Tag Archive for: F. A. Hayek

How Government Lost 15 Million Acres of Public Land in the United States

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Non-market allocations of resources are doomed to result in catastrophic waste and mismanagement, evidenced by a recent New York Times story exploring how ‘millions of acres of public lands aren’t really open to the public.’

Leave it to the United States Government to lose track of almost three states worth of public land. Only an institution with so little incentive and ability to allocate resources for the betterment of human wellbeing could instantiate such a catastrophic waste of potential.

The following is a story of an engineer named Eric Siegfried, a Montana man who caught public officials in almost unimaginable levels of incompetence and waste. It is also a cautionary tale about the way extreme misallocations of resources are the predictable outcome of America’s current form of land use governance, which systematically severs control over certain resources from anyone equipped to use them rationally and effectively.

Multiple articles in the New York Times have recently reported on the findings of a group of private hunters and wilderness enthusiasts who have brought attention to millions of acres that nobody previously knew existed. A Times article published in February reported that, “Across America, 15 million acres of state and federal land is surrounded by private land, with no legal entry by road or trail. If this so-called landlocked land was one contiguous piece, it would form the largest national park in the country, nearly the size of Vermont, New Hampshire and Connecticut combined.” And, “Most of these inaccessible public lands are in the West, and, until recently, their existence was largely unknown.”

The land was only discovered, according to another recent Times article, because of a smartphone app called OnX. “OnX was born when Eric Siegfried, a mechanical engineer and part-time hunting guide in Montana, decided to make a Google Maps for the wilderness,” the Times reports.

Unlike Google maps, OnX is optimized for use in forests and other wild areas, displaying property lines, wind patterns, fire histories, and other data useful to outdoorsmen but not to ordinary civilians.

Times contributor Ben Ryder Howe writes, “Property data is often inaccurate and outdated, and early in the development of OnX Mr. Siegfried found himself asking, ‘Why is there no nationwide picture of land ownership, of public and private property boundaries, of who owns what?’” And so, according to Howe, “By collating state and county data and putting it on a microchip, Mr. Siegfried turned the project in the scrapbooking room into a company that just received more than $87 million from investors and that understands the American landscape arguably better than the government does.”

Howe points out that, “In answering the question of who owns what, OnX helped bring to light how much public land — often highly coveted — is not reachable by the public.”

Land is highly coveted because it is a form of capital which, if allocated properly, can vastly enrich its owners and other participants in the market.

There are countless ways that individuals, or society generally, could utilize 15 million acres of land. People could live on it, thus increasing housing affordability and expanding the range of available options of where to live. People could convert its raw materials into transportable resources such as lumber or oil, thus improving commodity abundance and lowering the threshold at which the poor could afford to have their needs met. People could employ unique characteristics of its ecosystems to conduct scientific research. Or the land could be preserved in its current state, if its environmental, recreational, and/or aesthetic properties are deemed more valuable. Manifold possible uses exist, many of which can probably only be imagined by the innovators of the future.

It is impossible to know a priori which combination of potential uses are the best allocation of such an enormous supply of capital. But one thing is clear: When so much wealth and potential are on the line, the difference between efficient and inefficient resource allocation is the difference between countless livelihoods saved or destroyed. When housing prices, or food prices, or gas prices, are increased or decreased by the availability or unavailability of a few million acres worth of resources, it can make or break the health and safety of anyone whose current standards of living are near the margin of viability. And even for those well enough above the margin to be unconcerned about basic necessities, changes in the cost of living can still make or break their access to important commodities and opportunities such as a higher education, the ability to start a small business, or any other ambition they might have that requires significant investment.

So how could such a massive amount of potential wealth have been unaccounted for and untapped for so long, and what should happen to it now that it has been discovered?

It is commonly understood, even by avowed socialists as well as arguably Karl Marx himself, that socialist economies are generally less conducive to economic growth than market economies, hence the latter often being dubbed “capitalist.” One primary reason for this is that markets result in a mechanism of resource allocation that maximizes efficiency like no socialist, communist, or fascist economy has ever been capable of. And that mechanism is known as the price system.

The price system is merely the logical consequence of resources being controlled by individuals rather than collectives, and exchanged voluntarily rather than by force. These are the characteristics of a market economy, and they result in consumers and producers having extremely precise knowledge, communicated via prices, of exactly how useful each resource is for a wide range of potential uses, given the nature and scarcity of the resource relative to alternatives. And this precise knowledge allows budgeting, financing, shopping for the best among many available products, and so on to be subject to highly accurate calculations.

This crucial difference between market and non-market economies was first clearly articulated by the economist Ludwig von Mises in his 1920 essay, “Economic Calculation in the Socialist Commonwealth.” In it, Mises offered the following example:

“Picture the building of a new railroad. Should it be built at all, and if so, which out of a number of conceivable roads should be built? In a competitive and monetary economy, this question would be answered by monetary calculation. The new road will render less expensive the transport of some goods, and it may be possible to calculate whether this reduction of expense transcends that involved in the building and upkeep of the next line. That can only be calculated in money. It is not possible to attain the desired end merely by counterbalancing the various physical expenses and physical savings. Where one cannot express hours of labor, iron, coal, all kinds of building material, machines and other things necessary for the construction and upkeep of the railroad in a common unit it is not possible to make calculations at all.”

This point was expanded on by Mises’s disciple, the Nobel Prize winning economist Friedrich Hayek, who gives another instructive example in his seminal 1945 essay “The Use of Knowledge in Society”:

“Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. … All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all this without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes.”

Now think of the price system, or lack of one, in the context of Siegfried’s discovery.

When land is privately owned, the price system facilitates numerical comparisons between different possible uses of each plot of land (or useful subdivision thereof), such as people living on it, or excavating it for minerals, or growing crops on it, or conserving its current state—or countless other possibilities.

There is no way of knowing with certainty which is the best use of each plot of land, given the virtually infinite variables such as what alternative resources could be used for each of the possible uses of the land, how scarce and applicable to alternate uses each of those resources are, and so on. And of course, even the price system can’t account for all the variables, given that every event in the world comes with externalities, millions of uncertainties and butterfly effects that constantly shape our perception of the future into reality. But the price system accounts for more of the variables, and does so with more accuracy, than any other system because prices reflect each individual’s specific preferences and needs down to the cent whereas all other systems reflect either randomness or the preferences of some authoritarian subset of the population that has managed to dictate resource allocations according to their preferences while excluding the preferences of others.

(It is worth noting that the assumptions people make about the relative significance of one set of externalities over another tend to be totally unjustified. For example, there is a common assumption that the negative environmental externalities of industrial development such as logging or oil drilling outweigh the positive economic externalities. But it can just as easily be the case that when commodity prices are reduced by such supply increases, the resulting poverty alleviation and wealth creation generates positive externalities, such as more education and technological and scientific research, that outweigh the negative externalities.)

Private land is more likely than land governed any other way to be used for its optimal purpose, because its owner is free to sell it to the highest bidder, and the bidder with the most valuable idea of how to use it will typically be willing to pay the most for it. By contrast, “public” land is doomed to be allocated comparatively suboptimally. Because no individual is free to sell it to the highest bidder, it is instead trapped in its current use by whatever regulatory mire is preventing individuals from optimizing it.

Only in such a mire could the 15 million acres discovered by Eric Siegfried have been so tragically wasted. Individual property owners would almost certainly be too aware of their major assets to lose track of 15 million acres of real estate, because they themselves would be the ones to reap the rewards or punishments of the quality of their capital allocation choices.

Those acres, being “public” and thus illegal for individuals to settle, develop, or cultivate, were of so little use to anyone that nobody even bothered to do the basic research or exploration required to learn of their existence before it was discovered by accident. And all while there are millions of people without basic necessities, such as a peaceful place to sleep or grow food.

This arbitrary and incompetent allocation of 15 million acres should come as no surprise given the economics of public versus private ownership that have been well understood in the context of socialism and capitalism for more than a century. To solve the problem of rampant resource misallocation, the resources should be privatized so that individuals can start freely investing and innovating to make the most out of that which may otherwise be worthless enough to have abandoned completely.

AUTHOR

Saul Zimet

Saul Zimet is a Website and Data Coordinator for HumanProgress.org at the Cato Institute and a graduate student in economics at the John Jay College of Criminal Justice at the City University of New York.

RELATED ARTICLE: White House Spending $130,000 Per Day To Store Trump’s Border Wall Materials

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Joseph Goebbels’ Own Words Show He Loved Socialism and Saw It as ‘the Future’

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Socialists will continue to argue that Nazism was not “real” socialism, but the Nazi propaganda despised capitalism and spoke like Karl Marx.

One of the comforts of growing older is knowing that some things will never change.

Sports fans will always argue over the designated hitter rule and over who was the best heavyweight boxer of all-time (Muhammad Ali). Movie fans will never agree which Godfather movie was better, the first or the second (the first.) And the trumpets will sound at the Second Coming before capitalists and socialists agree on whether the Nazis were “really socialists.”

The last item has always puzzled me, I confess, and not just because the word is right there in the name: National Socialism. If you read the speeches and private conversations of the Nazi hierarchy, it’s clear they loved socialism and despised individualism and capitalism.

In his new book Hitler’s National Socialism, the historian Rainer Zitelmann gives a penetrating look into the ideas that shaped men like Hitler and Goebbels. While it’s clear they saw their own brand of socialism as distinct from Marxism (more on that later), there is no question they saw socialism as the future and despised bourgeoisie capitalism.

Consider, for example, these quotes from Joseph Goebbels, the chief propagandist for the Nazi Party:

  1. “Socialism is the ideology of the future.” – Letter to Ernst Graf zu Reventlow as quoted in Goebbels: A Biography
  2. “The bourgeoisie has to yield to the working class … Whatever is about to fall should be pushed. We are all soldiers of the revolution. We want the workers’ victory over filthy lucre. That is socialism.” -quoted in Doctor Goebbels: His Life and Death
  3. “We are socialists, because we see in socialism, that means, in the fateful dependence of all folk comrades upon each other, the sole possibility for the preservation of our racial genetics and thus the re-conquest of our political freedom and for the rejuvenation of the German state. – “Why We Are Socialists?” Der Angriff (The Attack ), July 16, 1928
  4. “We are not a charitable institution but a Party of revolutionary socialists.” -Der Angriff editorial, May 27, 1929
  5. “Capitalism assumes unbearable forms at the moment when the personal purposes that it serves run contrary to the interest of the overall folk. It then proceeds from things and not from people. Money is then the axis around which everything revolves. It is the reverse with socialism. The socialist worldview begins with the folk and then goes over to things. Things are made subservient to the folk; the socialist puts the folk above everything, and things are only means to an end.” -”Capitalism,” Der Angriff, July 15, 1929
  6. “In 1918 there was only one task for the German socialist: to keep the weapons and defend German socialism.” -”Capitalism,” Der Angriff, July 15, 1929
  7. “To be a socialist means to let the ego serve the neighbour, to sacrifice the self for the whole. In its deepest sense socialism equals service.” – diary notes (1926)
  8. “The lines of German socialism are sharp, and our path is clear. We are against the political bourgeoisie, and for genuine nationalism! We are against Marxism, but for true socialism!” – Those Damn Nazis: Why Are We Socialists? (1932)
  9. “We are socialists because we see the social question as a matter of necessity and justice for the very existence of a state for our people, not a question of cheap pity or insulting sentimentality. The worker has a claim to a living standard that corresponds to what he produces.” – Those Damn Nazis: Why Are We Socialists? (1932)
  10. “England is a capitalist democracy. Germany is a socialist people’s state.” – “Englands Schuld” (the speech is not dated, but likely was given in 1939)
  11. “Because we are socialists we have felt the deepest blessings of the nation, and because we are nationalists we want to promote socialist justice in a new Germany.” – Die verfluchten Hakenkreuzler. Etwas zum Nachdenken (1932)
  12. “The sin of liberal thinking was to overlook socialism’s nation-building strengths, thereby allowing its energies to go in anti-national directions.” – Die verfluchten Hakenkreuzler. Etwas zum Nachdenken (1932)
  13. “To be a socialist is to submit the I to the thou; socialism is sacrificing the individual to the whole. Socialism is in its deepest sense service.” – as quoted in Escape from Freedom, Erich Fromm
  14. “We are a workers’ party because we see in the coming battle between finance and labor the beginning and the end of the structure of the twentieth century. We are on the side of labor and against finance. . . The value of labor under socialism will be determined by its value to the state, to the whole community.”-Those Damn Nazis: Why Are We Socialists? (1932)

These quotes represent just a smattering of Goebbels’ views on and conception of socialism. One can see that in many ways the Nazi spoke much like Karl Marx.

Phrases like “we are a workers’ party,” “the worker has a claim to a living standard that corresponds to what he produces,” “money…is the reverse with socialism,” and “we are against the political bourgeoisie” could easily be plucked from Marx’s own speeches and writings—yet it’s clear Goebbels despised Marx and saw his brand of “national socialism” as distinct from Marxism.

So what sets National Socialism apart from Marxism? There are two primary differences.

The first is that Hitler and Goebbels fused their socialism with race and German nationalism, rejecting the international ethos of Marxism—workers of the world unite!—for a more practical one that emphasized Germany’s Völkischen movement.

This was a clever tactic by the Nazis. As the Nobel Prize-winning economist F.A. Hayek pointed out, it made socialism more palatable to many Germans who were unable to see Nazism for what it truly was.

“The supreme tragedy is still not seen that in Germany it was largely people of good will who, by their socialist policies, prepared the way for the forces which stand for everything they detest,” Hayek wrote in The Road to Serfdom (1944). “Few recognize that the rise of fascism…was not a reaction against the socialist trends of the preceding period but a necessary outcome of those tendencies.”

The second difference is that National Socialists were less concerned with directly controlling the means of production.

In his 1940 book German Economy, 1870-1940, Gustav Stolper, an Austrian-German economist and journalist, explained that though National Socialism was anti-capitalist from the beginning, it was also in direct competition with Marxism following World War I. Because of this, National Socialists determined to “woo the masses” from three distinct angles.

“The first angle was the moral principle, the second the financial system, the third the issue of ownership. The moral principle was ‘the commonwealth before self-interest.’ The financial promise was ‘breaking the bondage of interest slavery’. The industrial program was ‘nationalization of all big incorporated business [trusts]’. By accepting the principle ‘the commonwealth before self-interest,’ National Socialism simply emphasizes its antagonism to the spirit of a competitive society as represented supposedly by democratic capitalism . . . But to the Nazis this principle means also the complete subordination of the individual to the exigencies of the state. And in this sense National Socialism is unquestionably a Socialist system . . .”

Stolper, who fled from Germany to the United States after Hitler’s rise to power, noted that the Nazis never initiated a widespread nationalization of industry, but he explained that in some ways this was a distinction without a difference.

“The socialization of the entire German productive machinery, both agricultural and industrial, was achieved by methods other than expropriation, to a much larger extent and on an immeasurably more comprehensive scale than the authors of the party program in 1920 probably ever imagined. In fact, not only the big trusts were gradually but rapidly subjected to government control in Germany, but so was every sort of economic activity, leaving not much more than the title of private ownership.”

In his 1939 book The Vampire Economy: Doing Business Under Fascism, Guenter Reimann reached a similar conclusion, the economic historian Richard Ebeling notes.

“…while most of the means of production had not been nationalized, they had nonetheless been politicized and collectivized under an intricate web of Nazi planning targets, price and wage regulations, production rules and quotas, and strict limits and restraints on the action and decisions of those who remained; nominally, the owners of private enterprises throughout the country. Every German businessman knew that his conduct was prescribed and positioned within the wider planning goals of the National Socialist regime.”

The historical record is clear: European fascism was simply a different shade of socialism, which helps explain, as Hayek noted, why so many fascists were “former” socialists—”from Mussolini down (and including Laval and Quisling).”

Like Marx, the Nazis loathed capitalism and saw the individual will and individual rights as subordinate to the interests of the state. It should come as little surprise that these different shades of socialism achieved such similar results: poverty and misery.

Socialists will continue to argue that Nazism was not “real” socialism, but the words of the infamous Nazi propaganda minister suggest otherwise.

AUTHOR

Jon Miltimore

Jonathan Miltimore is the Managing Editor of FEE.org. (Follow him on Substack.) His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune. Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

What Marriage Was Like before Bureaucracy Marriage by Sarah Skwire

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Marriage is not what it once was.

FEE contributor Steve Horwitz’s new book, Hayek’s Modern Family, reminds us all that “the use of ‘traditional’ as an adjective for either marriage or the family more generally is … ahistorical.” Marriage and the family, he argues, have always been changing and evolving institutions, and we are mistaken when we take the practices of one period and valorize them, and them alone, as “traditional.”

What is true for the institutions of marriage and the family is also true for the institutions of betrothal and weddings. By now, we all surely know that traditions like the white wedding dress and the diamond engagement ring are late innovations. The white dress came about after Queen Victoria set the fashion when she married Prince Albert. And while rings had been a popular wedding token for a long time, the diamond engagement ring became all the rage only after a successful campaign by DeBeers in the 1930s. But it is not merely the decorative furbelows that are modern innovations. Nearly everything we think of as defining a betrothal and a wedding used to be up for debate.

I spent some time recently looking at and discussing Jan van Eyck’s famous painting The Arnolfini Portrait. The painting is probably most often called The Arnolfini Marriage Portrait, though scholars have debated for decades over whether it depicts a wedding, a betrothal, or some other legal ceremony. Others have felt it might simply be a portrait of a married couple, or even a memorial for a wife who died young. We’re not entirely sure.

But in the discussion I was involved in, we thought of the painting as a wedding portrait. Because of that, several of the folks involved were a little startled to see the woman looking decidedly pregnant. (In much the same way that we don’t really know the occasion for the portrait, we don’t really know that the woman is pregnant. The style of her dress may just make her appear to be. But to a modern eye, she looks at least seven months along.) Was van Eyck making a moral judgment on the sexual morality of this couple — depicting them as newly married, but with a pregnancy that far advanced? Or is her pregnancy an argument against the notion that this is a wedding portrait, since 15th century morality would not have allowed for premarital sex and pregnancy? What kind of wedding portrait was this, exactly?

I’ll leave the arguments about the accuracy of our thinking about The Arnolfini Portrait to the art historians. What I want to talk about is the accuracy of our thinking about what weddings used to look like.

As the historian Lawrence Stone points out in his book The Family, Sex, and Marriage,

Before 1754 there were still numerous ways of entering into [marriage]. For persons of property it involved a series of distinct steps. The first was a written legal contract between the parents concerning the financial arrangements. The second was the spousals (also called a contract), the formal exchange, usually before witnesses, of oral promises. The third step was the public proclamation of banns in church, three times, the purpose of which was to allow claims of pre-contract to be heard.… The fourth step was the wedding in church, in which mutual consent was publicly verified, and the union received the formal blessing of the Church. The fifth and final step was the sexual consummation.

While parts of the process Stone describes are a little antiquated, they don’t seem completely unfamiliar. And the whole thing sounds remarkably orderly — though it is worth noting that wealthier couples found ways to evade the more tedious parts of the process, such as the triple proclamation of banns, by buying a special license. But the apparent orderliness and familiarity of the process falls apart rapidly when we look just a little more closely.

Stone continues, “But it cannot be emphasized too strongly that according to ecclesiastical law the spousals was as legally binding a contract as the church wedding.… Any sort of exchange of promises before witnesses which was followed by cohabitation was regarded in law as a valid marriage.”

Marriage required no certification by the church or the state. Two individuals merely promised to marry one another in front of witnesses, and then lived together. That was sufficient. And sex and pregnancy in the months between the spousals and a church wedding, if one ever got around to having a church wedding, were routine and accepted.

This sounds like an ideal situation from a libertarian perspective. It’s certainly how I’d prefer that marriages take place. But things soon got even more complicated.

After the Reformation, the Catholic Church required the presence of a priest for a wedding to be valid. The Anglicans did not, though a church wedding came to be expected. However, lawyers still recognized the spousals as valid. And they distinguished between two kinds of spousals — one was not followed by consummation and could be broken. The other was followed by consummation and was binding for life.

Stone reminds us of a few other complexities.

The canons of 1604 stipulated that a church wedding must take place between the hours of 8 am and noon in the church at the place of residence of one of the pair, after the banns had been read for three weeks running. Marriages performed at night, in secular places like inns or private houses, or in towns or villages remote from the place of residence … were now declared illegal [but] they were nonetheless valid and binding for life. This was a paradox the laity found hard to understand.

It could be hard to tell, in other words, if you were married or not. It could be hard to tell, in other words, whether one was engaging in legal married sex or illicit and illegal fornication.

This problem is a key part of Shakespeare’s play Measure for Measure, which begins with the arrest of Claudio for fornication with Juliette. Claudio is shocked to be accused of the crime, because, as he says:

… she is fast my wife
Save that we do the denunciation lack
Of outward order.

But with the exacting Angelo now in charge of the city, the more rigorous definition of a legal marriage is being enforced, and Claudio is in trouble.

The attempt to codify and enforce a well-understood and long-standing traditional practice made that practice so complicated that it was incomprehensible and often made criminals out of well-intentioned and honest individuals. (Those who are thinking about the mess that is the discussion of bathroom laws in North Carolina may find that problem familiar.)

There’s little doubt now about who is married and who is not married. The United States has spent years in a painful debate over that question, but we finally do have legal clarity. But as two dear friends of mine head down the aisle this month and I listen to the complications and fees they are facing over the licensing of their marriage and their officiant, I do wonder if we’ve solved anything since the days of spousals contracted in front of witnesses or if we’ve just piled on unnecessary layers of legal complications, forms, and fees.

Sarah Skwire

Sarah Skwire is the poetry editor of the Freeman and a senior fellow at Liberty Fund, Inc. She is a poet and author of the writing textbook Writing with a Thesis. She is a member of the FEE Faculty Network. Email

RELATED ARTICLE: How to Avoid an Illicit Marriage: Marriage Banns.

Real Hero James U. Blanchard: You Can’t Keep a Good Man Down by Lawrence W. Reed

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Great movements are marked by the dedication and accomplishments of steadfast individuals who make the most of every moment, every opportunity, and every available resource. When those great men and women pass from the scene, they leave behind untold numbers of friends and followers who derive comfort from their memory and inspiration from their deeds.

Such a man was James U. Blanchard III, who died on March 20, 1999, at the age of 56.

The causes to which he devoted ceaseless energy and with which his name will always be associated are liberty and sound money. Jim knew that neither is long safe without the other. Few American entrepreneurs in the second half of the 20th century did as much as he did to promote them both. The opening sentence of his family’s formal notice of his passing summed him up well: “James U. Blanchard III was a man who accomplished much against great odds and changed more people’s lives than he ever knew.”

I was privileged to know Jim Blanchard for the last 15 years of his life. For two years, I served as chief economist for his firm. I spoke at many of his conferences. I traveled with him to Brazil, Nicaragua, and Kenya. Though many others knew him better, it didn’t take much acquaintance with him for anyone to marvel at what a man in a wheelchair can get done if he puts his mind to it.

Jim was nearly killed in a tragic automobile accident at the age of 17 and was unable thereafter to walk. But if anything, his handicap only spurred him on.

Not once did I hear Jim bemoan his physical plight. If he talked about it at all, it was to relate how sitting in a wheelchair gave him time to read. In his 20s, he read voraciously. Introduced to the writings of Ayn Rand by a medical student friend, he became an unabashed defender of laissez-faire capitalism. Rand’s influence on Jim is perhaps best exemplified by the name he gave his oldest son: Anthem. Jim also became a devoted reader of the Freeman and of books by FEE’s founder, Leonard Read.

In 1974, Gerald Ford signed a bill that restored the right of Americans to own gold. The real hero of that moment was Jim Blanchard, who had formed the National Committee to Legalize Gold in 1971 and spearheaded a nationwide grassroots campaign. He knew that governments don’t like gold because they can’t print it. He saw gold ownership as a fundamental human right, a hedge against government mismanagement of money, and a first essential step down the long road to monetary integrity.

True to his spirit, some of Jim’s efforts were dramatic and unconventional. He arranged for a biplane to tow a “Legalize Gold” banner over President Nixon’s 1973 inauguration. He also held press conferences around the country at which he would brandish illegal bars of gold and publicly challenge federal officials to throw him in jail. These and many other stories about Jim’s colorful career can be found in his 1990 autobiography, Confessions of a Gold Bug.

Once gold became legal, Jim held his first annual investment conference in New Orleans. Expecting 250 attendees, he was stunned to see 750 show up. More than 40 years later, Blanchard’s New Orleans Investment Conference carries on and has drawn tens of thousands of individuals from all 50 states and dozens of nations. Investment advice comprised most of the 25 programs Jim assembled, but he always made sure that attendees were provided a hefty dose of sound-money and free-market ideas. His speakers included Milton Friedman, F.A. Hayek, Robert Bleiberg, Walter Williams, and many other great economists. Ayn Rand’s last public appearance was at a Blanchard conference. (In October 2015, I’ll be speaking again at the conference myself.)

In the meantime, Jim’s original $50 investment to begin a coin business in the 1970s grew into a giant within the industry. When he sold the business 15 years later, it was a $115-million-a-year precious-metals and rare-coin company. He cofounded the Industry Council for Tangible Assets to combat unscrupulous business practices in the coin and bullion industry, and he helped to reverse several burdensome laws and regulations that afflicted American investors.

Jim’s adventurous instincts and love of liberty combined to put him on the front lines of important struggles around the world. On my return in 1986 from visiting with activists in the anti-communist underground in Poland, I went to Jim with a request. I advised him that for $5,000, pro-freedom forces in Warsaw could translate Milton Friedman’s Free to Choose into Polish and then print and distribute hundreds of copies throughout the country. He wrote that check on the spot, and many others for similar causes behind the Iron Curtain. Not content only to fund these worthy endeavors, he often transported illicit, pro-freedom literature himself when he visited communist countries.

One of Jim’s favorite foreign projects was assisting anti-communist rebel forces inside war-torn Mozambique in the 1980s and early 1990s. He once sent a colleague and me on a clandestine journey inside the country to live for two weeks with the rebels in the bush and help to spread a pro-freedom message. Once the war was over and Mozambique adopted policies friendly to private property and free markets, Jim pitched in to assist in reconstruction.

“I remember my father as the bravest and most adventurous person that I have ever known to this day,” Anthem recently told me.

He never let anyone tell him no. He was fearless in his belief in the goodness of the human spirit. He understood that the path to personal betterment is best shepherded by free enterprise, and [he understood] the importance of balance between natural rights and property rights protected by a responsible, accountable, made-as-limited-as-possible government.

If Jim were alive today, he would beam with pride in his son, who carries three famous names: Anthem Hayek Blanchard is founder and president of Anthem Vault, a Nevada-based company pioneering a gold-backed cryptocurrency called HayekGold after Nobel laureate and Austrian economist F.A. Hayek. (Browse through the news items on the company’s web page and you’ll learn more about the currency that wouldn’t even be legal today had it not been for the work of Anthem’s father.)

Anthem says his father taught him “above all else” that true freedom can only be achieved once the world experiences a Hayekian choice in currency that technologies like bitcoin, HayekGold, and other virtual assets are wonderfully making a rapidly growing reality. I know Pop would be the most excited person in the world about all of these new technology developments enabling Austrian economics to flourish in a modern digital society.

Jim Blanchard overcame personal tragedy to become a powerful figure for liberty and sound money. His indomitable spirit lives on in all those who know that the noble causes to which he devoted his life require both hard work and eternal vigilance.

Video from FreedomFest: Remembering James U. Blanchard III with Lawrence Reed

RELATED ARTICLES:

Jim Blanchard’s 1990 autobiography, Confessions of a Gold Bug

Jim Blanchard’s 1984 interview of Austrian economist F.A. Hayek

Steve Mariotti’s 2014 interview with Anthem Hayek Blanchard


Lawrence W. Reed

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s.

EDITORS NOTE: Each week, Mr. Reed will relate the stories of people whose choices and actions make them heroes. See the table of contents for previous installments.

Socialism Is War and War Is Socialism by Steven Horwitz

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“[Economic] planning does not accidentally deteriorate into the militarization of the economy; it is the militarization of the economy.… When the story of the Left is seen in this light, the idea of economic planning begins to appear not only accidentally but inherently reactionary. The theory of planning was, from its inception, modeled after feudal and militaristic organizations. Elements of the Left tried to transform it into a radical program, to fit into a progressive revolutionary vision. But it doesn’t fit. Attempts to implement this theory invariably reveal its true nature. The practice of planning is nothing but the militarization of the economy.” — Don Lavoie, National Economic Planning: What Is Left?

Libertarians have long confounded our liberal and conservative friends by being both strongly in favor of free markets and strongly opposed to militarism and foreign intervention. In the conventional world of “right” and “left,” this combination makes no sense. Libertarians are often quick to point out the ways in which free trade, both within and across national borders, creates cooperative interdependencies among those who trade, thereby reducing the likelihood of war. The long classical liberal tradition is full of those who saw the connection between free trade and peace.

But there’s another side to the story, which is that socialism and economic planning have a long and close connection with war and militarization.

As Don Lavoie argues at length in his wonderful and underappreciated 1985 book National Economic Planning: What Is Left?, any attempt to substitute economic planning (whether comprehensive and central or piecemeal and decentralized) for markets inevitably ends up militarizing and regimenting the society. Lavoie points out that this outcome was not an accident. Much of the literature defending economic planning worked from a militaristic model. The “success” of economic planning associated with World War I provided early 20th century planners with a specific historical model from which to operate.

This connection should not surprise those who understand the idea of the market as a spontaneous order. As good economists from Adam Smith to F.A. Hayek and beyond have appreciated, markets are the products of human action but not human design. No one can consciously direct an economy. In fact, Hayek in particular argued that this is true not just of the economy, but of society in general: advanced commercial societies are spontaneous orders along many dimensions.

Market economies have no purpose of their own, or as Hayek put it, they are “ends-independent.” Markets are simply means by which people come together to pursue the various ends that each person or group has. You and I don’t have to agree on which goals are more or less important in order to participate in the market.

The same is true of other spontaneous orders. Consider language. We can both use English to construct sentences even if we wish to communicate different, or contradictory, things with the language.

One implication of seeing the economy as a spontaneous order is that it lacks a “collective purpose.” There is no single scale of values that guides us as a whole, and there is no process by which resources, including human resources, can be marshaled toward those collective purposes.

The absence of such a collective purpose or common scale of values is one factor that explains the connection between war and socialism. They share a desire to remake the spontaneous order of society into an organization with a single scale of values, or a specific purpose. In a war, the overarching goal of defeating the enemy obliterates the ends-independence of the market and requires that hierarchical control be exercised in order to direct resources toward the collective purpose of winning the war.

In socialism, the same holds true. To substitute economic planning for the market is to reorganize the economy to have a single set of ends that guides the planners as they allocate resources. Rather than being connected with each other by a shared set of means, as in private property, contracts, and market exchange, planning connects people by a shared set of ends. Inevitably, this will lead to hierarchy and militarization, because those ends require trying to force people to behave in ways that contribute to the ends’ realization. And as Hayek noted in The Road to Serfdom, it will also lead to government using propaganda to convince the public to share a set of values associated with some ends. We see this tactic in both war and socialism.

As Hayek also pointed out, this is an atavistic desire. It is a way for us to try to recapture the world of our evolutionary past, where we existed in small, homogeneous groups in which hierarchical organization with a common purpose was possible. Deep in our moral instincts is a desire to have the solidarity of a common purpose and to organize resources in a way that enables us to achieve it.

Socialism and war appeal to so many because they tap into an evolved desire to be part of a social order that looks like an extended family: the clan or tribe. Soldiers are not called “bands of brothers” and socialists don’t speak of “a brotherhood of man” by accident. Both groups use the same metaphor because it works. We are susceptible to it because most of our history as human beings was in bands of kin that were largely organized in this way.

Our desire for solidarity is also why calls for central planning on a smaller scale have often tried to claim their cause as the moral equivalent of war. This is true on both the left and right. We have had the War on Poverty, the War on Drugs, and the War on Terror, among others. And we are “fighting,” “combating,” and otherwise at war with our supposedly changing climate — not to mention those thought to be responsible for that change. The war metaphor is the siren song of those who would substitute hierarchy and militarism for decentralized power and peaceful interaction.

Both socialism and war are reactionary, not progressive. They are longings for an evolutionary past long gone, and one in which humans lived lives that were far worse than those we live today. Truly progressive thinking recognizes the limits of humanity’s ability to consciously construct and control the social world. It is humble in seeing how social norms, rules, and institutions that we did not consciously construct enable us to coordinate the actions of billions of anonymous actors in ways that enable them to create incredible complexity, prosperity, and peace.

The right and left do not realize that they are both making the same error. Libertarians understand that the shared processes of spontaneous orders like language and the market can enable all of us to achieve many of our individual desires without any of us dictating those values for others. By contrast, the right and left share a desire to impose their own sets of values on all of us and thereby fashion the world in their own images.

No wonder they don’t understand us.


Steven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

Is the “Austrian School” a Lie?

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Is Austrian economics an American invention? by STEVEN HORWITZ and B.K. MARCUS.

Do those of us who use the word Austrian in its modern libertarian context misrepresent an intellectual tradition?

We trace our roots back through the 20th century’s F.A. Hayek and Ludwig von Mises (both served as advisors to FEE) to Carl Menger in late 19th-century Vienna, and even further back to such “proto-Austrians” as Frédéric Bastiat and Jean-Baptiste Say in the earlier 19th century and Richard Cantillon in the 18th. Sometimes we trace our heritage all the way back to the late-Scholastic School of Salamanca.

Nonsense, says Janek Wasserman in his article “Austrian Economics: Made in the USA”:

“Austrian Economics, as it is commonly understood today,” Wasserman claims, “was born seventy years ago this month.”

As his title implies, Wasserman is not talking about the publication of Principles of Economics by Carl Menger, the founder of the Austrian school. That occurred 144 years ago in Vienna. What happened 70 years ago in the United States was the publication of F.A. Hayek‘s Road to Serfdom.

What about everything that took place — most of it in Austria — in the 74 years before Hayek’s most famous book? According to Wasserman, the Austrian period of “Austrian Economics” produced a “robust intellectual heritage,” but the largely American period that followed was merely a “dogmatic political program,” one that “does a disservice to the eclectic intellectual history” of the true Austrian school.

Where modern Austrianism is “associated with laissez-faire economics and libertarianism,” the real representatives of the more politically diverse tradition — economists from the University of Vienna, such as Fritz Machlup, Joseph Schumpeter, and Oskar Morgenstern — were embarrassed by their association with Hayek’s bestseller and its capitalistic supporters.

These “native-born Austrians ceased to be ‘Austrian,'” writes Wasserman, “when Mises and a simplified Hayek captured the imagination of a small group of businessmen and radicals in the US.”

Wasserman describes the popular reception of the as “the birth of a movement — and the reduction of a tradition.”

Are we guilty of Wasserman’s charges? Do modern Austrians misunderstand our own tradition, or worse yet, misrepresent our history?

In fact, Wasserman himself is guilty of a profound misunderstanding of the Austrian label, as well as the tradition it refers to.

The “Austrian school” is not a name our school of thought took for itself. Rather it was an insult hurled against Carl Menger and his followers by the adherents of the dominant German Historical School.

The Methodenstreit was a more-than-decade-long debate in the late 19th century among German-speaking social scientists about the status of economic laws. The Germans advocated methodological collectivism, espoused the efficacy of government intervention to improve the economy, and, according Jörg Guido Hülsmann, “rejected economic ‘theory’ altogether.”

The Mengerians, in contrast, argued for methodological individualism and the scientific validity of economic law. The collectivist Germans labeled their opponents the “Austrian school” as a put-down. It was like calling Menger and company the “backwater school” of economic thought.

“Austrian,” in our context, is a reclaimed word.

But more important, modern Austrian economics is not the dogmatic ideology that Wasserman describes. In his blog post, he provides no actual information about the work being done by the dozens of active Austrian economists in academia, with tenured positions at colleges and universities whose names are recognizable.

He tells his readers nothing about the  books they have produced that have been published by top university presses. He does not mention that they have published in top peer-reviewed journals in the economics discipline, as well as in philosophy and political science, or that the Society for the Development of Austrian Economics consistently packs meeting rooms at the Southern Economic Association meetings.

Have all of these university presses, top journals, and long-standing professional societies, not to mention tenure committees at dozens of universities, simply lost their collective minds and allowed themselves to be snookered by an ideological sleeper cell?

Or perhaps in his zeal to score ideological points of his own, Wasserman chose to take his understanding of Austrian economics from those who consume it on the Internet and elsewhere rather than doing the hard work of finding out what professional economists associated with the school are producing. Full of confirmation bias, he found what he “knew” was out there, and he ends up offering a caricature of the robust intellectual movement that is the contemporary version of the school.

The modern Austrian school, which has now returned to the Continent and spread across the globe after decades in America, is not the dogmatic monolith Wasserman contends. The school is alive with both internal debates about its methodology and theoretical propositions and debates about its relationship to the rest of the economics discipline, not to mention the size of the state.

Modern Austrian economists are constantly finding new ideas to mix in with the work of Menger, Böhm-Bawerk, Mises, and Hayek. The most interesting work done by Austrians right now is bringing in insights from Nobelists like James Buchanan, Elinor Ostrom, and Vernon Smith, and letting those marinate with their long-standing intellectual tradition. That is hardly the behavior of a “dogmatic political program,” but is rather a sign of precisely the robust intellectual tradition that has been at the core of Austrian economics from Menger onward.

That said, Wasserman is right to suggest that economic science is not the same thing as political philosophy — and it’s true that many self-described Austrians aren’t always careful to communicate the distinction. Again, Wasserman could have seen this point made by more thoughtful Austrians if he had gone to a basic academic source like the Concise Encyclopedia of Economics and read the entry on the Austrian school of economics.

Even a little bit of actual research motivated by actual curiosity about what contemporary professional economists working in the Austrian tradition are doing would have given Wasserman a very different picture of modern Austrian economics. That more accurate picture is one very much consistent with our Viennese predecessors.

To suggest that we do a disservice to our tradition — or worse, that we have appropriated a history that doesn’t belong to us — is to malign not just modern Austrians but also the Austrian-born antecedents within our tradition.

Steven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

B.K. Marcus

B.K. Marcus is managing editor of the Freeman.