Wednesday, June 29, 2011

Plan ahead

Second Annual AEA Conference on Teaching Economics
and Research in Economic Education
May 30 – June 1, 2012
Boston, MA

The AEA Committee on Economic Education (CEE) is organizing the second annual conference on teaching undergraduate and graduate economics, and research on economic education at all levels (including precollege). The conference is cosponsored by the Journal of Economic Education. All sessions will be held at the Royal Sonesta Hotel in Boston, except a dinner at the Federal Reserve Bank of Boston. Plenary speakers at the conference will include:

•Susan Athey, "Economics Education for the Internet Age: Design, Analysis, and Experimentation in Large-Scale Online Marketplaces"

•Peter Diamond, “Unemployment, Vacancies, Wages”

•Greg Mankiw, “Recent Challenges Facing Monetary and Fiscal Policy, and What They Mean for What We Teach”

A large number of concurrent sessions will also be scheduled, featuring both research and pedagogy papers, panel discussions, and workshops on teaching economics at the college level (undergraduate and graduate). Proposals for individual papers, complete sessions of papers on a particular theme, panel discussions, or workshop sessions, should be sent by e-mail to KimMarie McGoldrick, University of Richmond, kmcgoldr@richmond.edu no later than December 1, 2011.

The registration fee for the Boston conference will be $75 for AEA members until April 15, and $125 after April 15. For those who are not AEA members, the registration fee will be $125 until April 15, and $175 after April 15. Registration for the conference and hotel will open on March 1, 2012, on the AEA CEE web page.

Sunday, June 26, 2011

Unfunded Liabilities

We are told that unfunded liabilities are about $60 trillion. In my view, this is an extremely misleading figure. Michael Cannon from Cato noted that US Federal government unfunded liabilities are more like $119 trillion. I think Cannon’s estimate is also too conservative.
If you take a valuation approach to the debt creation similar to how valuation of a stock price is carried out, you come up with much larger numbers. A stock price is a function of the stream of expected earnings. How far out should this stream of expected earnings included in the expectations? Is it just 1 year, 2 years, 10 years, or what? The length depends on the type of business and the degree of uncertainty. When the discount rate is sufficiently large to make the value of the period so small that that period doesn’t matter. With debt the discount rate doesn’t change as rapidly because uncertainty does not rise as time increases.
More importantly, I maintain that all debt has an implicit government guarantee. Thus, any increase in debt implies an increase in unfunded liabilities. Consider for instance, the Pension Benefit Guarantee Corporation, a government agency. Here is what its mission statement says:
• We work with companies to keep their pension plans. Last year PBGC staff negotiated with dozens of companies, both in bankruptcy and otherwise, to preserve their plans. Partly as a result 250,000 people will keep their pension plans that otherwise might not.
• When plans do fail, we step in and make sure benefits keep getting paid. We work to ensure that retirees get the full benefits provided by law—on time. Over the years we’ve become responsible for almost 1.5 million people in 4,200 failed plans. Every month, on average, we pay $467 million for pensions for 801,000 retirees. PBGC is also responsible for future payments to almost 700,000 who have not yet retired. During FY 2010, we assumed responsibility for 109,000 additional workers and retirees in 172 failed plans.
• We implement pension laws, and work with the President and Congress to improve them. In FY 2010 we worked with both the private sector and other government agencies to implement the funding provisions provided by the Pension Protection Act of 2006, and, working with other agencies, helped Congress revise it. We will continue to provide policymakers with the information they need to decide if and when future changes are necessary.
Another example includes all bank deposits and loans. If sufficient to upend the balance sheet of a financial institution, all debt created by loans from financial institutions is implicitly guaranteed by the government. Consider these numbers listing the nation’s unfunded liabilities:
1) Federal government: $120 trillion
2) Pensions Benefit Guarantee Corporation $1.5 trillion
3) State and Local Governments $4 trillion
4) Private Sector guarantees by government X percent of Private Sector Debt ?
5) Private Sector Debt = 7.6 x public sector debt = $90 trillion
If “X” is .90, then unfunded liabilities exceed $200 trillion, using current estimates of federal government and state and local government unfunded liabilities. If that estimate of unfunded liabilities is undervalued, then we could argue that total unfunded liabilities exceed $300 trillion.
At what point does debt become too high? If unfunded liabilities are $120 trillion, with 320 million people in the U.S., then each person, each man, woman and child has a liability of $37,500. With unfunded liabilities of $300 trillion, total per person liability is about $1oo,ooo per person.

Thursday, June 23, 2011

Wednesday, June 22, 2011

Saturday, June 18, 2011

2011 AEA - papers and presentations

2011 AEA Annual Meeting: Session Webcasts are now available for viewing (AEA members only)

Text of Nobel Lunch address by Avinash Dixit

A letter from Orley Ashenfelter, Program Committee Chair.

Friday, June 17, 2011

Aplia

Welcome to Aplia's economic news blog, a place to explore current events that relate to your econ classes.

Revisiting the Reach of the BP Oil Spill
by Ben Resnick


A year ago, cleanup efforts to recover from the Gulf oil spill were just beginning, but the effects of the spill were already finding their way into markets. While the debates and projections attempt to forecast how far the oil will spread, economists understand that the effects of the spill will reach further than the oil itself ever could. While many initial discussions focused on the local impact of the disaster, applications of the basic supply and demand model shed light on how a regional disaster can spread to national and global markets.

Aplia is dedicated to improving students' learning by increasing their effort and engagement with your course. Founded by an instructor for other instructors, Aplia offers students premium, automatically graded assignments with detailed explanations that ensure they put forth effort on a regular basis. Aplia saves instructors valuable time they'd otherwise spend on routine grading while giving students an easy way to stay on top of coursework with regularly scheduled assignments. These assignments have been developed for a range of textbooks and are easily customized for individual teaching schedules. Currently, Aplia supports college-level courses and has been used by more than 1,000,000 students at over 1,300 institutions.

Thursday, June 16, 2011

Odds and Ends

It seems we have a Luddite for President. Barack Obama told a news program yesterday that employment is not picking up because business has substituted capital for labor. Look, he says, there are ATM machines rather than tellers. Would Obama's economy be better if we banned all technological change?

In the Mercatus Center a study was recently published listing the economic freedom of the states. There are some problems in the study given that Oregon is ranked sixth most free when Oregon is nearly as regulation plagued as Washington and California. But, Arizona was ranked 22. New Hampshire was 1. We need to look at why Arizona is only in the top 45% of most free states.

The Community College Board again raised the property tax. Amazing how the Board has the power to increase the tax any time it wants. The Goldwater Institute has been investigating the profligate spending by the Community Colleges and it appears that rather than raising their revenue, the Board should reduce some of its spending.

"Shovel ready jobs were not so shovel ready" says the President regarding the reason his stimulus plan did not help employment. Shovel ready literally would have been the FDR action of employing people to dig holes and employing other people to fill them in. This reduces unemployment. Does it increase standards of living?

I was a guest on the Terry Gilberg talk show on KFYI the other night and spent most of the time talking about the debt and the debt ceiling. I argued that the debt ceiling should not be raised; interest payments can be made and social security checks sent out and military paid all from current revenues. Not raising the ceiling would force government to prioritize. But a forecast -- it will be raised and without matching cuts.

Tuesday, June 14, 2011

Virtue and markets

From The Coordination Problem - Steven HorowitzCapitalism makes it possible to engage and deploy the whole range of bourgeois virtues.

Well P&G is at it again, this time in the aftermath of the recent tornadoes. The New York Times reports:

Days after the tornado, two of the company’s brands, Tide and Duracell, arrived with their own specially equipped trailers and crews, which set up in a Wal-Mart parking lot in Joplin.

One trailer housed the Tide Loads of Hope mobile laundry, first dispatched to post-Katrina New Orleans in 2005, which provided free wash-and-fold service. The other was the Duracell Power Relief Trailer, which provided free batteries and flashlights as well as charging stations for phones and laptops.

I take special pleasure in noting that they set up shop in a Walmart parking lot.

Sunday, June 12, 2011

Top Schools to Study Austrian Economics

Pete Boettke writes:

For good and bad, the vast majority of graduate programs in economics offer roughly the same policy emphasis. To be sure, they emphasize different fields of study (e.g., industrial organization, monetary economics, and public economics) and different methods (e.g., formal theory, applied econometrics, computational methods, and experimental to name a few). In most graduate programs, there will usually be a few faculty members who have very strong sentiments about the market as the main allocation mechanism and pessimism about the government in that role. They certainly would not dominate, but they will not be absent either. And this is true whether we are talking about the elite programs such as Harvard, Chicago, Princeton, MIT, and Stanford or run-of-the-mill programs such as Iowa or Michigan or Maryland. It is no longer like the 1960s, where free market economists were only found at Chicago and its satellites such as UVA, UCLA, Washington, and Rochester.


DOCTORAL PROGRAMS (leading to PhD)
Claremont Graduate School (CA) — http://www.cgu.edu/pages/653.asp
Students can specialize in both Neuroeconomics/Behavioral Economics and Public choice/public finance. Interested students should contact Paul Zak.

Clemson University (SC) — http://economics.clemson.edu
Students can specialize in public choice economics and property rights economics as faculty include Robert Tollison, Bruce Yandle and Dan Benjamin. Interested students should contact Skip Sauer.

Florida State University (FL) — http://mailer.fsu.edu/~tzuehlke/doctoral
The DeVoe Moore Center at FSU (with Professors Benson, Gwartney and Holcombe) provides students interested in studying the role of government in the market economy with fellowships and research support. Interested students should contact Bruce Benson.

George Mason University (VA) – http://economics.gmu.edu
George Mason is the home of ICES (experimental economics), CSPC (public choice economics), LEC (Law and economics), and Mercatus (Austrian economics). Students can specialize in these areas during their graduate students, as well as more traditional fields such as Industrial Organization, Public Finance and Monetary economics. Interested students should contact either Dan Houser or Richard Wagner.

New York University (NY) — http://econ.as.nyu.edu/page/home
NYU is the highest ranked program in economics that is strong in Austrian/free market economics. This is the intellectual home of Ludwig von Mises (1945-1969) and Israel Kirzner (1956-) and interested students should contact either Mario Rizzo or David Harper.

Suffolk University (Mass) — http://www.suffolk.edu/college/4408.html
The Beacon Hill Institute provides a strong public policy focus, and the specialization in public choice/public finance is a very strong track. Interested students should contact Ben Powell.

West Virginia University (WV) — http://www.be.wvu.edu/phd_economics/
Very strong in the fields of public finance and public choice. Interested students should contact Russ Sobel.

GRADUATE PROGRAMS (MA/MS)
San Jose State University (CA) — http://www.sjsu.edu/economics/graduate_students/ma_econ/index.htm
Program has been developed over the past decade and has been an excellent feeder program to PhD programs. Interested students should contact Edward Lopez

Loyola University in New Orleans (LA) — http://www.business.loyno.edu/bba/economics
Walter Block and his colleagues have built a strong program and are investigating establishing a graduate program that will be an outstanding feeder program for PhD programs. Interested students should contact either Walter Block or Dan D’Amico

UNDERGRADUATE PROGRAMS
Beloit College (Wis) – http://www.beloit.edu
Emily Chamlee-Wright has built a very strong educational program for free market students. Also on the faculty is Josh Hall.

Grove City College (PA) — http://www.gcc.edu
Very strong emphasis on Austrian/free market economics. Faculty include Jeff Herbener and Shawn Ritenour.

Hillsdale College (MI) — http://www.hillsdale.edu
Very strong emphasis on Austrian/free market economics. Faculty include Charles Steele, Ivan Pongracic, and Nicolai Wenzel.

Hampden-Sydney College (VA) — http://www.hsc.edu
Very strong emphasis on Austrian/Virginia Political Economy/free market economics. Faculty include Tony Carilli, Greg Dempster, and Jennifer Dirmeyer.

Rhoades College (TN) — http://www.rhodes.edu
Strong academic program with very good faculty in economics. Contact Art Carden for information.

Troy University (AL) — http://www.troy.edu
A newly established economic program under the direction of Scott Beaulier. Scott is building the program quickly and Troy promises to be one of the best options for students interested in free market economics to pursue.

Saturday, June 11, 2011

Do tariffs actually reduce imports?

This is not the question that should be asked, rather what is the effect of protectionism on economic welfare and growth. Moreover, a secondary effect of protectionism is to shape attitudes and activity toward rent seeking from the state. i would argue that this leads to a set of actions that are immoral and, more importantly, an expansion of this immorality into the public consciousness.

"Rather depressingly, the article reveals a problem that often occurs with government intervention.... “The only Americans getting more work as a result of the tariffs are Washington lawyers, who have been hired by both U.S. and Chinese companies. Their work includes haggling each year over private “settlement” payments that Chinese manufacturers denounce as a “protection racket.”

Fearful of having their tariff rates jacked up, many Chinese furniture makers pay cash to their American competitors, who have the right to ask the Commerce Department to review the duties of individual companies. Those who cough up get dropped from the review list.”

Friday, June 10, 2011

Method v knowledge

Who's better at teaching difficult physics to a class of more than 250 college students: the highly rated veteran professor using time-tested lecturing, or the inexperienced graduate students interacting with kids via devices that look like TV remotes? The answer could rattle ivy on college walls.

A study by a Nobel Prize-winning physicist, now a science adviser to President Barack Obama, suggests that how you teach is more important than who does the teaching.

He found that in nearly identical classes, Canadian college students learned a lot more from teaching assistants using interactive tools than they did from a veteran professor giving a traditional lecture.



Read more: http://www.chron.com/disp/story.mpl/ap/science/7562312.html#ixzz1MRmLmN4o

Shock Therapy or Top Down Planning

Pratt notes the failure of so many development plans when those plans are imposed from above -- from agencies and other nations. It reminds me of the "shock therapy" that was central to the Commanding Heights book and video. You might recall that Jeff Sachs was intially invited to Bolivia to consult on stopping hyperinflation. He ended up helping Bolivia to implement a quick, drastic, move to freer markets and the end of hyper money supply growth. He went on to help other Latin American countries and then Poland and Russia. The shock therapy of stopping hyperinflation makes sense when a central bank and government have allowed the money supply to grow out of proportion. Paul Volker essentially did this in the early Reagan years following Carter's double digit inflation. While we could argue that allowing central banks to create money out of thin air is what the basic problem is, once this has been done, the solution is to cut the money supply.

What Sachs helped Bolcerowitz do in Poland was far more drastic. A plan of switching immediately from the centrally planned economy to free markets and capitalism was implemented with terrible results. The institutions of capitalism did not exist. The rule of law did not exist. Private property rights did not exist. There was no free market sector that could drive the economy forward while creative destruction did its work. The result in Poland and in Russia was a period of corruption, and a drastic reduction in output and employment. Poland saved itself by stopping the shock therapy and moving toward a more gradual or evolutionary program. Russia did not. The corruption was too large, the oligarchs took over the "commanding heights" of the economy and capitalism was not allowed to develop.

Top down imposition does not work. Central planning does not work.

Thursday, June 9, 2011

Poll: Americans Want Government to Push Economic Mobility.

Boyes and I have blogged about the tension in a free and liberal society between the value or desire for freedom v security. A key variable in this tradeoff can be found in the set of conventions, norms and beliefs that make up the informal institutional structure of society.

Informal institutions are powerful, slow to change and shape the formal institutional framework. North points out the role played by culture and argues that beliefs trump "facts".

That being the case, the US has experienced an explosion in Leviathan over the past 20 years. Today we are in the midst of a debate about the sustainability of Leviathan.

A recent WSJ article illustrates the contradiction between the majority belief systems and the ability to support those beliefs:

An overwhelming majority of Americans want the government to help poor and middle-class Americans better their lot, but there was significant disagreement about whether or not the government was pursuing the right strategy. The poll seems to underscore a long-running truism that everyone wants to help the poor but no one agrees how to do it.

Stated differently, we all want government help, as long as the payment for that help either lies in the future or is financed in the present by someone else.

Wednesday, June 8, 2011

Stuck in transition

Will constructivism "triumph" again?

Today, poorly thought-out reforms in North Africa and the Middle East are being rushed through under the perceived threat of Islamist extremism. But even when such fears are well-founded, reforms should be evaluated on their own merits in broad consultations.

Tuesday, June 7, 2011

World Economics Association

Dear Readers of the Real-World Economics Review,

We, the 141 economists from the 40 countries listed below, invite you to join the World Economics Association which we are launching today.

Two commitments listed in our Manifesto sum up the project.

1. To plurality. The Association will encourage the free exploration of economic reality from any perspective that adds to the sum of our understanding. To this end, it advocates plurality of thought, method and philosophy.

8. To global democracy. The Association will be democratically structured so as not to allow its domination by one country or one continent.

The creation of the WEA addresses an obvious gap in the international community of economists – the absence of a truly international, pluralist association. Today’s digital technology makes it feasible to close this gap quickly and cheaply through a bottom-up, grass-roots approach.

The WEA has been legally constituted in the United Kingdom as a “Community Interest Company”, a special legal category (with an asset lock) for non-profit organizations whose purpose is to serve the public interest.

Membership of the World Economics Association is free. To join, all that you need to do is go here and then enter your name, email address and country and then click. You will also be given the option of providing us with a few professional details, but none of these are required. You will receive an email confirming your membership of the WEA . You will also be given the opportunity to make a donation to the running of the WEA . We want to emphasize that the WEA has no major donors, neither institutional nor individual, behind it.

Monday, June 6, 2011

Book Review - Intellectuals and Society

ASET book club read this book last year - this review captures my view of this flawed, yet accessible analysis by Sowell. While not his best work - Knowledge and Decisions would be a much better look at this topic, I would say that this book is worth a look.

Intellectuals are usually so absorbed in their visions for a better world that they have no patience for the gradual change that comes through market processes and voluntary action. Why wait for “social justice” outcomes such as the elimination of poverty or the end of discrimination if the government can simply mandate higher wages or outlaw “unfair” hiring practices? Sowell acknowledges that some intellectuals understand that State coercion, no matter how splendid the intentions behind it, is counterproductive. Most of them, however, continue advocating programs built around mandates, prohibitions, and taxes. Power is their opiate.

Sunday, June 5, 2011

ASU seizing online future

ASU, one of the nation's largest public universities, projects 30,000 students will attend fully online by 2020, a tenfold increase from today. Tens of thousands of additional, on-campus students would attend partly online.


Online-only students always pay per credit hour. This fall, undergraduate online tuition runs $425 per credit hour. Students also pay fewer fees than their on-campus counterparts.


Read more: http://www.azcentral.com/community/tempe/articles/2011/06/05/20110605arizona-state-online-classes.html#ixzz1ORvopTCEASU seizing online future

Adaptive efficiency

I was reminded of the importance of Douglass North's insight in listening to Mike Munger's always excellent comments last month on EconTalk and reading Tim Harford's blog.

Munger observed that institutions evolve, but not necessarily in a wealth enhancing manner - a lesson he learned from North. In his two most recent books, Understanding the Process of Economic Change and Violence and the Social Orders, North makes the point that institutional change is path dependent and very slow to change.


The review of the latter:

North argues that economic change depends largely on "adaptive efficiency," a society's effectiveness in creating institutions that are productive, stable, fair, and broadly accepted--and, importantly, flexible enough to be changed or replaced in response to political and economic feedback. While adhering to his earlier definition of institutions as the formal and informal rules that constrain human economic behavior, he extends his analysis to explore the deeper determinants of how these rules evolve and how economies change. Drawing on recent work by psychologists, he identifies intentionality as the crucial variable and proceeds to demonstrate how intentionality emerges as the product of social learning and how it then shapes the economy's institutional foundations and thus its capacity to adapt to changing circumstances.

The review of the former

Although I think that Violence has a lot going for it, that is not to say it is a successful book overall. It is useful, in my opinion, to contrast NWW with another work of “big think,” Daron Acemoglu and James Robinson’s Economic Origins of Dictatorship and Democracy. This is fair because NWW do so themselves in their book. Imagine that yours truly is to teach a graduate class on “Institutions and Economic Performance.” My goal is to train students to do independent research. Which of these two works would better serve as a text? For me the answer is easy -- Acemoglu and Robinson.


Although I do not think NWW is particular useful as a practical blueprint for research beyond taxonomy I emphasize that many of the ideas in the book have merit and are worthy of further exploration, particularly in a policy setting where formal theory (as opposed to ideas) may be counterproductive. Above all, the notion that one cannot simply “get rid” of the superficial exterior of natural states and thereby uncover the beating heart of an open access order yearning to be free is the book’s most important idea, and profound.



So, if institutions move down a path of predation and power concentration this self reinforcing process make will continue toward a stable state that may be slow to change direction.


Harford wrote:

Experimenting, learning, and adapting is inescapable in a complex world.

Harford was referencing military special ops in the above posting. I was motivated to think about this application in terms of adaptive efficiency that might well be destructive rather than productive. Time will tell the story about the long term, unintended consequences of the bin Laden assassination. That is, while the operation may have exemplified the process of adaptive efficiency in mechanics the consequence in terms of path and outcome way well be wealth destoying.

I often conflate military emergence and adaptation and suicide. While methods and mechanics for both may well emerge that reflect adaptive efficiency, the outcome, while stable, may not be wealth creating.

Saturday, June 4, 2011

America’s Turning Point

Hummel writes:

Lincoln’s war delivered a blow to civil liberties as well. The Union’s resort to nationally administered conscription touched off so much resistance that the President suspended habeas corpus throughout the North. Traditional estimates are that the administration imprisoned without trial or charges 14,000 civilians during the conflict, but some historians believe the figure to be much too low. To be sure, the greater number were citizens of either the border states or the Confederacy itself, and many of those arrested secured quick release within a month or two, usually after swearing a loyalty oath. Yet the federal government at the same time monitored and censored both the mails and telegraphs and shut down over 300 newspapers for varying periods.


He goes on to illustrate the ratchet effect -

Many of these measures were of course abandoned at the fighting’s end. Federal spending fell from its wartime peak to only 3 to 4 percent of GDP. Although not a trivial decline, it still left spending at twice prewar levels, and the largest postwar expenditures were war-related. Interest on the war debt initially accounted for 40 percent of federal outlays, and by 1884 veterans’ benefits were consuming 30 percent. These benefits were so lavish that they constitute the national government’s first old-age and disability insurance and stand as a precursor to Social Security. The impact of the Civil War was even felt in the seemingly unrelated area of obscenity. Congress passed the first act regulating mail content in response to complaints that troops were ordering pornographic material, and this became the basis for the Comstock witch hunts of the 1870s.

The Real Turning Point
This ratchet effect is a phenomenon historians frequently observe. Yet the Civil War did something more.

Wednesday, June 1, 2011

A Few Random Thoughts

The health care debate seems to have settled on two issues: should Obamacare be repealed? And, how should Medicare be saved from bankruptcy. The democrats are arguing that without the constraints of Obamacare, the costs of Medicare will continue rising. The republicans are arguing that Ryan’s plan to slowly shift the system to one of vouchers and the use of private insurance companies. The democrat arguments against Ryan’s plan are that costs will rise so much that the voucher will be insufficient and the old people will end up without care. This is a great divide between those who have no idea how markets work versus those who want to rely on the market. If the third party payer in Medicare was eliminated, individuals would seek out their best options, private companies would offer policies that those individuals want and are willing to pay for. It would drive prices down not up. Costs would rise no faster than the rise in prices in other sectors.

The debt ceiling debate is also interesting. If the ceiling were not raised, the Treasury would have to figure out how to reduce spending. Since it would want to pay the debt costs, it would have to cut elsewhere. The question is whether there is enough to cut without dealing with Medicare and Social Security. Looking at the data, there is enough room to cut – all that has to happen is that revenue matches spending. But scare tactics and wild rhetoric will surely define the debate, and it is likely the debt ceiling will be passed due to fear of government shutdown.

Finally, Pratt links to the survey of economists. I find it not surprising but still depressing that economists consider Krugman a star and don't even think of Hayek or Mises, that 60 some percent vote republican and 20 percent republican.

Caging the Dogs of War - Robert Higgs - Mises Daily

Higgs' analysis here is familiar to those of us with knowledge of the role of government in society and/or Higgs excellent body of research. That said, this long post is an outstanding review of a set of values/principles that shape the thinking of those who adovcate for liberty and responsibility. These values include:

1. Non aggression and the valuing of human life.

2. Liberty

3. Individualism

4. Responsibility

In an accessible and sensitive analysis of the foundations and consequences of war Higgs makes a number of points worth considering.

First - "catastrophic success" in the current war. Thinking about the first (ultimate?) value described above and war one can readily see the two sides of the argument. Non aggression values life. Intervention in the form of war sacrifies life for a "higher" value or good. So the image of a catastrophic success describes a successful war - death and destruction on a scale (catastrophic) that achieves a value higher than life. I am reminded of Nixon's rationale when asked about the war in his time - in response to the question of why are we fighting he responded - for peace. Yep, an oxymoron but one that is consistent across demoncratic and republican administrations over time.

Higgs says it so much better -

In sum, when we ask ourselves who took the United States to war in Iraq (and keeps it engaged there) and what those individuals hoped (and still hope) to gain by doing so, we quickly come to appreciate what a roaring success this venture has been and continues to be for all of them. In view of the endless death and destruction being visited upon the hapless people of Iraq, however, not to mention the great and growing number of deaths, injuries, and mental disorders being suffered by US troops in the Mesopotamian killing fields, we might well describe this adventure as a catastrophic success.


Higgs goes on to make a provocative point, one that I wish was more widely debated. That is, the Warfare State is guided by a set of motivations that are designed to capture and expand rents - both economic and political. In fact, the warfare state moves to a society that conjoins economic and political activity in order to more effectively hold and expand power. Inevitably this process leads down a road of serfdom - a poverty of existence anticipated and articulated by Orwell, Huxley and others. Higgs' characterization:

Reality of Rule, which is to say, from the government's effectively having gone to war permanently against the bulk of the American people, as well as episodically against unfortunate groups of foreigners in the Third World, where the US government seeks to establish or maintain its hegemony. By saying that the government has placed itself in a state of war against most of the people — namely, all those outside its own supportive coalition — I mean no more and no less than what John Locke meant when he wrote about this condition in his Second Treatise of Government

There it is, a warfare state wages war - I am still trying to decide if this is indisciminate or conscious, but I tend to agree with Higgs. That is the war is internal against those who might prevent rent seeking, oppose rent seeking or passively fail to support the rent seeking as well as externally. The history of the US does confirm this former target or victim of government power. Think of Lincoln (actually the apparatus of war that quickly returned) and the Maryland legislature, Wilson and the actions taken across the US and the more recent Patriot Act. Think large and small actions of invasion against individual by the state in the interest of the warfare state. I will be flying with my family this weekend and as the state fights the war on terror, my wife and children will be subject to the more intimate of invasion of privacy at the airport. So will I.
Caging the Dogs of War - Robert Higgs - Mises Daily