The Constitution and Intellectual Honesty

Should we promote healthy eating habits?  Should we go to Mars?  Should we protect intellectual property on the internet?  When I respond to loaded questions like these, I try to be very careful to explore all of the implications and structure my arguments against the proposals into logical categories.  Why do I assume I am against?  Because 99% of the time the person asking these questions equates the word "we" with the government.  Should the parent promote healthy eating habits to his child?  Certainly.  Should a group of individuals calling themselves the government print or steal money to pay for the promotion of eating habits they define to be healthy?  A resounding No!

Thus, I may make a moral argument that any activity the government engages in, however benign on the surface, is paid for with stolen money and is enforced with the barrel of a gun, and that general insight is a sufficient reason to be against it.  I may make an economic argument that if we trace the consequences of a given government policy, not just for the short run, but for the long term, and not just the impacts to one group, but to all groups, we will find numerous reasons in equity and justice to be against it.  I may also make pragmatic arguments using history to show examples of previous instances when good intentions mixed with government power had very bad outcomes.

However, my simplest argument, and the one that I have the most difficulty convincing people of, is the constitutional argument.  This is the explanation that Ron Paul has given hundreds of times when asked why he was the lone dissenting voice in a 434 to 1 vote.  He will say the constitution doesn't give the authorization to create a department of homeland security, or to pass an anti-spam e-mail bill, or to give a gold medal to Mother Theresa.  In some cases, it might even be a bill that Dr. No would like to pass, but if he doesn't find authorization in the constitution, he feels that he must obey his oath of office and vote no just the same.  So what is it that Dr. Ron Paul sees in the Constitution that the other 434 members of Congress do not?

It's safe to say that Dr. Paul would not agree with my college professor who told me that the constitution is a "living document" that can change and adapt to meet the challenges of the day.  He wasn't referring to the ability to amend the constitution, but rather to re-interpret it in order to discover new powers that eluded previous administrations.  Rather than take this "living document" approach to interpretation, Dr. Paul would say that he accepts a strict or literal interpretation of the constitution: it is written in English, and it means what it says.

Is the constitution a blank slate that be interpreted to give the federal government the power to write and enforce any law it can pass?  Or does the federal government only have the 17 powers enumerated in Article I, Section 8, with all other powers belonging to the States and to the people?  Unlike Nancy Pelosi, who responded, "Are you serious?" when a reporter asked her where the Constitution grants Congress authority to enact an individual health insurance mandate, I think this is a very serious question that is long overdue for open, honest dialogue.

My goal is to convince you that history, logic, and intellectual honesty are on the side of a strict interpretation of the constitution.  While we may differ on what a government should be able to do, we need to come to an agreement on what our government can do.  If you want to change the rules, then amend the constitution.  It's been done before, and it can be done again.  I will even propose an amendment that would legalize all of the unconstitutional practices engaged in by our government to show that I am sincere about wanting a level playing field where we all follow the same rules and know the boundaries of what our government can and cannot do.

Drafting this proposed amendment is the least I can do, because the current arrangement, over a century old, of having our politicians take a sworn oath to protect, defend, and enforce a document that they either do not read, do not understand, or purposefully work to subvert, is a shameful practice not worthy of a free people.

I first heard this proposition in Michael Badnarik's Constitution Class.  Take the Red Pill.

Constitution 101

Most have heard of divided powers or checks and balances, but may not understand what that means in practice, especially in light of how the federal government operates today.  At an over-simplified level, think of the British Monarchy that American revolutionaries fought a war against.  Ignoring the few restrictions imposed by Magna Carta, the King of England could write, enforce, and judge the laws of the land.  All sovereign power resided in the King.  While Hamilton and his branch of the founding fathers wanted to bring this form of government to America, the only way to sell the 13 colonies then united under the Articles of Confederation into ratifying the Constitution was to tell them that they were setting up a government of divided powers, relieving the colonists of the concern that they were setting up a government just as powerful and prone to tyranny as the one they just fought off.

Thus, instead of granting all sovereign powers to a single man or group of oligarchs, the constitution claimed to divide the powers normally exercised by a king amongst different branches and groups of people, thinking that their individual ambitions would prevent power from flowing to a central source, as each branch would want to defend their powers in their own self-interest.  Hence, Articles I, II, and III of the Constitution set up the legislative, executive, and judicial branches of the federal government, respectively.

Article I, Section 1 of the Constitution says, "All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives".  The power to legislate is the power to write laws.  Article II of the Constitution defines the executive Power, the power to execute or enforce the laws, in a President of the United States.  Article III grants the judicial Power, to judge the laws and cases under the Constitution, to a Supreme Court.

Going back to Article I, we find that the first few sections define what Congress is, how they will be elected, how the Senate and House of Representatives will interact with each other, and how bills will be proposed and passed.  It isn't until Article I, Section 8 that we arrive at the 17 Powers delegated to the Congress, that I argue, are the only powers that legislation can be passed in pursuance thereof.

Section 8 starts, "The Congress shall have the Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States."  It then enumerates 16 additional powers, including the power to borrow Money, to coin Money, to set up Post Offices, to declare War, to provide a Navy, and others.  It concludes with the last power, "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Office thereof."

It seems clear to me that the only powers the federal government would have are those delegated to Congress in Article I, Section 8, and the only laws they would be able to pass would be those necessary and proper to carry out those laws.  Thus, to execute the power of establishing a post office, the congress could enact legislation to tax or borrow money for its creation, make purchase orders to build the post offices, hire people to be post men, etc.

Not yet trusting the arguments of the federalists who were promoting the adoption of the Constitution, the states wouldn't ratify it until it was amended with the Bill of Rights.  This amendment detailed some of the specific individual rights that no government law could violate, and reiterated the understanding made by the federalists that the federal government was one of specific and limited powers.  Article X of the Bill of Rights makes it plain as day what powers the government had, and for those powers it doesn't have, who has them:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

What more needs to be said?  If something is reserved to me, can it also be yours?  Clearly, the only laws the federal government can constitutionally pass, execute, and judge upon are those in pursuit of their 17 enumerated powers.  All other powers not delegated belong to the States, and to the people.  So while there is nothing in the Constitution prohibiting the State of Rhode Island from creating a Department of Education, or prohibiting me, one of the people, from buying and selling health insurance, this is not something the federal government can engage in.

Answering Objections

The first objection that I want to answer questions my authority to have any kind of opinion as to what is constitutional.  Where is my black robe and gavel?  Only those dressed in such a costume are allowed to think about the limits of federal government power.  In other words, "Isn't it the supreme court's job to decide what is and isn't constitutional?"

The Supreme Court's powers are outlined in Article III, and no where does it say that they are to be the sole deciders of what is or isn't constitutional.  That idea didn't originate in the Constitution, but was declared by the Supreme Court itself in Marbury vs. Madison.  How does that have any more legitimacy than if the Congress passed legislation declaring itself the sole decider of constitutionality, or if the President executed a signing statement declaring that he is sole decider of what is or isn't constitutional, or if the State legislature of Tennessee did the same by passing legislation?  The answer is they are all wrong, none are the final authority on issues of constitutionality, as they are all co-equal judges of the constitutional contract to which they are equal parties.

This idea of all the states being co-equal judges as to matters of constitutionality is not a new idea, but is as old as the Constitution itself.  Thomas E. Wood's book Nullification: How to Resist Federal Tyranny in the 21st Century highlights many important documents from State legislatures as they affirmed their responsibility to nullify federal laws they deemed unconstitutional, such as the notorious Alien and Sedition Act.  While the Alien and Sedition Act was used by my college professor as proof that the constitution doesn't really mean anything, since it was clearly violated with this law so close to its creation, he ignored important history from the states that makes the opposite case.

Consider the Virginia Resolutions of 1798, which explicitly declared the Alien and Sedition Act unconstitutional because it "exercises a power nowhere delegated to the federal government" and even worse is "positively forbidden by one of the amendments thereto".

The Kentucky Resolutions of 1798 were approved by the Kentucky House and Senate, and the first paragraph is worth quoting in its entirety for its clear and unambiguous language:
"Resolved, That the several states composing the United States of America are not united on the principle of unlimited submission to their general government; but that, by compact, under the style and title of a Constitution for the United States, and of amendments thereto, they constituted a general government for special purposes, delegated to that government certain definite powers, reserving, each state to itself, the residuary mass of right to their own self-government; and that whensoever the general government assumes undelegated powers, its acts are unauthoritative, void, and of no force; that to this compact each state acceded as a state, and is an integral party; that this government, created by this compact, was not made the exclusive or final judge of the extent of the powers delegated to itself, since that would have made its discretion, and not the Constitution, the measure of its powers; but that, as in all other cases of compact among powers having no common judge, each party has an equal right to judge for itself, as well of infractions as of the mode and measure of redress."
Just because the Supreme Court declared itself the final judge of constitutionality contrary to the view the States historically held, this doesn't preclude the Supreme Court from making correct decisions.  So let's look at the three arguments they use when declaring that powers not specifically delegated to the federal government in Article I, Section 8 are constitutional.

General Welfare

Can the federal government make any law that is for the "general welfare"?  Again, let's quote the offending passage in the context that this was the first of the 17 enumerated powers:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;"
For those that like arguments in the form of an appeal to authority as well as majority rule, we see that two of the founding fathers, author of the Declaration of Independence Thomas Jefferson, as well as James Madison, father of the Constitution, both took a narrow interpretation of the general welfare clause against Alexander Hamilton, who was the first to argue a broad interpretation.

Jefferson explained,
“[T]he laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. They [Congress] are not to lay taxes ad libitum for any purpose they please; but only to pay the debts or provide for the welfare of the Union. In like manner, they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose.”
Similarly, James Madison said that spending must be tied to one of the other specifically enumerated powers, and is not a specific grant of power, but a statement of purpose qualifying the power to tax.

So Alexander Hamilton disagreed, arguing that spending is an enumerated power that Congress can exercise independently of the others if it can be construed to benefit the general welfare.  Is this all there is to the story, an honest disagreement about what general welfare really means?

Unfortunately, after reading The Federalist Papers, The Anti-Federalist Papers, and Thomas DiLorenzo's book Hamilton's Curse: How Jefferson's Arch Enemy Betrayed the American Revolution--and What It Means for Americans Today, I have come to take a more conspiratorial view of this matter.  In the Federalist Papers, of which Hamilton was one of the main authors, we see them assuring the public to not take the warnings of the anti-Federalists seriously.  The Federalists said again and again that State's rights would be intact, just as they were under the Articles of Confederation, and that this federal government would be a limited one of definite powers.  Yet, just as soon as the Constitution was ratified, we see Hamilton singing another tune as secretary of Treasury in his Report on Manufacturers where he first claims "the power to raise money is plenary and indefinite" and "The terms general Welfare were doubtless intended to signify more than was expressed".

Not only did Hamilton promote this treacherous idea during his tenure as secretary of Treasury, but he also first promoted the idea of "implied powers" in his Opinion on the Constitutionality of the Bank of the United States.  He wrote, "there are implied, as well as express powers, and that the former are as effectually delegated as the latter."

This is what I mean by intellectual honesty.  During the secret Constitutional Conventions Hamilton was promoting all kinds of ideas that were shot down. He wanted the Constitution to create an all powerful National government with a permanent president and senate, where the president would be a kind of king who would appoint governors over vassal states with veto power over the laws.  He didn't get what he wanted, so he said what needed to be said in order to convince the states to ratify the Constitution, and the moment it was passed he used his influence to promote a reinterpretation to create his national government of unlimited powers using stealth and lawyer tricks because he couldn't succeed in open and honest debate.

Interstate Commerce

The interstate commerce clause has been used to justify every power usurped by the federal government from Obamacare, to gun-free school zones, to fining someone for growing too much wheat.  It is the third power expressly delegated to congress, and it says in Article I, Section 8, Clause 3:
"To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes"
So what does regulate mean?  Today, regulate means to create laws and rules.  Our toilets are federally regulated by the government to use no more than 1.6 gallons per flush.  Guns are regulated with rules concerning how many bullets can be in a magazine.  Traffic is regulated by signs, lights, and an army of police to enforce them.

But what did regulate mean when the Constitution was written?  Even the Supreme Court let out a bit of honesty in Gonzales v. Raich in 2005:
"The Commerce Clause emerged as the Framers' response to the central problem giving rise to the Constitution itself: the absence of any federal commerce power under the Articles of Confederation.  For the first century of our history, the primary use of the Clause was to preclude the kind of discriminatory state legislation that had once been permissible."
James Madison argued that regulate meant to "keep regular", and the power to regulate commerce was for the purpose of preventing the states from enacting tariffs against each other that would favor in-state businesses.  So Virginia couldn't impose a 100% tax on its imports of candles to encourage its domestic candle-makers at the expense of Vermont's candle-makers, thus keeping commerce between the states "regular".

The definition of regulate can be confirmed in other areas of the Constitution, such as Article I, Section 8, Clause 5:
"To coin Money, and regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".
Does anyone think this meant to pass and enforce laws about what the value of money must be worth?  No, it meant to keep the value of money regular.  The colonies had numerous disasters experimenting with paper money prior to the Constitution, so they gave Congress the power of normalizing the value of money by limiting it to gold and silver coin, which cannot be wildly inflated like paper money.

We also see the word regulate in Article II of the Bill of Rights:
"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."
Today, the word regulate supposedly gives the government the power to dictate how many rounds my rifle can have, how long the barrel must be, and whether or not it can be suppressed, semi-auto or full-auto, etc.  However, when the Constitution was written a well regulated Militia did not mean the government could tell the colonists what types of muskets they could use, as shown in The Founders' Second Amendment: Origins of the Right to Bear Arms by Stephen P. Halbrook.  He convincingly shows that a well regulated Militia referred to every able-bodied man aged 16-60 having a properly working firearm and being trained in its use and ready in a moment's notice to use it should the call be made.

In his article Can the Government force you to eat broccoli, Judge Andrew Napolitano puts this argument to rest in its historical context.
"The language in the Commerce Clause authorizes Congress “to regulate” commerce among the states. When James Madison wrote that phrase, he and the other Framers were animated by the startling lack of interstate commerce among the states under the Articles of Confederation.  This was the period after the Revolution and before the Constitution when the merchants and bankers who financed the Revolution also controlled the state legislatures.  They were both creditors, because they had lent money to the state governments to finance the war, and debtors, because they now controlled the machinery of state government that owed them money.

What did they do? They were the original corporatists and crony capitalists.  They formed cartels to diminish in-state competition, and they imposed tariffs to discourage out-of-state competition.  Thus, in order to turn 13 mini-economies into one large economy, and to protect the freedom to trade, Madison used the word “regulate,” which to him and his colleagues meant “to keep regular.”  So, the Constitution delegated to Congress the constitutional power to keep interstate commerce regular by prohibiting state tariffs, and it did so."
Necessary and Proper

Can the federal government make any law that is "necessary and proper"?  Necessary and proper for what?  While I risk fighting a straw-man, I don't see a way to rebut this view other than by showing the context in which it is written.

At the end of Article 1, Section 8, after expressly delegating 17 powers to the Congress, it concludes by saying:
"To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Office thereof."
So tell me again, what laws does Congress have the authority to make?  "The laws necessary for executing the foregoing Powers."  Could that be referring to the 17 enumerated powers directly preceding, or foregoing, that clause?  Thomas Jefferson said that necessary meant necessary, not just convenient, for executing the foregoing powers, otherwise what is the point of enumerating powers if the government also has this blank check for any power it can conceive of?  Even Alexander Hamilton defended the necessary and proper clause against this very interpretation in Federalist No. 33, saying that it only clarified the proper means for executing the "certain specified powers" with "necessary and proper laws".

Given we have intellectual arch-enemies Jefferson and Hamilton agreeing on this, the last place we have to look for the federal government's mythical blank check is in the previously mentioned "implied powers" doctrine promoted by Hamilton.  To counter this, I've saved my best argument for last, the historical facts and the logical implications of the necessity for the 18th amendment.

The 18th amendment

While not as popular as the first 10 amendments, the 18th is worth quoting in full because it is the corner stone of the best argument I have for intellectually honesty through adopting a strict interpretation of the Constitution.
"Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress."
Why did the federal government amend the constitution in this way? Why does Section 2 grant Congress and the States the power to enforce this article by legislation? Why didn't they just pass legislation with the language of Section 1? Drumroll….. Because it would have been unconstitutional!

Remember, the 18th amendment was ratified in 1919 and went into effect in 1920.  This was long before the great depression and the onslaught of unconstitutional offices, departments, laws, and regulations that came with FDR packing the Supreme Court with judges sympathetic to his goals.  But the laws on the books in 1920 applied then as they do now.  Then, as now, the Constitution is the supreme law of the land, and any undelegated powers usurped by the federal government are unauthoritative, void, and have no force of law.  If the Constitution required that the federal government of 1920 required them to amend the Constitution to grant them the power to make alcohol illegal before they could execute legislation to that effect, then the same prerequisite applies today to any power not expressly delegated.

That being said, we must now come to the sad conclusion that Michael Badnarik first shocked me with many years ago:

Most of the things the federal government does are unconstitutional.

So what do we do about it?  I'm hoping to educate the American people to this disturbing fact so that we can reach a common baseline understanding before we can begin to have an open and honest debate about the direction our government is going and where we should go from here.

Before we should ask the question, "Should the government do X", we must take a queue from Dr. Ron Paul and first ask, "Is the government allowed to do X"?  If the answer is in the negative, then we should follow the rules and first amend the Constitution to grant the power before it can pass legislation to enforce it.

As President Washington said in his farewell address,
"If in the opinion of the People, the distribution of modification of the Constitutional powers be in any particular wrong, let it be corrected by an amendment in the way the Constitution designates.  But let there be no change by usurpation… the customary weapon by which free governments are destroyed."
Proposing the 28th Amendment

Using language similar to that found in the Constitution and its amendments, I am proud to unveil my proposed 28th amendment to the Constitution.  Anyone familiar with my views will know that I am adamantly against most of the powers I am proposing that we give the federal government, but I do this in the same spirit that Dr. Paul used when he introduced a bill to declare war and promptly voted against it.  His thinking went that if we're going to go to war, we might as well maintain the rule of law, declare war constitutionally, and hold our elected representatives accountable for the decision.  Similarly, if the federal government is going to usurp all of these undelegated powers outside of law, we might as well amend the constitution to give them the powers to do the things they are doing anyway, in order to restore the rule of law, re-open an intellectually honest debate, get an accurate assessment of how far we've fallen, and give all of us citizens fair warning of what is coming.


In the pursuance of intellectual honesty, it has been seen fit to amend the Constitution of the United States, the Supreme Law of the Land, such that the powers and responsibilities that have been usurped, as well as the powers and responsibilities that have been abandoned, relinquished, and renounced, shall be granted or transferred to the appropriate branch of government, be it the Legislative, Executive, or Judicial, such that the powers and responsibilities that have henceforth been exercised by the federal government of the United States, including its departments, administrations, agencies, and agents thereof, shall be made lawful and constitutional, while repealing certain articles of amendment to the Constitution that purport to restrict the federal government of the United States' lawful ability to infringe upon the rights of the people, in favor of an assignment of the privileges that may be bestowed or revoked to the people by their sovereign government.

Section 1. The Congress shall be granted the following powers, and the ability to enforce these powers by appropriate legislation:
  • To create an Army Corps of Engineers, which shall have full regulatory authority over the waterways, lakes, and marinas of United States and all territory subject to the jurisdiction thereof;
  • To create a Bureau of Alcohol, Tobacco, Firearms (ATF), and Explosives, which shall have full regulatory authority to declare any Arm, including, but not limited to, machineguns, short barrel shotguns, short barrel rifles, destructive devices, AOWs and silencers, illegal to possess, transport, manufacture, or sell;
  • To create a Bureau of Land Management (BLM), which shall have the authority to own, control, and manage land including, but not limited to, land suitable for oil, gas, and coal operations;
  • To create a Center for Disease Control and Prevention (CDC), which shall have full regulatory authority concerning diseases, birth defects, environmental health, workplace safety and health, and vaccinations;
  • To create a Central Intelligence Agency (CIA), which shall have the responsibility of collecting, analyzing, and dissemination intelligence, as well as conducting clandestine operations in the United States and abroad, including, but not limited to the powers to engage in assassinations, government overthrows, arms and narcotic trafficking, and false-flag terrorism;
  • To create a Commodity Futures Trading Commission (CFTC), which shall have full regulatory powers concerning commodity futures and option markets;
  • To create a Consumer Financial Protection Bureau (CFPB); which shall have full regulatory authority over banks, credit unions, and other financial corporations;
  • To create a Department of Agriculture, which shall have full regulatory authority over the possession, manufacture, transportation, packaging, labeling, and selling of food and beverages; the power to create a Welfare program for the distribution of Food Stamps; the power to subsidize public and private school lunch programs, and to determine the criteria of eligibility thereof;
  • To create a Department of Commerce, which shall have regulatory authority over areas of trade, economic development, technology, environmental stewardship, and sustainable development;
  • To create a Department of Education, which shall have full regulatory authority related to funding education, administering the distribution of funds, and enforcing discrimination laws, as well as the power to grant public loans, and to guarantee the backing of private loans for the purpose of education;
  • To create a Department of Energy, which shall have full regulatory authority to create rules and regulations governing the forms and manner that energy shall be manufactured, sold, or consumed for private or public purpose;
  • To create a Department of Health and Human Services (DHHS), which shall have the authority to engage in the business and activities of research, public health, food and drugs, and health insurance, including Medicare and Medicaid;
  • To create a Department of Homeland Security, which shall have full regulatory authority over the United States and all territory subject to the jurisdiction thereof concerning Counterterrorism, Border Security, Immigration, and Cybersecurity;
  • To create a Department of Housing and Urban Development (HUD), which shall have full regulatory authority concerning matters related to community planning and development, home owning, home buying, real estate transactions,
  • To create a Department of Labor, which shall have regulatory authority concerning matters including, but not limited to, the welfare of wage earners, job seekers, retirees, working conditions, advancement opportunities, and mandated work-related benefits and rights;
  • To create a Drug Enforcement Agency (DEA), which shall have full regulatory authority to declare any plant, chemical, or derivative substance illegal to possess, transport, manufacture, or sell;
  • To create a Farm Credit Administration (FCA), which shall have regulatory authority over banks, associations, and related entities of the Farm Credit System (FCS), which shall ensure compliance with the Farm Credit Act of 1971 and FCA regulations, and which shall administer loans and grants to individuals and corporations that may or may not be engaged in agriculture.
  • To create a Federal Bureau of Investigation (FBI), which shall have federal law enforcement power concerning the areas including, but not limited to, terrorism, foreign intelligence and espionage, cyber attacks and high-technology crimes, public corruption, civil rights, national criminal organizations, white-collar crime, and violent crime;
  • To create a Federal Deposit Insurance Corporation (FDIC); with the power to insure and guarantee the checking and savings accounts of public and private banks, thrift institutions, and other financial corporations, as well as the power to enforce compliance with consumer protection laws, including, but not limited to, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Truth-In-Lending Act, the Fair Debt Collection Practices Act, and the Community Reinvestment Act;
  • To create a Federal Emergency Management Agency (FEMA), which shall have full regulatory, enforcement, planning, and management authority concerning any natural, man made, or economic hazard, including, but not limited to, terrorism, earthquakes, tornados, hurricanes, floods, fires, and hazardous spills
  • To create a Federal Trade Commission (FTC), which shall have full regulatory and enforcement authority to regulate all trade and business if such can be perceived to concern consumer protection and competition, fraud, deception, mergers, acquisitions, or unfair business practices including charging too much, charging too little, or colluding with other businesses to charge the same amount for a good or service;
  • To create a General Services Administration (GSA), which shall have full regulatory authority including, but not limited to, Federal Acquisition Regulation (FAR), Federal Management Regulation and Federal Travel Regulation (FTR);
  • To create a National Aeronautics and Space Administration (NASA), which shall have the responsibilities concerning technology related to air and space, including, but not limited to Aeronautics, Human Exploration and Operations, and the exploration of the solar system;
  • To create a National Institute of Health (NIH), which shall fund medical research in universities and research institutions;
  • To create a National Institute of Standards and Technology (NIST), which shall have non-regulatory powers to promote innovation and industrial competitiveness, and advance measurement science, standards, and technologies;
  • To create a National Railroad Passenger Corporation (AMTRAK), which shall have the power to engage in the business of transportation via trains and light rail;
  • To create a National Weather Service, which shall provide weather, hydrologic, and climate forecasts and warnings for the United States, its territories, adjacent waters and ocean areas;
  • To create a National Security Agency (NSA), which shall have the power to clandestinely collect, process, analyze, produce, and disseminate signals intelligence information, of both foreign and domestic origin, as well as having full regulatory authority of security regulations covering operating practices, and the transmission, handling, and distribution of signals intelligence and communications;
  • To create a Nuclear Regulatory Commission, which shall have full regulatory authority governing nuclear reactor and nuclear material safety, issue orders to licensees, and adjudicate legal matters;
  • To create a Securities and Exchange Commission (SEC), which shall have full regulatory power concerning securities being offered for public sale, corporate reporting, proxy solicitations, tender offers, insider trading, and registration of exchanges, associations, brokers, dealers, transfer agents, and clearing agencies, as well as enforcement power of laws governing the securities industry including, but not limited to, the Securities Act of 1933, the Securities Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002 (SOX), and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010;
  • To create a Social Security Administration (SSA), which shall have the power to lay direct taxes on income, as well as the power to give money to persons based on age, wealth, and disability; -And
  • To create a Transportation Security Administration (TSA), which shall full regulatory authority over all the airports of United States and all territory subject to the jurisdiction thereof, including the right to sexually assault patrons of said airports, and the authority to shut down any air traffic to an airport that refuses to comply with said Administration.
Section 2. The Congress shall renounce their power to coin money, and shall be granted the power to delegate this responsibility, as well as the power to create paper and electronic fiat money, to a private central bank, which shall be the Federal Reserve Bank.

Section 3. The Congress shall renounce their power to declare War, and shall be granted the power to delegate this responsibility to the President of the United States of America.

Section 4. The House of Representatives shall renounce their power to originate all bills for raising revenue, and the Senate shall be granted the power to concurrently originate such bills.

Section 5. The Congress shall renounce their sole ownership of the power to legislate, and the President of the United States of America shall be granted the concurrent power to legislate through Presidential Signing Statements.

Section 6. The first article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To regulate religious institutions through the formation of 501c3 corporations;
  • To create "free-speech zones", to grant the privilege of speech, and to repeal said privilege;
  • To regulate the Press, particularly concerning, but not limited to, matters related to national security; -And
  • To arrest the people for peaceably assembling, including, but not limited to, when such assembly shall coincide with a national or international meeting such as NATO, the UN, the World Bank, the CFR, the Trilateral Commission, and the Bilderberg group.
Section 7. The second article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To grant and revoke the privilege of keeping and bearing Arms based on criminal record, education, medical history, or any other qualification deemed proper; -And
  • To prohibit the possession, manufacture, importation, transportation, or sale of Arms, including, but not limited to, machineguns, short barrel shotguns, short barrel rifles, destructive devices, AOWs and silencers.
Section 8. The fourth article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To search and seize any person, house, paper, and effect, for any reason that any agent of the Federal government shall believe to be reasonable; -And
  • To monitor, intercept, and record all electronic communications.
Section 9. The fifth article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To hold any person, including American citizens, indefinitely, without the benefit of any trial, for any reason;
  • To grant the President the power to order the assassination of any person, including American citizens, for any reason;
  • To take private property without just compensation for private or public use under the authority of eminent domain; -And
  • To confiscate the private property of a person that is charged with a crime, including the freezing of bank accounts.
Section10. The sixth article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To charge a person with a crime without being informed of the nature and cause of the accusation, and to be charged by secret witnesses, including, but not limited to, accusations involving national security; -And
  • To be deny a person charged with a crime the privileges of obtaining witnesses in his favor, a public trial, and an impartial jury, including, but not limited to, crimes involving national security.
Section 11. The seventh article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To deny the privilege of trial by jury, including, but not limited to, charges involving traffic violations, family courts, and other administrative misdemeanors and felonies.
Section 12. The eighth article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To impose excessive bail and fines, including, but not limited to, hundreds of thousands or millions of dollars; -And
  • To inflict cruel and unusual punishments, including, but not limited to, enhanced interrogation techniques such as water-boarding, sexual torture, and the technique known as "Diesel Therapy", whereby a prisoner is shackled at the feet and handcuffed at the wrists, reinforced with a box-like structure which stiffens the chains and locks the wrists at a 90-degree angle, whereby the handcuffs are connected to a waist chain that is connected to another chain which connects the shackles, which pinch the nerves and restrict the flow of blood causing severe pain and swelling, often resulting in damage to the feet, as toenails under pressure from blood-blisters become infected and deformed, requiring surgery or the pulling of the nails out by the roots, whereby the prisoner will be transported from bus to bus and onto plane after plane, being shuttled from one prison to another, for weeks on end, 20 hours per day in chains.
Section 13. The ninth article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To grant all administrative rights to the federal government of the United States, including its departments, administrations, agencies, and agents thereof, whereby privileges will be granted and revoked to the people, at the full discretion of any agent of the United States.
Section 14. The tenth article of amendment to the Constitution of the United States is hereby repealed, in pursuance of granting the Congress the following powers, and the ability to enforce these powers by appropriate legislation;
  • To grant all powers delegated, implied, or conceivable imagined to the federal government of the United States, including its departments, administrations, agencies, and agents thereof.


Give me the facts!

A few months ago I realized how much time I was wasting commenting on articles and debating strangers on Facebook.   The revelation prompted me to cut myself off cold turkey.   I began to enjoy the automatic emails from Facebook, pleading with me to sign in because of all the important status updates I was missing.   God only knows how many pictures of desert and political memes I missed out on.   Not only did I discover how much more productive time I had, but I felt happier overall because I was no longer bummed out over my inability to convert the masses.

But alas, last weekend I couldn't resist commenting on an article in my alma maters' newspaper, the Iowa City Press Citizen, which reported that Obama would be coming to the University of Iowa to speak on the subject of the increasing burden of student loan debt.   It is one of my favorite topics because it's a timely issue and a great opportunity to highlight the unintended consequences of good intentions and government subsidies.

Knowing from past experience that most people won't read a comment if it's longer than a few sentences, I tried to make it short and sweet.

Of course nothing I said was original or from my own mind.  I stole the whole argument from Peter Schiff, and concluded my intellectual piracy by quoting Harry Browne.

If you haven't heard the argument that the reason college tuition is out of control is due to the unintended consequences of government guaranteed student loans, I highly recommend you listen to the below 20 minute clip from the Peter Schiff show. He interviews Kelli Space, a young woman that graduated with an astounding $200,000 in debt after graduating from Northeastern University with a degree in sociology. Rather than continue to steal his thunder, I'll leave it up to you to listen while I move on to the point of this blog.

So one of the responses my comment provoked challenged me to give evidence, calling it "those nasty little facts that get in the way".  While I had no intention of reverting back to my old time-wasting habit of battling strangers on the internet, I saw that someone else accepted his challenge in my place.  He proceeded to give my opponent "the facts", including quoting CPI numbers, claiming that since 1986 the overall inflation rate has been 115%, while the price of tuition has risen 498%.

This was exactly the line of argument I was trying to avoid, and for good reason.  It didn't have any impact on my opponent, instead he chided my supporter for pulling biased "facts" from a Google search, and invited him to recommend similarly biased "facts" from the NRA the next time a gun control article is published.

This exchange epitomizes one of the biggest problems we have in this country.  While I tried to keep my argument grounded on logic, analogy, and economic theory, he wanted hard numbers, the "facts".  When my supporter gave him those "facts", he was arguing by an appeal to authority.  Problem: my opponent did not respect that authority, he has his own authority with his own set of "facts".  Neither my supporter nor my opponent learned anything from each other, they both walked away with the continued belief that their set of "facts" from their respective authority figures are right, and the other side has been duped by charlatans.

Like most people that identify themselves as being on the left or the right, they have mutually exclusive world views.  The right has think tanks that supply them with "facts", and the left has theirs.  My "facts" are your propaganda, and vise versa.  Just about the only thing they have in common is they have both renounced the use of logic, particularly deductive reasoning.  And that is a big problem.

Start with a true premise, and if you reason correctly, you will arrive at a true conclusion.
Right now humans aren't much better at this than penguins.

Logic: the science of correct reasoning

Ludwig von Mises encouraged all of his economic students to first read a book on logic.  In particular, he recommended An Introduction to Logic by Morris R. Cohen and Ernest Nagel.  This is because the Austrian school is based on a priori knowledge and deductive reasoning.  A priori knowledge comes independent of experience.  "All bachelors are unmarried".  The truth of this statement is implied in the definition of the word bachelor.  There is no experiment to be done, nothing to prove or disprove.  Deductive reasoning transmits truth from premises to conclusion, such that if you start with a true premise and reason correctly, your conclusion is guaranteed to be true as well.

In Human Action, Mises says,
"Aprioristic reasoning is purely conceptual and deductive. It cannot produce anything else but tautologies and analytic judgments. All its implications are logically derived from the premises and were already contained in them. Hence, according to a popular objection, it cannot add anything to our knowledge."
Unfortunately, that popular objection has not lost clout.  Today, if logic is taught at all, it's done with an emphasis on mathematics for computer science majors.  The doctrine of Positivism took over the science of economics long ago, and it still maintains mainstream dominance.  Positivism views that all authentic knowledge comes only from experience, or sensory data, and the logical, mathematical, and statistical treatment of that data.

Hence, mainstream economics is a positivist doctrine that puts the science of economics in the same category as physics or the other natural sciences.  But is that where it belongs?

Ludwig von Mises believed that economics was a sub-category of praxeology, a term he coined which comes from the Greek praxis, meaning action, and logos, talk or speech.  Hence, praxeology is the deductive, aprioristic study of human action based on the action-axiom.  This self-proving axiom makes the radical suggestion that human beings purposefully utilize means over a period of time in order to achieve desired ends.  In other words, humans engage in purposeful behavior.   We are not billiard balls to be isolated in a lab and prodded with stimuli to scientifically generate a response.   We have goals that we strive towards, and while humans can have a difference of opinion as to what constitute worthwhile goals, and even though we can be mistaken about where our behavior will lead us, the fact remains that we engage in voluntary and purposeful behavior.

Therefore, rather than aligning economics with physics and the natural sciences, the Austrian School views economics as a specialized category of praxeology, such that it is the study of human action under conditions of scarcity.  The word economics itself implies scarcity.  What does it mean to 'economize'?  It means to conserve, to avoid waste, to use or manage with thrift, etc.  If you can imagine a world of immortal beings that can summon goods and desires from the power of their enlightened minds, then to economize would be without meaning, as nothing, not even time, would be scarce.

To learn more about praxeology, there is no better resource than Mises' magnum opus, Human Action.  This link takes you to the Ludwig von Mises Institute where you can read the book for free, and download it as pdf, epub, or even as an audio book.

Understanding that this topic can quickly get esoteric when speaking in the abstract, I'll try to elucidate the difference between the positivist and the praxeological approach to economics by analyzing a law of economics that is universally recognized among professional economists as well as laymen.

The law of supply and demand

The law of supply and demand is accepted by both the Austrian School of economics as well as the mainstream positivist economic schools of thought.  This law states that if the supply of a good rises, and the demand stays the same, then other things being equal, the price will fall.  It also implies that if the supply of a good falls, ceteris paribus (with other things the same), the price will rice.  Conversely, if we hold the supply of a good constant, and use demand as our independent variable, then the price will rise and fall in the same direction as the demand.

The difference between the mainstream positivist approach to economics and the Austrian's aprioristic deductive method will be made clear as we see how each school discovers this law.

For the follower of the Austrian school, we start with the above mentioned action-axiom, that human beings engage in purposeful behavior.  That is the only premise we need, and now we move on to our deductive reasoning.

Human beings engage in purposeful behavior, they use means to achieve ends.  A mean can be a good or service, such as using the means of food to obtain the end of nourishment, or the means of a vehicle to achieve transportation to a given destination.

The first unit of a good, the means, will be used to satisfy the most urgently felt desire, the ends.  This is true based on the meaning of the word "first" and "most", it is tautologically true.

It follows that the second unit of a good or service will be used to satisfy the second most urgently felt need.  The third unit will be used to satisfy the third most desired need, as well as the fourth, the fifth, ad infinitum.  This is true by definition.  Note that these rankings are ordinal numbers, not cardinal.  It makes no sense to say that you value the 10th unit of a good 10x more than the first.  These rankings are the order of preference expressed through human action.

Quoting Mises' most accomplished student, Murray Rothbard:
"The important consideration is the relation between the unit to be acquired or given up and the quantity of supply (stock) already available to the actor. Thus, if no units of a good (whatever the good may be) are available, the first unit will satisfy the most urgent wants that such a good is capable of satisfying. If to this supply of one unit is added a second unit, the latter will fulfill the most urgent wants remaining, but these will be less urgent than the ones the first fulfilled. Therefore, the value of the second unit to the actor will be less than the value of the first unit. Simi­larly, the value of the third unit of the supply (added to a stock of two units) will be less than the value of the second unit. It may not matter to the individual which horse is chosen first and which second, or which pounds of butter he consumes, but those units which he does use first will be the ones that he values more highly. Thus, for all human actions, as the quantity of the supply (stock) of a good increases, the utility (value) of each additional unit decreases."
Thus, starting with the action-axiom and following a trail of deductive reasoning, we have arrived at the law of marginal utility.  Also known as the law of diminishing returns, it states that each additional unit of a good or service will be subjectively less valued than the previous.  In praxeology speak, for a given individual, each additional unit of a specific good will be the means to satisfy an end of lesser and lesser importance, by definition.  Just as the definition of bachelor implies the property of being unmarried, we see that the premise of purposeful human action implies this law.

To assist our understanding, we can plot the ordinal ranking of ends against an increasing quantity of a specific good (means) for a given individual.  This graphic is taken from chapter 1 of Murray Rothbard's treatise Man, Economy, and State (Also available for free in pdf and epub):

By introducing the premise that there is more than one type of good that can serve as a means to accomplish the ends desired by men, we can consider how a given individual could rank two different goods that could satisfy a number of ends.  Starting with another graphic from Man, Economy, and State, I've made some improvements by color-coding the data points for supply goods X and Y, and combining the two graphs to reveal the resultant value scale for an individual when only considering these two goods.

When the individual whose preferences expressed by human action are graphed above has 0 units of supply goods X or Y and is given the choice of obtaining one, and only one unit of either, he will choose one unit of supply good Y to satisfy his most urgently felt need.  Given additional choices to add a unit of either good to his stock, we see the next three units of good X are subjectively valued progressively lower before our hypothetical individual comes to the point that he would rather have a second unit of good Y than a fourth unit of good X.

Another way to think about the implications of this graphic is presented in the scenario when the individual whose preferences are shown in this value scale already has 7 units each of supply goods X and Y in his stock.  Faced with the choice of giving up one unit of either good, he will first choose to give up his 7th unit of good Y.  His second least desired end that can be satisfied with the means of supply goods X or Y will be that satisfied by his 6th unit of supply good Y.  Upon the third and fourth choice to be made, this individual will give up his 7th and 6th units of supply good X.

This example limited to only two types of supply goods is just one potential value scale for a given individual, and an infinite variety of value scales can be imagined. By adding the premise that different human beings have different value scales for the means and ends they subjectively value, we are ready to continue our chain of deductive reasoning and think of the necessary conditions for two individuals to engage in voluntary exchange.

Murray Rothbard contrasted the pre-requisites of exchange when considering single unique goods or homogenous supplies of goods in Chapter 2 of Man, Economy, and State:
"If the goods in question are unique goods with a supply of one unit, then the problem of when exchanges will or will not be made is a simple one. If A has a vase and B a typewriter, if each knows of the other's asset, and if A values the typewriter more highly, and B values the vase more highly, there will be an ex­change. If, on the other hand, either A or B values whatever he has more highly than what the other has, then an exchange will not take place. Similarly, an exchange will not take place if either party has no knowledge that the other party has a vase or a type­writer.

On the other hand, if the goods are available in supplies of homogeneous units, the problem becomes more complex. Here, in determining how far exchanges of the two goods will go, the law of marginal utility becomes the decisive factor. If Jones and Smith have certain quantities of units of goods X and Y in their possession, then in order for Jones to trade one unit of X for one unit of Y, the following conditions have to be met: To Jones, the marginal utility of the added unit of Y must be greater than the marginal utility of the unit of X given up; and to Smith, the marginal utility of the added unit of X must be greater than the marginal utility of the unit of Y given up."
The first revelation to be noted from the necessary conditions of voluntary exchange is that both parties subjectively value what they are giving up less than what they will receive.  Both Jones and Smith walk away from the transaction better off, both feel wealthier than before, both now have the means to satisfy an end that ranks higher on their value scales than the end which could have been satisfied by the means they gave up in exchange.  While it would make no sense to say that both parties walked away with the "heavier good", as weight is an objective measurement, in contrast we see that in the minds of both Smith and Jones they each believe that he has gotten the better deal because of the difference in their subjective value scales.  Beauty is in the mind of the beholder.

This axiomatic truth of mutual benefits to both parties of all voluntary exchanges is of critical importance to libertarian public policy, as it would apply to everything from laws that purport to "protect the consumer" to violations of the right to contract such as a minimum wage law.  Not to get distracted when we are so close to arriving at the law of supply and demand, we can now consider the second scenario described by Rothbard and consider how the value scales of Smith and Jones will determine how many exchanges they will engage in, and the implications to be considered when one of them no longer sees a benefit in exchange and they arrive at a point of equilibrium.

At T0, the time before any exchanges have been made, we have Smith possessing 5 units of Y, with his 1st, 5th, 6th, 8th and 10th most urgently felt needs being satisfied, but completely lacking in units of X that could satisfy his 2nd, 3rd, 4th, 7th, and 9th most urgently felt wants.  Alternatively, Jones has 5 units of X and no Y, and a completely different value scale than Smith.

Because of their mutually unequal subjective value scales, they can both benefit by exchange, as Smith will sacrifice the means to satisfy his 10th most urgently felt need (Y5) in order to receive his first unit of X which will satisfy his 2nd most urgently felt need.  Jones is just as eager to engage in trade, as he is able to get rid of his 5th unit of X, which satisfies his 10th most urgently felt need, and in exchange will receive his first unit of Y, which will satisfy his 3rd most urgently felt need.

At T1 we see how both Smith and Jones are in higher positions on for their respective value scales, both are now satisfying a need that ranks higher than they were before entering into exchange.  Their value scales allow an additional trade, such that at T2 Smith now has 2 units of X and 3 units of Y, satisfying his top 3 needs, while Jones concludes with 3 units of X and 2 units of Y, with his top 5 most urgently felt needs all being satisfied.

It is at T2, after two exchanges have taken place, that another trade is no longer possible.  Smith would be eager to trade his 3rd unit of Y for a third unit of X, which would move him up his value scale from satisfying his 6th to his 4th most urgently felt need.  However, Jones will not make this trade, as he values his third unit of X more than a third unit of Y, and he will not sacrifice the means to satisfy his 5th most urgently felt need for the means to satisfy his 7th.  Their two man, two good economy has reached a point of equilibrium.

For simplicity's sake the X price of Y and the Y price of X maintained a 1 to 1 ratio, but based on the value scales above we could have imagined other scenarios whereby Smith could have offered his 2nd, 3rd, 4th and 5th units of Y for just 1 unit of X, sacrificing the means to satisfy his 5th, 6th, 8th and 10th most urgently felt needs in order to raise his position on his value scale and satisfy his 2nd most urgently felt need.  Hence, we could have had the Y price of X rise to 4, and the X price of Y fall to 1/4.

As more people enter the economy of X and Y who have an even wider variety of value scales, we will see exchanges continue to be made amongst the most eager buyers and sellers.  When the market participants are aware of each other and the exchanges willing to be made, we will see one common price start to dominate the market.  While a given individual may be willing to sacrifice 4 units of Y for 1 unit of X, he would much rather sacrifice just 1 unit of Y if he can find a capable seller willing to do so.

In Murray Rothbard's example, he used barrels of fish and horses as his X and Y, and ended up with the above equilibrium price, where 5 horses will each be traded for a price of 89 barrels of fish per horse.  He summarized his horse-fish economy with the following,
"We began with a stock of eight horses in existence (and a certain stock of fish as well), and a situation where the relative positions of horses and fish on different people’s value scales were such as to establish conditions for the exchange of the two goods. Of the original possessors, the “most capable sellers” sold their stock of horses, while among the original non-possessors, the “most capable buyers” purchased units of the stock with their fish. The final price of their sale was the equi­librium price determined ultimately by their various value scales, which also determined the quantity of exchanges that took place at that price. The net result was a shift of the stock of each good into the hands of its most capable possessors in accordance with the relative rank of the good on their value scales. The ex­changes having been completed, the relatively most capable pos­sessors own the stock, and the market for this good has come to a close."
With the market at equilibrium, only a change in the relative demand and supply schedules of the market participants can re-open the market for exchange.  In that situation, or in a market that is constantly changing such that an equilibrium price is never firmly set, a change in the demand or supply schedules for a given market will result in consequences that are guaranteed to follow certain laws based on the tautological truths arrived at earlier.

For instance, if the demand schedule for a good increases, then we know that relative to the previous point of reference, the market participants subjectively value that good for the need that it will satisfy higher than before.  This could come about from the previous market participants experiencing changes in their individual value scales, or from new players entering the market and displacing previous market participants with their higher demand.  If we know that in addition to the demand schedule increasing, that the supply schedule has decreased or remained the same, then the equilibrium price is guaranteed to increase.  If Smith's value scale has increased such that he is now willing to sacrifice his entire stock of Y in order to fulfill the need fulfilled by one unit of X, then he could pay up to 5 Y for 1 X, but Jones would certainly not accept less than the 1 Y price previously arrived at, as the seller always prefers the highest possible selling price for his good.

We can also make conclusions about the quantity of exchanges that will be made based on the supply schedule.  If the supply schedule increases than either the previous market participants have become more capable or specialized in their field, or new players are entering the market and competing with the Jones' of the world in the supply of X.  If the supply schedule increases while the demand schedule increases or stays the same, then we are guaranteed to have more exchanges taking place.  At a price of 1 X to 1 Y each possible exchange will only occur if the ranking of the additional unit of X ranks higher than the loss of one unit of Y.  If Jones or his competitor can now sell 5 X for 1 Y, then more exchanges will take place then ever before.  When something is on sale you buy more of it.  Think of 2 for 1 deals or the low profit high volume sales strategy.

Thus, starting with a few self-evident premises and using deductive logic to explore the implications, we have arrived at the law of marginal utility, the necessary conditions for voluntary exchange, and the necessary consequences to equilibrium price and quantity exchanged given changes in the demand schedule or supply schedule, also known as our long awaited Law of Supply and Demand.  I'm stealing one last graphic from Rothbard's Man, Economy, and State to list the full matrix of possible permutations for this law.

Google, or better yet Startpage, "Law of Supply and Demand proof" and you'll find resources and papers with dozens of equations and complex formulas.  While a mathematical proof may resemble the sequence of deductive logic employed here, only the Austrian school explicitly derives its conclusions from the premise of purposeful human action.  The graphics used here are to assist in understanding, plotting ordinal rankings expressed in the moment of action, we do not confuse the role of the actor who chooses to buy, sell or abstain from the graph that models that behavior.

How would someone "show me the facts" that relied on positivist economics and appeals from authority?  Maybe you could record the price of all exchanges of a good for a given population and time, archiving all the buyers and the sellers, examining their behavior and comparing it to a curve predicted by a mathematical equation?  Of course you'd have to get visibility to buying patterns and consumer preferences, perhaps through historical surveys or consumer reports.  You'd also have to factor how complementary and substitute goods could have influenced the market price and quantity sold of this specific example good.

Without a theory to guide your selection of facts, just about any hypothesis could be proposed and any theory could be arrived at.  You'd be free to cherry-pick your data points and extend your imaginary line that supposedly models "perfect competition" until you are prepared to recommend the perfect rate of interest or quantity of stimulus in order to achieve a 2.1% increase in job growth.  This is the height of absurdity.  The pretense of knowledge knows no bounds.


Just for the record, I'm not afraid of math.  I had to master all the techniques of vector calculus, matrix algebra, and differential equations on my path to an electrical engineering degree.  While some of those techniques were hard to get my head wrapped around in the abstract, it all came together when I had to apply those lessons in my physics and electric circuits classes.  It 'clicked' when I saw that these mathematical concepts truly do govern physical phenomenon in our world.

But does it make sense to apply those techniques in the sphere of human action?  Is it correct to use the positivist and empirical scientific techniques one uses to discover the law of gravity or the behavior of electronic circuits to the question of how to govern and influence the behavior of free thinking human beings?

While the positivist schools of thought may claim to be more scientific and able to predict a 2.4% growth in GDP based on an $80 billion stimulus, it is the Austrian school that should get the credit in the sphere of making accurate predictions.  After a few more premises and lines of deductive reasoning we could arrive at the Austrian Business Cycle Theory (ABCT), which has been used by various Austrians to predict every major boom-bust cycle from the Great Depression, the post WWII recovery, the end of the Bretton Woods system, the Japanese lost decade, the dot-com bubble, and the housing bubble.

To learn more about the Austrian School of Economics, the best books to read are the economic treatises by Mises and Rothbard, respectively, Human Action and Man, Economy and State.  Gene Callahan's Economics for Real People is a good introductory book to the Austrian School.  Tom Woods has also assembled an impressive collection of free books and online videos at learnaustrianeconomics.com.
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