A Thoroughly Incurious Press

An email has been circulated recently to the effect that the following list of things from Barack Hussein Obama's background are missing, unreleased, or unavailable. I have not personally researched these things, but am given to believe that this list is generally accurate:

1. Occidental College records.............................unreleased
2. Columbia College records..............................unreleased
3. Columbia Thesis paper..................................unavailable
4. Harvard College records.................................unreleased
5. Selective Service Registration........................unreleased
6. Medical records..............................................unreleased
7. Illinois State Senate schedule........................unavailable
8. Illinois State Senate records..........................unavailable
9. Law practice client list...................................unreleased
10. Record of baptism.........................................unavailable
11. Certified Copy of original Birth certificate....unreleased
12. Embossed, signed paper Certification of Live Birth...............................................................unreleased
13. Anything published as editor of the Harvard Law Review..........................................................unavailable
14. Anything written as a Professor at the University of Chicago.........................................................unavailable

I will correct this list if it is brought to my attention that any of this is incorrect, but if this list is even remotely correct, setting aside for the moment any consideration of Mr. Obama's right to privacy versus the public's right to certain public records, the more interesting questions to me are:

1. How can it be that in a nation with a "free" and "independent" press, these things could not have been investigated, and if truly missing or unavailable, could have been almost completely ignored by all of the leading news media?
2. What does it say about the American voters that someone with such a well-hidden past could be elected to the most powerful position in the nation, in light of such apparent media complicity to cover up for him?

Having read recently a book titled "The Debates on the Constitution," and other works about the vigorous debate just prior to the drafting of our "Declaration of Independence," I cannot help but conclude that the posterity of the men and women who sacrificed so much to give birth to this great nation, has not been well served by their descendants of late. They would surely be shocked at our incuriosity and intellectual laziness.

I am nearly left as thoroughly at a loss for words, as Mr. Obama seems to be completely at a loss for any record of his prior existence.

Is this some "Matrix"-like life-imitating-art? In which case, just exactly whose imagination is he a figment of?

ps: The essay I wrote 10/16/08, just before the election, about Mr. Obama being a cultural chameleon, still seems rather appropriate: http://bit.ly/gsOo4

"Do you forget to free the slaves?"

(c) May 20, 2009 - FV Hayek & Co. LLC

Reading the book "Dead Aid - Why Aid is Not Working and how there is a better way for Africa" by Dambisa Moyo; a very interesting and important work. The reader with insight will realize that there is more in what the author has written, than is found in words on the page. It may be that there are larger principles of philosophical economics here, than just the tragic circumstances the author documents in Africa, and the vitally important conclusions she draws from them. I have not finished reading the book yet, but am struck with some thoughts that I wanted to capture.

The epiphany for me as I read this fascinating work, is that many economic ills come from misunderstanding what money and wealth are. Wealth should properly be seen as an incidental by-product of the creative act. Money was created as a convenient exchange medium for wealth. If you begin looking at money and wealth as the purpose or object of the creative act, you begin to think that moving it around is "creative," that is to say that by moving it around, something has been created; that transfer payments are a reasonable facsimile or surrogate for the creative act. But it is not that humans need money, it is that they need to be engaged in creation. Wealth and money will surely be a result of such engagement, but giving someone money does not replace their human need to create. It would be as if I could bottle my sweat from a workout and give it to someone else, and in so doing I could satisfy their need for a workout, when all it would do is make them smell bad.

If you want to help someone, teach them how to work and create; giving them money enslaves them to your work and creativity. As the old addage says: "Better to teach one to fish than to give them a fish."

This is not to say that charitable giving can never be a good thing, but when giving charitably, it should be to invest in those who are doing important creative work, which might not initially - or ever - generate enough profit to be self-sustaining on its own. In essence you are then "purchasing" their creative output on your behalf. You are hiring them to do service for you. In this sense, it is not truly "charity" but a free market exchange of value just like any other. The best "giving" always makes one feel richer in the bargain, but the goal must not be merely to feel good.

Understand that to some degree you are enslaving that worker by purchasing their work, and that it is always better to find a way to help that indentured servant free himself from his servitude if possible. You will always get the greatest "return" when you can free that slave to create productivity on his own, independent of your largesse.

Too often, charitable givers are so busy "feeling good" that they forget to "free the slaves."

"Culture Chameleon"
The Boy George Theme Song for Barack Obama
© 10/16/08

A chameleon is a remarkable reptile that can change its colors to blend in and appear at home in front of any surroundings. The brilliance of the Barack Obama campaign is based upon three principles, eloquent speech, youthful good looks, and an ability to be a political chameleon in every situation.

Unfortunately, John McCain has failed to fully connect the dots to close the deal that explains who his opponent is.

Why do the associations with Ayers, Wright, and others matter? McCain managed to raise the issue of Ayers and Acorn in last night’s debate, but he failed to explain why these associations matter. The informed, decided voters get it, but the undecided are still left wondering what the point is. The Obama campaign has succeeded in painting this as meaningless and pointless “looking back” when we have urgent issues that require looking forward.

Why does voting “present” more than “yes” or “no” matter?

Why does Obama try to minimize his associations with controversial figures from his past and with ACORN?

The answer is that Obama is a very smart leftist who realizes that America does not elect leftist politicians. If he wants to be elected, he recognizes that he must be a chameleon. Obama has made a studied effort to create a background that cannot easily be nailed down to reflect his core beliefs. This allows him to claim all kinds of populist positions to garner votes from the great middle of the American electorate who largely make their voting decisions based on mainstream media “sound bites.”

The McCain/Palin campaign has failed to explain that the reason Obama’s associations with Wright and Ayers and other radical leftists matters is that it is a true reflection of Obama’s core beliefs before he began to run for the presidency as a chameleon who can change color every time he speaks in front of a different audience. McCain has shied away from calling his opponent a radical. It is a tough label to make stick to a candidate who has left very little trail to follow, but this is precisely the point, the only point, to his past associations. It is not a matter of his “judgement,” as if these associations were incidental or accidental. The friendly mainstream media persists in dismissing these associations, portraying the issue as unfair character assasination; calling it "guilt by association." The fact is that one's long time associations do matter, they are a reflection of the most important choices an individual can make. In Obama's case, they are isolated cases of poor judgement, but persistent repeated evidence of his core beliefs, and the dishonesty of his present campaign to appear to be a purple candidate.

If McCain and Palin cannot nail down the fluorescent-blue leftist Obama in front of a purple American electorate, they will lose the election to the most radical leftist the American voters have ever voted for. America will probably face control by a radical leftist in the White House, a filibuster-proof left-leaning Congress, a leftist mainstream media, two or three new left-leaning Supreme Court nominees – with no viable confirmation challenge, and thousands of new leftist bureaucrats in Washington (about 7,000 in the executive staff alone).

McCain and Palin must explain why Obama’s past associations matter. Presently, the electorate feels like this is just so much attempt to distract and deflect from the current bad economic news; never mind that the financial news should indict the very democrats who were paid off to protect Fannie Mae and Freddie Mac, and should be advantage McCain and other Republicans who tried to reign in these excesses but were blocked by the Democrats that are presently controlling the investigation into what happened.

Can truth emerge from all of this? It does not appear very likely in the near term, but history has an incisive way of eventually cutting through the haze.

But our near term future desperately hangs in the balance, on the shoulders of McCain and Palin’s rhetorical skills, against the skillful rhetoric of a well-funded political chameleon.

“When the Patient is Dying, First Stop the Bleeding.”
© December 6, 2008

In times of severe national economic crisis it is not unreasonable for the government to provide emergency “stimulus” to the economy, but poor understanding of economic fundamentals can lead to foolish “stimulus” plans that fail to stimulate, and must certainly have unintended negative consequences.

It has become popular lately, especially among politicians on the left, to call for the Congress to pass a “Stimulus Package” of spending on “infrastructure projects;” government spending on roads, bridges, and other projects. Without a doubt, this spending does create some jobs for some industries that have been hurt by the economic recession. The theory is that these are projects from which the whole public derives some benefit, and the positive effects on these narrowly targeted industries will have some stimulative trickle-down effects on other industries. The construction worker buys a new pair of boots, a fast-food burger for lunch, or maybe even a new truck, all good things. The question we must ask as wise students of basic economics, is: What does a rigorous “cost / benefit” analysis say about this plan, and is there any better plan?

The most immediate benefit goes to the contractors and suppliers who build these projects, but these are just a few of the millions of participants in the economy. Selfishly, it immediately occurs to me that I do not build roads or bridges, or produce any of the raw materials that go into these projects. True, I do drive on roads and bridges. I spent an hour or two on roads, and drove across a bridge or two just today, but in the last month as I have contemplated how the current economic downturn might affect my family, I do not honestly remember asking myself, trembling, “What if the government does not build a new road or bridge for me to drive on?” My memory is not what it once was, but I just cannot remember any urgency attached to such a thought. Now that the left has recommended this “urgently needed stimulus plan,” forcing me to contemplate how it might affect me in the coming weeks and months as these new infrastructure projects get started, I suppose in the coming months I might have a new opportunity to wave at a friendly construction project flagger, after a brief delay on my way to work. And in six months or a year or two, maybe I will get to drive on a shiny smooth new road or bridge… Hummm… I guess that would be nice, sort of. But, honestly, it just does not give me shivers of enthusiasm for the wonderful help it will be as I try to pay my bills, and worry if I might be laid off from my job. As an “urgently needed” miracle cure for our current economic woes, it leaves me, underwhelmed.

The first problem with this “stimulus” policy then, is that it singles out a few categories of workers and industries to offer stimulus which of course they will undoubtedly appreciate, but it fails to provide meaningful immediate help to the thousands of other industries and millions of other workers who are also experiencing a very difficult economy. Not that smooth asphalt and friendly flaggers aren’t nice, but they seem entirely insufficient to the economic challenges facing us.

To understand the larger problem with this government spending “stimulus” policy, requires a bit of clear economic thinking. Any time the government gives money to one group, that money must have been taken from another group. It may come as a shock to some, but the simple truth is that, THE GOVERNMENT HAS NO MONEY OF ITS OWN! If the government would give me a dollar of services, it must first take a dollar from you to pay for it, but like any “service provider,” government services include very large “overhead” expenses. In order to spend a dollar on someone the government wants to help, they have to take about a dollar and a half, or more, from someone else. Even if you have stimulated one small segment of the economy by a dollar, the vast bulk of the rest of the economy has not been “stimulated” by a dollar, but rather “starved” by that same dollar, plus a half a dollar or more of unproductive government overhead. It must surely be uncontroversial that government overhead is not in and of itself “productive;” it creates nothing to add to the gross domestic product of the nation, it is at best a transfer of value with some loss.

To illustrate the point, imagine that a patient comes to the hospital emergency room having lost so much blood that he needs a transfusion. If the doctor inserts a transfusion needle in one arm to deliver fresh blood, and then connects the other end of the transfusion tube to a needle in the other arm of the same dying patient, we would think he was quite foolish. Clearly this is not going to help. But if the doctor then cut a small hole in the middle of the tube so that a large portion of the patient’s own blood leaked out, we would be justified in concluding that the “doctor” was not just foolish, but was contributing to the imminent death of the patient.

On the other hand, it is not unreasonable for the government to want to help stimulate the economy, and there are useful things that government can do. If the government is concerned about rising rates of unemployment, and limited business capital, the answer is to let businesses keep more of their own money. The capital gains tax on business in this country is 35%, one of the highest rates among all developed countries. The business income tax rates are 15% to 35%, the higher of these rates again being among the highest in the world. If the government really wants to stimulate the economy, why not reduce the top business tax rates to 10% immediately, tomorrow, and reduce tax rates on small businesses to zero to stimulate the creation of new businesses. Congress could pass that bill, the President could sign it, and it would begin to have an effect almost as soon as the ink had dried. All businesses, in all industries, could immediately begin planning based on the knowledge that they would be able to keep as much as 25% more right from the bottom-line profits of their company and from every capital gains transaction. If they were worried about needing to lay off workers, they could immediately announce that it would not be necessary. If they had put off growth plans due to the slowing economy, they could immediately turn those decisions around. Many businesses who had been concerned about an inability to borrow the liquidity needed to run their business, could fund their business immediately from a 25% increase in their own net cash flow. Better yet, with a business tax cut, there is no “overhead” loss to the overall economy. One hundred percent of the benefit of the tax cut would immediately be injected into every industry. Every worker in the nation would immediately be more secure. At these rates, the USA would have one of the lowest business tax rates of all developed countries. Multi-national companies making choices about where to expand their operations, would be far more inclined to do so within the USA instead of going offshore. Industries involved in global trade would suddenly be as much as 25% more profitable relative to their global competition. Small businesses could get started or continue to grow much more easily.

Can anyone fail to recognize this basic truth of fundamental economics? The largest experiment in the history of government “stimulus” spending on “infrastructure” was FDR’s “New Deal,” which utterly failed to stimulate the economy. A decade after the 1929 crash, the economy still had very large double digit unemployment and was still experiencing the longest and deepest economic downturn in the history of American capitalism. The great depression was not “cured” until after World War II had changed the entire global economic landscape.

To return to our medical analogy, at 35% tax rates, the patient – our ailing economy – has been receiving the economic equivalent of the medieval medical treatment once known as phlebotomy, blood-letting, that was once thought to drain sickness from the body. Medical science long ago learned that blood-letting only weakened the patient and made recovery much slower and more difficult. It is basic first-aid training that the first thing to do with an injured patient is to stop the bleeding. Our politicians, especially those on the left side of the aisle, should learn this same lesson, from medicine, and economic history: In the midst of a serious recession, if businesses are struggling and unemployment is rising, the right treatment is to stop the bleeding.

“Third-World” Economics Lessons for the “First-World”
(c) 2006 - FVHayek & Co. LLC

The PBS video production of “Commanding Heights,” adapted from the book by the same name (Yergin, 2002) is fascinating in its breadth and scope. It follows the thread of economic thought throughout the twentieth and early twenty-first centuries in a way that provides an invaluable foundation of understanding. It is modern history punctuated with the meaning of economic events. This book and video provide context and meaning for the contributions of towering figures like Friedrich Hayek, and John Maynard Keynes, and for many lesser known, yet significant figures. With all of this, it was Hernando DeSoto’s “The Mystery of Capital,” introduced to me through this video, which has been most striking to me. (DeSoto, 2000) This book led me full circle back to the conservative economics of “The Road to Serfdom,” (Hayek, 1944) “Free to Choose,” (Friedman, 1980) and “Basic Economics.” (Sowell, 2004)

DeSoto’s research seeks to understand why the desperately poor of third-world and formerly communist countries often struggle to reap the benefits of capitalism. His basic thesis was so fascinating that I was compelled to rewind the segment and replay it numerous times, hanging on each word. What was compelling to me about DeSoto’s work was that he may have found the key to empowering the poor, not in yet another aid program, but in streamlining the legal property mechanisms by which the wealth and power they already possess could be made real. As one who believes in entrepreneurial capitalism, and its ability to free the divine spirit of the individual, this was a revelation for me. As I came to understand his argument for turning the dead-capital in the extra-legal property systems of the third-world into the productive capital of a functioning legal property representation system, the second epiphany for me was the implication that this research has for the “poor and disenfranchised,” the so-called “have-nots” of the first-world. But before looking at that, it is necessary to understand what DeSoto’s team has discovered.

The foundation of Hernando DeSoto’s work is the distinction between the concept of “capital,” and the systems of “money” and “property” by which we represent and exchange capital. He points out that these systems have evolved in the “first-world,” first in Europe and then in the United States, over centuries, in a not altogether deliberate, nor easily decipherable process. He and his team have scoured historic archives to trace the evolution of “extra-legal” property systems into the familiar systems we know today. These extra-legal systems are the means by which property was controlled, transferred, and protected before properly functioning legal systems of property and money were developed. He has researched the functioning, and dysfunctions, of the legal and extra-legal property systems of the newly formed United States, of its westward expansion, of the California “gold-rush,” and of their parallels with the current state of emerging market economies around the world. These systems have become so much a part of our daily existence that we no longer appreciate the implications of operating without these systems, as many newly capitalist economies today still must. The significance of DeSoto’s work cannot be fully appreciated until he explains that even the “poor” of developing economies have vast resources of potential capital which is rendered “dead-capital” by their extra-legal status.

“Even in the poorest countries, the poor save. The value of savings among the poor is, in fact, immense – forty times all the foreign aid received throughout the world since 1945. In Egypt, for instance, the wealth that the poor have accumulated is worth fifty-five times as much as the sum of all direct foreign investment ever recorded there, including the Suez Canal and the Aswan Dam. In Haiti, the poorest nation in Latin America, the total assets of the poor are more than one hundred fifty times greater than all the foreign investment received since Haiti’s independence from France in 1804. If the United States were to hike its foreign-aid budget to the level recommended by the United Nations – 0.7 percent of national income – it would take the richest country on earth more than 150 years to transfer to the world’s poor resources equal to those they already possess.” (DeSoto, 2004, p. 5)

This is a good place to make an important relevant point about charitable giving. The United States – in fact – donates a good deal more aid to other countries, as a function of GDP, than any other country in the world; between government and private aid, totaling about 0.5 percent. It seems noteworthy, and relevant to this discussion, that the U. N., other countries – and even DeSoto it would seem – routinely overlook the fact that the U.S. is indeed more charitable than any other country, because they routinely ignore private giving, an oversight which is understandable when you realize that Europe and indeed most other developed countries by comparison give almost nothing to private charities. Their focus is totally on the flow of capital from government to individuals, rather than the creation of capital by individuals. (Brooks, 2006, pp.115-121) The other very interesting thing is that in the U.S., the individualist “right-wing conservatives,” the so-called “neo-cons” are far more charitable than the collectivist “left.” Arthur C. Brooks’ research data shows that the two traits most correlated with charitable giving are regular church attendance, and a distaste for government wealth re-distribution. Those who are associated with these traits are twice as likely to be charitable as those who are not, and will donate 100 times more money to charity, and 50 times more money to explicitly non-religious charitable causes. (Brooks, 2006, pp. 10-12) In short, those who say they care about the poor and who favor government control and wealth re-distribution (the political left), do very little individually to help the poor, and those who are opposed to government wealth re-distributions, give far more individually to charity. The point is that perhaps the “left” should listen to “conservatives” when they say that the way to help the poor is to remove obstacles from the market wealth creation systems, it is apparently not true that conservatives say these things just because they are greedy and selfish, as those on the “left” routinely charge. Now DeSoto has confirmed very much the same thing, the way to help the poor is to get the government out of the way, and implement simple, functional, legal property systems. Hayek may have best described the virtue of the individualist’s values in his seminal work “The Road to Serfdom” (which in the interest of brevity I do not insert here, but have included as an appendix). (Hayek, 1944, pp. 65-67)

Returning to DeSoto’s research of the poor, one is tempted to ask: “If the poor have so much capital, why are they ‘poor’?” DeSoto goes on:

“But they hold these resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment.” (DeSoto, 2000, pp. 5-6)

It turns out that this is just the beginning of the story. It is the legal system of representation that turns property into capital, but in the process this capital accomplishes many other things. Utility providers that supply electricity, natural gas, heating oil, water and sewer service, telephone service, trash collection and other things are willing to connect their services to a particular piece of property and trust that the owner will pay the bill, precisely because there is a formal legal system of record through which they have recourse if the owner fails to pay for these services; indeed, because there is – legally – an owner. The ready availability of these services, in turn, increases the useful value of the property they connect to. Owners of property which is properly represented in legal systems are compelled to abide by the legal agreements they enter into, because they have a stake in the legal system, and because their property is at risk of lien and lawsuit if they do not. These underpinnings are so interwoven in every facet of our society that we can scarcely imagine the far-reaching ramifications absent such a system.

It is not that there are no governments and legal systems in third-world countries, it is rather that the systems there are so excessively bureaucratic, dysfunctional, and corrupt as to be unusable by any but an elite few; those that DeSoto describes as existing inside the “bell jar” of privilege. Hernando DeSoto and his research team set out to understand just how dysfunctional these legal systems are for those outside the bell jar:

“To get an idea of just how difficult the migrant’s life was, my research team and I opened a small garment workshop on the outskirts of Lima, Peru. Our goal was to create a new and perfectly legal business. The team then began filling out the forms, standing in the lines, and making the bus trips into central Lima to get all the certifications required to operate, according to the letter of the law, a small business in Peru. They spent six hours a day at it and finally registered the business – 280 days later. Although the garment workshop was geared to operating with only one worker, the cost of legal registration was $1,231 – thirty-one times the monthly minimum wage. To obtain legal authorization to build a house on state-owned land took six years and eleven months, requiring 207 administrative steps in fifty-two government offices … To obtain a legal title for that piece of land took 728 steps. We also found that a private bus, jitney, or taxi driver who wanted to obtain official recognition of his route faced twenty-six months of red tape.” (DeSoto, 2000, pp. 18-20)

DeSoto documents comparable circumstances in the Philpines, Haiti, Egypt and elsewhere:

“In every country we investigated, we found it is very nearly as difficult to stay legal as it is to get legal. Inevitably migrants do not so much break the law as the law breaks them – and they opt out of the system. In 1976, two-thirds of those who worked in Venezuela were employed in legally established enterprises; today the proportion is less than half. Thirty years ago, more than two-thirds of the new housing erected in Brazil was intended for rent. Today, only about 3 percent of new construction is officially listed as rental housing. To where did that market vanish? To the extra-legal areas of Brazilian cities called favelas, which operate outside the highly regulated formal economy and function according to supply and demand. There are no rent controls in the favelas; rents are paid in U.S. dollars, and renters who do not pay are rapidly evacuated.” (DeSoto, 2000, p. 21)

Niryana Murthy – the founder and CEO of InfoSys in India, confirms DeSoto’s research, and has seen the difference that reforms can make:

“…prior to reform in India [it] required two years and fifty trips from Bangalore to Dehli to get permission to import a computer worth $1500. Things are different now: ‘Ever since 1991, there has not been a single instance when I went to Dehli for any license for any business of InfoSys. Today I can import a computer worth millions of dollars’ without having to see a single bureaucrat or apply for any license. The results have been extraordinary: India’s software exports have been growing at a 50 percent rate. … ‘The lesson to be learned there is the less the regulation, the further the government is away from business, the better it is for business.’” (Yergin, 2002, p. 228)

Murthy, once sympathetic to socialism, also said in the PBS video:

“If you want to eradicate poverty, you don’t do it by re-distributing existing wealth, you have to create new wealth.” (Yergin, 2002, DVD)

What makes DeSoto’s thesis doubly fascinating, is the parallels to be found in the first-world. Conservatives have long complained of the economic drag created in this country from excessive government regulation and bureaucracy. Beginning with Friedrich Hayek, and continuing with Milton Friedman, Thomas Sowell, and others, conservatives have long said that the best way to make everyone better off economically is to remove impediments to free market activity. Even Deng Xiaoping of China, who opened China to market reforms, said that he had

“... two choices: to distribute wealth or distribute poverty.” (Yergin, 2002, p. 410)

The socio-political debate in developed countries now often devolves to the rhetoric of “the widening gap between the rich and poor,” or even the more highly-charged language of the “haves and have-nots.” It should first be said that even the “poor” in the U.S. are dramatically better off than what would be considered “poor” in third-world countries. Nevertheless, if the fact is that there is a widening gap between the rich and poor in the U.S., it is because the middle and upper classes are creating so much new wealth, not because the poor in the U.S. are getting poorer. The economic truth is that the success of those creating new wealth uplifts even those who are not as successful, but DeSoto’s research may show the way to improving the opportunity for the poor to benefit.

I believe the impediments to market activity that exist: excessive government bureaucracy, excessive taxation, and so on, are felt more acutely, and create more real obstacle to upward mobility if you are poor. This is clearly what DeSoto has found in the third-world, and I see no reason why that should not be the case in the first-world. These bureaucratic drags on the economy in the U.S. are often the result of well-intentioned efforts to help the poor which inevitably hurt more than they help. As Hayek, Friedman, and Sowell repeatedly point out, the left typically prefers to transfer wealth from those at the top to those at the bottom through taxation and large bureaucratic entitlement programs, and the right prefers to increase the opportunity for all classes to participate in the wealth creation potential of capitalism by removing these government obstacles. We have long realized that one problem with the plan of the left is that to the degree that you increase transfer payments from wealth creators, it tends to decrease incentives and put the brakes on wealth creation. What is fascinating about the research of Hernando DeSoto, is that if his research shows the way for the poor of the third-world to become successful capitalists and raise themselves out of poverty, surely the much less “poor” of the first-world can be no less empowered. Contrary to this view is that of the socialist “wealth redistributionists,” which strikes me as yet another example of “The soft bigotry of low expectations;” (Bush, 2004) the belief that the poor are incapable of helping themselves, leaving them increasingly dependent on social welfare programs.

While we may not lack the legal property systems to the degree that developing economies do, still there must be lessons here worth learning. As any would-be entrepreneur in the U.S. knows too well, our legal systems are not without impediments. These systems are not such a challenge to a wealthy entrepreneur with a staff of lawyers and accountants, but lowest cost lawyer’s fees might run $250 an hour. A simple product patent costs about $5,000 to $10,000 with legal and filing fees. In my personal experience, the City of Hillsboro, Washington County, Oregon, a small business can be charged $27,000 just to move across the street, ostensibly an assessment for traffic impact fees, even when there is in fact no reasonable impact at all. The U.S. Federal code, the IRS statutes, and the state and local codes, are so complex that no entrepreneur can know the tiniest fraction of the laws he must obey. A would-be entrepreneur of modest means has a tough job just getting started. If we are really serious about benefiting from more surplus value in the economy, a very large portion of the accounting and legal fees paid by all businesses are consumed accommodating a massively bloated tax code, and an entire industry created to serve it; costs which could be almost entirely recovered by replacing the IRS with a greatly simplified tax code.

The genius of DeSoto’s thesis is that our property becomes capital and we are made wealthy by it because we have made ourselves accountable to our legal system, but that this only works for those to whom this legal system is practically accessible. As our legal and government systems become bloated and dysfunctional, the first to be disenfranchised are the poorest among us. If we want to allow the poor to better participate in the vast wealth creating potential of our economy, we should simplify our bureaucracy and legal codes. When conservatives say, as Ronald Reagan, famously, that we need to “get the government off our backs,” or we need to reduce taxes, it is not because conservatives are greedy or stingy and do not want to help the poor, Arthur Brooks has established the truth of who is charitable and who is not. Conservatives and Christians should know that capitalism, unleashed, provides the greatest opportunity for all people to prosper, and embodies the Biblical principles of sowing and reaping.
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Brooks, Arthur C. (2006). Who really cares – America’s charity divide, who gives, who doesn’t, and why it matters. New York, N.Y.: Basic Books.

Bush, George W. (September 2, 2004). President Bush's Acceptance Speech to the Republican National Convention. Retrieved December 12, 2006, from http://www.washingtonpost.com/wp-dyn/articles/A57466-2004Sep2.html

DeSoto, Hernando. (2000). The mystery of capital – Why capitalism triumphs in the west and fails everywhere else. New York, N. Y.: Basic Books.

Friedman, Milton and Friedman, Rose. (1980). Free to choose – A personal statement. New York, N. Y.: Harcourt.

Hayek, F. A. (1944). The road to serfdom. Chicago, Ill.: University of Chicago Press.

Sowell, Thomas. (2004). Basic economics – A citizen’s guide to the economy. New York, N. Y.: Basic Books.

Yergin, Daniel, and Stanislaw, Joseph. (2002). The Commanding Heights – The battle for the world economy. New York, N.Y.: Touchstone.

Yergin, Daniel and Cran, William (Writers). (2002). The Commanding Heights – The battle for the world economy. [Television Series Episode, DVD]. Yergin, Daniel and Thompson, Sue Lena (Executive Producer), Heights Production. Sullivan, Michael (Executive Producer) WGBH. Boston: WGBH.
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Appendix:

“Not only do we not possess … an all-inclusive scale of values: it would be impossible for any mind to comprehend the infinite variety of different needs of different people which compete for the available resources and to attach a definite weight to each. For our problem it is of minor importance whether the ends of which any person cares comprehend only his own individual needs, or whether they include the needs of his closer or even those of his more distant fellows – that is, whether he is egoistic or altruistic in the ordinary senses of these words. The point which is so important is the basic fact that it is impossible for any man to survey more than a limited field, to be aware of the urgency of more than a limited number of needs. Whether his interests center round his own physical needs, or whether he takes a warm interest in the welfare of every human being he knows, the ends about which he can be concerned will always be only an infinitesimal fraction of the needs of all men.

This is the fundamental fact on which the whole philosophy of individualism is based. It does not assume, as is often asserted, that man is eqoistic or selfish or
ought to be. It merely starts from the indisputable fact that the limits of our powers of imagination make it impossible to include in our scale of values more than a sector of the needs of the whole society, and that, since, strictly speaking, scales of value can exist only in individual minds, nothing but partial scales of values exist – scales which are inevitably different and often inconsistent with each other. From this the individualist concludes that the individuals should be allowed, within defined limits, to follow their own values and preferences rather than somebody else’s; that within these spheres the individual’s system of ends should be supreme and not subject to any dictation by others. It is this recognition of the individual as the ultimate judge of his ends, the belief that as far as possible his own views ought to govern his actions, that forms the essence of the individualist position.

This view does not, of course, exclude the recognition of social ends, or rather of a
coincidence of individual ends which makes it advisable for men to combine for their pursuits. But it limits such common action to the instances where individual views coincide; what are called “social ends” are for it merely identical ends of many individuals – or ends to the achievement of which individuals are willing to contribute in return for the assistance they receive in the satisfaction of their own desires.” (Hayek, 1944, pp. 65-67)

A Classical Education Primer

(c) October 15, 2004

What exactly is a “classical Christian school.” Most people hearing this description today would have little idea what it means. The term “classical” refers to a very specific set of education principles, but many people today might dismiss the term “classical” in this context as synonymous with a “traditional” or “ordinary” Christian school. Classical education was indeed ordinary many years ago, but it is hardly that today. The education described in the autobiography of a well-educated person from one or two or centuries ago, would sound very familiar to a classical student, but quite foreign to those educated in “public” schools today. I became involved with classical education at a small local private school, first as the parent of a student enrolled there, then invited to join their board of trustees, and finally becoming a part-time teacher and learning to employ the classical method in a classroom. Along the way, as has long been my habit, I read everything I could find on the subject.

While classical education is quite foreign to most people today, it has been central to education for most of the history of western civilization, coming to us originally from the ancient Greeks. Classical education was founded on the trivium, the progymnasmata, and rhetorical oratory. Later the quadrivium was added. The trivium is both content, and a theory of the three stages of learning: grammar, logic, and rhetoric. The progymnasmata is a system of fourteen teaching exercises ranging from fable, to thesis. In medieval times the quadrivium expanded the classical curriculum with four additional areas of content: arithmetic, geometry, music, and astronomy. The quadrivium may be understood as the study of “number”; arithmetic being pure number, geometry being number in measured space, music being number in measured time and sound, and astronomy being number in the measured movements of the heavens. Contemporary classical Christian education integrates all areas of the classical curriculum with a Christian foundation and expands the curriculum with additional contemporary subjects. The principal failing of most non-classical contemporary education is its intentional abandonment of the trivium, and at best a haphazard employment of the progymnasmata. Contemporary educators began a calculated movement away from the classical method and curriculum in the last century as part of the humanist movement for reasons which shall become clearer as we better understand the classical method.

Many people would partly recognize the names of the three stages of the trivium, without understanding their full significance. First is the grammar stage from which we get our name for “grammar school” and spans from birth through about sixth grade. The logic stage corresponds roughly to middle school. The third and final stage is the rhetoric stage and may begin any time in high school or later. These ages and corresponding stages are useful approximations, which do not apply uniformly to every individual or every subject, but the order of progression through these stages is necessary and consistent. Even an adult, well into the rhetoric stage of development in basic education, will find it useful to follow an orderly progression through the stages of the trivium when learning any new field of study. While the trivium was developed by the pagan Greeks, the wisdom of their educational structure was recognized even by early Christians, who saw that the trivium’s grammar, logic, and rhetoric stages correspond quite well with the Biblical concepts of knowledge, understanding, and wisdom.

The grammar stage of learning is that stage where the elemental building blocks of a subject are taught; the knowledge upon which all subsequent understanding is built. We are most familiar with the term “grammar” from our study of English grammar, indeed so familiar that we often think of grammar only in terms of the building blocks of language, but all areas of learning have their own “grammar.” In mathematics, it is necessary to first learn such things as number systems, and arithmetic operators. In art, one must first learn the color wheel, and the skills required to create images with different media. Contemporary classical educators continue to prefer to teach the grammar of language through the study of classical Latin and Greek, both for their value as root languages to many other western languages, as well as for the elegance of their formal structure. Contemporary classical teaching methods for the grammar stage may use flash cards, rhymes, songs, and games to support the repetition required for rote memorization of such things as times tables, spelling, vocabulary, or geography.

The logic stage of learning expands upon the foundation laid in the grammar stage with the addition of rules for combining these building blocks into more complex structures. In mathematics there are rules of association and commutation, methods for finding a least common denominator, and methods for factoring complex expressions, which correspond to the “logic” stage of learning mathematics. In the field of music, after one has learned the grammar building blocks of musical meter, note, scale, and instrument, there are principles of expression, and genres of style for combining these basic skills which correspond to the “logic” stage of learning to create music. Classical teaching methods for the logic stage will practice the manipulation of grammar and logic with exercises that may duplicate the great developments of masters in the field. In mathematics they might repeat the discovery of solutions to important problems, in music they might learn to perform the work of a master composer, and in art they might learn the traditional styles of various genres of art. There is still rote memorization required for the logic stage, but the logical constructs also embody elegant structure and purpose that can be understood in a way that supports learning, unlike much of the knowledge that must be memorized in the grammar stage.

When a student has learned the grammar of a subject, and understands its logic, the student is finally prepared to go beyond what has been taught to create his own unique expression of that subject. It is as if the knowledge and understanding are akin to the gestation and early nest-development of a beautiful bird which suddenly takes flight with rhetorical expression. Like the grammar and logic stages, we tend to recognize the term rhetoric more narrowly to describe a form of spoken discourse. It is difficult for us to appreciate fully what oratory meant to the classical Greeks because we are awash in a sea of communication, most of which is rhetorically vacuous and incompetent. Television, radio, billboards, printed books and magazines surround us in every waking moment of our day. If we turn on the radio or television and hear a serious rhetorician speaking, most people today will switch to some lighter form of entertainment, finding such discourse too demanding. The ancient Greeks held oratory in much greater esteem, and exercised it with a great deal more care and deliberation, an example we would do well to return to. The great orators of their day were great men indeed. A student had to master the grammar and logic stages of learning before earning the right to enter the ranks of the rhetoricians. One imagines that even an average logic-stage student then would easily recognize the rhetorical fallacies that we are oblivious to today. The foundation laid down in the first two stages of the trivium was seen as necessary to be sufficiently qualified to have a valid opinion from which to speak. Until then, the student’s opinions on a subject were of little consequence to anyone but the teacher guiding that student’s learning. There is humility and respect inherent in the classical method, in that man’s knowledge is viewed clearly as “standing on the shoulders of those who came before.” Public oration was a privilege that had to be earned by learning what had been passed on from the past. We may understand this better if we remember that this was long before the invention of movable-type or any form of mass media as we know it. Oratory in the public forum was akin to “publishing” for the ancient classicists. Just as a distinguished professional journal will not publish the writings of a beginner in their field, scholars in ancient Greece needed to establish their qualifications before they could earn the right to “profess” their ideas in public oratory. This is the derivation of our word “professional,” one whose standing has earned him the right to profess his ideas either through public oration – or today – through publication. The competent rhetorician then is the culmination of scholarship.

The remarkable thing about the three stages of the trivium is that the stages align quite well with observed natural development in young people. Any parent of a grammar-stage child will recognize the incessant questioning and an insatiable appetite for gathering facts. Children in this stage seem to enjoy rote memorization, even engaging in it for play. It seems that each answer only suggests ten more questions. A child in this stage of learning will often repeat something they are learning, chant-like, sometimes to the point of annoyance to the adults around them, yet without any hint of boredom. Children at this stage seem to be “hardwired” for the task of rote memorization as they accumulate the grammar of every subject they are exposed to. As I wrote this, sitting in a coffee store, a little girl about two years old came in and sat down with her father near me. In the first five minutes of her arrival she had practiced naming “table, chair, light, up, down, dad, and phone” talking to herself, thoroughly content to practice the correct application of those words. I could see in her face the utter satisfaction of simple knowledge. She had no need to form a sentence, or understand the words in some deeper way, she needed no audience, it was enough to revel in the correct application of “her” words.

A child entering the logic stage of learning is also quite recognizable to anyone who has spent much time with middle school students. The questioning of the grammar stage gives way to a crude form of argumentation. Almost any statement asserted by a peer or an adult may be the subject of a challenge, clarification, juxtaposition, comparison, or contrast from the student in the logic stage. Their logic will generally lack the sophistication or relevance of a competent rhetorician. The perfectly correct statement, “In one more day you will be a teenager,” may be met with the retort: “Actually I will be thirteen at one second after midnight, before it becomes daytime.” This is a classic “shallow” early-logic-stage argument which can be quite frustrating to a parent, but is a perfectly normal developmental exercise. While not incorrect, this argument contributes nothing useful to the discourse. It is simply the novice logician exercising a new-found ability, however annoying it may be to those they exercise upon. The student at this stage who is taught the formal structures of logic and logical fallacy will internalize these with this repetition and practice.

The student who has fully mastered the first two stages of learning and matured sufficiently may enter the rhetoric stage of learning. This stage is characterized by a student who goes beyond the grammar and logic they have been taught to combine these in new creative ways, developing ideas and opinions that are worthy of being publicly “professed.” The typical student today reaches this stage of maturity in their learning sometime during high school and college. A competent rhetorician knows the historical foundations and fundamental principles of their subject thoroughly, and has learned nearly all they can about their subject from others. Clearly, some disciplines take longer to reach this stage than others. The rhetorician stands on the shoulders of others, and leaps beyond this foundation to contribute new ideas, theories, and knowledge to their field. Knowledge and understanding that is “greater than the sum of its parts” and may aspire to wisdom.

The progymnasmata is a set of fourteen methods employed by the classical teacher to lead the student to knowledge and understanding. The name progymnasmata is a linguistic "cousin" to the more familiar word gymnasium, a place where one exercises to learn athletic skills. In much the same way, the progymnasmata may be thought of as a set of exercises for the development of knowledge and understanding. Some of these techniques would be quite familiar today, while others would very likely be quite obscure. Most teachers of any persuasion would find it difficult to teach without using some of these methods, but the classically trained teacher strives to employ them all. The fourteen exercises of the progymnasmata are fable, narrative, anecdote, proverb, refutation, confirmation, commonplace, encomium, vituperation, comparison, impersonation, description, thesis or theme, and defend / attack a law. A casual examination of just the familiar terms in this list correctly creates the image of a process that builds on the knowledge and tradition passed on from before. It is interesting also to note that the two terms perhaps most unfamiliar today, encomium and vituperation, describe examinations of individual character. As I learned to be a classical teacher, I was encouraged to find ways to apply these exercises to every subject I taught, and found them powerfully effective techniques that challenged and refined my own understanding.

Socratic questioning, named for, and made famous by the philosopher Socrates, is not explicitly a part of the progymnasmata, but an implicit and powerful technique of classical teaching, particularly in the logic stage and beyond. In this technique, the teacher questions the student, first to discover the relevant foundation of knowledge already attained, and then by asking questions just at the edge of their understanding, guides the thinking of the student to new understanding. In this way, the Socratic questioner may lead a student through the same path to knowledge taken by those who first discovered it. A student who has thus been led to “discover” new understanding, may truly then “posses” it.

Much that popularly passes for education today fails utterly as the direct result of having abandoned the trivium. Fundamental to the philosophy of the "humanists" is an abhorrence of absolute truth, or preexistent, preeminent deity. They have taken seriously the serpent’s claim in the garden that “Ye shall be as gods.” Believing themselves to be the only “god” they need, the humanist is unwilling to be bound to truth as it is handed down by those who have gone before, insisting that the world, even the historical past, can be re-created as they believe it should be, or should have been. The humanist may claim sincerely, “that may be your truth, but it is not my truth.” In this context, the early humanists spoke often of their abhorrence of the rote memorization and drill characteristic of the classical grammar stage, seeing it as slavish devotion to tradition. Dispensing with this, they encourage even young children to “express themselves” and discover their “truth” about a subject. Modern humanist education has taken this so far as to abandon even with the very notion of objective standards, having given themselves over to the anarchy of, not atheism, but omni-theism – we are all god; “Ye shall be as gods.” Yet even in this foundation of their beliefs, they are liars and deceivers, true to the nature of the serpent who inspires them. While professing to be the essence of tolerance toward all ideas, they indoctrinate a humanist dogma founded more on blind faith than any theology in all of history, and are utterly intolerant of any doctrine that would teach otherwise. Young students who have not yet mastered either grammar or logic are encouraged to express themselves, while being subtly indoctrinated in the way of “correct” humanist belief in pragmatism and relativism, defenseless to apply reason or tradition that might undermine these “truths” [sic]. In the process of undermining the classical method, the student fails to learn a reliable foundation on which to build their ideas. The classicist confidently says this student has been sold a fraudulent education lacking any valid foundation, while the humanist believes he has “evolved” beyond the need for devotion to any tradition, no matter how rich its foundation. The Christian surveys the world and sees entropy, not evolution, at work, but suspects the cure is not far off.

My own education came about many years ago just as the humanists were succeeding in removing the last vestiges of the classical curriculum from public schools. I had the good fortune to attend a small Christian school until half way through the fourth grade, enough to learn most of a proper grammar education, and a great love for reading; these were my academic salvation. Even though the school was not explicitly classical, it had never occurred to them to deviate from tradition. At that point, my parents became concerned that I might miss-out on the “new math” which was then being introduced in public schools. It now seems absurd to think that there was anything “new” in mathematics that needed to change the training of a fourth-grader. From that point forward, my education went downhill until I graduated from high school with only four classes in my senior year and much of the traditional curriculum no longer required. Many years later when my eldest son reached school age, I discovered that things had only gotten worse since I had left school. It had become standard policy to not correct, or assign any score or grade, to any work through the fourth grade for fear of impeding the creativity or self-esteem of the students. This discovery became the impetus for the search that led me to rediscover classical education. Regrettably, I did not have the benefit of a proper classical education, but through avid reading, and learning to teach classically, I have come to an approximation of its result, and an appreciation of its value.

There is a small but growing movement of classical Christian educators in this country, both in many small classical academies, and in the form of support for home-schoolers. I have been fortunate to find such schools for my sons and have witnessed astonishing accomplishments from them. Classical education theory has radically changed the very way that I view knowledge, and everything I now study as an adult. It has revolutionized my life and the lives of my sons. I have come to understand that our society is in great peril for abandoning it. I think that perhaps never in the history of our great nation has there been so great a need for a new generation of young people educated classically, and filled with the Word of God. If we feel a need for men and women like our founders, we must educate our youth as our founders were educated.

If you are the parent of school age children, please, find a classical school near you, or home-school with a classical curriculum. I have never met a parent who regretted the decision to prepare their child a classical education.

Whither the “Two-Party" System?
© May 2, 2009

I just watched the Glenn Beck show on Fox News Channel today and was disturbed by only one thing.

He had a group of “Tea Party” attendees in studio to dispel many of the lies and distortions we’ve seen about the “Tea Party” movement. This studio audience did a fine job of taking our government leaders to task for fiscal and social policy mismanagement. They showed themselves to fit none of the mainstream media distortions. One journalist in the audience observed that Jefferson and Madison would have recognized in the opinions of that audience, the government they worked to create, and in the mainstream media and many of our political elites, the government the founders worked to overthrow.

There was just one moment in all of this discussion which disturbed me: By a unanimous show of hands they indicated they do not believe in the “two-party system.”

It is easy to understand where this sentiment comes from. Both of the major parties have been guilty of extreme abuse of our constitutional system of government. So if both parties have become badly misguided, why would rejection of the traditional two-party system be cause for concern?

Many Americans have not taken the time to appreciate the wisdom of the two-party system. They reject the recent actions of both parties, but they “throw the baby out with the bathwater” when they reject the two-party system. Why is this?

Our constitutional republic form of government was created by men who shared a profound respect for the frailty of man. Our founders understood well that power may, and very often does, corrupt even the best of men. When we read the debates among our founders as they crafted our government with its historic “separation of powers” structure, we can see clearly that they sought to create obstacles to over-concentration of power. They knew that if either the executive, or the legislative, or the court systems of our national government could become dominant, the abuse of that power would be the undoing of our republic, and our freedoms. Indeed any serious student of the constitutional debates of our founders knows that they had the humility to realize that even they themselves could not be trusted with any over-concentration of power.

There is a very subtle principle here that must be examined carefully. It is not that two, or three, or five is a better number for divisions of government or parties, the question is, how do we structure our system so that we prevent “over-concentration of power,” because power corrupts men. Our three-part government serves this end because no one of the three parts of our government can exercise unlimited power without the cooperation of the other two. A two-party system also serves this end of preventing “over-concentration of power” because it requires that at least 50% of the voters agree for any given candidate to be elected.

Our “party” political system requires that the “parties” have “primary elections” to nominate their candidates, and we then convene “general elections” where the nominated candidates of these parties compete for the overall vote of the whole body of voters.

It is simple arithmetic to analyze the percentage of voters who must agree to elect a candidate from among several choices. With two choices, there must be at least 50% plus one vote to elect a candidate. With three parties, there need only be 33% plus one who agree, to elect a candidate, with ten parties, there would only need be 10% plus one. A system of more than 2 parties, thus, allows a concentration of power which may inevitably be injurious to the quality of our leadership.

The problem is that this self-same concentrating effect is dangerously seductive. We do not begin third parties as equal 33% competitors. If I join a minority party of say 5% of the electorate, I will very likely be able to find a party with whom I have a great deal of common cause. But that party, by definition cannot win, and of the remaining two parties who can win, I allow the party FARTHEST from my beliefs to become more dominant. Even if I believe we can grow this third party to equal 33% control, I will have created a situation where any group with more than 33% may gain control. I would like to think that my 33% will control, but it is at least as likely that some other 33% will gain control, making this very dangerous. This is a dangerous over-concentration of power, just as would be a government takeover by any one of the three parts of our constitutional government.

The temptation to leave the dominant two parties, is akin to a childish “take my toys and go home” approach to politics. Wisdom says we need to repair or rebuild the party which is closest to our view. This is hard, and often frustrating work. As Benjamin Franklin famously said: “Politics is the art of the possible.” The great strength of the two party system, within a free society of many competing opinions, is that it forces us to choose from among the lesser of two evils. Just because it is impossible to achieve every goal we would like within one of the two parties, we should not be deluded to think that we can do better with three parties; we are very likely to do much worse, despite the seductive “purity” of a third party. We are all tempted to “want our own way,” like a child, but as mature adults in a pluralistic society we must learn to master the art of compromise.

There is no shortcut to reforming our society. If we want to fix things, we must change minds, educate young people, hold our political representatives accountable, become informed about the dominant issues of the day, learn the art of debate, use every form of new media to its fullest, and become activists within whichever one of the dominant parties is closest to our views. If we abandon the dominant parties for a minority third party, we may feel the brief drug-like “rush” as we “get our own way” in the campaign debates, but the history of third party movements is that they serve only to help elect their closest polar-opposite. It’s a nice “rush” during the campaign, but the hangover the morning after election-day lasts for years. Like it or not, that is the practical reality of minority third parties! Those debates belong in the primaries of a major party, rather than the incestuous “love-fest” of a minority party.

But the real seduction of a third party is the belief that we can grow it to become equal to, and ultimately dominant over, the other two parties. This is the hardest seduction to resist, but just as dangerous. If we could grow a third party, along the way to dominance, we create a situation where the BEST 33% of the electorate can win an election, but at the same time we have created a dangerous situation where the WORST 33% of the electorate can win, and the odds are two to one that our view will not dominate.

The conservative view, the view of our founders, who intentionally made it difficult for any small group to gain control, and who created structural obstacles to resist change in our government lest we err in our haste, that view must prefer the two-party system; it is inherently more conservative.

Rather than emasculate a “Libertarian” or “classical liberal” perspective within a fruitless third party, and allow both dominant parties to avoid the pressure to include those views, far better to work within one of the dominant parties. As you take your views out of a dominant party, that party – by definition – moves even farther from your views because your views no longer need be accommodated by it.

As some in our society would move our government closer to fascism or socialism, which would be easier support for that group to gain consensus from? Would it be easier for them to gain the support of 33% of the voters, or 50% of the voters?

The two-party system, in all its frustrating “lesser of two evils” compromises, nevertheless is a vital safety mechanism against the dangerous over-concentration of power which our founders had the great wisdom to guard against. Tyrants can more easily win elections, when a small plurality is allowed to prevail. We would do well to learn from the wisdom of our founders, and master Franklin’s “art of the possible.”