The Free Market

What happened to the gold standard? As Greenspan put it, "following World War I such tight restraints on economies were seen as too inflexible to meet the economic policy goals of the twentieth century." What those policy goals were, Greenspan did not spell out. Let's fill in the blanks.

With huge segments of the world economy mired in depression, can we conclude that capitalism has failed or that the market behaves irrationally? That seems to be the consensus among many commentators, so we hear a wide range of calls for government intervention to patch things up.

In the nineteenth century, the legal profession was open. There were no mandates on the kind or duration of education a person had to have. No law restricted anyone from offering his services. The only complaints were from lawyers who wanted to force "higher standards" upon the market.

The coalition of government bureaucrats, politicians, trial lawyers, and "political activists" who have orchestrated the demonization of "Big Tobacco" are about to wage a similar smear campaign against what the pressure group Common Cause has labeled "Big Booze." The beer, wine, and liquor industries will be demonized; dramatically higher taxes will be called for; and unconstitutional bans and restrictions on commercial advertising will be vigorously lobbied for. This was the political modus operandi of the anti-smoking movement, and it will now be carried over to other industries.

As the world financial system entered a state of collapse, commentators said that Russia had traded the shortages of socialism for the bank runs and financial panics of capitalism. In fact, modern finance and banking are built on unstable, socialistic foundations.

Big media outlets are ignoring the quiet revolution that is taking place across America. Politicians don't talk too much about it for obvious reasons. This revolution is building incredible momentum. It now threatens the legitimacy of every level of government, the viability of government management of society, and the credibility of career politicians, assuming someone still has any faith in them.

No sooner is John Maynard Keynes declared irrelevant for modern economics than some establishment figure declares him the god of the age. It happened again, in the pages of Fortune Magazine (August 17, 1998). The writer was MIT's Paul Krugman, one of the most famous economists alive. His article, "Why Aren't We All Keynesians Yet?" was a hymn of love to the man who made government management of the economy a worldwide practice.

Agriculture Secretary Daniel Glickman has been deeply troubled by perceived problems with America's food supply. In a meeting with the Senate Agricultural Committee last fall, Glickman urged lawmakers to approve legislation which would give his department more enforcement authority over cases of contaminated meat and poultry. Among other provisions, he demanded that the department be able to impose fines of $100,000 per day on violators of meat-processing regulations. "I think we can come down a little more strongly on the side of the consumer," the secretary told senators.

The world has just finished what, for Americans, is the curious spectacle of the Soccer World Cup. Every four years since the 1930s teams representing 32 countries have met (in a different venue each time) to decide who is best. Much of Europe, South America, and Africa come to a halt during the three weeks of Cup play.

In 1944, Ludwig von Mises published one of his least-known masterworks: Omnipotent Government: The Rise of the Total State and Total War. Drawing on his prewar experience in Vienna, watching the rise of the National Socialists in Germany (the Nazis), who would eventually take over his own homeland, he set out to draw parallels between the Russian and German experience with socialism.

In the midst of an economic boom, strange things were happening at General Motors. Huge swatches of its highly paid, coddled, unionized labor force were on strike. The result was catastrophic: GM plants all over North America shut down.

The Microsoft Corporation's continuing difficulties with the Department of Justice, even after an appeals court ruled in the company's favor, reveal the absurdity of attempting to apply 19th-century antitrust law to a 21st-century computer and telecommunications marketplace.

Can government do a better job than private markets in any area of the economy? Consider: The tax-funded Human Genome Project, sponsored by the National Institutes of Health, has been the toast of the scientific elite for nearly a decade. It held out the promise of mapping of the entire structure of DNA, which in turn would lead to unparalleled medical breakthroughs and a new era for biotechnology.

When Carol Browner, head of the Environmental Protection Agency, proposed new air quality standards last year, she claimed that thousands of Americans are being killed every year by tiny particles in the air with diameters of less than 2.5 microns. The EPA currently regulates airborne pollutants 10 microns in diameter, so Browner asked to have the agency's powers expanded. Charcoal grills, lawnmowers, and other gasoline-powered equipment could be outlawed when they produce too much pollution.

Recent mergers and acquisitions reach out and touch everyone. In turn, everyone wants to participate in the wave of executive soul-searching. It's true that parties affected by large transactions can occasionally assist in refining corporate values. But make no mistake about the dynamics of control: almost anyone would claim a seat at the bargaining table for a chance of lucrative reward. These seats are in fork's range of shares of the pie.

How is capitalism being treated in American popular culture today? The signals are mixed, but generally the picture is bleak.

Antitrust bureaucrats have been running roughshod over free enterprise for more than a century, imposing themselves between consumers and companies at the behest of envious competitors. Antitrust sums up everything that is wrong with the state.

November and December mark the bicentennial of the Kentucky and Virginia Resolves. Penned by Jefferson and Madison, the Resolves are peerless for their brief but masterful explication of the Constitution. Though there will be no parades or celebrations of the Resolves 200th birthday, the subjects—formerly citizens—of our great welfare-warfare state need to reacquaint themselves with the Resolves principles. Like no other document, the Kentucky and Virginia Resolves mark the path to a return to constitutional government.

Former FTC Chairman James C. Miller III, tells the story of how, in the early 1980s, Chrysler head Lee Iacocca requested that the FTC block a proposed joint venture between General Motors and Toyota. The request was denied. GM and Toyota formed the New United Motor Manufacturing Corporation. Iacocca entered into his own joint venture with Mitsubishi.

It was a news story to end all news stories—literally. The announcement that a giant asteroid was headed for the vicinity of the earth caused a momentary sensation.