Saturday, 05 December 2015 05:12

Ramblings

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Ramblings

Allan C. Brownfeld

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby (Council for Inter-American Security). He has been a staff aide to a U.S. Vice President, Members of Congress, and the U.S. Senate Internal Security Subcommittee. He is associate editor of The Lincoln Review, and a contributing editor to Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

Remembering Milton Friedman on the 100th Anniversary of His Birth

Milton Friedman, the 1976 winner of the Nobel Prize for Economic Science, and the pre-eminent American advocate of free enterprise, was born on July 31, 1912 - a hundred years ago. This is an appropriate time to commemorate his life and reflect upon his achievements in advancing freedom.

It was Milton Friedman's belief that free enterprise was the only form of economic organization consistent with other freedoms. In his important book Capitalism and Freedom, he points out that

The kind of economic organization that provides economic freedom directly, namely competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables one to offset the other.

It was his view that

Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated - a system of checks and balances. By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.

Businessmen, Friedman liked to point out, believe in maximizing profits, not necessarily in genuinely free markets. He declared that

With some notable exceptions, businessmen favor free enterprise in general, but are opposed to it when it comes to themselves.

In a lecture entitled "The Suicidal Impulse of the Business Community" given in 1938, he declared that

The broader and more influential organizations of businessmen have acted to undermine the basic foundation of the free market system they purport to represent and defend.

What would Milton Friedman think of the recent bailout of failing banks, supported by both Republicans and Democrats? Wall Street Journal columnist David Wessel points out that

He didn't trust central bankers. He blamed the Bank of Japan for the deflation of the 1990s and the Fed for the Great Depression of the 1930s and the Great Inflation of the 1970s. He would, if his co-author Anna Schwartz is any clue, have condemned the bank bailouts of recent years. "They should not be recapitalizing firms that should be shut down," she told The Journal in 2008.

The issue he devoted most of his time to in his later years was school choice for all parents, and his Friedman Foundation for Educational Choice, is dedicated to that cause. He used to lament that

We allow the market, consumer choice, and competition to work in nearly every industry except for the one that may matter most, education.

Friedman was also proud to have been an influential voice in ending the military draft in the 1970s. When his critics argued that he wanted a military of mercenaries, he would respond:

If you insist on calling our volunteer soldiers "mercenaries," I will call those who you want to draft into service involuntary "slaves."

One of Friedman's former students at the University of Chicago, the respected economist Thomas Sowell, recalls that

Like many, if not most, people who became prominent opponents of the left, Professor Friedman began on the left. Decades later, looking back at a statement of his own from his early years, he said: "The most striking feature of this statement is how thoroughly Keynesian it is." No one converted Milton Friedman, either in economics or in his views on social policy. His own research, analysis, and experience converted him. As a professor, he did not attempt to convert students to his political views. I made no secret of the fact that I was a Marxist when I was a student . . . but he made no effort to change my views. He once said that anybody who was easily converted was not worth converting. I was still a Marxist after taking Professor Friedman's class. Working as an economist in the government converted me.

As a student of Friedman's in 1960, Sowell, who is black, notes that

I was struck by two things - his tough grading standards and the fact that he had a black secretary. This was years before affirmative action. People on the left exhibit blacks as mascots. But I never heard Milton Friedman say that he had a black secretary, though she was with him for decades. Both his grading standards and his refusal to try to be politically correct increased by respect for him.

In the late 1960s, Friedman explained that "there is no such thing as a free lunch." If the government spends a dollar, that dollar has to come from producers and workers in the private economy.

Friedman once said that

The true test of any scholar's work is not what his contemporaries say, but what happens to his work in the next 25 or 50 years. And the thing that I will really be proud of is if some of the work I have done is still cited in the textbooks long after I'm gone.

It seems certain that Milton Friedman will not only be cited in the textbooks but that men and women who value freedom everywhere in the world will recognize in him one of its prophetic voices. He clearly identified the intrinsic link between freedom of speech, religious freedom, the freedom to govern oneself - and economic freedom that, as he often pointed out, is simply democracy applied to the marketplace.

Recent Events Show That Honor and Integrity - Once Valued and Transmitted - Are Increasingly Rare in Today's Society

Honor and integrity used to be important in the American society. This writer, as a student at the College of William and Mary, signed the school's Honor Code, which declared that anyone who stole or cheated would be immediately removed from the college. This was the first Honor Code at an American college. It reflected the values of that society. Professors left the room when students took exams, and dormitory rooms were often left unlocked. Honor was more valued than anything that might be gained from dishonor.

Now, our society seems to have embraced a different standard of value, or non-value. Consider just a few recent developments.

* Seventy-one at New York's elite Stuyvesant High School were involved in cheating on the state's Regent's examinations in Spanish, U.S. History, English, and Physics. Stuyvesant admits just the top tier of 8th graders. The students involved in cheating were not expelled - and were not even given a failing mark in the exam. Instead, they remain enrolled in the school and will be able to retake the exam. Commenting on this, Frank W. Abagnale, the subject of the book, movie and Broadway musical "Catch Me if You Can," declared: "We do not teach ethics at home, and we do not teach ethics in school because the teacher would be accused of teaching morality. In most cases, we do not teach ethics in college or even instill ethics in the workplace."
* A report issued in mid-July by former FBI Director Louis Freeh, after an eight-month investigation, concluded that four of Penn State University's most powerful leaders, including head football coach Joe Paterno and the school's president, covered up allegations of sexual abuse by an assistant coach because they were concerned about negative publicity. Confronted with reports that Jerry Sandusky lured boys to the State College campus where he sexually abused them, Penn State's leadership deferred to "a culture of reverence for the football program" and repeatedly "concealed Sandusky's activities from authorities." Freeh said "Our most saddening and sobering finding is the total disregard for the safety and welfare of Sandusky's child victims by the most senior leaders at Penn State."
* Congressional ethics, we know, is an oxymoron. Recently, a report was issued by Rep. Darrell Issa (R-CA), chairman of the House Committee on Oversight and Government Reform, about how a group of lawmakers and their staff benefited from a "VIP" loan program not available to the public that waived fees, cut interest rates, and eased borrowing standards. Countrywide Financial offered the special loans in an effort to dissuade lawmakers from voting for stiffer banking regulations. The report names names, with many lawmakers still in Congress, but it did not include a letter from Issa calling for the ethics panel to investigate the matter. Without the letter, the ethics panel is not required to do a thing.
* In Washington, D.C., there are calls for the resignation of Mayor Vicent Gray. He has refused to answer questions about whether or not he knew, before or during the 2010 Democratic mayoral primary, about a secret, well-funded and illegal "shadow campaign" on his behalf. More than $653,000 was unlawfully used to purchase materials and hire workers to secure his victory over then Mayor Adrian Fenty two years ago, money allegedly supplied by a prominent businessman with significant contractual interests with the U.S. Government. Mayor Gray's campaign slogan was "character, integrity, leadership." Three members of the D.C. Council - and a host of others in the city - have called for the mayor to resign.

Many books have been written about financial misdeeds on Wall Street, about child abuse and cover-ups within the Roman Catholic Church, and among the Orthodox Jewish community in New York. While it may be true that bad news is news while good news is not, the bad news is increasingly widespread.

Our crisis in values has been building for some time. The May-June1988 issue of The Harvard Magazine published an eleven-page essay, "Ethics, the University, and Society," by President Derek Bok. He declares that

The American nation is greatly in need of some means to civilize new generations of the people, preparing them to serve as honest, benevolent, productive citizens of a free society, and all of Harvard's deliberations and studies and initiatives and earnest concerns have not resulted in any effective means of Character Education.

Derek Bok concludes:

Despite the importance of moral development to the individual and the society, one cannot say that higher education has demonstrated a deep concern for the problem. . . . The subject is not treated as a serious responsibility worthy of sustained discussion and determined action. . . . If this situation is to change there is no doubt where the initiative must lie. Universities will never do much to encourage a genuine concern of ethical issues or to help their students to acquire a strong and carefully considered set of moral values until presidents and deans take the lead.

Needless to say, things have deteriorated a great deal since then. It is not only the values of average Americans that appear to be in a fee fall of decline, but those of our elites may be leading the way. Who in Washington or Wall Street - or at Penn State - is held responsible for what they do?

New York Times columnist David Brooks laments about the decline on the part of today's elites. In the past, he writes, elites

. . . had a stewardship mentality, that they were temporary caretakers of institutions that would span generations. They cruelly ostracized people who did not live up to their codes of gentlemanly conduct and scrupulosity. They were insular and struggled with intimacy, but they did believe in restraint, reticence, and service.

Today's elite, in Brooks' view,

. . . is more talented and open but lacks a self-conscious leadership code. The language of meritocracy (how to succeed) has eclipsed the language of morality (how to be virtuous). Wall Street firms, for example, now hire on the basis of youth and brains, not experience and character. Most of their problems can be traced to this. If you read the e-mails from the Libor scandal you get the same sensation from reading the e-mails in so many recent scandals: these people are brats; they have no sense that they are guardians for an institution the world depends on; they have no consciousness of their larger social role.

How to reverse our moral decline is not a subject that is being widely discussed in our contemporary society. It should be. If it is not addressed, all of us - and our children and grandchildren - will be losers.

Those Who Are Serious About Cutting Spending Should End Depression-Era Farm Subsidies

Government spending, everyone realizes, is out of control. During President George W. Bush's tenure from 2001 through 2009, the national debt doubled. According to Bruce Riedl of the Heritage Foundation, the prescription drug bill alone is projected to add nearly $400 billion in its first decade.

Both parties are clearly in this together. According the Factcheck.org:

Spending under President Obama remains at a level that is quite high by historical standards. Measured as a percentage of the nation's economic production, it reached the highest level since World War II in fiscal 2009.

Since 2009, the Obama administration has maintained trillion dollar deficits. Writing in Roll Call, Dustin Siggins and David Weinberger report that

If we average spending as a percentage of GDP under Bush from 2001 to 2009, it comes to just over 20 percent. . . . If we do the same for Obama from 2010 to 2012, we get about 24 percent, quite a bit higher than the historical average.

One place to cut spending is to eliminate depression-era farm subsidies. But since each farm state has two senators, some Democrats, some Republicans, this has been difficult to do. Now, in our era of economic decline and skyrocketing government debt, it is time to take a serious look at this wasteful program.

In 2012, the Department of Agriculture is projected to spend $22 billion on subsidy programs for farmers. Veronique de Rugy of the Mercatus Center at George Mason University notes that this program was introduced in the 1930s to help struggling small family farms but

. . . the subsidies have become the poster child for government welfare for the affluent. Farm households have higher incomes, on average, than do non-farm U.S. households. Figures from the USDA show that in 2010 the mean farm household income was $84,400, up 9.4 percent from 2009. This is 25 percent higher than the mean U.S. household income of $67,350 as reported by the U.S. Census Bureau for 2010.

Beyond this, farm subsidies tend to flow toward the largest and wealthiest farm businesses. According the Environment Working Group database, in 2010, 10 percent of farms received 74 percent of all subsidies. These recipients are large commercial farms with more than $250,000 in sales and mostly produced crops tied to political interests. The Cato Institute's Tad DeHaven and Chris Edwards calculate that more than 90 percent of all farm subsidies go to farmers of just five crops - corn, wheat, soybeans, rice, and cotton. For every federal dollar spent on farm subsidies, 19 cents goes to small farms, 19 cents goes to intermediate (middle income) farms, and 62 cents to the largest commercial farms.

In De Rugy's view

The tragedy is that while cronyism benefits the haves, all other Americans - especially those with lower incomes - suffer from the resulting distortions. Take the domestic sugar industry as an example. The government protects its producers against foreign competitors by imposing U.S. import quotas, and against low prices generally with a no-recourse loan program that serves as an effective price floor. As a result . . . U.S. consumers and businesses had to pay twice the world price of sugar on average since 1982.

According to the Center for Responsive Politics, the U.S. farm lobby contributes millions of dollars to political campaigns to maintain federal support for the subsidies. The agribusiness sector as a whole spent $124 million on lobbying 2011. For the past decade, the amount of money this sector has spent on lobbying has grown more than 69 percent. Between 1995 and 2009, 23 farmers currently serving in Congress have signed up for farm subsidies.

The fact is that the U.S. has the richest, most productive agricultural sector, and the best fed population in the world. Boosted by $136.3 billion in gross sales to other countries, U.S. net farm income hit a record $98.1 billion in 2011. A new Economist Intelligence Unit report ranks the U.S. as the most "food secure" nation in the world, based on the affordability and quality of its food supply. The U.S. provides the equivalent of 3,748 calories per day for each of its roughly 314 million people. That is nearly 1,500 calories more than the minimum necessary for a healthy life.

Still, every five years Congress drafts a farm bill as if U.S. agriculture cannot possibly exist in a real free market economy. At this very moment, farm-state lawmakers and the lobbyists who swarm around them, are preparing to extend this program of subsidies. The Senate has already passed a measure priced at $969 billion over the next decade. The House has gone on summer vacation without acting as Republicans weigh the election-year political risks of proceeding with that chamber's own near-trillion dollar measure.

Editorially, The Washington Times points out that

Like the bank bailouts and TARP, the farm bill illustrates the capture of the legislative process by special interests. The last farm bill in 2008 was the focus of $173.5 million in lobbying expenditure. . . . This is all money spent on what the Mercatus Center's Matthew Mitchell calls "unproductive entrepreneurship" where people are organizing and expending their talent to become rent seekers, and the end result is wealth redistribution, not wealth creation. Real entrepreneurship innovates in ways that are socially useful. Cronyism diverts resources . . . into a system that rewards privileges to favored groups. In the case of the 2008 farm bill, recipients of subsidies of $30,000 or more had an average household income of $210,000.

Many in Congress who speak of their belief in the free market and who decry huge government deficits, nevertheless seem ready to extend farm subsidies into the future. This tells us, unfortunately, that what we are witnessing is politics as usual. And both parties are in it together. No one needs to wonder why we can't bring government spending under control. This is why. *

Read 3294 times Last modified on Saturday, 05 December 2015 11:12
Allan C. Brownfeld

Allan C. Brownfeld is the author of five books, the latest of which is The Revolution Lobby(Council for Inter-American Security). He has been a staff aide to a U.S. vice president, members of Congress, and the U.S. Senate Internal Security Subcommittee. He is associate editor of The Lincoln Review, and a contributing editor to Human Events, The St. Croix Review, and The Washington Report on Middle East Affairs.

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