BBT Speaker Series–Larry Schweikart–Sept. 28

The first speaker of the BB&T speaker series will be Professor Larry Schweikart, an historian who has written on the American Entrepreneur and Banking in the American West.  His talk on September 28 at the Wes Banco Arena will be on the 7 Events that Made America.  The charge for this event will be $10 to cover the cost of lunch.  Doors open at 11:30.  Talk will begin at 12 noon.  A press release will follow on this site soon.

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Stephen Moore Speaks in Wheeling

I finally found the file from Stephen Moore’s talk at the Fort Henry Club in Wheeling.  Enjoy!

Stephen Moore from BBT Economics on Vimeo.

The Wall Street Journal editor speaks to the Wheeling community at the Fort Henry Club.

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Germany & Free Markets

In the WSJ, from a George Mason prof, how Germany came out of the post WW2 economic slump:

Fortunately for ordinary Germans, Erhard—who became director of the economic administration for the U.K.-U.S. occupation Bizone in April 1948—thought otherwise. A currency reform that he helped to design was slated to replace the feeble old Reichsmark with the new Deutsche mark in all three Western zones on June 20. Without approval from the Allied military command, Erhard used the occasion to issue a sweeping decree abolishing most of the price controls and rationing directives. He later told friends that the American commander, Gen. Lucius Clay, phoned him when he heard about the decree and said: “Professor Erhard, my advisers tell me that you are making a big mistake.” Erhard replied, “So my advisers also tell me.”

It was not a big mistake. In the following weeks Erhard removed most of the Bizone’s remaining price controls, wage controls, allocation edicts and rationing directives. The effects of decontrol were dramatic.

The shortages ended, black markets disappeared, and Germany’s recovery began. Buying and selling with Deutsche marks replaced barter. Observers remarked that almost overnight the factories began to belch smoke, delivery trucks crowded the streets, and the noise of construction crews clattered throughout the cities.

The remarkable success of the reforms made them irreversible. A few months later the French zone followed suit. The Allied authorities went on to lower tax rates substantially.

Between June and December of 1948, industrial production in the three Western zones increased by an astounding 50%. In May 1949 the three zones were merged to form the Federal Republic of Germany, commonly called West Germany, while East Germany remained under Soviet domination as the German Democratic Republic.

Growth continued under the market-friendly policies of the new West German government. Erhard became the Minister of Economic Affairs, serving under Chancellor Konrad Adenauer from 1949 to 1963. The West German economy not only left East Germany’s in the dust, it outgrew France’s and the United Kingdom’s despite receiving much less Marshall Plan aid. This was the era of the Wirtschaftswunder or “economic miracle.”

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The Founders, Property, and Federalist #10

One of my former students writes an excellent piece at Heritage, noting this piece by Thomas G. West, on the Founders and their dedication to free markets. This issue came up for a brief moment today in my American Government class while going over Federalist #10.

Drawing on the West study, Shaw points out that the Founders were remarkably similar in their protection of property individuals earned. Government was there, to protect property and to enforce that protection through and by the rule of law. If I could add, this was a moral issue to the Founders: to allow someone to violate the property rights of another was a violation of the rights inalienable endowed into each every human being.

Cut to the class discussion today in Federalist #10:

The second expedient is as impracticable as the first would be unwise. As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed. As long as the connection subsists between his reason and his self-love, his opinions and his passions will have a reciprocal influence on each other; and the former will be objects to which the latter will attach themselves. The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

So to Hamilton and Jefferson, we can add Madison: the object of government is to protect private property–an extension of securing our natural rights. This protection is because each and every human being is equal in those rights. Different human beings have different talents. It follows, that some will be more productive and more talented than others in acquiring property, and in putting their gifts/talents to use. We can see how this might apply to a person who invents something the consumer might want and becomes rich as a result of a calculated risk. This inventor (let’s say it is Henry Ford), will likely get rich.

The same right that protects an Henry Ford, though, protects anyone who accumulates property. It protects rich and poor alike. The problem, as Madison notes, is that the people become inflamed, jealous, and motivated by greed or some other passion. The rich, and the poor, have violated the rights of others derived from their passions. The rich might have a desire for more, and the poor possess the desire of greed/envy.

The necessity to remedy this problem in a political community is the first object for Publius in crafting a defense of the then proposed U.S. Constitution. Without the protection of the faculties of others, and the property that results from their talents and risks, there would not be a strong commercial republic–or rather the republic would not be strong without a strong commercial and market sector. Taking into account the Declaration, a government that redistributes property (without consent) abandons its primary object it was instituted. The Founding remedies the problem of faction, which would violate the rights of others who have property no matter the source.

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Vaclav Havel on Economics in Czech Republic

As noted here, Vaclav Havel had this to say, while drinking a scotch:

The government has embraced an arrogant ideology. They claim to know the key to prosperity. It’s analogous to communism. They thought the same thing. The clever ones – themselves – would run everything. That’s the analogy. The key to prosperity is to let things run themselves. We’ll liberalize everything, let everyone look after himself, let business, not the state, run the economy. The state should have no views, no policies of its own. Just open it all up, step back, let it go and you’ll see how well everything will work if we just leave things alone.

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The Austrians are Back

This weekend, the WSJ had a lengthy bio of GMU professor, Peter Boettke and his part in the revival of Austrian Economics.

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Government Defaults Loom

So says Morgan Stanley:

Investors face defaults on government bonds given the burden of aging populations and the difficulty of increasing tax revenue, according to a Morgan Stanley executive director.

“Governments will impose a loss on some of their stakeholders,” Arnaud Mares in the firm’s London office wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” he wrote.

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The Limitless Welfare State

William Voegeli from the Claremont Salvatori Center speaks about his new book, Never Enough: America’s Limitless Welfare State.

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Kudlow on Obama and the Economy

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George Leef on the Laffer Curve

George Leef at JLF writes about the Laffer Curve:

The right question to ask is not what tax rate maximizes government revenues, but what is the proper scope of government activity. That’s all we should pay for.

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