sexta-feira, 6 de novembro de 2015

"Reconciliation with reality" - More freedom less government - More Mises less Keynes

In this troubled world of much noise and low light, I think we should focus on  values that made prosperous and rich the Western world. I wrote the annexed text to focus on values that have proved valid along time. I am pleased to offer these ideas for discussion. Comments are welcome. thoughts below are focused on 3 tragedies of human civilization: in Syria, in the USA and in Brazil. I seek to find a common denominator between them, pointing out to the origin of the spurious relationship of politics and economics and the futility of the intervention of Governments. The proposed solution is based on a new Social Pact where is predominant the philosophy of the Austrian economic theory, and discarded into the trash of history is the Keynesian influence. My insertion of quotes from wise thinkers throughout the text aims to take advantage of the experience of scholars and statesmen – they had circumstantial reasons to summarize their rich experiences in a few words, and that should serve as a compass for generations to come.
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"Reconciliation with reality"
(Versöhnung mit der Wirklichkeit )
More freedom less government
More Mises less Keynes

Caixa de texto: We haven't learnedI was dismayed with the photo of the 3-year-old Syrian boy found dead on the beach,  his face on the Turkish beach sand, dressed up, angel hair, shoes without socks. We sent him back from this world, this little angel just arrived, without giving him an opportunity to show his talentwho knows he wouldn't be a Leonardo da Vinci, a Luciano Pavarotti or Andre Rieu, and mesmerize the world? 
His Family was looking for new opportunities, in the insane condition of those who are in this world, without a place in it. They left a whole life behind, with an uncertain future ahead. They were trading certain death for a probable one. How can any heart stand such anguish! de texto: 'Blood and Lies' Tony BlairCaixa de texto: Jason Liosatos GalleryI show below the refugee crisis plaguing the world, and the causes of this tragedy:

“Many people sympathize with the refugees, of course, and would like to help them. The question is how to do it without infringing on the interests of the residents of the countries where the refugees are moving. Meanwhile, a massive uncontrolled shocking clash of different lifestyles can lead, and already is leading to growing nationalism and intolerance, to the emergence of a permanent conflict in society” - President of Russia Vladimir Putin, regular meeting of the Valdai International Club - October 19 and 22, 2015 - experts from 30 countries - War and Peace

Former US Senator Ron Paul (R-TX) set with rare mastery and his usual wisdom the responsibilities for this tragedy: " The reason so many are fleeing places like Syria, Libya, Afghanistan, Iraq is that American and European foreign interventionists left these destabilizing countries with no hope of economic recovery. This mass migration from the Middle East and beyond is a direct result of the neocon foreign policy of invasion and regime change by pushing "democracy" in the barrel of a gun ".
He concludes by recommending to the interventionists: "stop meddling in the Affairs of other countries. Embrace the prosperity that comes with a peaceful foreign policy, not the poverty that goes with running an empire. End of the Empire "- The Real Refugee Problem – And How To Solve It -9/6/2015- RonPaul Institute

We will migrate to another tragedy, the U.S. government debt never seen in the past, where children born today are already in debt for unaccountable actions that transfer their problems to the next generations. To sacrifice the future to have an advantage in the present is an inconsequential action.
 Ron Paul's conclusion is definite: "Deficits mean future tax increases, pure and simple. The increase of deficits should be seen as a tax on future generations, and the politicians who create deficits should be condemned as creators of taxes".  
cid:image030.jpg@01CF157D.E2DF1600Reagan adds his fine irony:
"Government is like a child. An alimentary canal with a big appetite at one end and no sense of responsibility at the other”.
Reagan’s eight years per capita GDP adjusted for inflation rose 3.5 percent per year. Compared to 0.7 percent in the previous eight years and 1.5 percent in the following eight years. For those who support America’s wealth “can be attributed” to regulation. Well, sure, it “can be attributed” to Zeus - OCTOBER 19, 2015 Peter St. Onge - Robert Shiller Is Shilling for Socialism

Migrating to corruption in Brazil, this fabulous diversion of resources that embarasses everyone, the cruelest crony school in economics. Hegel, the prolific german thinker, rolling over in his grave, must be "howling with the wolves" and reviewing his concept of the State as the Supreme creation of human ethics!
Corruption in Brazil makes real the ironic observation that Governments are composed of two groups. One half is incompetent and the other is composed by people who are capable of anything.

Important to differentiate concepts:
Free market economy refers to a system of production and exchange that is based on the law, on equal rights for all, freedom of choice, freedom of trade, freedom to innovate, guided by profits and losses, and the right to enjoy the fruits of one’s own labour. It operates with the  spontaneous interaction of individuals, free from the restraints of the State, when no other system is forced on the population. It's as natural as the seasons and the presence of gravity. Meeting the needs of others is essential, and the most successful competitors in the free market are those who best meet the needs of others, with more effectiveness than any charity institution. You make money by doing what other people want, not what you want.
“All the charitable institutions in the world over the course of the last decade have not met as many needs as the market meets in a single hour” Capitalism, Socialism, and the Pope - By John C. Goodman.
 “Social and economic freedom is not just the best policy for a free people, it is the indispensable framework for the future”. The Cato Institute
Crony Economics refers to spurious exchanges between producer interests and politicians and bureaucrats who seek power at any cost, who do not disdain alliances with fraud, cheating and corruption. The King's friends are investing more in politics than in economics, real whores who sell their brain instead of the body. Reagan defined this with remarkable irony: "it has been said that politics is the second oldest profession. I learned that it bears a striking resemblance to the first. The experienced Kissinger said: "ninety percent of the politicians give a bad reputation to the other ten percent".
This clash between pro-market and pro-business is an old one. Adam Smith wrote “The Wealth of Nations” to denounce mercantilism, the crony capitalism of his day. Milton Friedman said at a 1998 conference: “There’s a common misconception that people who are in favor of a free market are also in favor of everything that big business does. Nothing could be further from the truth.”

Fortunately, the Brazilian society presented efficient antidotes, thanks to the competence and determination of Judge Sergio Moro and his team of young Attorneys who are rescuing the dignity of all the people. "Worst of all, systemic corruption impacts the sense of self-esteem of a people. An entire people who pays a bribe is a people without dignity".
The old and decadent judicial system is being humbled by the competence, intelligence and pragmatism of this new generation.
A sign of Bankruptcy of the decadent righteousness that demeans an entire society, is to allow outstanding sports leaders to walk on a red carpet at home and to wear handcuffs abroad.

This spurious relationship of politics and economics grew with the legislation of the New Deal (regulatory explosion) of F.D. Roosevelt (1933-45), American President during four terms, as a function of the circumstancial need of interventionist measures to mitigate the effects of the economic crisis of the 30's and of World War II
“But once FDR came to power, he enacted the longest string of cockamamie, prosperity-killing measures of any president in American history.
The economy still hadn't recovered from World War II, a war that didn't help the economy or get us out of the Great Depression. It prolonged the government-made pain”. - The Great Depression and the New Deal - by Murphy, Robert P.

Steven Horwitz, Professor of Economics at the University of Saint Lawrence, brings to light the period of the Great Depression: "In spite of the strong evidence, of Hoover's beliefs for his actions as President, of the remarks by his contemporaries and modern historians, the myth persists that Hoover was an example of laissez faire. Of all Presidents, Herbert Hoover was one of the most active in intervening in the economy”.  President Hoover (1929-32), though famous for his "laissez faire", seems to have inspired the New Deal
Caixa de texto: 'Creating Hell on Earth'Caixa de texto: Jason Liosatos Gallery"Don't forget that I discovered that over ninety percent of all national deficits, from 1921 to 1939, were caused by payments for past, present and future wars." Franklin D. Roosevelt
"People do not make wars. It’s Governments that make them ". Ronald Reagan
Caixa de texto: Jason Liosatos GalleryCaixa de texto: 'Nobody Wins'"No Government voluntarily reduces its size. Government programs, once released, never disappear. Really a Government Office is the closest thing to eternal life we always see in this world ". Ronald Reagan An example was the New Deal Act of 1933, that sought to cartelize almost all industries in the U.S., in the belief in human intervention on the laws of the market. Within this dominant spirit, appeared in 1936 the "General theory of employment, interest and money", by  the Englishman John Maynard Keynes, who legitimized the false assumption that it was possible to use the iron hand of the State to direct or manage the market. Created in this way, there came a partnership of bureaucrats and politicians seeking to act on the market. As if this were not enough, Keynes was the key figure at the meeting of 44 countries and world economic leaders, held in the bucolic american town of Bretton Woods for 3 weeks in July, 1944. There was created the World Bank, together with the International Monetary Fund. This meeting, little more than 1 year before the end of World War II, defined and legitimized government intervention in the economy worldwide and attracted the massive membership of participants. You need to understand the circumstances of the time: a world destroyed by war, unemployment in high concern and the dismay of entire populations clamoring for hope. The interventionist theory of Keynes supplied this demand, strongly stimulated by the F D Roosevelt's New Deal. Let's see the main advice of Keynes:
"We must, therefore, establish effective instruments of State economic policy, enabling it to adjust the interest rate in order to keep it below the" marginal efficiency of capital ", increase consumption through the expansion of public expenditure and expand investment by means of public loans able to absorb idle resources."
“In the early stages of the Keynesian revolution, macroeconomists emphasized fiscal policy as the most powerful and balanced remedy for demand management. Gradually, shortcomings of fiscal policy became apparent. The shortcomings stem from timing, macroeconomic theory, and the deficit itself”. - Paul SamuelsonEconomics (15th ed.) [1995]

“What surely ought to happen is what happened in the now-rich world, where countries developed in their own way, in their own time, under their own political and economic structures. No one gave them aid or tried to bribe them to adopt policies for their own good. What we need to do now is to make sure that we are not standing in the way of the now-poor countries doing what we have already done. We need to let poor people help themselves and get out of the way—or, more positively, stop doing things that are obstructing them”. - The Great Escape,  Princeton University economist Angus Deaton - 2015 Nobel prize in economics

It would be unjust to evaluate the contribution of Keynes based on one isolated quote, if only because the circumstances favored emotional decisions in a desperate attempt to generate jobs. Strengthening aggregate demand through taxes and fees, only transfers resources under the invariable law of the market to the questionable field of human will. It creates more jobs in government bureaucracy by subtracting those from the private sector, or it creates a big parasitic system, fully supported with our taxes. Something like: "Everything for the people, but without the people". This is enlightened despotism
This is exactly what has happened in this dumb world of dictatorship of the bureaucracy, the most terrible form of human bondage. The world needs to walk in the opposite direction: to strengthen the private sector and reduce bureaucracy.
"The passion has helped us; but you can't do more than that. In the future it will be our enemy. Reason, cold, calculating and dispassionate, must provide all materials for our future support and defense." Abraham Lincoln
"In the development of a system that we hope will last for a long time, we must not lose sight of the changes that time will produce." James Madison 
“One of the great mistakes is to judge policies and programs by their intentions rather than their results. We all know a famous road that is paved with good intentions” Milton Friedman

But this created an indigestible mix of politics and economics, which are separate areas by nature.
Economics allows the appropriation of resources when the agents are regulated by the inexorable law of supply and demand.
Politics is an art where the human will prevails.
With this the economy lost the condition of a science and should be assisted by psychology, sociology and anthropology, even while in politics was introduced a dependency ratio, anti democratic par excellence, where the luck of the governed depends on the virtue of the rulers
However, the most significant was the false belief in the ability to manage markets, something similar to attempting to supervise the law of gravity-an impossibility in nature. Development doesn't happen by external intervention, it happens from the inside out.
The application and practice of Keynesian interventionism is affecting each individual on the face of the Earth, and has been the most damaging and devastating human action. We're wasting all the efforts made by civilization in centuries.  Mankind is digging its own grave.
“When the ‘conditions for development’ are present, aid is not required. When local conditions are hostile to development, aid is not useful, and it will do harm if it perpetuates those conditions.”
“The negative forces are always present; even in good environments, aid compromises institutions, it contaminates local politics, and it undermines democracy. If poverty and underdevelopment are primarily consequences of poor institutions, then by weakening those institutions or stunting their development, large aid flows do exactly the opposite of what they are intended to do. It is hardly surprising then that, in spite of the direct effects of aid that are often positive, the record of aid shows no evidence of any overall beneficial effect”. -  The Great Escape, Princeton University economist Angus Deaton - 2015 Nobel prize in economics

“If ye would go up high, then use your own legs! Do not get yourselves carried aloft; do not seat yourselves on other people's backs and heads!” - Friedrich Wilhelm NietzscheThus Spake Zarathustra [1883-1891]

In the three tragedies focused above: refugee crisis, government debt and corruption, the main responsibility lies in the financial empowerment of the State, legitimized by Keynes' interventionist theory.
How irresponsible, senseless and inconsequential it was to preach a system without balance and sustainability, a bottomless pit: the government could acquire debt and spend willfully, because this would create jobs, even if the jobs created meant to bomb children and the elderly in a foreign country, to fill the coffers of political parties so that they could buy consciences and stay in power. This is all that the powerful of those times wanted to hear: someone credible among scholars, who would justify and legitimate the inconfessable human will that has permitted to do terrible things that seem to come from hallucinated fanatics for power, "from the stingingly visionary to the psychically disturbed", to use the words of the competent English historian Eric Hobsbawm
“We have grown up as a nation, respected for our free institutions and for our ability to maintain a free and open society. There is something about the way the CIA has been functioning that is casting a shadow over our historic position and I feel that we need to correct it”.
 Former President Harry S. Truman, in an op-ed published in the Washington Post on December 22, 1963

Hayek"In a country where the only employer is the State, the opposition means death by starvation. The old principle of who does not work does not eat is replaced by a new principle: who does not conform does not eat ". Hayek
“The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can't get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods”. (quotation attributed to H. L. Mencken - irresistible for libertarians)

"My readings of history convinced me that bad government results from excessive government". Thomas Jefferson

Since the end of World War II in 1945, the Keynesian approach had several versions: neo, post, new Keynesianism, trickle down or monetarism and others: structuralism, supply side economy, neo liberalism, all of them anti market or based on the false premise of man's ability to manage markets. In this way, the world lived a hell where these policies are exhausted. Keynes ' model does not work, and remains active only for lack of an alternative.
We have to admit that we made the wrong choice, shortly after the Second World War: we were on the proposed economic interventionism of Keynes and the liberalism of the Austrian school. Keynesianism became the dominant economy in the world – mainstream - with scandalous centralization of power in Governments, choking the private initiative. The best result achieved was a stagflation-mixture of stagnation and inflation –an insult to human intelligence. The error is not a tragedy, tragic is not learning from the mistake.
Resultado de imagem para lysander spooner frases
“It is the notion of authority that forms the true locus of dispute between libertarianism and other political philosophies.  Libertarians are skeptical about authority, whereas most accept the state’s authority in more or less the terms in which the state claims it.  This is what enables most to endorse governmental behavior that would otherwise appear to violate individual rights: nonlibertarians assume that most of the moral constraints that apply to other agents do not apply to the state”.  The Problem of Political Authority (emphasis added) page 178 of Michael Huemer’s excellent 2013 book. 
Alan E. Johnson“On the difficult issue of the proper role of government in the economy, I am undecided, though it is clear to me that neither total central planning nor totally unregulated laissez faire works. It seems to me that some amount of governmental regulation is necessary, but what that should be depends on a number of particular judgments that should be informed both by experience and by knowledge of such matters as history and economics. Perhaps a fault of the Left is not always being sufficiently aware of the practicalities of running a business or the unintended consequences of governmental action. Perhaps a fault of the Right is not always being sufficiently aware of the historical fact that unmitigated laissez faire sometimes leads to injustice or that the profit motive may not be the supreme principle of the universe. We need to learn from each other, and I hope that this forum facilitates such learning”. – in Goodreads forum - Alan E. Johnsonauthor of  “The First American Founder: Roger Williams and Freedom of Conscience”, 2015 (Emphasis added)

"The problem has been developing for many years: a kind of alcoholism in which economic society has depended on the Government to solve all their problems. Governments promised to end unemployment, to eradicate poverty, to mitigate the pain of aging and disease, and even to reduce the consequences of the mistakes of bankers and businessmen. Irresistible Promises! This was exactly what everyone wanted. We become alcoholics, dependent on the Government, and we did not have any idea of who would pay the price of this addiction. " Von Mises -speech at the University of Athens in 1984)

If the market is fully liberated, as suggested by the Austrian school, this would greatly increase the concentration of income and the distance between rich and poor. We need to organize a new Social Pact, having the Resultado de imagem para lysander spooner frasesconcept of work as a process of transformation of human energy into physical or intellectual power. This energy has to be ensured a priori, with nutrition, health and education, as job contractual clauses provided by private companies to the employee and his dependents and the government reducing correspondent taxes. From then on, the economic theory of the Austrian school is incomparable. Meritocracy, competition, free market, reducing the economic power of the State, would finally result in dignity and freedom to produce and consume. Humanism would be an appropriate label for the regime resulting from this Social Pact, not featuring capitalism or socialism. It will fulfill the promise of the American Revolution –"you will never strengthen the weak by weakening the strong". It would also fulfill the French Revolution's promise of "liberty, fraternity and equality"
La santé papes devenue « marronnier » journalisme italien.Humanism replies mainly the call of Pope Francis: "I would like to encourage you to keep in mind all those persons around us, who are imprisoned in a cycle of poverty. They must also be given hope. The fight against poverty and hunger must be fought constantly and on many fronts, especially on their root causes" (Pope Francis, to the American Congress, during his visit of September, 2015.

Humanism would not instill judgment and balance in the budget makers, bureaucrats and politicians as decision makers, but it would systematically end deficits. It does not, either, grant ethical and moral values to businessmen, bureaucrats and politicians, but it would prevent corruption. It also does not prevent Syrian families seeking better opportunities in life, but the Syrian local entrepreneurs would generate and stimulate jobs and opportunities for their people.
I feel a deep anguish to understand why Hitler didn't face resistance in his own people, so civilized and politically evolved, to the point of taking him from power. I also seek to understand why the academic world, with remarkable intelligences, did not condemn the Keynesian theory of government interventions in the economy. It is hard to find a theory more damaging and devastating to mankind.
Identifying the virus in the social structure is a necessary condition, but the army of antivirus must act to insulate it and neutralize it.
"In the long run even the most despotic governments with all their brutality and cruelty are no match for ideas. Eventually the ideology that has won the support of the majority will prevail and cut the ground from under the tyrant's feet. Then the oppressed many will rise in rebellion and overthrow their masters."- Von Mises

"Every person, as Stoics said, should be first and mainly left to their own care; and each person is certainly, in all respects, more fit and able to take care of themselves than anyone else "- Adam Smith

"What, then, are the tasks of a Government? Not to regulate Commerce; Not to educate people; Not to teach religion, not to administer charity; Not to make roads and railways;but simply to defend the natural rights of man.. --to protect the person and property --to avoid the attacks of the powerful over the weak. --in short, to administer justice. This is the natural, the original assignment of a Government. I don't understand it should do less: it should not be allowed to do more. Herbert Spencer, "The proper sphere of government" [1843]

Below is a chart of the evolution of economic thought since the 16th century.
 “It is impossible to understand the history of economic thought if one does not pay attention to the fact that economics as such is a challenge to the conceit of those in power.
Yes, but only for sound economics – the economics of scholars such as Adam Smith, J.B. Say, Frederic Bastiat, Carl Menger, Alfred Marshall, Frank Knight, Fritz Machlup, Ronald Coase, George Stigler, Milton Friedman, Armen Alchian, Yale Brozen, James Buchanan, Gordon Tullock, Leland Yeager, Harold Demsetz, Gary Becker, Bruce Yandle, Julian Simon, Deirdre McCloskey, Robert Higgs, David Friedman, and George Selgin (and, also, Austrians such as Mises, Hayek, and Israel Kirzner).  There are, of course, other species of economics, such as Keynesianism and much of modern welfare economics, that assure those in power that their conceits are justified – that the man-in-the-street’s economic superstitions are well-grounded in reality – that sufficient concentrations of power can in fact make miracles occur. - page 67 of the 2007 Liberty Fund edition of Ludwig von Mises’s 1949 magnum opus, Human Action
Russ Roberts and John Papola are responsible for these instructive vídeos (see below) - the debate between Keynes and Hayek is an excellent job that shows, as Mises wanted, that economic Science must not be limited to the classroom, but can be studied by everyone, using the available technology of communication. I sincerely acknowledge their fantastic job of communication that enhances the importance of the the Austrian economic theory. 
I strongly suggest watching these simulated debates between Keynes and Hayek- -a rap showing their distinct and often opposing arguments Fight of the Century: Keynes vs. Hayek Round Two (subtitled in Portuguese)

These 2 giants of economic thought patterned civilization and our lifestyle. Hayek is consistent and targeted towards future generationsKeynes didn't live long enough to watch the hell we live today with his reckless theory - in the medium term we are all dead!!
Recall that both F.A. Hayek and Keynes predicted a crash would occur in 1929: Hayek because interest rates were too low, Keynes because they were too high!

Also, the simulated debate of Smith and Marx - see: Adam Smith and Karl Marx: Liberalism and socialism (Genc) – great job of Globo Ciencia (sorry, portuguese only) Debate of the century - Smith and Marx (EJA) – excelent job of Vanzolini Foundation – USP/SP – Brazil (sorry, portuguese only)
Evidence for flowing water on Mars – this opens up the possibility of life; of wonders we cannot begin to imagine. Its discovery is an astonishing achievement. Meanwhile, Martian scientists continue their search for intelligent life on Earth. George Monbiot, published in the Guardian 30th September 2015

In the department of human tragedies, we can't forget that nature gave man a penis and a brain, but insufficient blood to make them run concurrently.

To relax after a stressful subject, watch this masterful presentation on the celebration of the tenth anniversary of the play "Les Miserables." of Victor Hugo. Do You Hear the People Sing- Published in January 21, 2015

Gratitude for this wonderful world, watch: -  image and text that brings peace,  exalts the noblest human feelings, soothes
the soul in moments of affliction, stimulates meditation and
feeds the spirit. May such peace of mind accompany you and your Family in this coming year!
Let us celebrate this coming year with much hope and faith in the infinite possibilities of the human being to find, by generations that succeed one another, the solution to our problems. Each child who arrives in this world is a flame of hope and renewal.

Ronaldo Campos Carneiro – Oct/2015

From: Alan Johnson 
Date: 2015-10-26 11:15 GMT-02:00
Subject: RE: Quote in my text
To: Ronaldo campos carneiro

Ron – The English version is fine.  Although I don’t know Portuguese, I trust you have translated it correctly.  Alan

From: Ronaldo campos carneiro [] 
Sent: Monday, October 26, 2015 12:00 AM
To: Alan Johnson
Subject: Re: Quote in my text

Thanks Alan I´m happy if you agreed in 30% of argues. See enclosed your quote in english and portuguese. I appreciate your statement:  profit motive may not be the supreme principle of the universe.
Regards. Ron


2015-10-25 12:15 GMT-02:00 Alan Johnson <>:

I’ve now had an opportunity to read your attachment.  I do not agree with your economic ideology (though I once was sympathetic to libertarianism and even now see how you could come to that conclusion, especially in the Brazilian context) and do not wish to be associated with it.  However, I would not object if you included the entirety of the quotation (including the part you omitted with an ellipsis) as follows:

On the difficult issue of the proper role of government in the economy, I am undecided, though it is clear to me that neither total central planning nor totally unregulated laissez faire works. It seems to me that some amount of governmental regulation is necessary, but what that should be depends on a number of particular judgments that should be informed both by experience and by knowledge of such matters as history and economics. Perhaps a fault of the Left is not always being sufficiently aware of the practicalities of running a business or the unintended consequences of governmental action. Perhaps a fault of the Right is not always being sufficiently aware of the historical fact that unmitigated laissez faire sometimes leads to injustice or that the profit motive may not be the supreme principle of the universe. We need to learn from each other, and I hope that this forum facilitates such learning

I agree with some of the insights of the libertarians but disagree fundamentally with their basic anarcho-capitalist theory (or quasi-anarcho-capitalist theory).  Nevertheless, if you include the entirety of the quotation from me, I do not object to your using it, with appropriate attribution, in your essay.  If you just fill in the part you have replaced with an ellipsis, it will be all right.


Alan E. Johnson
Author and Independent Scholar
History, Law, Political Science, Philosophy