LIBERTARIAN BOOK CLUB: Organized Crime - The Unvarnished Truth About Government by Thomas DiLorenzo
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Organized Crime: The Unvarnished Truth About Government by Thomas DiLorenzo
Located here for free.
Politics and thieves, coercion and regulation, fascism and the Fed, centralization and liberty, workers and unions, trade and freedom, free-market achievements and government disasters in American history — this book covers it all!
Section 1: Coercion and Regulation
I thought his synopsis and examples from Forty Centuries of Wage and Price Control: How NOT to Fight Inflation was solid. I’ll be adding it to my reading list. Unfortunately, no AudioBook version!
The “DiLorenzo’s Laws of Government” are pretty solid. I’ll need to expound on them later in a longer article and have them somewhere where I can share them easier when I’m arguing with people who want bigger government. They resounded with me as I think they will with others.
• DiLorenzo’s First Law of Government- In government, failure is success. Welfare Bureaucracy, Government Schools, NASA tragedies and the Federal Reserve, etc.
• DiLorenzo’s Second Law of Government- Politicians will rarely, if ever, assume responsibility for any of the problems that they cause with bad policies.
• DiLorenzo’s Third Law of Government- With few exceptions, politicians are habitual liars.
• DiLorenzo’s Fourth Law of Government- Politicians will only take the advice of their legions of academic advisers if the advice promises to increase the state’s power, wealth, and influence even if the politicians know that the advice is bad for the rest of society.
I also agreed that the price control section was timely after the debate we just endured following Hurricane Irma. I've written EXTENSIVELY about it here on my Steemit blog. How is it that The Continental Congress wisely adopted an anti-price control resolution on June 4, 1778 but it's still up for debate the negative effects?
That Resolution read:
“Whereas it hath been found by experience that limitations upon the prices of commodities are not only ineffectual for the purpose proposed, but likewise productive of very evil consequences—resolved, that it be recommended to the several states to repeal or suspend all laws limiting, regulating or restraining the price of any Article.”
If they knew price controls always failed 240 years ago, why is it even a question today? I blame education, or lack thereof.
Chapter 3 Who Will Regulate the Regulators
The logic on ‘providing more power to the Fed in order to prevent another Great Recession” was spot on:
“One of the biggest governmental lies is that financial markets are unregulated and in dire need of more central planning by government. Laissez-faire is said to have caused the “Great Recession.” Fed bureaucrats have lobbied for some kind of Super Regulatory Authority to supposedly remedy this problem. Th is is all a lie because according to one of the Fed’s own publications (“The Federal Reserve System: Purposes and Functions”), the Fed already has “supervisory and regulatory authority” over the following partial list of activities: bank holding companies, state-chartered banks, foreign branches of member banks, edge and agreement corporations, U.S. state-licensed bank branches, agencies and representative offices of foreign banks, nonbanking activities of foreign banks, national banks, savings banks, nonbank subsidiaries of bank holding companies, thrift holding companies, financial reporting procedures of banks, accounting policies of banks, business “continuity” in case of economic emergencies, consumer protection laws, securities dealings of banks, information technology used by banks, foreign investment by banks, foreign lending by banks, branch banking, bank mergers and acquisitions, who may own a bank, capital “adequacy standards,” extensions of credit for the purchase of securities, equal opportunity lending, mortgage disclosure information, reserve requirements, electronic funds transfers, interbank liabilities, Community Reinvestment Act sub-prime lending “demands,” all international banking operations, consumer leasing, privacy of consumer financial information, payments on demand deposits, “fair credit” reporting, transactions between member banks and their affiliates, truth in lending, and truth in savings.”
I had never heard of the non-profit libertarian think tank Competitive Enterprise Institute nor its annual product Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State. It outlines the annual effect of regulations on business in the United States. Just checking out the fact sheet was valuable.
As someone who thinks government spending and the national debt are keystone issues of our time, I also want to check out Underground Government: The Off-Budget Public Sector, his book written with James Bennett in 1983. Maybe we can get that book into the hopper for the Book Club!
Chapter 5: Our Totalitarian Regulatory Bureaucracy
“In chapter 5 of F.A. Hayek’s 1944 classic, Th e Road to Serfdom, the Nobel laureate warned that the state need not directly control all or even most of the means of production to exert totalitarian control over the economic life of a nation. He cited the example of Germany where, as of 1928, “the central and local authorities directly control 53 percent” of the German economy. In addition to this, wrote Hayek, private industry in Germany was so heavily regulated that the state indirectly controlled “almost the whole economic life of the nation.” It was through such totalitarian controls that Germany traveled down “the road to serfdom.” As Hayek further stated, “there is, then scarcely an individual end which is not dependent for its achievement on the action of the state, and the ‘social scale of values’ which guides the state’s action must embrace practically all individual ends.” In other words, government regulation was so pervasive that the pursuit of profit, driven by consumer preferences, was mostly replaced by the whims of regulatory bureaucrats.”
“First, construct a totally unrealistic theory of “perfect” competition that assumes away all real-world competition with assumptions of perfect information, homogenous products and prices, free or costless entry and exit from industry, and “many” firms. Second, compare real-world markets to this utopian Nirvana state and condemn the markets as “imperfect” or “failed. The third characteristic of market failure theories is to recommend intervention by presumably perfect government that is assumed to suffer from no failures and which will correct the failures of the market.”
When I read that, it reminded me of this.
I read DiLorenzo's Real Lincoln which I highly recommend. I like how in chapter nine he describes Rod Blogajevich as an amateur crook compared to Honest Abe. It is not just a matter of businesses contributing to campaigns to get political favors but politicians using threat of regulations to extort contributions.
Good point on the housing bubble:
“So when the Fed’s expansionary monetary policy caused the real estate bubble, the extraordinary increases in property values were accompanied by equally extraordinary property tax increases. (After the bubble had burst, local governments were eager to raise property tax rates so as not to lose property tax revenue."
“A principle of public choice economics is that politicians will always do all they can to disguise subsidies to less-than-meritorious groups, such as millionaire corporate farmers. If they can subsidize them through protectionism, or price supports, this is much preferred than simply writing the millionaire businessman a check.”
He discusses Hamilton and I recommend the Tom Woods vs Michael Malice debate (in which I side with Tom.
He expands a bit on the idea he expressed earlier of why exactly mainstream media is so pro-government.
I agree with DiLorenzo that secession, nullification, decentralization and localism is more effective at achieving liberty than nationalism or universalism, but it is important to understand, “Of course “states” don’t have rights; only individuals do." Since he understands that I think it is confusing that he keeps using the phrase.
I definitely agree with him that repeal of the seventeenth amendment would greatly improve our situation. But that that seems highly unlikely to ever happen.
The Virginia and Kentucky Resolutions. I read this short book a few years ago and highly recommend it.
Reclaiming the American Revolution: The Kentucky and Virgina Resolutions and their Legacy
“The Lacrosse, Wisconsin Democrat newspaper advocate assassination when it editorialized in November of 1864 that “If Abraham Lincoln should be reelected for another term of four years of such wretched administration, we hope that a bold hand will be found to plunge the dagger into the tyrant’s heart for the public welfare.” (Does that violate the NAP?)
DiLorenzo basically says that Abraham Lincoln and Adolph Hitler were brothers from another mother.
He points out that governments are by far the worst killers in history and that in that regard Abraham Lincoln was worse than Pol Pot.
DiLorenzo eviscerates Paul Krugman, which is always fun.
“Krugman is right about democracy in a sense: Democracy is essentially one big organized act of bullying whereby a larger group bullies a smaller group in order to plunder it with taxes. The “Civil War” proved that whenever a smaller group has finally had enough, and attempts to leave the game, the larger group will resort to anything—even the mass murder of hundreds of thousands and the bombing and burning of entire cities—to get its way.”
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Chapter 26 and 27
In these chapters he does still more debunking of the Lincoln mythology. I did notice though that he doesn't claim that the War of Northern Aggression was an unmitigated evil - just mostly evil with terrible consequences, but he does acknowledge that the abolition of slavery was the one positive outcome of the war.
He also discusses how American government is both fascist and socialist.
Chapter 30 – 33
These chapters are all about the evils of central banking.
I agree completely and have nothing to add except that coincidentally yesterday, before reading chapter 30, I used a very similar article by DiLorenzo to counter a commenter on this post who was saying that all economists think the Fed is great and that basically Ron is a crank.
That post and Brion's book should be of interest to anyone who liked that chapter.
Ch 32 reminded me of this meme.
This chapter debunks the notion that the Federal Reserve is in any way libertarian just because Alan Greenspan was head of it once.
Debunks the myth that the Fed is in any way independent - Fed chairmen basically do the bidding of the president in order to maintain their jobs. President wants loose policy? President gets loose policy, and vice versa.
I liked his discussion on the damage done by typical college economics textbooks, particularly Paul Samuelson's, which is most popular.
Explains how government caused the sub-prime mortgage meltdown.
This is useful because people often try to blame DE-regulation when nothing could be further from the truth.
As an aside, I found The Big Short an entertaining movie on the subject if you have not seen it, but it largely leaves unmentioned government as a cause and this chapter definitely fills in the blanks.
Macroeconomists Discover Economics and Debunk the New Deal (Again) is probably the most intriguing to me. Seven decades of economists who have sold us the line that the New Deal and large-scale government spending is what got us out of the Great Depression.
It took several decades but macroeconomic model builders, who consider themselves to be the elite of the economics profession, have finally discovered freshman-level principles of economics and have used that discovery to finally debunk FDR’s New Deal. (Beginning in the 1930s Austrian School economists like Henry Hazlitt recognized the truth about the New Deal: It made the Great Depression deeper and longer lasting.)
The only wise thing to have done was to have allowed the liquidation of hundreds of overcapitalized businesses to occur, cut taxes and spending, and deregulate. Instead, the Fed increased the money supply by 100 percent in a failed attempt to create another bubble while the president and Congress implemented an explosion of government interventionism. That was the
first time in American history that a depression was responded to with government interventionism rather than governmental retrenchment, and the result was a seventeen-year long Great Depression, the worst in history.
The essay is solid and I'll need to look into Murray Rothbard's America's Great Depression to learn more.
That mainstream macroeconomists and their modeling have come around against governmental interventionism during a depression is great. Now, if the citizenry can learn that before the next bubble pops. I foresee politicians and special interests will use the next crisis as an opportunity to line their pockets.
Will Socialism Make You Happier? The Trojan Horse of “Happiness Research”I hadn't heard of this statist argument before but basically
"...statists around the world are changing their tune and saying that prosperity doesn’t really matter after all; what matters is how happy we are. And, they say, that is what government can be really, really good at—making us happy. Consequently, they argue, there should be no more limits on governmental powers, for limiting governmental powers will limit our very happiness."
In the year this book was published, Bhutan was the 'Happiest' according to the UN-sponsored "World Happiness Report". Yes, Bhutan. This hellhole, ahem, I mean paradise:
As an intelligence officer which has experience in this part of the world... No.
This year's winner is Norway, which is much more beautiful and bearable.Source:WORLD HAPPINESS REPORT 2017 It's also a lot more socialist, which to be fair, is the point. It's edited by leftist academic Jeffrey Sachs of Columbia University, what else would you expect?
As F.A. Hayek commented in The Road to Serfdom, the end of socialism was always egalitarianism; only the means changed over time, beginning with government ownership of the means of production and transforming to income redistribution through a welfare state and a “progressive” income tax.
These happiness researchers never make any mention at all of the well documented pathologies created by welfare statism, such as the destruction of the work ethic, family breakup, the growth of dysfunctionality caused by a welfare state that removes people from the working population, etc.
Thus, “happiness research” is part of a crusade to persuade the public that poverty and servitude to the state are superior to prosperity and freedom. It is a new version of what twentieth-century communists referred to as “socialism with a smiling face” during the last, dying days of totalitarian communism.
The Canard of “Asymmetric Information” as a Source of Market FailureGood information on the Nirvana Theory of Markets. I tried to look more into it, but it is unique to only this writing.
Nirvana Fallacy— comparing real-world markets to an unattainable utopian ideal (perfect competition), and then denouncing markets because they fall short of utopia or Nirvana. Having “proven” that markets “fail,” the analyst then proposes government intervention under the assumption that no such failures will infect government. Markets may not be perfect, but government is assumed to be.
Overall, I liked Section 5 the best. The ease at which he demystifies economic myths is extremely understandable. I just wish it was taken onboard by many voters who refuse to heed the empirical evidence against government intervention.
Asymmetric information problem really applies to government not the free market:
“In this case we are dealing with the well-established fact that, in their capacity as voters, people tend to be “rationally ignorant” of almost all of what government does. In fact, government is so pervasive that no human mind could possibly comprehend the tiniest fraction of one percent of what government in a country the size of the U.S. does. Consequently, special-interest groups dominate all democratic governments;”
A related problem I think is that "public servants" are allowed to keep secrets from their supposed masters.
“Politicians perpetuate the myth of government job creation because the government jobs that are created are seen by the average voter, whereas the private-sector jobs that are destroyed (or never created) are not.”
I.e. Hazlitt's seen and unseen as described in Economics in One Lesson
DiLorenzo shoots down the gender wage gap myth. Tom Woods has done a couple of shows on this subject as well, as I recall.
DiLorenzo lays out a decent criticism of how Government, corrupted by size and motive, has engaged in forceful and deceitful acts against the populace.
To be honest, I really dislike collections of articles such as this and found in other "books". If an author is still alive, such collections are always better to be formed in to a true book that is able to cleanly explain a subject from start to finish. While DiLorenzo's articles are well written (and are quite often sourced with citations! Such a rarity among articles), the execution of the message would have been much better had he taken the time to write these out in to full chapters of their own.
The topics covered in the book were good ones to discuss (though I think that the mentions of the Civil war would be better served in a separate book), but I do wish that the author had expanded more on the topics of taxation, subsidies, and the enforcement of victimless crimes.
Overall a good read, and some articles were absolutely fantastic. If only the author could have written this out as an actual book and added another hundred pages or so, this could have been something especially fantastic.
edit: I've decided to give the book 5 stars, from the original 4. I find that I often go back to the book to re-read certain articles when I come across various topics of discussion. I still wish that the author had written a proper book instead of just compiling a collection of his articles, though.
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