November 12, 2011

A Lengthy Saturday Ramble...

So much on which to catch up.

Delayed Review Corner: Am I the only one who read the assignment? Blog friend gd admitted over lunch the other day that he had not yet consumed George Selgin's Theory of Free Banking. I said that I had with as little gloating as I could muster.

It is a very interesting book, and Selgin changed my mind about many things. If I had a time machine (more on this to come) I might go back and hand a copy to Alexander Hamilton. I will not summarize, because an Internet search of selgin free banking finds a trove of Selgin himself in YouTubes, discussions, and his own Free Banking website. To bring this segue 'round, I found that site this morning, as Don Boudreaux at Cafe Hayek highlighted this awesome post of Selgin taking down a NYTimes reporter. Ow, that has got to sting!

I respect nonetheless those who, having given serious thought to the matter, conclude that gold remains our best hope. Alas, such people make up but a small fraction of self-described gold bugs. My standard reaction to finding myself within earshot of any of the rest is to look for a more remote and unoccupied bar stool.

But there's one thing that's guaranteed to bring out the gold bug in me, and that is ill-informed arguments against the gold standard. No, make that stupid arguments, because the ones I have in mind aren't merely ill-informed. They are ill-informed in a way that suggests that the persons who make them don't even think about what they're saying.

An example of the sorts of arguments I have in mind is this opinion piece from yesterday's New York Times, in which Eduardo Porter responds to recent pro-gold testimonials of various Republican presidential candidates and conservative talking heads. Such persons aren't exactly heavyweights when it comes to making good arguments for returning to gold. Yet in trying to show just what lightweights they really are, Mr. Porter mainly succeeds in revealing his own featherweight grasp of monetary economics and history.


Selgin's book is as informative as his comprehensive rebuttal to Mr. Porter. But it is far less entertaining. The recommendation came from our blog's favorite PhD. Economics Professor, and I fear he may have inured more to such tracts than the rest of us. It's not bad by any means, but it is pretty heavy slogging in spots. Worth it to get a serous rebuttal to the bad monetary policy on both sides that sends Selgin to the empty barstool. But I cannot call it a cake walk. As Selgin might say "Because it is not a walk. And there is no cake."

Staying on the literary theme, I find myself back in fiction, and back to a favorite author. I read every one of the many words Stephen King published before The Dark Tower VII in 2004. King said he was retiring and I took him at his word, closing that chapter as I was moving toward non-fiction. I knew he had written a few more, but I honored my half of his retirement.

Hearing of the historical fiction, counterfactual "11/22/63" I had to bite. I pre-ordered and it magically showed up on my Kindle this week.

King's writing chops remain. (I think I wrote this about Peggy Noonan yesterday.) It is a page-turner, can't-put-it-down, entrancing yarn. Of course, King's lefty politics have always been on display in interviews and in his books. I put up with them both to enjoy the rest of his skill set and because he leaves it to a few lines in one of his notoriously large books. It is fairly easy to roll your eyes and move on.

But... Over the years, I have become more sensitive and Mister King has become a bit more strident. It strikes me that the very premise of this book is an extension of Progressivism. Not content with managing our diets, smoking habits, and appreciation for our fellow planetary travelers, King is going to "manage" our history for us. Now, I am taking a step too far here -- but I am definitely taking it in the right direction.

[SPOILER ALERTS TO FOLLOW, I am not deep enough in to "spoil" anything beyond what a review might say. But if, like me, you won't even read the cover flap before you dive in, move along, pardner, move along...]

A peculiar opportunity opens for very limited time travel. Present day folks can appear in Maine (natch) in September 9, 1958. Sherman cannot set the Way-back machine to 1770 to stop Alexander Hamilton enumerating the "Coin money" power into the Constitution (toldja), but he can go to 1958 and come back. The guy who discovers this has heath problems, so he convinces a casual friend to take up his quest. Go back there, live until 1963 and stop Oswald.

The uncomfortable bit is the recruitment. Wouldn't it be great if you stayed around until 2000 and flipped the election to Al Gore in Florida? But you'd be in your eighties, it might not work. That is just partisan, elitist nonsense and I really can move on after an eye roll and a head shake. In all of 1958+ history, your first thought is "President Albert A Gore, Jr.?" Whatever, dude.

Back to the brass tacks, I was less able to shake off the paternalism of the plot line. There are some science-fictiony questions about consequences, but King, in the raspy voice of Diner owner Al, lays out a utopia. JFK is saved -> RFK does not run to avenge his brother, so he is not assassinated -> The Vietnam War is okay because LBJ, with his -- and I quote -- "my balls are bigger than yours George Bush mentality" does not escalate. (George Bush started the Vietnam war, no wonder we want to beat him in 2000) -> Martin Luther King is not in Memphis (his assassins lack transportation I guess) -> there are no race riots.

Now I watch Buffy and accept vampires for the purposes of allegory and entertainment. I discard all the math and physics howlers in good science fiction. And I enjoy Stephen King's monstrous Chevrolets, werewolves, and aliens because they are vital to the story. But this historical utopia is tough to bear.

Of course I did move on, and it is a ripping good story. I think of Stephen Fry's superb "Making History" where a similar, limited opportunity is used to prevent Adolph Hitler's birth. Spoiler Alert: that one does not come out all hugs and puppies. Likewise, King is bright enough that I suspect he will test his own assumptions. But the willingness to discard a half century of spontaneous order to go back and line up the soldiers his way is disturbing.

And those are my views on monetary policy. Have a great weekend.

Shameless Self Promotion Posted by John Kranz at November 12, 2011 9:33 AM

It seems that the accomplished Mister King, try as he may in the soaring apex of his skill, remains mired in the genre that made him a famous multi-millionaire apologetic capitalist.

Posted by: johngalt at November 13, 2011 9:54 AM

"This book is an important work in monetary theory." If he does say so himself! I can't wait to read it and, so to speak, compare notes with him.

The very problem with modern currencies is that they're forced upon people. (Fundamentally, the very problem with governments is that they are forced upon people. A dictatorship is the few forcing the many. Even a supermajority is forcing at least one individual. If everyone agreed, if every man were free of his neighbors forcing him into paying taxes for something he didn't wish, then there would be no need for a government.) Nothing holds any government from basing it on whatever it chooses, which today is faith in future taxpayers (funding present spending as well as paying off previously incurred debt). But allow people to trade with what currency they'd like, and governments go out of the deficit spending business, and consequently they lose their power.

A friend asked me several years ago about a scenario, an economy of three individuals. Peter always trades a lot with Paul, but somehow Bob can't get a hold of any money to trade with Paul. Let's say Peter has a personal grudge and wants to isolate Bob. But this is logistically impossible if Bob wants to trade with Paul, because Bob would certainly have money sometime. It's all a matter of Bob offering goods and services that Paul wants. And if Peter somehow has so much economic control that he trades with Bob such that Bob has only enough money to trade with Peter, that still doesn't matter. First, Peter is only hurting himself by limiting trade. Second, if Paul and Bob want to trade, they will find a way. In the end, if a free people want to trade, they'll find their own medium of exchange, or resort to bartering if they have to (normally an inefficient system but nonetheless usable as a last resort while a currency is worked out).

Something I've been meaning to blog about for a long time is Bretton Woods. It may seem paradoxical, but it was the antithesis of free trade. Arbitrary decisions by politicians and central bankers, not free market participants, were what declared country X's currency at a certain ratio to Y's. Governments can only declare; free individuals are who determine what's truly correct.

Even a gold standard isn't intrinsically free market. Again, it's a government declaring something, rather than individuals saying, "I offer you this quantity of gold in payment," or, "Here's an electronic credit based on gold held for me." I might not trust government coins' purity, thinking the mint will pull a Septimius Severus (one of the Roman emperors notorious for debasing the denarius). I might have information about dramatic increases or decreases in the supply of gold, or knowledge of a nuclear breakthrough that could manufacture gold cheaply (the reverse of Goldfinger's nefarious plan). If I don't trust the government, I, and whoever among my trading partners share the sentiment, might sooner trust a bank's paper notes as a promise to pay.

Posted by: Perry Eidelbus at November 13, 2011 2:49 PM

I thing you'd dig the Selgin book, Perry. It is the most free market approach I've seen.

You can grab it free, if you have an eReader or want to read it on computer.

Posted by: jk at November 13, 2011 3:21 PM

Yes indeed. The HTML version is quite nicely formatted.

Posted by: Perry Eidelbus at November 13, 2011 10:36 PM

Anna Nicole pictures! Where are the damn Anna Nicole pictures?

Posted by: Boulder Refugee at November 14, 2011 5:34 PM

Heh. -- we really do need a "Like" button...

Posted by: jk at November 14, 2011 7:45 PM | What do you think? [6]