, because it is best for the person as well. For scholarships, it's the same thing. People are different; we are individuals — that's our philosophy, right?

  3. Mises Academy: Stephan Kinsella teaches Rethinking Intellectual Property: History, Theory, and Economics
  4. Informality

    People should be able to speak their minds, in a cultural and physical environment that is conducive to continuous communication. We should avoid letting people hide in their own corners.

    When we decided to start MisesBrasil, we didn't yet know Lew Rockwell personally, and contacted him by email to ask whether we could start translating articles. We got a prompt email back, with one simple sentence: "Please, do translate." That's a great example of efficacy and informality.

A great team must also raise the funds for projects, be it a conference, video, books, or other. Funding for projects, in my experience, is easier, because the sponsor sees the product and its immediate result.

But, as importantly, we must also raise funds to pay for the good team's work! Because we need a team of talented people, potentially staying for a whole career, they must know they will be rewarded, and they will live a good life if they stay — for this we need funding, specifically for that purpose.

But it doesn't necessarily mean that endowment funds are the way to go. I'll explain with an example from The Starfish and the Spider.

It's the story of the Apache people. When the Spaniards arrived in America, they found huge empires. In 1519, Cortés and his 80 men arrived in Central Mexico, which was dominated by the Aztec Empire, with Tenochtitlan as capital — only a couple of other cities in the world were larger. It was a centralized empire, with Montezuma II as supreme leader. Cortés had a meeting with Montezuma, in which he said, "give me all your gold, and I won't kill you." He didn't fulfill his promise, took Montezuma prisoner, and then killed him. The Aztec people lost their drive with the death of Montezuma, and crumbled. They were quickly defeated.

The same happened in South America, with the Inca Empire. Pizarro followed the same "take-the-gold, kill-the-leader strategy" with Atahualpa.

Further north in Mexico, in the present day United States, the Spaniards encountered the Apaches — and lost. The Apaches were a much less sophisticated people than the Aztecs and the Incas — they had never built a pyramid or a paved road, or even a town. But they distributed political power: they weren't a coercive, "leader-calls-the-shots" people like the Aztecs and the Incas; they worked voluntarily, without a supreme leader.

They had leaders, but they were spiritual leaders, who led by example only — the Nant'ans. One of the famous Nant'ans was Geronimo, who never commanded any army. When he decided to fight, all Apaches joined him not because Geronimo said so, but because they thought it was a good idea; but you didn't need to.

Apache decisions were made at different places. An attack may have been planned at one tribe, organized at another, and executed at a third place.

The anthropologist Tom Nevins explains that the Spaniards started to kill Nant'ans, but immediately new ones emerged. They also tried to put fire to and destroy villages, but the Apaches became nomads. Try to catch them now! The Apaches even unwillingly gained control of territory they didn't control before.

The Spaniards lost to the Apaches. The Mexicans, later, also lost to the Apaches. The Americans finally defeated the Apaches, in the 20th century, by giving cattle to the Nant'ans. Previously, they led by example, now they could reward and punish tribe members using this valuable resource. The Nant'ans began fighting each other in tribal councils for control. The power structure became hierarchical and centralized. This finally broke down the Apache society.

That explains my skepticism of endowment funds — people shouldn't be chasing the endowment money, but working toward the dream. That makes things more challenging, because fundraising must be a continual, full-time job.

Another interesting example from The Starfish and the Spider: AA, Alcoholics Anonymous, which is totally decentralized. Bill Wilson, the founder and an alcoholic himself, after many attempts to cure himself through specialists, realized that it is far easier not to comply with a commitment of sobriety to a specialist than to a group of your peers. His initiative became an instant success.

As the organization expanded autonomously to other cities, Bill was faced with the decision to whether or not to claim control and centralize it. He decided to let it stay an open system, without a central command. Therefore, there is not even a way to know how many members or circles there are. The AA became flexible, equal, and mutating. The Apaches mutated and became nomads, while the AA mutated and today helps food addicts and gamblers. Well, it may even mutate to cure Charlie Sheen!

When the record industry first faced Napster 10 years ago, it was tough for them, because they were up against a very decentralized network, but Napster still had an identifiable CEO, management, and central servers. Napster lost via lawsuits.

The decentralized music network then mutated, and further developed the Peer-to-Peer anonymous technology. The customers' information was still centralized in some of the mutated initiatives, which allowed further persecution. Eventually everything was spread and decentralized and now we have torrents. And we mostly don't recognize the record industry as it once operated.

Lew is like Bill Wilson of the AA — he catalyzed the idea, built the main cell and got out of the way for the talents to rise and cells to spring up like MisesBrasil and many others.

At first it may seem LvMI is a spider — it has a board, a CEO, some hierarchy, a physical address. But look again — Auburn is not where the organization exists. The professors are spread all over the world, there's no formal hierarchy, and we have the Mises and Rothbard Institutes acting independently, and at the same time as a network.

If you would thump the Mises Institute on the head, would Austrolibertarianism die? No! Is there a clear division of roles among the cells? No! Is knowledge concentrated? No! Are cells self-funded or are they centrally funded? I wish the Mises Institute would throw some checks at us, but no, we are not centrally funded! Ladies and gentleman, we then reach the conclusion we are genuine starfish. As with the Internet, if one pulled down half of its sites, it would survive.

We're a cell-based, independent, underground network. We are building the network as we speak. Because it is an open system, more and more people want to contribute, first as individuals, and then — which is what really makes a difference — as a team, as independent cells.

And if we are talking about people that would like to start an Austrolibertarian cell, you don't need more than to put up a site, and start translating and publishing material. Just do it. It's simple, and virtually costless. We've done it in Brazil, Gabriel Calzada has done it in Spain, the Joachims have done it in Sweden, Vlad in Romania, and likewise in Poland, Japan, Russia, Belgium, and other places. To build a great team, of course, is more of a challenge, but they are sprouting, because we have the example of Lew and the LvMI team.

When the network fully develops and the network effect kicks in, or should I say accelerates, there's no stopping us. The centralized statists won't be a match for us!

Is the Tea Party's Revolution Serious?

Is the Tea Party's Revolution Serious?

Mises Daily: by

[Transcribed from the Libertarian Tradition podcast episode "The Tea Party's Revolution"]

The Whites of Their Eyes

Jill Lepore is a professor of history at Harvard and a journalist whose work appears in the major mainstream media. The New York Times and the Los Angeles Times are on the list of publications to which she contributes, as is The New Yorker, where she's listed on the masthead as a "staff writer." Her latest book, which was published back in September by Princeton University Press, is called The Whites of Their Eyes: The Tea Party's Revolution and the Battle over American History. Unsurprisingly, it reads rather like a long magazine article.

It meanders here and there in a leisurely fashion; it includes tidbits from Lepore's reading in American history and other tidbits from interviews she conducted with members of the contemporary tea-party movement, but it seems never to really reach any particular point. In the end, it doesn't really end; it just stops. She raises some big questions — "What was the Revolution about? What is history for? Who are we?" — but never really answers them.

If there is any overarching argument to The Whites of Their Eyes it would seem to be this: the members of the contemporary tea-party movement believe, according to Lepore, in a version of American history that she dismisses as "a fantasy," an 18th century with

no slavery, poverty, ignorance, insanity, sickness, or misery … only the Founding Fathers with their white wigs, wearing their three-cornered hats, in their Christian nation, revolting against taxes, and defending their right to bear arms.

This outright "fiction," Lepore argues, may, for example, be accused of having "compressed a quarter century of political contest into 'the founding,' as if ideas worked out, over decades of debate and fierce disagreement, were held by everyone, from the start." She quotes an exchange between Glenn Beck and Sarah Palin. "Who's your favorite Founder?" Beck asks Palin. "Um, you know, well," she replies. "All of them."

It is not, of course, clear whether Mrs. Palin actually knows the names of any of these Founders Beck was asking her about, as it is not clear whether she knows anything else at all about them either. It is relatively certain, however, that Glenn Beck does know both who the Founders were and at least something about what they said and did. He has claimed, for example, that Thomas Paine, "was the Glenn Beck of the American Revolution," a not entirely implausible interpretation of the facts.

The problem, however, at least as Lepore sees it, is that Beck is a devotee of the tea-party movement's version of American history, which she calls not "just kooky history [but] antihistory." Then she decides that perhaps a better term for it is "historical fundamentalism." And for the rest of the book, that's the term she goes with. "Historical fundamentalism … is to history," she writes, "what astrology is to astronomy, what alchemy is to chemistry, what creationism is to evolution."

More specifically,

historical fundamentalism is marked by the belief that a particular and quite narrowly defined past — "the founding" — is ageless and sacred and to be worshipped; that certain historical texts — "the founding documents" — are to be read in the same spirit with which religious fundamentalists read, for instance, the Ten Commandments; that the Founding Fathers were divinely inspired; that the academic study of history (whose standards of evidence and methods of analysis are based on skepticism) is a conspiracy and, furthermore, blasphemy; and that political arguments grounded in appeals to the founding documents, as sacred texts, and to the Founding Fathers, as prophets, are therefore incontrovertible.

As Lepore points out, the Founding Fathers "weren't even called the Founding Fathers until Warren G. Harding coined that phrase in his keynote address at the Republican National Convention in 1916." He used the phrase again a few years later, "during his inauguration in 1921," in an inaugural address written in what H.L. Mencken described as

H.L. Mencken's
Notes on Democracy

the worst English that I have ever encountered. It reminds me of a string of wet sponges; it reminds me of tattered washing on the line; it reminds me of stale bean soup, of college yells, of dogs barking idiotically through endless nights. It is so bad that a sort of grandeur creeps into it.

It was in that very same speech that Harding attested his "belief in the divine inspiration of the founding fathers."

Lepore provides inconclusive anecdotal evidence, which I nevertheless find persuasive, that the tea-party movement is mainly just a bunch of disaffected Republicans who really care nothing for small government or individual liberty but merely want to see the GOP back in the White House and back in control of Congress. For example, she cites a 2010 New York Times/CBS News poll as revealing that "63 percent of self-described tea party supporters gain most of their television news from Fox, compared with 23 percent of all adult Americans," and Fox News is, of course, little more than the outsourced publicity arm of the Republican Party.

She also presents such evidence from her own interviews with members of the tea-party movement. She found that

Tea partiers liked to describe their movement as a catchall — Austin Hess identified himself as a libertarian, Christen Varley described herself as a social and fiscal conservative — but it didn't catch everything. Opposition to military power didn't have a place in the twenty-first century tea party. It did, however, have a place in the Revolution.

Moreover, the commitment to individual liberty exhibited by many of those Lepore talked with was rather scant, to say the least. She interviews one tea partier, Christen Varley, who is working "to try to get a ban on same-sex marriage on the ballot." Lepore "asked her whether that didn't amount to more government interference, but the problem, she said, was that the government had interfered so much already that it had nearly destroyed the family, and the only thing for it was to use the government to repair the damage." In other words, "I oppose large, intrusive government, except when I don't." Where could you find a better definition of conservatism?

At another point in her period of interaction with the tea partiers, mostly in Boston, Lepore asked a self-proclaimed libertarian, Austin Hess, "if he was troubled by Christen Varley's work with the Coalition for Marriage and the Family. 'We do not discuss social issues and foreign policy issues,' he said." Later,

I asked Austin Hess whether he was worried Sarah Palin was hijacking the tea party. He shrugged. "The enemy of my enemy is my friend," he said. "I don't agree with her about a whole lot of things, but we're not conducting purity tests. We're building coalitions."

Ten lectures
with Ralph Raico

Lepore also finds anecdotal evidence of historical ignorance among the contemporary tea partiers. She talks with a Midwesterner named Patrick Humphries, for example, who tells her he "was born in Indiana and grew up in Iowa." Humphries believes, like most of his fellow tea partiers, that the policies of the Obama administration represent a "radical change" — a "government takeover of the economy." But of course Obama's actual policies are merely the policies all presidential administrations, both Republican and Democratic, have pursued for nearly 80 years. They are virtually indistinguishable from the policies of his predecessor, George W. Bush. Much of the tea party talk about the supposed evil of the Obama administration is really just empty rhetorical excess.

And Lepore does have a tendency to take the contemporary tea partiers' somewhat overheated rhetoric a bit too literally. She seems to think, for example, that they really want to return to the 18th century — or, to be more exact, to the way government was conducted back then. And that is something Lepore herself does not want.

She tells the sad story of Peter Franklin Mecom, Benjamin Franklin's nephew, the son of his sister Jane. When Jane's husband, Edward Mecom, died, Lepore writes, he

left his wife with nothing but debts, not least because, long before he died, he had lost his mind. Whatever ailed him, it was heritable. When Jane's son Peter fell prey to the Mecom madness, Benjamin Franklin paid a farmer's wife to take care of him.

The care she provided did not, however, meet Jill Lepore's standards. "Whenever I hear people … talk about getting back to what the founders had," she writes, "a government that won't give money to people who don't work, I think about Peter Franklin Mecom: he was tied up in a barn, like an animal, for the rest of his life." Nor does Mecom's case represent the full extent of Lepore's dissatisfaction with the politics of the late 18th century. "In eighteenth-century America," she writes, "I wouldn't have been able to vote. I wouldn't have been able to own property, either." And her rejection of that prospect is flat and final. She writes, "I don't want to go back to that."

She approvingly quotes Thurgood Marshall's 1987 remark in which he mocked what he called the "complacent belief that the vision of those who debated and compromised in Philadelphia yielded the 'more perfect union' it is said we now enjoy." Marshall expressed a certain skepticism about "the wisdom, foresight, and sense of justice exhibited by the Framers" and noted that "the government they devised was defective from the start, requiring several amendments, a civil war, and major social transformations to attain the system of constitutional government and its respect for the freedoms and individual rights … we hold as fundamental today."

There is merit in this statement — though a historically literate libertarian would remonstrate a bit about Marshall's wording. It's doubtful, for example, that a civil war was actually "required" to get rid of slavery, and not all of those constitutional amendments Marshall seemed to hold in such high regard were "required" either, not if the end you had in view was the protection of individual rights.

The one in 1920 that permitted women to vote was doubtless "required" for that objective to be achieved. But what about the provisions of the Reconstruction Amendments that effectively turned over to a monstrously enlarged federal government all the matters that had previously been concerns of the various states? Did this have the effect of better protecting the individual rights of Americans? The matter is, at the very least, debatable.

The important point, however, is that no tea partiers I know of are asking that the government policies of the late 18th century be adopted anew — that slavery be reinstituted, that women be denied the right to vote and the right to own property. What the tea partiers are asking is rather that our current government be run according to the principles that underlay the American Revolution. But there's the rub. For what are those principles?

The Founding Fathers didn't agree with each other about everything. In fact, the more you read their letters and other writings, the more it seems that they agreed with each other about virtually nothing except the desirability of breaking with England and establishing a new government for what had been 13 separate English colonies. This is presumably why Glenn Beck asked Sarah Palin to name her favorite Founder, and it was her ignorant belief — or so, at least, it seems to me — that the founders all agreed that made her unable to answer his question.

If you think of the American Revolution as most modern libertarians do, as having been a major event in the libertarian tradition, as having been underlain by essentially libertarian ideas, if what at least some tea partiers want is that our current government be run according to libertarian principles — well, then, what they want is a federal government that scarcely exists, a federal government closer to the one that operated under the Articles of Confederation than to any US federal government that has existed since adoption of the Constitution. If, like most tea partiers, however, you're a conservative, then the principles you probably believe underlay the American Revolution were "no taxation without representation," the right to bear arms, and, of course, the doctrine that the United States was to be a "Christian nation."

It is a skewed understanding of the Revolution that permits such a view as this, of course, which is Lepore's point. What today's tea partiers think they know about the American Revolution is partial and selective when it isn't absolute bunkum.

Jill Lepore believes, and I agree with her, that it would be better if the tea partiers got their facts right, so that their understanding of the meaning of the American Revolution was more nuanced and closer to the actual truth.

She is inclined to blame her own profession for the problem. Academic historians stopped writing for the general reader decades ago, she argues, and began turning out highly specialized scholarship that frankly didn't expect any readers other than fellow professors.

She has a point, but I myself am a firm believer in the view that you can lead a horse to water but you can't make it drink. The horse has to want a drink. The American electorate has to want the truth about American history. Too many Americans really don't want truth — any truth. What they want is mythology that will confirm their prejudices.

Those of us who communicate with the public about history do have to get out the word about what American history really is. But just doing that won't guarantee a change in public attitudes toward the American Revolution. We still need a thirsty horse.

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