"There is no maxim in my opinion which is more liable to be misapplied, and which therefore needs elucidation than the current one that the interest of the majority is the political standard of right and wrong...." ~ James Madison
Column by Mark Davis.
Exclusive to STR
I’ve enjoyed Max Keiser and the Keiser Report for the last few years. His stands pointing out the thoroughly corrupt financial system, supporting silver and gold money and calling out the US Treasury Department pimps like Paulson and Geithner with their revolving door to Goldman Sachs have been outstanding. Max also took a very courageous stand against CIA renditions. So I was somewhat surprised and confused when I saw this report. Still, it was not the report itself that inspired me to weigh in, but the not allowing of a seemingly simple comment that I made to be posted. This intensified my curiosity and led me here. First some background.
The stance that Mises was a “fake Austrian” economist is so silly and over the top that I just had to laugh. I could not see what Max was trying to accomplish, but his usual stand-up comic style of investigative journalism had turned more serious and esoteric. The lightweight “Austrian economist” (Sandeep Jaitley) he interviewed seemed so confused and contradictory that it came off as contrived nonsense. Keiser wasn’t trying to use any wit whatsoever, just attack von Mises and, it seems, libertarians in general. The shot across the bow warning at the end to Lew Rockwell seemed to reveal a bit of personal animosity, but I certainly don’t know that. It all seemed so bizarre and out of character that I just had to wonder: WTF, Max?! Hmmm, anyway, Tom Woods reacted in a reserved manner, pointing out the silliness of the Mises heresy comments here.
Then Max Keiser responded to Woods’ straightforward little economics lesson with an abbreviated rant saying:
“The idea that private interests preserve the capital value of resources (‘unless they are interfered with by the state’) produces a superior economic outcome over the public interest's preservation of capital value of resources is the type of pseudoscience, faux-Austrian claptrap that gives rise to economic dictatorialism, completely blind to the actual consequences of its actions. What Woods is advocating here is in effect central planning, but the ‘right kind’ of central planning by the ‘right people’; the complete opposite of what Austrians say they are supposedly in favor of and a complete contradiction of what Menger was trying to elucidate before the Mises crowd came along and poisoned the water.”
Woods replied to Keiser’s snarky response with this. Thomas Woods is more than capable of defending himself, and my interest was still peripheral at best, as I often seek entertainment value in such trivial matters. However, Max’s response and the comments section below it appeared to me to go beyond the original academic finer points of Austrian economic theory and into justifications for the state. This got me going a bit.
First, I believe the root of this controversy goes back to the fractional reserve banking debate between Antal Fekete (pro-FRB) and Murray Rothbard (anti-FRB). Both views promote a gold standard and differ over, basically, the definition of fraud. There are some sidebars as to using mathematical models and ultimately it’s about promoting Fekete’s Real Bills Doctrine, but the academic discussion boils down to ethical standards. This is where the disagreement over the true line of Austrian economics becomes a point of contention and gets heated, with Fekete and his followers (that now apparently includes Keiser) seeking a theoretical fig-leaf for promoting what many Austrians consider to be fraudulent financial instruments. To do this, they have to throw Mises under the bus as a “fake Austrian” and purge the popular Austrian movement of heretics that oppose fractional reserve banking.
That being said, the point I wanted to make was to challenge the statist projection that it is the Austrians who are “completely blind to the actual consequences of [their] actions.” As if statists of any kind have ever done that with respect to state interventions, ha! Further, it was my intention to point out “the gun in the room” that statists always, and I mean always, ignore. My quick comment was:
“There appears to be a common theme here among the statists seeking to denigrate the philosophy of non-aggression and property rights: that the world, or any part thereof, can only be 'run by' 1) state central planners or 2) corporate central planners. This is a false dilemma, and the idea that it is possible for anyone or anything to truly 'run' an economy reveals a childish worldview that glorifies the power of central authority.
“Corporations and the state have a symbiotic relationship. The modern state was organized as a corporation (e.g., The Massachusetts Bay Colony) and corporations only exist because of privileges enforced by the state (e.g., limited liability). The men that 'run' the biggest corporations also 'run' the state, so trying to separate them is impossible. So to view the state and corporations as confrontational is naïve and just what these powerful men wish. The state and corporations are now and forever joined at the hip. A true lover of liberty must oppose both as one and the same.
“Libertarians do not believe in the ability of free markets to regulate behavior. Statists can only see collectivist entities (forest) at the expense of individuals (trees) and often mischaracterize libertarians as believing in free-market magic. But men regulate men; the only question is by what method. The state is a monopoly on the use of force (ring of power) that men use to impose their wills on other men based on authoritarian ideals and institutions. This is why men who seek the ring of power are inevitably flawed individuals. The free market is an amalgamation of individuals and voluntary institutions that seek to cooperate for mutual benefit based on libertarian ideals. The former glorifies the power and influence of violence and the latter glorifies the power and influence of self-interest. Any system based on the benevolent use of violence is self-defeating, while systems based on the recognition of other men’s self-interest will prosper.”