Douglas Rushkoff’s servings of word salad are indigestible.  If you can make sense of the title of this post, then you might be able to make sense of Rushkoff’s work.

Here’s another howler from his new book, Throwing Rocks at the Google Bus; it appears on page 131:

When monarchs and their favored merchants founded the first corporations, the idea that they would be obligated to grow didn’t look like such a problem.  They had their nations’ governments and armies on their side – usually as direct investors in their projects.  For the Dutch East India Company to grow was as simple as sending a few warships to a new region of the world, taking the land, and enslaving its people.

If this sounds a bit like the borrowing advantages enjoyed today by companies like Walmart and Amazon, that’s because it’s essentially the same money system in operation, favoring the same sorts of players.

WHAT??!!!??!!

The operation of the Dutch East India Company as described by Rushkoff doesn’t sound to me anything like – not a bit like – not remotely like – not even in a drunken stupor would it sound like – “the borrowing advantages enjoyed today by companies like Walmart and Amazon.”

One can only guess what fantastical fictions Rushkoff has in mind when he pecks out such a string of words.  Does he believe that Uncle Sam threatens to torpedo banks if they don’t lend money to Amazon at below-market interest rates?  Is he saying that Wal-Mart uses the state to enslave people to work for it and that this system of slavery gives Wal-Mart “borrowing advantages”?  Is Rushkoff arguing that Amazon and Wal-Mart are successful only because, or chiefly because, Uncle Sam is a direct investor in these companies?  Is Rushkoff aware that neither Amazon nor Wal-Mart enjoys a government-granted exclusive privilege to ‘serve’ its market?  (Indeed, because both are retailers, Amazon and Wal-Mart compete against each other for consumer patronage!)  Who knows what Rushkoff means?

Rushkoff carelessly equates the general corporate form – which evolved into existence in the 19th century – with government-created and subsidized monopolies.  And absurdly he alleges that the success of corporations such as Wal-Mart and Amazon is based upon theft and slavery.

While some corporations today do receive special, unjust government favors, these are not typical.  Since the 19th century, the creation of a corporation required no special governmental act.  And incorporation today does not come along with monopoly privileges of the sort that were enjoyed by the Dutch East India Company.  Incorporation certainly doesn’t entitle the corporation to deploy, or to have deployed on its behalf, the government’s armies or warships.  It is historical ignorance of unacceptable magnitude for Rushkoff to conclude that the origin, nature, and operation of government-created incorporated monopolies such as the Dutch East India Company inform us today of the origin, nature, and operation of companies, such as Amazon and Wal-Mart, that are incorporated under general incorporation statutes.  The two sorts of corporations have almost nothing in common.

I need not say it, but I’ll say it nevertheless: neither Amazon nor Wal-Mart enslaves workers or has Uncle Sam enslave workers for these companies’ use.  (Employing low-skilled workers at low pay – employing workers who perhaps have no better employment options than at Amazon or Wal-Mart – is emphatically not slavery.)  And while perhaps these companies have sometimes benefitted from the unjust use of eminent domain, the successes of Amazon and of Wal-Mart are not based upon such land-grabs.  The success of these companies is based upon the successful innovations that they’ve each made in reaching and in serving retail customers, and in managing their supply chains and inventories.  None of these innovations was done with government force deployed specially for their benefit.

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Quotation of the Day…

by Don Boudreaux on May 18, 2016

in Property Rights

… is from page 173 of Tom Bethell’s superb 1998 book, The Noblest Triumph:

The classical-liberal conception of rights is likely to be discomforting to any ruling class, no matter how constituted, because it reliably subtracts power from those who rule, or hope to, and distributes it among the people.  Decentralized private property has had precisely that effect.

The late-1960s and early-1970s phrase “Power to the People!” – although chanted mostly by the economically uninformed hippies of that era as a mantra for more and (what they imagined would be) ‘purer’ collective decision-making – is actually an excellent phrase for summarizing the benefits of secure private property rights.  An owner of private property – even if only the property in his or her own person – can individually chose how that property is used.  The only restraints on use are a rather small list of common-law “DON’Ts” – such as “DON’T use your property to physically impede other owner’s uses of their property” – that emerge to ensure that every property owner has rights to use his or her property that are commensurate with the property rights of other individuals.

The individual property owner cannot force others to participate in her chosen use, although she is free to bargain for others’ voluntary participation in that use.  And the individual property owner need not first secure the approval of other people in order for her to use her property as she chooses, as long as she does not attempt to use her property in ways that violate one or more of the “DON’Ts.”  Through the institution of private property, each person’s voice is significant, for that voice always has an effective veto power over the uses to which her property might be put, and the owner is under no obligation to win the approval of a majority of some group, or of some government official, in order for her to use her property in whatever way she individually chooses (again, subject, as always, to the “DON’Ts”).

One of the greatest delusions of many people is that freedom and ‘voice’ in one’s life resides chiefly in, and is secured chiefly by, the right to vote.  In fact, freedom and voice in one’s life resides chiefly in, and is secured chiefly by, the rights of private property (and the associated law of contract and tort).

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Bonus Quotation of the Day…

by Don Boudreaux on May 17, 2016

in Myths and Fallacies, Taxes

… is from page 570 of the final volume – Bourgeois Equality – of Deirdre McCloskey’s paradigm-shifting trilogy on the essence and role of bourgeois values in modern life (footnotes deleted; link added):

Robert Higgs, who is an expert on both the history of slavery and the history of taxes, notes that the arguments in defense of slavery have run parallel with the arguments for taxes.  No one volunteers for slavery, just as no one pays taxes voluntarily.

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What to Say?

by Don Boudreaux on May 17, 2016

in Myths and Fallacies

When one reads passages such as the one quoted below from pages 130-131 of Douglas Rushkoff’s new book, Throwing Rocks at the Google Bus, one is left wordless at the spectacle of such a vast quantity of ignorance being packed into such a small number of words.  Rushkoff is here writing about the late middle ages and early Renaissance (footnote deleted):

In country after country where local moneys were abolished in favor of interest-bearing central currency, people fell into poverty, health declined, and society deteriorated by all measures.  Even the plague can be traced to the collapse of the marketplace of the late Middle Ages and the shift toward extractive currencies and urban wage labor.

The only reference Rushkoff supplies in the above quotation is to another book of his, namely, to pages 170-171 of his 2009 volume, Life, Inc. (which I’ve not read and will not waste my time reading).

My colleague Larry White or my friend George Selgin can comment on Rushkoff’s monetary history better than I can – for example: Just when did national governments ‘abolish’ “local moneys”?  And what historical evidence is there for the assertion that changes in markets brought about by the nationalization of the money supply so worsened the material conditions of the masses and so altered the structures of life and commerce that not only did people’s health decline, but people became – because of these changes – more susceptible to the plague than they would otherwise have been?

I do not doubt that nationalization and monopolization of money was an undesirable occurrence.  But I’m pretty darn sure that – whatever its faults or merits – such nationalization and monopolization did not cause urban wage labor.  Nor did it cause the growth of cities and the expansion of trade that might perhaps be blamed for the Black Death of the 14th century.  (Growth of cities by creating more densely populated living areas through which disease can more easily spread, and expansion of trade that allowed flea-bearing rats to be brought to Europe on merchant ships from central Asia.)

And I’m quite certain that the nationalization and monopolization of money a few hundred years ago cannot reasonably be blamed for causing people back then to ‘fall into poverty.’  Most people back then were already in poverty, and deeply so.  For Rushkoff to suggest, as he does, that widespread poverty was chiefly caused by the nationalization and monopolization of money in the late middle ages proves only Rushkoff’s utter lack of knowledge of history.

Finally – and most absurdly – is Rushkoff’s claim that local moneys were displaced by “interest-bearing central currency.”  While there were from time to time a handful of experiments with interest-bearing currencies, the vast majority of currencies used throughout history – and that are used now – are emphatically not interest-bearing.  Rushkoff, however, throughout his book complains repeatedly of the interest-bearing currencies that we today generally use!  I have never, ever received interest from the Fed (or the U.S. Treasury, or from my local bank, or from anyone else) on my dollar balance held as cash.  Have you?  More to the point, has Douglas Rushkoff?  I’m quite certain that he has not – which, then, raises the question: what does he mean by the term “interest-bearing central currency?”

Perhaps he means not that interest is paid to currency holders but that currency holders must pay interest on the currency they hold.  (Much of the time, as here, it’s difficult to tell what Rushkoff means, as he uses terms – such as “extractive currencies” – that seem to have meaning but possess neither any commonly understood and accepted definition nor are ever defined by Rushkoff.  Readers, presumably, are expected simply to go “Ououou – extractive currencies!  That sounds bad.  It must, therefore, be real and bad.”)  If Rushkoff means by “interest-bearing currency” currency that requires its users to pay interest to the issuer, he again is mistaken.  I have never paid interest to the Federal Reserve for the many dollars that I’ve held as cash over my lifetime.

I’ve suffered losses of my cash-balances’ value because of inflation, but value lost on cash balances to inflation is not an interest payment.  (Moreover, Rushkoff himself believes that the Fed protects holders of cash from inflation.  That Rushkoff is wildly mistaken about this reality is irrelevant to the point being made here.)

Federal Reserve Notes, whatever their weaknesses or strengths, neither earn interest nor require their holders to pay interest.  So, again, what does Rushkoff mean by his frequent use of the term “interest-bearing currency”?

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Competition Should Trump

by Don Boudreaux on May 17, 2016

in Politics

This morning NPR ran a short segment on Megyn Kelly’s forthcoming interview with Donald Trump, the vulgarian and perhaps-misogynist who appears to be headed toward winning the 2016 GOP presidential nomination.  The segment focused on Trump’s attitude toward women.

I’m convinced, from what I’ve read and from what I’ve seen on t.v. of Trump, that he has no truly liberal attitude toward women.  (Actually, Trump has no truly liberal attitude toward anyone.)  But the dominant thought that ran through my mind as I listened to this NPR segment is this one: “It’s a shame that the attitude toward women of a prospective or actual president of the United States matters.”  It is only because Uncle Sam has lots of power – and because the U.S. president has over the decades seized a great deal more power than the Constitution meant for the president to possess – that a president’s attitude toward women (and toward men, and toward rich people, and toward poor people, and toward gay people, and toward foreign people, and toward you-name-the-people) matters.

If a local restaurant owner or bank manager has a sour attitude toward middle-aged straight white guys with coonass last names, then I simply don’t go to that restaurant or that bank.  Or, more likely, that restaurant owner or bank manager, who desires my business, successfully pretends that his attitude is different from what it really is.  Either way, I’m not harmed by this sour attitude.

But a U.S. president is different.  He or she worries far less about keeping me, an individual, pleased than does a private merchant.  Not only can I practically not take my government business elsewhere, the U.S. president has at his disposal the use of force – and he gets to use that force over a wide, and expanding, range of activities.

It would be far better for us to not have to worry if a president is a vulgarian, a bigot, or a bloviating ignoramus than it is to instead have to worry, as we now must, about keeping such a person out of the Oval Office.

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… is from page 92 of the 2012 revised and updated edition of Steven Landsburg’s classic 1993 book, The Armchair Economist (original emphases):

Individual rationality, coupled with competition and prices, leads to efficient outcomes; that is, outcomes in which there remain no unexploited opportunities to improve everybody’s welfare.  This is so even though individual rationality and competition without prices rarely leads to such desirable outcomes.

Market-set prices are utterly essential.  Such prices are much more essential than most people understand them to be.  Such prices are more essential than even many economists understand them to be.  This key economic understanding isn’t grasped, for example, by those economists who support minimum wages (or who deny that minimum wages generally price some low-skilled workers out of jobs or out of hours of employment).  These economists, by supporting minimum wages, support a policy that prevents the operation of the single most powerful force for bringing into as-close-as-possible alignment the multitude of physical constraints and personal preferences on the employers’ side with the multitude of physical constraints and personal preferences on the workers’ side.

These economists, in short, have a poor understanding of price theory.  And no amount of knowledge and facility with statistics and econometrics can make up for a failure to grasp price theory.

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Bob Higgs accurately identifies the danger of today’s illiberal obsession by so-called “liberals” with scrubbing modern education of any and all of those edges-of-reality that enhance not only students’ knowledge, but also their perspective and judgment.

Writing in the New York Times, Gregg Easterbrook wonders why all the many reasons that exist today for optimism are ignored by people who insist on insisting that doomsday is nearly upon us.

I don’t often agree with Michael Gerson, but I share his assessment of Donald Trump – and of those Republicans who are now supporting that bloviating ignoramus.

Here’s part four of George Selgin’s important primer on monetary policy.

David Boaz reflects on China’s Cultural Revolution – which occurred 50 years ago.

Tim Worstall wisely calls for an end to the nostalgia for manufacturing jobs.

In this Mercatus Center Policy Brief, Liya Palagashvili fleshes out an especially important part of her and my longer study on the U.S. Department of Labor’s harmful new overtime-pay regulations.

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Bonus Quotation of the Day…

by Don Boudreaux on May 16, 2016

in Inequality

… is from page 638 of the newly published final volume – Bourgeois Equality – of Deirdre McCloskey’s paradigm-shifting trilogy on the essence and role of bourgeois values in modern life (footnote deleted; link added):

The indulging of the vice of envy shows in many arguments on the left.  [Tony] Judt, justifies taxing the rich explicitly as “diminishing social tensions born of envy.”  Perhaps it would be better – as Henry Clark and I would suggest – to earnestly counsel people not to indulge the vice of envy.

It would be amusing, were the reality not so sad, to reflect on the positive correlation between the expressed fear that “Progressives” claim to have of envy-born-of-inequality boiling into destructive social unrest and those same “Progressives'” seemingly boundless enthusiasm for insisting incessantly and loudly to all who will listen that monetary-income (or monetery-wealth) inequality is today at dangerously high levels.  And these loud bewailers of such inequality remain silent about the growing equality of what really matters: consumption opportunities.

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The Jokes Are On Us

by Don Boudreaux on May 16, 2016

in Politics

I love these cocktail napkins that I saw for sale this evening at an Arlington, Virginia, restaurant.

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When armed thugs arrive at your door and demand your money and your car keys, you do as they demand in order to avoid being murdered, but you don’t for a moment think that the thugs’s demands are furthering the greater good.  But let those thugs win the votes of a majority of your neighbors who authorize the thugs to steal your money and your car, and you – if you are like the typical person – play along agreeably, having convinced yourself of the lie that the thugs’s deepest motive is to help you and the society of which you are a member.

It is, in fact, a sick joke.

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Left Behind

by Don Boudreaux on May 16, 2016

in Reality Is Not Optional

On Saturday George Selgin sent the following note to me:

I just had the idea that you should launch a new annual award for the year’s outstanding socialist ignoramus, and call it the “Left Behind” award.

This morning, David Henderson informed me, in passing, by phone of this 2013 article on Hugo Chavez in Salon by David Sirota.  It’s entitled “Hugo Chavez’s economic miracle.”  Really; that’s the actual title.  And Sirota doesn’t mean it to be facetious.

David H. learned of this article from Bob Lawson’s Facebook page.  While I’ve known of Sirota for some time – see, for example, herehere and here – I’d forgotten just how poorly informed he is and how very bizarrely he reasons.

Considering the horrible if completely predictable Chavezian events in today’s Venezuela, Sirota’s praise for the policies of Chavez (which continue to be followed by Maduro) make Sirota a prime contender for the first annual “Left Behind” award.

(I wonder – seriously – if Sirota is embarrassed by what he wrote in 2013.  He should be.)

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