Monday, January 11, 2016

“economic imbeciles”

Have Hope: Our Opponents Are Economic Imbeciles.

By Gary North

I have never had a lot of patience. I suppose this is one of my character flaws.

I do not suffer fools lightly. I suppose this is another one of my character flaws.

I use strong rhetoric to deal with economic imbeciles. I do not regard this as one of my character flaws. I regard it as one of my strengths.


All around us are economic imbeciles. We find them in the major university economics departments. We find them on the financial media sites. We certainly find them in Congress. Above all, we find them on the Federal Open Market Committee. These people believe that a government committee, filled with tenured bureaucrats, is better equipped to solve economic problems than the competitive free market is, where people have their own money on the line.

They really are economic imbeciles. They may have IQ’s that got them through college or graduate school. But, in their understanding of cause and effect, they are imbeciles. They do not understand that they are imbeciles. They preach to the choirs that surround them.

Why do economic imbeciles get a hearing? Because voters desperately want to justify the fact that they have used the state, and especially the federal government, to confiscate wealth from each other. They want to believe in their hearts that they are doing the morally right thing by sending out a thug with a badge and a gun, who tells the hapless citizen to fork over his money, or he will go to jail. We have an entire political and economic system which rests ultimately on this threat.

Anyone who falls intellectually for this kind of immorality is not a reliable judge of much of anything. When this person goes looking for an expert opinion to justify the fact that he is a thief, he is likely to find that only third-rate logicians, who cannot follow the chain of reasoning, are going to come forward in the name of organized theft.

It starts with a moral problem. It starts with a violation of the commandment not to steal. We have a modern civilization that is built on a systematic violation of this commandment.

The overwhelming majority of voters today are convinced that the present economic order in no way violates this principle. Virtually all of the pastors in the pulpits are convinced of this. They don’t preach against the organized theft of modern Keynesianism. They don’t think it’s part of their calling to point out the obvious ethical implications of the system of government that compels people to support other people, merely because the other people don’t want to go out and get a job.

Or maybe other people do want to go out and get a job, but they find competition from outside the country difficult to deal with. So, they call upon economic imbeciles to justify their desire by establishing trade barriers against imported goods. Fortunately, on this particular issue, there are a limited number of economic imbeciles with any influence, and there have not been many since the early 19th century. From Adam Smith until Murray Rothbard, economists who understand cause and effect have been opposed to trade barriers. So, those people who feel that they have a right to keep foreigners from competing against them have to appeal to economic imbeciles who cannot think straight.

I suppose I shouldn’t use strong rhetoric. The phrase “economic imbeciles” is strong rhetoric. The problem is this: these people really are economic imbeciles. They literally cannot follow cause-and-effect and economic analysis. This is why they don’t like Austrian school economics. This is why most of them favor central banking. This is why they favor government intervention into the economy. Their instinctive reaction to every problem is to get the government to pass a law, set up a bureaucracy, and send out people with badges and guns to tell other people what to do. It is a way of life for these people. It is also a way of life for the court economists who are on government payrolls in tax-funded universities.


If there were no built-in self-destruct arrangements in the very character, meaning moral character, of the institutions of organized theft, then I don't think we could win the battle. If it were simply a matter of good arguments driving out bad arguments, I don't think we could win this thing. Self-interest really is dominant. That is what economic analysis teaches, and I believe this principle.

But self-interest on behalf of organized theft is misplaced. Built into the creation, and built into the free market economy, are a series of poison pills. When individuals use violence or the threat of violence to interfere with market processes, they don't look at the long-term consequences of these interferences. Somewhere down the road, there is going to be hell to pay. There is going to be a great default. There is going to be something that disrupts the lives of those voters, as well as their victims, who vote in favor of the expansion of governments into the lives of citizens.

The defenders of organized theft deny that there are these built-in negative sanctions against any society that follows these practices, but, as I've said, the defenders are economic imbeciles.

If incorrect ideas and bad ethics did not produce bad results, the case for liberty would never get off the ground. People would simply ignore the arguments. But, there really are built-in negative sanctions that will produce disasters in those societies that extend the influence and power of civil government into market processes. The public will be astounded when these sanctions arrive. Millions of voters are going to go looking for answers. In that period of confusion, consternation, and enormous capital losses, which is going to destroy the dreams and schemes of generations of complacent thieves, the thieves are going to want to know how this happened.

I think the success of the movie, The Big Short, is indicative of the opportunity that lies ahead. The movie does not talk about the Federal Reserve System, but it certainly talks about the bankers, greed, and the fact that the government did nothing to protect the victims. When the really big short takes place, defenders of liberty will have an opportunity to enter the competitive arena of ideas. We will have this advantage: we are not economic imbeciles. We can follow cause and effect. We can express these ideas without resorting to arcane formulas. We can actually speak in English. Most of our opponents do not have this ability. They cannot make themselves understood by the general public.


The Keynesians have no equivalent of this slogan: "There is no such thing as a free lunch." This is a powerful slogan. So is this one: "You can't get something for nothing." So is this one: "If it sounds too good to be true, it probably is." So is this one: "Honesty is the best policy." But, above all others, we have this one: "Thou shalt not steal."

The Keynesians have this slogan: "I'm from the government, and I'm here to help you." The entire case for Keynesianism is based on this slogan.

This is why it pays to defend freedom. Even when the overwhelming majority of voters do not want to hear the arguments, we should keep making them. We should keep pointing out that there will be horrendous negative repercussions for violations of the principle of voluntary exchange. We don't get a hearing, except during crises. I have good news. There will be plenty of crises in which we will get a hearing.


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