Robert Higgs

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John T. Flynn on American Fascism

July 20, 2010 in Fascism by Greg | 3 comments

The growth of fascism in America was noted by Robert Higgs in the post Participatory Fascism. Prior to this, American journalist John T. Flynn – like Friedrich A. von Hayek – warned near the conclusion of WWII how this state of events might transpire:

Fascism will come at the hands of perfectly authentic Americans, as violently against Hitler and Mussolini as the next one, but who are convinced that the present economic system is washed up and that the present political system in America has outlived its usefulness and who wish to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing billions every year and spending them on all sorts of projects through which such a government can paralyze opposition and command public support; marshaling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination all to be done under the authority of a powerfully centralized government in which the executive will hold in effect all the powers with Congress reduced to the role of a debating society. There is your fascist. And the sooner America realizes this dreadful fact the sooner it will arm itself to make an end of American fascism masquerading under the guise of the champion of democracy.¹

Flynn predicted the ominous effect of unlimited government spending over time:

Continuing this policy will no longer run with the great current of desire in America. Regulating business, cutting in as the partner of industry, repressing the labor unions that were encouraged to action, satisfying the aged who were lured on to dream of abundance—all this will present a problem that will call for such drastic impositions upon every section of the population that nothing short of a totalitarian government supported by the weapons of ruthless coercion and the will to use them will bring compliance from the people. We shall presently be presented with the final crisis—the necessity of taking the last few steps of the last mile to fascism in some generated crisis, of ending the prologue and running up the curtain on the swelling theme—or of calling off the whole wretched business in some costly, yet inescapable, convulsion.²

What were Flynn’s intentions? According to Ronald Radosh,

John T. Flynn on American Fascism »»

As We Go Marching. New York: Doubleday and Company, Inc., 1942. 252-253.↩
Ibid. 257.↩

Healthcare Costs

March 27, 2010 in Health Care by Greg | 6 comments

Now that the House of Representatives passed the healthcare reform bill last week, it may be useful to count the so-called “unintended” costs of the bill. Earlier this week, AT&T announced it would take a $1 billion non-cash accounting charge in the first quarter because of the health care overhaul and may cut benefits it offers to current and retired workers. Previously, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law will raise expenses. Yesterday, 3M Co. said it will also take a charge of $85 million to $90 million.

Although these costs will reduce the overall productivity gains that could otherwise have been achieved, the long-term effects of this bill are still to be determined. For example, Robert Higgs recently noted:

. . . because health-care-related economic activity is such a huge part of the overall economy, what happens in this sector will have significant consequences for the operation of other sectors. For example, when Obamacare turns out to be much more costly than the government has claimed it will be, the government’s demand for loanable funds will be greatly increased, with far-reaching effects on interest rates, investment spending, economic growth, and even the U.S. Treasury’s creditworthiness. It is not inconceivable that the burden of supporting this health-care monstrosity will prove to be the (load of) straw that breaks the back of the government camel in the credit markets, where the U.S. Treasury has long been able to borrow the greatest amounts at the lowest rates of interest because its bonds were considered virtually riskless. Indeed, that status as the lowest-risk borrower seems already to be approaching the breaking point, even before the new health-care legislation has taken effect. Implementation of this law can only worsen the Treasury’s plight.¹

Meanwhile, Moody’s reported that the United States and other “Western nations, particularly Britain, have moved ‘substantially’ closer to losing their gilt-edged ratings. The ratings are ‘stable,’ but ‘their distance-to-downgrade has in all cases substantially diminished.’”²

Sources:

“The Health-Care Reform Act: Que Paso?”. 23 Mar 2010. The Independent Institute. 27 Mar 2010.↩
Jolly, David and Catherine Rampell. “Moody’s Says U.S. Debt Could Test Triple-A Rating”. 15 Mar 2010. The New York Times. 27 Mar 2010.↩

Great Depression and Current Recession Compared

October 9, 2009 in Economics by Greg | 1 comment

Earlier this week, Robert Higgs, Senior Fellow in Political Economy at The Independent Institute, spoke about the similarities and differences between the Great Depression and the current recession at the Economic Liberty lecture series. Although he finds considerable differences between the two events, he feels there are only a few similarities between the Great Depression and the current recession.

Below are my notes of his presentation.

There are some similarities as well as differences.

The media and journalists have rushed to see these similarities.

I was shocked.

The Great Depression was so much more horrible, devastating, than the current recession.

They were using this talk to sell some type of policy to the people who look to the government for answers.

I don’t feel the two events are fully comparable.

People would be much happier living through today’s recession than during the Great Depression.

Read the rest of this entry »

Cause of Economic Crisis

June 23, 2009 in Economics by Greg | No comments

Anatomy of a Train Wreck: Causes of the Mortgage Meltdown is a research report written by a University of Texas at Dallas economics professor about the cause of the current economic crisis. If you’ve read Pharaoh’s Dream – A Modern Interpretation by J. Reuben Clark, Jr., then you’ll be especially interested in this excerpt from the executive summary of the report:

Why did the mortgage market melt down so badly? Why were there so many defaults when the economy was not particularly weak? Why were the securities based upon these mortgages not considered anywhere as risky as they actually turned out to be? This report concludes that, in an attempt to increase home ownership, particularly by minorities and the less affluent, virtually every branch of the government undertook an attack on underwriting standards starting in the early 1990s. Regulators, academic specialists, GSEs, and housing activists universally praised the decline in mortgage-underwriting standards as an “innovation” in mortgage lending. This weakening of underwriting standards succeeded in increasing home ownership and also the price of housing, helping to lead to a housing price bubble. The price bubble, along with relaxed lending standards, allowed speculators to purchase homes without putting their own money at risk.¹

As Robert Higgs noted in Participatory Fascism:

In all cases a coalition of big business and the government has emerged, as “fascism’s abrogation of the market in favor of political control over the economy inherently favors big business at the expense of the small entrepreneur.” Characteristically there has been an “extensive interchange of positions between ranking civil servants and high corporate executives”.

If you have time, you might enjoy this video that explores the cause of the crisis from the PBS show McCuistion.

Sources:

Leibowitz, Stan J. “Anatomy of a Train Wreck: Causes of the Mortgage Meltdown”. 3 October 2008. The Independent Institute. 21 June 2009.↩

General Motors Bankruptcy

June 3, 2009 in Business by Greg | 6 comments

General Motors Corp. filed for bankruptcy and became the second-largest bankruptcy in U.S. history. According to the Wall Street Journal:

President Obama defended his decision to take a majority stake in GM, saying it was unavoidable and temporary. “We are acting as reluctant shareholders,” he said in a televised address.¹

The story went on to state:

Some Republican lawmakers called the move another sign of the administration’s deepening incursion into the private sector. And the risk remains high that the administration or Congress could meddle in the company’s day-to-day affairs, an experience familiar to banks that took government bailout cash last fall.

Since it was reported that General Motors approached the government about a possible bailout², this scenario reminded me of the following quote about how business leaders often seek government to intervene for the so-called “public good”:

Businessmen have done more than their full share to foster the active regulatory state from its very inception. Consider William Simon’s recent description of the relation of business and government as he witnessed it during his tenure as Secretary of the Treasury in the 1970’s:

“I watched with incredulity as businessmen ran to the government in every crisis, whining for handouts or protection from the very competition that has made this system so productive. I saw Texas ranchers, hit by drought, demanding government-guaranteed loans; giant milk cooperatives lobbying for higher price supports; major airlines fighting deregulation to preserve their monopoly status; giant companies like Lockheed seeking federal assistance to rescue them from sheer inefficiency; bankers, like David Rockefeller, demanding government bailouts to protect them from their ill-conceived investments; network executives, like William Paley of CBS, fighting to preserve regulatory restrictions and to block the emergence of competitive cable and pay TV. And always, such gentlemen proclaimed their devotion to free enterprise and their opposition to the arbitrary intervention into our economic life by the state. Except, of course, for their own case, which was always unique and which was justified by their immense concern for the public interest.”

One wonders whether anyone – with the possible exception of a few right-wing ideologues – any longer supports the free-market system as an inviolable desideratum; whether anyone is willing to bear its costs in order to preserve its benefits. Talk is cheap, and accordingly business people often talk as if they favor capitalism. But the blatant hypocrisy of their rhetoric suggest that it is either a political device, deliberately employed as part of a “public relations” strategy, or a mindless reflex inherited from the past and readily abandoned when it seems incompatible with short-run gain.³

What’s your view point?

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Sources:

King, Neil, Jr. and Sharon Terlep. “GM Collapses Into Government’s Arms”. 2 June 2009. The Wall Street Journal 3 June 2009.↩
Rasmussen, Scott. “Americans Have Voted ‘No’ on GM Bailout From Day One.” 1 June 2009. Rasmussen Reports. 3 June 2009.↩
Higgs, Robert. Crisis and Leviathan: Critical Episodes in the Growth of American Government. Oxford: Oxford University Press, 1987. 243.↩

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