“Making a Difference”: Curing Others Through Snake Oil

Population growth as a driver of economic demise has been recycled for centuries. The Malthusian population trap was shown as a fallacy long ago yet lives on to this very day. What if one differentiates between fallacies being the classic snake oil argument/fallacy vs. the shaping societal outcomes argument/fallacy? (1)

A fallacy must have an author and a receiver/believer. The author wants the receiver to believe the author’s notion as an outcome is desired. What if one concentrates on outcome and divides “outcome” into individual outcome vs. individual and others outcomes?

In the classic case of the snake oil salesman the salesman wants the receiver to believe the potion in the bottle will alleviate the problems of the receiver. The desired outcome being the snake oil salesman, on an individual basis, gains while the receiver/believer, on an individual basis, is duped [although some are not duped in that the mind is a weird and wonderful place and a placebo can have positive effects]. Moreover, in the main, the same snake oil salesman and same snake oil potion cannot return to the same individual as his dupery has been uncovered. That is, there is little chance for repeat fallacy sales.

Although snake oil salesmen continue to exist today and wild remedies continue to abound, a second fallacy category has emerged regarding shaping outcomes via fallacy. It’s the same snake oil salesman, and the same salesman wants to gain [notoriety, sell books, interviews, speaking engagements, etc. ….the classic Al Gore case] and the author still is concentrating on the individual receiver/believer, but the remedy is much less individual as societal based. Stated alternatively, rather than buying a bottle of snake oil and individually being cured of what ails you as an individual, you buy an abstract notion that by owning the abstract notion you cure not only yourself but you cure others as well.

Hence the fallacy of the bottle-of-potion is merely substituted by the abstract-potion. However, where the bottle full of potion was an individual cure the abstract potion is your supposed ability to cure yourself and cure others as well.

The supposed ability of being able to cure others through the abstract potion is related to a fallacy- facilitator known as “making a difference”. That is, rather than concentrating on one’s self and if you as an individual improve as an individual [improvement of one sort or another] than society improves as society is merely a summation of all individuals. Conversely, the abstract potion regarding curing others is based on you making a difference in society as society is not viewed as a summation of individuals rather society is an abstract notion of a preconceived outcome of altruistic attributes of society and to meet these societal attributes individuals should conform to the preconceived society. That is, society becomes a real thing with real attributes and leaves the realm of the abstract. You hence “make a difference” by curing others through having others conform to the preconceived attributes. Your “making a difference” becomes your ability to make others conform to the fallacy [curing others through snake oil].

Returning to the proposition that the shaping of societal outcomes through fallacy is a separate form of snake oil, let us examine some real life examples:

(1)    As stated earlier the Malthusian population trap that lives on without end,

(2)    The living wage and the minimum wage,

(3)    Fair and greed,

(4)    Social justice,

(5)    Global warming, global cooling finally morphing into the all-inclusive “climate change”,

(6)    Gender gap,

(7)    Achievement gap,

(8)    Add you fallacy here ---> ___________.

In the classic snake oil salesman case the same snake oil salesman and same snake oil potion cannot return to the same individual for more fallacy sales as his dupery has been uncovered. That is, there is little chance for repeat fallacy sales. However, the shaping societal outcomes argument/fallacy does in fact repeat itself over and over again. Why? Thomas Sowell made an excellent observation regarding fallacy in his book A Conflict of Visions. When a proposition such as the Malthusian population trap is disproved the author merely comes back and amends the original proposition so that there is no way to prove or disprove the proposition. (2)

 Here is a real life/real-time example: global cooling was disproved and then amended to global warming which was disproved and finally is amended to "climate change". Global cooling was disproved, global warming was supported by a hoax, hence one merely changes the proposition to "climate change" and the subject is so broad and so encompassing it leaves the author with the ability to point to any change.... cooling, warning and for that matter no-change as evidence of "climate change". Hence the author has purposely re-framed the proposition in such a way that there is no way to prove or disprove the proposition.

Notes:

(1) From Economic Man to Economic System, Harold Demsetz

(2) A Conflict of Visions, Thomas Sowell

PIIGS: Remember it is Portugal, Italy, Ireland, Greece and……Spain.

“…the historically important central puzzle of economics was to explain how independently acting people in an unplanned decentralized, private ownership economic system allocate their resources and, in particular, to explain how it is that the uses they seem to make of resources seem to be well coordinated”. - Harold Demsetz (1)

Independently acting people in the unplanned aggregate economic environment coordinate well. Man-made systems do not coordinate well in a vast and aggregate economic environment. (2)

Imagine if one is faced with having to “unwind” man-made political systems masquerading as economic systems in Europe. Europe being a vast economic environment. The unwind becomes a crisis for many as the man-made politico systems, the larger and more complex they are, breed larger and more complex negatives that public choice theory explains. (3)

Robert Higgs at the Independent Institute has made the assertion that legislation leading to regulation “ratchets up”. That is, little is ever repealed, merely more is added on. Hence we have a corpus of regulation that can never erode, only expand. A zero floor of erosion in corpus with all new gains in regulation becoming part of the corpus – rarely or never to erode. (4)

Imagine being on the ground in Europe and trying to ratchet back/unwind all the man-made politico silliness and during every step of the way encountering Marie, Thomas, and Peter living off of, and depending upon, the zero floor of erosion of corpus that sustains his/her income in one form or another.

Notes:

(1) From Economic Man to Economic System, Harold Demsetz
http://www.amazon.com/From-Economic-Man-System-Institutions/dp/1107640857

(2) F.A. Hayek, from the essay The Pretense of Knowledge

(3) James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, 1958

(4) Dr. Robert Higgs, http://www.independent.org/aboutus/person_detail.asp?id=489

43,000 K-12 Schools Labeled as Low or Underachieving

Whatever one’s political point of view is regarding the bipartisan supported and consequential legislation known as “No Child Left Behind”, the one interesting yield of the legislation is an abundance of data produced. “The Testing triggered by the law, however, helped researchers gather an abundance of data on student progress in annual math and reading exams”. (1)

Apparently, data regarding K-12 educational scores were tremendously difficult to obtain before the data now available as a consequence of No Child Left Behind. “Erich Hanushek, an economist at the conservative Hoover Institute, said that 40 years ago he toiled in school districts gathering test data. By the mid-2000s, research on teacher effectiveness trickled out, but No Child Left Behind opened the floodgates”. (2)

With data now in hand, The Center of Education Policy estimates 43,000 (48%) of US schools are now low or underachieving as defined by No Child Left Behind. (3) (4)

The statistic above begs a question: the 48% low or underachieving schools, given a 300% real dollar increasing in spending on education is the US since 1960, means what? Many people state that more money does not solve the problem. Fair enough observation. However, regarding the spending and the miserable results one needs to examine the further question of: Where did the money go? If the 300% increase in spending did not yield output improvement, the resources merely disappeared and evaporated into thin air? –Or- the money/resources was absorbed by the participants of the delivery model and not delivered to the end consumer which is the student/child.

The mantra of more spending yielded stagnant or even declining results misses the point that the resources were allocated elsewhere. Was the money returned to the taxpayer? A check was written to each student? No, the money ended in the delivery model.

Regardless of the zeal to put educators on a pedestal as “those teaching the citizens of the future” and the like, one needs to look beyond the drama and romance of politically framed redirect arguments and look at the hard cold facts of educator total compensation and education administration expansion and accelerated compensation. One needs to examine the infrastructure spending and crony capitalism there associated.

The question/observation then becomes: if spending has increased by 300% in real dollars since 1960; student test scores are level or declining; school system administrators regularly making six figure incomes and six figure retirement incomes while teacher pay, benefits and retirement have escalated as well; with school building construction continuing at always ever increasing and over-run costs….then one has in fact been shown the money. That a late stage collectivist based model delivered through monopoly has merely done what it’s destined to do in its late stages: increased inputs yields no increase in output and the power purveyors of the model marginally reward underlying participants while rewarding themselves handsomely - all the while shirk increasing at an increasing rate. (5)


Notes:

(1)  School Law Earns One Credit: derided ‘No Child’ initiative forms basis for broad changes in educational system, Stephanie Banchero, The Wall Street Journal, 02/09/2012. http://online.wsj.com/article/SB10001424052970203315804577209773654799182.html

(2) Ibid.

(3) Ibid.

(4) AYP Results for 2010-11, Center for Education Policy,  http://www.cep-dc.org/displayDocument.cfm?DocumentID=386

(5) From Economic Man to Economic System, Harold Demsetz, 2008, Cambridge University Press.

Third Party Satisfaction Bandits

The term “Utility“, in economics, is basically the amount of satisfaction one receives from the consumption of a good, service or action. Marginal utility is the amount of satisfaction one receives from consuming additional units of the same good, service, or action. Since marginal utility drops off regarding consumption of additional units of the same good, service or action, the general proposition is that consumers consume a basket of goods, services, and actions of which each item has maximum utility hence reaching maximum total utility.

For example, rather than a basket comprising twenty identical packages of chocolate chip cookies with diminishing marginal utility regarding each addition package of cookies, one has a basket comprising a variety of items such as cookies, milk, coffee, lettuce, tomatoes, a haircut and a book with each item having maximum marginal utility thus yielding maximum total utility for the particular basket.

Let us assume on a given day consumer A acquires basket X of goods, services, and actions and has achieved maximum total utility. That the particular basket yields maximum satisfaction given price and the allocation of scare resources with alternative uses. All is tidy and neat as consumer A has reached maximum total utility!

-Or- did A not reach maximum total utility due to market intervention-distortions by third parties? The assumptions in the example above is that A reaches maximum utility given “market constraints“. However, if market constraints become market constraints and market intervention-distortions by third parties, does A reach maximum total utility?

What if third party decisions, resulting in market intervention-distortion, cause consumer A to acquire basket X3P [where X3P represents the assortment of goods, services, and actions available due to third party market intervention-distortion]. That is to say, consumer A wanted to reach maximum total utility by having the freedom to choose and hence acquiring basket X of goods, services, and actions. However consumer A was unable to actually find X.

Consumer A could not find X as third party market intervention-distortion precluded X and substituted X with available option X3P.

　
Therefore consumer A does not reach his particular maximum total utility as he never acquired X. In essence, A acquires X3P due to third party market intervention-distortion. A is not at the point of maximum total utility. If A is not at maximum total utility where did the difference go?

Before we examine the missing maximum total utility, we need to consider a statement by Harold Demsetz, department of economics UCLA, from his book From Economic Man to Economic System, Chapter 10, pages 141 -159, entitled The Public Corporation: Its Ownership and Control. Demsetz writes on page 158:

‘A tax levied on corporate profit reduces the care and effort owners put into its operation, since part of the return that would have been received by owners will go to the state. Defacto, private owners of the corporation are saddled with a shirking partner, the state, which takes part of the revenue and provides none of the effort to improve the firm’s return. Consequently the greater is the corporate tax rate, the greater the incentive for corporate owners and management to pursue the “quiet life”.’
If state [government] acts as a “shirking partner” (which takes part of the revenue and provides none of the effort to improve the firm’s return) then do third party market intervention-distortions also act as a “shirking partner” in regards to A‘s quest for maximum total utility? Since A is not at maximum total utility did the difference go to the shirking partner represented by a third party advocating market intervention-distortions?

Now examine these observations by Thomas Sowell from his book The Vision of the Anointed, pages 74 and 75:

‘One of the problems faced by “consumer advocates” in general is how to make the consumers’ own preferences disappear from the argument, since consumer sovereignty conflicts with moral surrogacy by the anointed.’

‘Displacing responsibility from the consumer to the producer has been a crucial part of consumer advocacy.’

‘…approach boils down to is that third parties should preempt the consumer’s choice…’

Sowell is basically stating that third parties that advocate their particular choices know its poor politics to attack the consumers’ particular preference hence they preempt the consumers’ preference at the producer level. That its much better politics to attack the producer. By attacking the producer the third party advocate superimposes their particular choices on the producer and hence preempts the choices of the consumer.

Now we return to the question:
If A is not at maximum total utility where did the difference go?

The missing utility is captured by the third party. The third party might merely be do-gooders that capture utility in the form of “satisfaction” [utility] that they have somehow, some way, solved/improved the consumer’s preference by morphing the preference into their particular preference. Other third parties, acting as economic rent seekers, benefit from the morphing preference. Stated alternatively, a second set of third parties directly benefit from the preference being directed to the preference they in fact produce.

Government planned regulation and over regulation as a job creator? Huh?

‘ "I think the answer is no," Ellison said when asked if he believes regulations kill jobs. "And here is why: When we talked about increasing fuel efficiency standards, the industry responded, and they need engineers and designers and manufacturers, and they need actually more people to help respond to the new requirement."

"I believe if the government says, look, we have got to reduce our carbon footprint, you will kick into gear a whole number of people that know how to do that or have ideas about that, and that will be a job engine. I understand what you mean, because if anything adds a cost to a business, you could assume that that will diminish that business's ability to hire. But I don't think that's actually right. I think what businesses want is customers and what -- if they are selling product, if they have a product to sell they will do well even if they have some new regulations to meet," the Congressman said.’ (1)

For a moment examine Rep. Ellison’s economics. “I understand what you mean, because if anything adds a cost to a business, you could assume that that will diminish that business's ability to hire. But I don't think that's actually right“. OK, and an increased cost is not a factor of production due to what? “I think what businesses want is customers and what -- if they are selling product, if they have a product to sell they will do well even if they have some new regulations to meet". Hence cost is a non-factor in production and firms merely need to “want customers” and product is sold regardless of cost.

That’s it, is it? Amazing economic breakthrough!

Therefore we need to throw out the following economic axions:  regulation is a form of tax, regulation is generally a limitation on private property rights, capital and human capital migrate to the environment of lowest tax and lowest regulation, overtime most capital and most human capital migrates to the environment of lowest tax and lowest regulation.

Here is a another gem from Rep. Ellison and regards to his breakthrough work in the field of economics: “When we talked about increasing fuel efficiency standards, the industry responded, and they need engineers and designers and manufacturers, and they need actually more people to help respond to the new requirement”. Hence additional resources are required [“…need engineers and designers and manufacturers…”]. Apparently those resources appear magically and have no effect on other recourses with alternative uses within a macro economy. According to Ellison we merely throw out the current economic axiom that we live in a world of scarcity, there is never enough of anything to satisfy all those who want it, hence a rationing agent must be introduced which is price in a free market economy. That the allocation of scarce resources with alternative uses is merely a fallacy. You merely regulate allocation!

Tax comes in many forms including regulation. Regulation besides acting as a tax is also a form of central planning. Maybe Rep. Ellison should consider the following:

(1) A tax levied on corporate profit reduces the care and effort owners put into its operation, since part of the return that would have been received by owners will go to the state. Defacto, private owners of the corporation are saddled with a shirking partner, the state, which takes part of the revenue and provides none of the effort to improve the firm’s return. Consequently the greater is the corporate tax rate, the greater the incentive for corporate owners and management to pursue the “quiet life”. - Harold Demsetz, From Economic Man to Economic System, page 158.

(2) This way lies charlatanism and worse. To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm.

But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. - F.A. Hayek, from the essay The Pretense of Knowledge.

(3) Economists are often asked to predict what the economy is going to do. But economic predictions require predicting what politicians are going to do-- and nothing is more unpredictable.

The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. - Thomas Sowell

H/T: Our Dinner Table blog

(1) http://www.realclearpolitics.com/video/2011/10/09/dem_congressman_keith_ellison_regulations_create_jobs.html

The Political-Economy of Politico Energy Policy -or- how to love higher prices funded by your own tax dollars!

Freedom is not simply the right of intellectuals to circulate their merchandise. It is, above all, the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their “betters.” - Thomas Sowell from Knowledge and Decisions.

　
The most common forms of competition discussed in the social studies are impersonal competition which is directed toward a goal and personal competition which is directed toward any one individual. One needs to note that personal competition can lead to rivalry and differing stages of conflict at the point of exchange during competition. A third form of competition is “cultural competition” which is competition between two or more cultural groups. (1)

Restricting one’s freedom to use pecuniary wealth to influence others, say by offering higher prices to win agreements to sell, results in greater emphasis on “personal characteristics competition.” - Harold Demsetz (2)

Demsetz is stating that at the point of exchange, during competition, impersonal competition changes to personal competition when pecuniary wealth is restricted. Likely if any competitor is restricted in some freedom at the point of exchange some level of personal competition is introduced. As mentioned above, personal competition can lead to rivalry and differing stages of conflict at the point of exchange during competition.

Note that in Demsetz’s example, implicitly assumed, is that some exogenous power restricted freedom to use, in this example, pecuniary wealth.

What if an exogenous power, such as politicos, used verbal virtuosity based on the way things ought to be and the same politicos through the mechanism of government used regulatory authorities and their inherent regulatory powers to simultaneously create conditions for personal competition and cultural competition to the exclusion of impersonal competition? What if such conditions then fostered an army of economic rent seekers aka crony capitalism rather than an army of competitors in a free market environment? Could such conditions ever be present?

Welcome to the wonderful world of politico directed Department of Energy (DOE) loans to green energy companies simultaneously accompanied by the regulatory edicts of the Environmental Protection Agency (EPA).

Lets first examine cultural competition. If certain politicos want to foster cultural competition they must frame a cultural competition debate which subdivides culture into competitors. The politico purposely draws some distinction and purposely promotes an item as being positive and another item as being negative [verbal virtuosity based on the way things ought to be]. For example, green energy is positive and fosil based fuel is negative.

Next we have personal competition. The same group of politicos through the mechanism of government purposely act as an exogenous power to purposely restrict the freedom of one cultural competition competitor in the now purposely politico made cultural competition environment. For example, raise taxes and regulation on fossil fuels while subsidizing green energy.

We now have culture competition simultaneous with personal competition. Hence the politico has created an environment in which politico-created competing cultures compete on a personal basis. Stated alternatively, rather than free enterprise competition occurring in the area of energy to create the most efficient allocation of resources with alternative uses, politicos through the mechanism of government have created a centrally planned misallocation of resources with alternative uses by introducing cultural and personal competition.

Who loses when a misallocation of resources occur? The consumer is the ultimate loser as prices rise for the item in question [energy] while the consumer is also taxed [subsidies for green energy]. Hence the consumer is not only harmed by higher prices, the consumer is paying tax dollars to in effect create the higher prices. You have been duped again? Well of course you have!

Who gains when a misallocation of resources occur? The producer that charges above market prices (when lower market-based prices are available) and simultaneously enjoys subsidies [taxpayer money]. The politico also benefits as he/she has exercised political constituency building through the use of taxpayer dollars (tax payer funded subsidies recalculate back to the politico in the form of political contributions of one type or another including monetary). You have been duped again? Well of course you have!

What has been created for you, the consumer, by politicos through the mechanism of government? Your tax dollars have been put to work! You have funded a price increase for yourself and simultaneously funded select firms and funded political contributions all achieved by politicos through the mechanism of government misallocating resources to their particular gain. Very nice!

“The government has nothing to give. The government is simply a mechanism which has the power to take from some to give to others. It is a way in which some people can spend other peoples' money for the benefit of a third party - and not so incidentally themselves.” -Milton Friedman



Notes:


H/T Cafe Hayek



(1) Nature and characteristics of Competition, http://www.sociologyguide.com/basic-concepts/Characteristics-of-Competition.php


(2) Harold Demsetz, 1988, Ownership, Control, and the Firm, page 17.

The "State" Represents itself as the Shirking Partner in the form of Tax

‘A tax levied on corporate profit reduces the care and effort owners put into its operation, since part of the return that would have been received by owners will go to the state. Defacto, private owners of the corporation are saddled with a shirking partner, the state, which takes part of the revenue and provides none of the effort to improve the firm’s return. Consequently the greater is the corporate tax rate, the greater the incentive for corporate owners and management to pursue the “quiet life”.’ - Harold Demsetz’s, From Economic Man to Economic System, Chapter 10, pages 141 -159, The Public Corporation: Its Ownership and Control.
 
In essence, the state represents itself as the shirking partner in the form of tax. Since firms are merely a collection of households, both the firm and accompanying households are saddled with shirking partner which takes part of the revenue and provides none of the effort.
 
Its worth considering Demsetz's proposition before one deliberates what the shirking partner does with the revenue taken. That is, decouple the two propositions of state through tax acting as a shirking partner -from- what the shirking partner ultimately does with the revenue taken.
 
Tax certainly is a disincentive. However, "disincentive" is rather abstract until you place the face upon disincentive as the shirking partner. That the disincentive in fact is the shirking partner providing zero effort yet taking revenue. If one was saddled with a shirking partner other than state, would one continue with such a partner?
 
The second item is what does the shirking partner, that provided zero effort yet took revenue, do with such revenue? What if the shirking partner took the revenue and created more disincentives in the form of regulation (another form of tax). Not necessary regulation associated with the minimal state, rather regulation associated with the ever expanding state. What if the shirking partner paid its subordinates high wages? What if the shirking partner took the revenue and enriched itself and its subordinates in the form of benefit plans and retirement plans? What if the shirking partner redistributed the revenue to those that suffer no tax (no shirking partner)?
 
Its no wonder James and Jane Goodfellow have such a low opinion of "state". What opinion other than a negative opinion could one possibly have regarding a shirking partner providing no effort yet taking revenue, then taking such revenue to create more tax, enrich itself, and redistribute "efforts"?

Firms have social responsibility? Firms spending someone else's money for social responsibility?

“So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not” - Milton Friedman

The above is an often quoted line by Milton Friedman. Few go further to determine what Friedman was meaning. Social Justice advocates use the quote to show the supposedly crassness of  the private enterprise system. That equality of outcome requires social responsibility/social justice.

Friedman stated: ' The discussions of the "social responsibili­ties of business" are notable for their analytical looseness and lack of rigor.' That observation may well come from Friedman studying F.A. Hayek. Hayek spent an entire decade studying "social justice". Hayek's conclusion was that social justice does not exist as its advocates never come forth with a definition [Friedman's: "... their analytical looseness and lack of rigor"]. (1)

Social justice comes from the concept "fair". That is, what is fair. Thomas Sowell has explained that "fair" is a concept that has little meaning except to the user of the term in a particular context. That is to say, "fair" is what you are doing and the other guy is not doing. (2) (3)

Further, firms are artificial entities. How can an artificial entity have a responsibility? Or as stated by Friedman: "Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom". Friedman makes a grand point which has been pointed out by Harold Demsetz on multiple occasions that firms are merely a collection of households. (4)

Going back to the quote above that began this essay, what did Milton Friedman mean? Likely much of the the answer can be found in the following 1970 essay by Friedman.

The Social Responsibility of Business is to Increase its Profits - by Milton Friedman


When I hear businessmen speak eloquently about the "social responsibilities of business in a free-enterprise system," I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free en­terprise when they declaim that business is not concerned "merely" with profit but also with promoting desirable "social" ends; that business has a "social conscience" and takes seriously its responsibilities for providing em­ployment, eliminating discrimination, avoid­ing pollution and whatever else may be the catchwords of the contemporary crop of re­formers. In fact they are–or would be if they or anyone else took them seriously–preach­ing pure and unadulterated socialism. Busi­nessmen who talk this way are unwitting pup­pets of the intellectual forces that have been undermining the basis of a free society these past decades.


The discussions of the "social responsibili­ties of business" are notable for their analytical looseness and lack of rigor. What does it mean to say that "business" has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom.

Presumably, the individuals who are to be responsible are businessmen, which means in­dividual proprietors or corporate executives. Most of the discussion of social responsibility is directed at corporations, so in what follows I shall mostly neglect the individual proprietors and speak of corporate executives.

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose–for exam­ple, a hospital or a school. The manager of such a corporation will not have money profit as his objective but the rendering of certain services.

In either case, the key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation or establish the eleemosynary institution, and his primary responsibility is to them.

Needless to say, this does not mean that it is easy to judge how well he is performing his task. But at least the criterion of performance is straightforward, and the persons among whom a voluntary contractual arrangement exists are clearly defined.

Of course, the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he rec­ognizes or assumes voluntarily–to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country. He may feel impelled by these responsibilities to de­vote part of his income to causes he regards as worthy, to refuse to work for particular corpo­rations, even to leave his job, for example, to join his country's armed forces. If we wish, we may refer to some of these responsibilities as "social responsibilities." But in these respects he is acting as a principal, not an agent; he is spending his own money or time or energy, not the money of his employers or the time or energy he has contracted to devote to their purposes. If these are "social responsibili­ties," they are the social responsibilities of in­dividuals, not of business.

What does it mean to say that the corpo­rate executive has a "social responsibility" in his capacity as businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers. For example, that he is to refrain from increasing the price of the product in order to contribute to the social objective of preventing inflation, even though a price increase would be in the best interests of the corporation. Or that he is to make expendi­tures on reducing pollution beyond the amount that is in the best interests of the cor­poration or that is required by law in order to contribute to the social objective of improving the environment. Or that, at the expense of corporate profits, he is to hire "hardcore" un­employed instead of better qualified available workmen to contribute to the social objective of reducing poverty.

In each of these cases, the corporate exec­utive would be spending someone else's money for a general social interest. Insofar as his actions in accord with his "social responsi­bility" reduce returns to stockholders, he is spending their money. Insofar as his actions raise the price to customers, he is spending the customers' money. Insofar as his actions lower the wages of some employees, he is spending their money.

The stockholders or the customers or the employees could separately spend their own money on the particular action if they wished to do so. The executive is exercising a distinct "social responsibility," rather than serving as an agent of the stockholders or the customers or the employees, only if he spends the money in a different way than they would have spent it.

But if he does this, he is in effect imposing taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other.

This process raises political questions on two levels: principle and consequences. On the level of political principle, the imposition of taxes and the expenditure of tax proceeds are gov­ernmental functions. We have established elab­orate constitutional, parliamentary and judicial provisions to control these functions, to assure that taxes are imposed so far as possible in ac­cordance with the preferences and desires of the public–after all, "taxation without repre­sentation" was one of the battle cries of the American Revolution. We have a system of checks and balances to separate the legisla­tive function of imposing taxes and enacting expenditures from the executive function of collecting taxes and administering expendi­ture programs and from the judicial function of mediating disputes and interpreting the law.

Here the businessman–self-selected or appointed directly or indirectly by stockhold­ers–is to be simultaneously legislator, execu­tive and, jurist. He is to decide whom to tax by how much and for what purpose, and he is to spend the proceeds–all this guided only by general exhortations from on high to restrain inflation, improve the environment, fight poverty and so on and on.

The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This jus­tification disappears when the corporate ex­ecutive imposes taxes and spends the pro­ceeds for "social" purposes. He becomes in effect a public employee, a civil servant, even though he remains in name an employee of a private enterprise. On grounds of political principle, it is intolerable that such civil ser­vants–insofar as their actions in the name of social responsibility are real and not just win­dow-dressing–should be selected as they are now. If they are to be civil servants, then they must be elected through a political process. If they are to impose taxes and make expendi­tures to foster "social" objectives, then politi­cal machinery must be set up to make the as­sessment of taxes and to determine through a political process the objectives to be served.

This is the basic reason why the doctrine of "social responsibility" involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scarce re­sources to alternative uses.

On the grounds of consequences, can the corporate executive in fact discharge his al­leged "social responsibilities?" On the other hand, suppose he could get away with spending the stockholders' or customers' or employees' money. How is he to know how to spend it? He is told that he must contribute to fighting inflation. How is he to know what ac­tion of his will contribute to that end? He is presumably an expert in running his company–in producing a product or selling it or financing it. But nothing about his selection makes him an expert on inflation. Will his hold­ing down the price of his product reduce infla­tionary pressure? Or, by leaving more spending power in the hands of his customers, simply divert it elsewhere? Or, by forcing him to produce less because of the lower price, will it simply contribute to shortages? Even if he could an­swer these questions, how much cost is he justi­fied in imposing on his stockholders, customers and employees for this social purpose? What is his appropriate share and what is the appropri­ate share of others?

And, whether he wants to or not, can he get away with spending his stockholders', cus­tomers' or employees' money? Will not the stockholders fire him? (Either the present ones or those who take over when his actions in the name of social responsibility have re­duced the corporation's profits and the price of its stock.) His customers and his employees can desert him for other producers and em­ployers less scrupulous in exercising their so­cial responsibilities.

This facet of "social responsibility" doc­trine is brought into sharp relief when the doctrine is used to justify wage restraint by trade unions. The conflict of interest is naked and clear when union officials are asked to subordinate the interest of their members to some more general purpose. If the union offi­cials try to enforce wage restraint, the consequence is likely to be wildcat strikes, rank­-and-file revolts and the emergence of strong competitors for their jobs. We thus have the ironic phenomenon that union leaders–at least in the U.S.–have objected to Govern­ment interference with the market far more consistently and courageously than have business leaders.

The difficulty of exercising "social responsibility" illustrates, of course, the great virtue of private competitive enterprise–it forces people to be responsible for their own actions and makes it difficult for them to "exploit" other people for either selfish or unselfish purposes. They can do good–but only at their own expense.

Many a reader who has followed the argu­ment this far may be tempted to remonstrate that it is all well and good to speak of Government's having the responsibility to im­pose taxes and determine expenditures for such "social" purposes as controlling pollu­tion or training the hard-core unemployed, but that the problems are too urgent to wait on the slow course of political processes, that the exercise of social responsibility by busi­nessmen is a quicker and surer way to solve pressing current problems.

Aside from the question of fact–I share Adam Smith's skepticism about the benefits that can be expected from "those who affected to trade for the public good"–this argument must be rejected on grounds of principle. What it amounts to is an assertion that those who favor the taxes and expenditures in question have failed to persuade a majority of their fellow citizens to be of like mind and that they are seeking to attain by undemocratic procedures what they cannot attain by democratic proce­dures. In a free society, it is hard for "evil" people to do "evil," especially since one man's good is another's evil.

I have, for simplicity, concentrated on the special case of the corporate executive, ex­cept only for the brief digression on trade unions. But precisely the same argument ap­plies to the newer phenomenon of calling upon stockholders to require corporations to exercise social responsibility (the recent G.M crusade for example). In most of these cases, what is in effect involved is some stockholders trying to get other stockholders (or customers or employees) to contribute against their will to "social" causes favored by the activists. In­sofar as they succeed, they are again imposing taxes and spending the proceeds.

The situation of the individual proprietor is somewhat different. If he acts to reduce the returns of his enterprise in order to exercise his "social responsibility," he is spending his own money, not someone else's. If he wishes to spend his money on such purposes, that is his right, and I cannot see that there is any ob­jection to his doing so. In the process, he, too, may impose costs on employees and cus­tomers. However, because he is far less likely than a large corporation or union to have mo­nopolistic power, any such side effects will tend to be minor.

Of course, in practice the doctrine of social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions.

To illustrate, it may well be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That may make it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects. Or it may be that, given the laws about the deductibility of corporate charitable contributions, the stockholders can contribute more to chari­ties they favor by having the corporation make the gift than by doing it themselves, since they can in that way contribute an amount that would otherwise have been paid as corporate taxes.

In each of these–and many similar–cases, there is a strong temptation to rationalize these actions as an exercise of "social responsibility." In the present climate of opinion, with its wide spread aversion to "capitalism," "profits," the "soulless corporation" and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.

It would be inconsistent of me to call on corporate executives to refrain from this hyp­ocritical window-dressing because it harms the foundations of a free society. That would be to call on them to exercise a "social re­sponsibility"! If our institutions, and the atti­tudes of the public make it in their self-inter­est to cloak their actions in this way, I cannot summon much indignation to denounce them. At the same time, I can express admiration for those individual proprietors or owners of closely held corporations or stockholders of more broadly held corporations who disdain such tactics as approaching fraud.

Whether blameworthy or not, the use of the cloak of social responsibility, and the nonsense spoken in its name by influential and presti­gious businessmen, does clearly harm the foun­dations of a free society. I have been impressed time and again by the schizophrenic character of many businessmen. They are capable of being extremely farsighted and clearheaded in matters that are internal to their businesses. They are incredibly shortsighted and muddle­headed in matters that are outside their businesses but affect the possible survival of busi­ness in general. This shortsightedness is strikingly exemplified in the calls from many businessmen for wage and price guidelines or controls or income policies. There is nothing that could do more in a brief period to destroy a market system and replace it by a centrally con­trolled system than effective governmental con­trol of prices and wages.

The shortsightedness is also exemplified in speeches by businessmen on social respon­sibility. This may gain them kudos in the short run. But it helps to strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces. Once this view is adopted, the external forces that curb the market will not be the social consciences, however highly developed, of the pontificating executives; it will be the iron fist of Government bureaucrats. Here, as with price and wage controls, businessmen seem to me to reveal a suicidal impulse.

The political principle that underlies the market mechanism is unanimity. In an ideal free market resting on private property, no individual can coerce any other, all coopera­tion is voluntary, all parties to such coopera­tion benefit or they need not participate. There are no values, no "social" responsibilities in any sense other than the shared values and responsibilities of individuals. Society is a collection of individuals and of the various groups they voluntarily form.

The political principle that underlies the political mechanism is conformity. The indi­vidual must serve a more general social inter­est–whether that be determined by a church or a dictator or a majority. The individual may have a vote and say in what is to be done, but if he is overruled, he must conform. It is appropriate for some to require others to contribute to a general social purpose whether they wish to or not.

Unfortunately, unanimity is not always feasi­ble. There are some respects in which conformity appears unavoidable, so I do not see how one can avoid the use of the political mecha­nism altogether.

But the doctrine of "social responsibility" taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, I have called it a "fundamentally subversive doctrine" in a free society, and have said that in such a society, "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." (5)

Notes:

(1) Hayek, his contribution to the political and economic thought of our time, Eamonn Butler.

(2) Intellectuals and Society, Thomas Sowell.

(3) A Conflict of Visions, Thomas Sowell.

(4) From Economic Man to Economic System, Harold Demsetz.

(5) The New York Times Magazine, September 13, 1970

Elitists

In political discourse you will see a reference to “elitists”. Generally the term elitists is used to designate the few somehow, someway enlighten individuals of the political, intellectual, or academic
classes who’s particular vision of society is somehow, some way more enlightened than the vision of others.

Some award the political term of “elitist” to Karl Rove. (1) However, Rove by no means was the first to refer to the label elitist. Milton Friedman referred to an “elite class” when discussing the emergence of the modern welfare state in his classic 1979 book Free to Choose. (2) Whereas
others argue the elitist label is merely anti-intellectual.  That is, people use the term in the positive
or negative. (3)

Is there a better definition, less political /more empirical, more thoroughly researched definition of “elitist”? Yes there is such an animal. Its most likely related to Thomas Sowell’s definition of
“special knowledge” as it appears in Sowell’s books A Conflict of Visions and Intellectuals and Society.

The term “special knowledge” as used by Sowell appears related to F.A. Hayek’s discussion of central planning and the inability of any one individual to have enough information to organize economic activity and associated outcomes.

F.A. Hayek’s discussion of decentralized knowledge trumping centralized knowledge is nicely summed up by Harold Demsetz as follows:

“…the historically important central puzzle of economics was to explain how independently acting people in an unplanned decentralized, private ownership economic system allocate their resources and, in particular, to explain how it is that the uses they seem to make of resources seem to be
well coordinated”.(4)

What is “special knowledge”?

An expert might be categorized as someone who is perceived to have acquired the most knowledge in one particular field of study such as geology or mathematics. Moreover, other participants within a particular field of study consider a particular person as an expert in the field of study. “Special knowledge” is when one leaves his/her particular field of expertise and acquires a self-designated position as an intellectual.

The self-designated and self-appointed intellectual designation is an attempt to transfer particular expert knowledge from an unrelated field to another field and instantaneously acquire “special knowledge” in a completely unrelated or mildly related field of study.

Special knowledge, the self-appointed intellectual, and political-economy?

Most notably, as pointed out by Rove, Friedman, and Sowell, the self-appointed intellectual , the elite as it were, want to comment and shape opinion specifically in the field of political-economy. For example, Paul Krugman trying to transfer his expertise in trade economics to political-economy commentary on society as a whole. Bill Gates trying to transfer his expertise in the field of computers to political-economy commentary on society as a whole. Barack Obama trying to transfer his expertise as a community organizer to political-economy commentary on society as a whole.

The once expert in a particular field, now a self-appointed intellectual in an unrelated field, has somehow, someway acquired “special knowledge” in the unrelated field. That is, the expert knowledge in a particular field becomes “special knowledge” in an unrelated field. Hence
“special knowledge” is merely notional propositions of the way things ought to be of a particular self-appointed intellectual with the premise being that an expert in one field is surely an expert in an additional field, that being most notably the political-economy.

Elites as the self-appointed intellectual?

Hence the definition of “elitist” as merely anti-intellectual misses the mark. It’s not that an elitist is anti-intellectual; it’s that an elitist is a self-appointed intellectual making political-economy
commentary on society as a whole through use of special knowledge which is in fact no knowledge. That is to say, we have a group of people, self-appointed people that have no expert knowledge in the field of political-economy, making notional statements which are in fact statements of “the way things ought to be”. That is, an elitist is a non-expert, making notional comments and putting forth
the notional propositions as fact, when the actual case is the notional propositions are merely their particular non-expert view of the way things ought to be and hence painting the world in one’s own self-image or self-vision.

(1)http://www.associatedcontent.com/article/1031684/elites_elitists_and_rove_politics.html?cat=9

(2) Free to Choose, 1979, Milton Friedman, chapter four,
page 98

(3) http://www.newsandsentinel.com/page/mboard.detail/fNav/71/What-does-the-term--elitist--rea---.html

(4) From Economic Man to Economic System, Harold Demsetz.

ObamaCare: the repeal of first stage economic thinking

The government solution to a problem is usually as bad as the problem. - Milton Friedman

Thomas Sowell has written extensively that politicos have a short political time horizon i.e. the next election cycle. Politicos then match their short term political time horizon to first stage economic effects of policy proposals. Matter-of-fact, Sowell wrote an entire book regrading first stage economic thinking entitled Applied Economics, thinking beyond stage one. (1)


Government solutions and the ObamaCare Repeal vote Wednesday 01/19/2011

The vote next week to repeal ObamaCare is odd out. That is, Friedman's advice is coming home to roost. Politicos always cave-in or never can quite muster a vote on the concept: "The Government solution to the problem is usually as bad as the problem". Never quite bring ourselves to test Friedman's quote. Ah, but the evil of it all.....next Wednesday Friedman is coming to bat.

Political time horizons and first stage economic consequences

Friedman's observation above and Sowell's "thinking beyond stage one" are worth considering regarding ObamaCare and much legislation in general. The basic premise is that legislation can have immediate economic consequences that are favorable. This short term favorable economic consequence matches the short term political time horizon of politicos. However, the exact same legislation has long term unfavorable economic consequences (known-knowns) as well as long term cascading unintended economic consequences (known-unknowns).

The long term economic consequences of legislation is not a concern of politicos as their focus is on a short term political time horizon i.e. next election. Hence legislation becomes a tool to create first stage favorable economic consequences to match a short term political time horizon. The problem immediately arises that legislation in fact creates long term economic consequences. These long term consequences are what James and Jane Goodfellow, their children, grand children, and so on must live with for years and decades to come. The Politico on the other hand merely wants to win the next election.

Therefore we have policy making politicos of the short term world creating long term economic consequences for the long term world that James and Jane Goodfellow live within. Real life examples abound. Social Security had major short term favorable economic consequences and hence matched the short term political time horizon of legislators of the time. Decades later James and Jane Goodfellow find that the unfunded future liabilities of Social Security are daunting. Merely take the term Social Security in the prior sentence and plug in Medicare, Medicaid, welfare, food stamps, public sector pensions, etc., etc.. The legislation created short term favorable economic consequences followed by cascading unintended economic consequences.

Behind the curve, ahead of the curve, and the 70 year dream

An odd out item with ObamaCare aka socialized medicine is that certain political groups have been pushing for socialized medicine for decades and decades stretching back at least seventy years. The socialized medicine scheme, when debated in 2009 and 2010, was referred to as a "dream" by proponents. A seventy year old dream.

Exactly what grand scheme had been developed and tested during these seventy years of dreaming? If one wants an item for seventy years wouldn't one have developed a comprehensive plan with details? Apparently not. In essence seventy years of a dream of socialized medicine was kept right in the dream world with nothing more developed than a fuzzy theme with no plan. For a group that wants to rely so heavily on government central planning it seems odd that for seventy years they forgot to develop a central plan. You might say proponents were/are seventy years behind the curve as ObamaCare was/is a cobbled together plan that boils down to a scheme of centralized price fixing. Problem is: central planning fails miserably and price fixing schemes have never worked in all of economic history. (2) (3) Brilliant! A failed delivery system delivering a known failed result!

However, there appears to be a vast majority of James and Jane Goodfellows that have looked ahead of the curve. You might even say, that for once, politicos have been caught with their hands in the short term political time horizon cookie jar. One might even speculate that James and Jane Goodfellows have come to the point of clearly understanding and adopting the classic essay by William Graham Sumner "The Forgotten Man". That is, the Goodfellows clearly understand they have in fact become the Forgotten Man: "He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him". (4)

So many social insurance and social welfare plans have exposed themselves as failures. That their long term economic consequences and cascading unintended economic consequences are failures for all to see. That massive hulking failures such as Social Security, Medicaid, and Medicare, have shown the public that long term dire consequences await them and their children. That the dreams of certain politicos become nightmares of the first order.



Behind the curve, politico's political time horizon, and a failed delivery system with known failed results.

The repeal vote, which is a vote on HR 2, becomes an affront to proponents of ObamaCare. How could anyone want to repeal a dream they have held for 70 years? A dream that in their view has become a reality.

The repeal vote is more reality than dream. The seventy year dream was really a theme with no plan. Then the plan was cobbled together based on politico's using first stage economic thinking to match their political time horizon. With the entire plan based on using a failed delivery system with known failed results. The problem is that the plan does not even have first stage favorable economic consequences. That the plan right out of the gate failed. Hence a cobbled together plan that was suppose to have, at the very least, first stage favorable economic consequences became an immediate cascading unintended economic consequence nightmare. That is, the politico's that are proponents of ObamaCare were so silly as to produce a plan that doesn't even create the illusion of favorable results to match their very own short term political time horizon. In other words, proponents of ObamaCare by their very own design produced the stage, set the stage, and generated the momentum for the repeal vote.

Collectivism's long history of failure

One only needs to examine history to see how collectivist plans fail. First we have the dawn of recorded history up to the Agricultural Revolution that was century-in, century-out of collectivism. Yes, collectivism is the oldest of economic systems. The results of collectivism up to the agricultural revolution was that mankind lived in an environment of constant starvation. Life was basic subsistence. Basic subsistence handed down from one generation to the next.

Collectivism's results were so poor that Malthus developed his theory of the Malthusian Population Trap. That mankind was stuck in a perpetual environment of basic subsistence and starvation as population was growing faster than food production. That mankind was stuck in a never ending battle to merely sustain life.

What changed the Malthusian Population Trap? The advent of private property agriculture in the Agricultural Revolution. Private property farming suddenly produced abundance in agriculture and man could for the first time feed himself. Out with Malthus in with abundance. (5)

Along the way private property, private property rights, and the price system developed. Note that private property, private property rights, and the price system "developed". That is, no central authority decided upon private property, private property rights, and the price system. Mankind merely stumbled into the systems. The systems occurred due to decentralized means. (6)

A basic premise should appear very quickly to the reader: decentralization created abundance and collective centralized planning created never ending subsistence results.

A major source of objection to a free economy is precisely that it ... gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

If collectivism is a failure why do collectivist propositions such as ObamaCare continue to be proposed?

The answer goes back to the constrained vision of mankind and the unconstrained vision of mankind.
The unconstrained vision of mankind, held by most collectivists, is that the nature of mankind can be changed, improved, and molded only by institutions of state. That a central authority [state] through governmental institutions is the only way to improve the nature of mankind.(7)


A review of the basis for repeal and first stage economic thinking

Prior to the repeal vote next week its likely a good idea to review the laundry list of basic errors within ObamaCare. Although this is not a complete list it should suffice to say that the problems are those of a plan doomed to fail:


(1) Federal bureaucrats overriding state rights and circumnavigating the McCarran-Ferguson act.
(2) The demise of consumer directed health-care.
(3) ObamaCare purposely designed to collapse into a single payer system.
(4) Another unsustainable entitlement atop of current unsustainable entitlements.
(5) A central planning scheme that is a known failed delivery system.
(6) A plan based on price fixing that results in quantitative and qualitative reduction in supply aka rationing.
(7) Ultimate third party decisions removing consumer choice.
(8) An unconstitutional individual mandate.
(9) The error of categorical risk management.
(10) A plan based on reverse risk management.
(11) A plan that fails to address let alone bend the cost curve.
(12) A plan that is based on the fallacy of universal coverage as universal coverage does not mean universal access and access will deteriorate.
(13) A plan with massive administration needs at a massive price.
(14) A plan that fails to address the allocation of scarce resources with alternative uses.
(15) A plan that fails the risk management matrix which is an axiom of insurance theory.
(16) Shifting costs to states in the form of massive increases in Medicaid that will bankrupt already stained state budgets.
(17) Massive tax increases.
(18) Lose of individual freedom.
(19) Add your basis for repeal here ---> ________.

Also, one sometimes will refuse to let issues stay settled by the adverse decision of such a procedure, specifically when the wrong decision is worse even than the disruption and costs of refusing to accept it, when the wrong decision is worse than conflict with those on the other side. - Robert Nozick

Summary

If one wishes to reform, improve, stream line, create more efficiency, allow for freedom of choice, reduce costs then ObamaCare needs scrapped. The ObamaCare plan has so many built-in failures that beginning anew is the only course of action. Ford once built the Edsel and they scrapped it. Howard Hughes built the H-4 (The Spruce Goose) and he scrapped it. There comes that point that a failed plan needs scrapped and a new course of action is desirable.


Notes


(1) Applied Economics, Thinking Beyond Stage one, Thomas Sowell.

(2)At 35, Nixon freeze still chilling, William Neikirk, The Swamp. http://www.swamppolitics.com/news/politics/blog/2006/08/at_35_nixon_freeze_still_chill.html

(3) Nixon, Price Controls, and the Gold Standard, excerpt from Commanding Heights by Daniel Yergin and Joesph Stanislaw, 1977, ed., pp. 60-64. http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_nixongold.html

(4) The Forgotten Man by William Graham Sumner, 1876 http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1654&layout=html

(5) From Economic Man to Economic System, Harold Demsetz

(6) Hayek: His Contributions to the Political and Economic Thought of our Time, Butler and Riggenbach.

(7) A Conflict of Visions, Thomas Sowell.