Guest Post: How Communism Almost Ruined The First Thanksgiving

The Plymouth Pilgrims progressed from the false dream of communism to the sound realism of capitalism.

by Richard M. Ebeling

This time of the year, whether in good economic times or bad, Americans gather with their families and friends and enjoy a Thanksgiving meal together. It marks a remembrance of those early Pilgrim Fathers who crossed the uncharted ocean from Europe to make a new start in Plymouth, Massachusetts. What is less appreciated is that Thanksgiving is also a celebration of the birth of free enterprise in America.

The English Puritans, who left Great Britain and sailed across the Atlantic on the Mayflower in 1620, were not only escaping from religious persecution in their homeland. They also wanted to turn their back on what they viewed as the materialistic and greedy corruption of the Old World.

Plymouth Colony Planned as Collectivist Utopia
In the New World, they wanted to erect a New Jerusalem that would not only be religiously devout but be built on a new foundation of communal sharing and social altruism. Their goal was the communism of Plato’s Republic, in which all would work and share in common, knowing neither private property nor self-interested acquisitiveness.

What resulted is recorded in the diary of Governor William Bradford, the head of the colony. The colonists collectively cleared and worked the land, but they brought forth neither the bountiful harvest they hoped for, nor did it create a spirit of shared and cheerful brotherhood.

The less industrious members of the colony came late to their work in the fields and were slow and easy in their labors. Knowing that they and their families were to receive an equal share of whatever the group produced, they saw little reason to be more diligent in their efforts. The harder working among the colonists became resentful that their efforts would be redistributed to the more malingering members of the colony. Soon they, too, were coming late to work and were less energetic in the fields.

Collective Work Equaled Individual Resentment
As Governor Bradford of the Plymouth Colony explained in his old English (though with the spelling modernized):

For the young men that were able and fit for labor and service did repine that they should spend their time and strength to work for other men’s wives and children, without recompense. The strong, or men of parts, had no more division of food, clothes, etc. than he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labor, and food, clothes, etc. with the meaner and younger sort, thought it some indignant and disrespect unto them. And for men’s wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc. they deemed it a kind of slavery, neither could husbands brook it.”

Because of the disincentives and resentments that spread among the population, crops were sparse and the rationed equal shares from the collective harvest were not enough to ward off starvation and death. Two years of communism in practice left alive only a fraction of the original number of the Plymouth colonists.

Private Property as Incentive to Industry
Realizing that another season like those that had just passed would mean the extinction of the entire community, the elders of the colony decided to try something radically different: the introduction of private property rights and the right of the individual families to keep the fruits of their own labor.

As Governor Bradford put it:

And so assigned to every family a parcel of land, according to the proportion of their number for that end . . . This had a very good success; for it made all hands very industrious, so as much more corn was planted then otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little-ones with them to set corn, which before would a ledge weakness, and inability; whom to have compelled would have been thought great tyranny and oppression.”

The Plymouth Colony experienced a great bounty of food. Private ownership meant that there was now a close link between work and reward. Industry became the order of the day as the men and women in each family went to the fields on their separate private farms. When the harvest time came, not only did many families produce enough for their own needs, but also they had surpluses that they could freely exchange with their neighbors for mutual benefit and improvement.

In Governor Bradford’s words:

By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many, for which they blessed God. And the effect of their planting was well seen, for all had, one way or other, pretty well to bring the year about, and some of the abler sort and more industrious had to spare, and sell to others, so as any general want or famine hath not been amongst them since to this day.”

Rejecting Collectivism for Individualism
Hard experience taught the Plymouth colonists the fallacy and error in the ideas that since the time of the ancient Greeks had promised paradise through collectivism rather than individualism. As Governor Bradford expressed it:

The experience that was had in this common course and condition, tried sundry years, and that amongst the Godly and sober men, may well convince of the vanity and conceit of Plato’s and other ancients; -- that the taking away of property, and bringing into a common wealth, would make them happy and flourishing; as if they were wiser than God. For this community (so far as it was) was found to breed confusion and discontent, and retard much employment that would have been to their benefit and comfort.”

Was this realization that communism was incompatible with human nature and the prosperity of humanity to be despaired or be a cause for guilt? Not in Governor Bradford’s eyes. It was simply a matter of accepting that altruism and collectivism were inconsistent with the nature of man and that human institutions should reflect the reality of man’s nature if he is to prosper. Said Governor Bradford:

Let none object this is man’s corruption, and nothing to the curse itself. I answer, seeing all men have this corruption in them, God in his wisdom saw another course fitter for them."

The desire to “spread the wealth” and for government to plan and regulate people’s lives is as old as the utopian fantasy in Plato’s Republic. The Pilgrim Fathers tried and soon realized its bankruptcy and failure as a way for men to live together in society.

They, instead, accepted man as he is: hardworking, productive, and innovative when allowed the liberty to follow his own interests in improving his own circumstances and that of his family. And even more, out of his industry result the quantities of useful goods that enable men to trade to their mutual benefit.

Giving Thanks for the Triumph of Freedom
In the wilderness of the New World, the Plymouth Pilgrims progressed from the false dream of communism to the sound realism of capitalism. At a time of economic uncertainty and growing political paternalism, it is worthwhile recalling this beginning of the American experiment and experience with economic freedom.

This is the lesson of the First Thanksgiving. This year, when we, Americans sit around our dining table with family and friends, we should also remember that what we are really celebrating is the birth of free men and free enterprise in that New World of America.

The true meaning of Thanksgiving, in other words, is the triumph of Capitalism over the failure of Collectivism in all its forms.




Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.

This article was originally published on FEE.org. Read the original article.

Guest Post - Natural Isn't Necessarily Better: Celebrating Human Achievement

by Richard Morrison

Human Achievement Hour—to be observed tomorrow, March 24, between 8:30 pm and 9:30 pm—is the Competitive Enterprise’s Institute’s annual celebration of innovation and progress.

During this hour, people around the world pay tribute to the advancements that inventors and entrepreneurs have created in every field, from health and energy to communications and transportation. These advancements allow us to live richer, fuller lives and protect us and our families from unpredictable hazards, both in everyday life and during emergencies and disasters.

Originally launched as an alternative to environmental activist campaigns like “Earth Hour”—which calls for participants to signal their concern for climate change by turning off all of their lights—Human Achievement Hour challenges people to celebrate the ability of humanity to solve problems creatively.

Some voices in the environment debate today view mankind as a plague upon an otherwise pristine and virtuous planet Earth. That perspective, afflicted with what philosophers call the “naturalistic fallacy,” calls for a smaller human population, limits on energy use, and government restrictions on deployment of valuable new technology. It elevates an anthropomorphic vision of Mother Earth above the health and safety of actual human beings.

Rather than confront environmental challenges with a vibrant, growing economy and human know-how, we hear repeated calls for lowering our expectations to brace for a resource-constrained future in which we’ll live materially poorer than our ancestors. Those conditions, we are assured, must come with strict government limits of what we can grow, use, mine, harvest, and create.
Even as a symbolic gesture, turning out our lights in response to global challenges sends the wrong message.

This overly pessimistic and profoundly depressing vision of our shared future ignores the vital human needs that depend on resource development and use of affordable energy sources, including fossil sources like oil, natural gas, and coal.

Even as a symbolic gesture, turning out our lights in response to global challenges sends the wrong message. The technological know-how, plentiful energy, and competitive economy that brought universal access to electricity to the developed world are precisely the forces that will allow all of us to prosper, flourish, and gain an increasing standard of living well into the future.

However you spend the hour tomorrow night, remember that human technology and affordable energy are making life better for billions of people around the world every day—from life expectancy and disease treatment to literacy rates and increased employment. Throwing up barriers and restrictions in the name of protecting the Earth will slow down those improvements. The costs, especially to the poorest and most vulnerable, are real.

Instead of sitting in the dark, Human Achievement Hour asks us all to celebrate the human spirit—and support a free society in whichever greater successes will be possible.

Reprinted from Competitive Enterprise Institute. 

Richard Morrison is the program manager of the Center for Advancing Capitalism, a project of the Competitive Enterprise Institute.

This article was originally published on FEE.org. Read the original article.

Marilyn Monroe and the Real Value of Profits

An obscure 1951 film that fell out of copyright gained some new life in the home video market simply because a then practically unknown Marilyn Monroe had a small supporting role.

DVDs of Home Town Story, written and directed by Arthur Pierson, are sold with big photos of Monroe on the cover, as though it is a “Marilyn Monroe movie.” It isn’t, but even if a few thousand people are induced to buy it for that reason, that’s a good thing, because the film has an important lesson about business and economics.

The actual marquee star of the movie (which runs a short 61 minutes, more like a TV teleplay than a feature film) is Jeffrey Lynn, who plays Blake Washburn, a small-town newspaper publisher who has just lost his seat in the state senate to the scion of a local manufacturer, John McFarland (played by veteran character actor Donald Crisp). Monroe plays a secretary at the newspaper and appears on screen for no more than five minutes.

Washburn is bitter about his campaign loss and, when he takes over the newspaper from his uncle, he embarks on an editorial crusade against big business, in particular railing against the profits made by large industrial corporations. His sometime foil in this is reporter Slim Haskins (played by Alan Hale, Jr., best known as the Skipper on Gilligan’s Island), who tells his boss to tone down the rhetoric.

While I watched Home Town Story, I initially thought this would be a typical left-wing agitprop piece from the early Cold War era, where the crusading newspaper editor would be the hero and the capitalist businessman would be the villain.

I was wrong.

About halfway through the movie, the whole tone of the film changes as business owner John McFarland shows up in the newspaper’s office. He wants to talk to Washburn about his editorials and offer an alternative point of view. Here’s the dialogue from that scene (which can be watched in full on YouTube):

McFARLAND: I’m interested in profits, both for myself and the customer. My main reason for coming here was to see if I could perhaps interest you in printing something about a pet theory I have. I call it “Profits to the Customer.”

WASHBURN: What do you mean?

McFARLAND: As I say, it’s my own private little pet theory. It’s very simple, not very complicated. You see, I’m not an economist, I’m just a businessman. I have to make a profit to stay in business.

WASHBURN: Sure, we all know that.

McFARLAND: I make a profit on every electric motor I sell but the customer must make a larger profit, because if he doesn’t, he won’t buy my motors and I’m out of business.

WASHBURN (incredulous): The customer must make a profit?

McFARLAND: That’s right … Yes, the customer must make a profit. For example, you have some typesetting machines out there. The manufacturer who sold them made a profit on them. But your paper would never have bought them in the first place if they couldn’t deliver something beyond their original cost. They must continue to work for your paper to be worth more to you than you paid for them. As a customer, that’s your profit.

WASHBURN (skeptical): My profit?

McFARLAND: Yes, you sell your newspaper to a man for five cents. He gets news, advertisements, and all kinds of information for his home and business. He gets service beyond the value of his five cents. As a customer, that’s his profit. The same story for everything else: the light bulb, the refrigerator, the telephone. For this, we pay a few dollars a month. Our profits are enormous in steps alone. In case of an emergency, it’s value can’t be estimated.

SLIM HASKINS: That’s a different slant from what we’ve been printing.

WASHBURN, after a long pause: As you say, that’s just a theory. But you can’t deny that you are a big business.

McFARLAND: In your editorials, you’ve been insisting that because a thing is big, it’s bad. It takes bigness to do big things. Our industries turned out equipment for our armed forces in a remarkably short space of time. It was a big job and it was well done. It helped us to win the war and preserve our country. That’s what American industry with its bigness was able to accomplish. Was that bad, Blake?

The last fifty years, we’ve come a long way. It used to take a week to get a letter across the United States. Now we do it in one day. The difference in time alone could affect the happiness of a family. It might even mean a matter of life and death.

In my time, I’ve seen advances in industry that have added twenty years to the average span of life. My father died in the old country at the age of forty, an old man. His work was absolute drudgery, slavery, on his own farm from five o’clock in the morning until eight o’clock at night. But because I live in America, I feel like a young man, and I’ll be 65 in April.

WASHBURN, irked: Why are you telling me all this?

McFARLAND: Well, I thought perhaps you might be interested in both sides of this profit question, and print something else for a change.

WASHBURN, steaming: Mr. McFarland, I don’t tell you how to run your plant, so please don’t tell me how to run my paper. I’ll print my own conception of business profits. Good day, sir.

McFARLAND: Well, I just thought I’d come in and talk – which I have.

Remember, Blake, when this country was first discovered, there was nothing here. Now look around you, everything you see is profits. Our transportation, communication, household appliances, medical equipment. Notice them sometime, Blake. They’re the real profits.

The plot soon turns to a school field trip, where Washburn’s young sister is trapped in an abandoned mine. With the help of equipment made by McFarland’s factory, and because McFarland has a private airplane he offers to Washburn to take the girl to a hospital in Capital City, the little girl’s life is saved. As a topper, as the girl is wheeled out of surgery, McFarland notices the motor operating a respirator helping the girl breathe: “Hmm,” he says quietly. “That’s one of ours.”

As a result, Washburn’s next editorial has a different approach.

“You know, Slim, seven hours ago, John McFarland with a pet theory I didn’t think was worth printing. Theories have a funny way of becoming facts.”

Curious about the writer and director of Home Town Story, and wondering where he might have come up with the ideas that inspired the film, I did a bit of research.

Arthur Pierson only directed two other feature films. Most of his work was in television, and he ended his career as an executive at Hanna-Barbera, the animation company best known for producing The Flintstones and The Jetsons.

Something early in Pierson’s career stood out, however. It turns out before he became a director and screenwriter, he was an actor. Between 1929 and 1940, he appeared in eleven Broadway plays.

In fact, in 1935, he was in the original Broadway cast of The Night of January 16th, written by Ayn Rand.

Now, you don’t suppose that Arthur Pierson, Hollywood director, got some of his ideas about business and profits from the Goddess of the Market herself, do you?

The Pope's Medieval Economics - Still and Again

With a brief respite for Thanksgiving, social media and the blogosphere have been astir with conversations about Pope Francis' new apostolic exhortation, Evangelii Gaudium ("Joy of the Gospels"), which, despite being a lengthy disputation on the Trinity and other aspects of Catholic theological dogma, has had its few passages on economics singled out for praise and criticism.

I have earlier written about how the top ranks of the Catholic hierarchy are stuck in the Middle Ages when it comes to economic thinking, including Pope Emeritus Benedict XVI.

The core problem in the current Pope's thinking is found in this passage from Evangelii Gaudium (slightly truncated):

"In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts..."

This has been "confirmed by the facts" so many times I am confounded by the Pope's ignorance of free-market economics, whose theoretical principles were first propounded by the Spanish Scholastics of the early Renaissance.

This Pope, like his predecessors, adheres to a medieval mode of thinking about economics in which wealth distribution is a zero-sum game: Some people are rich because other people are poor. It completely ignores how wealth can be created (making a bigger pie, not just cutting up smaller and smaller pieces to share) through human ingenuity facilitated by the rule of law, respect for property rights, and freedom of thought and information.

The rise of capitalism -- or, as I prefer to call it, free enterprise -- has historically been the most effective driver of wealth creation and lifting people out of poverty. In the past 30 years alone, a billion people who were once living in dire poverty are now middle-class and even rich (by any standard) just in China and India, where liberalized economic policies have freed them from lives that were, by all accounts, nasty, brutish, and short (if not solitary, given those countries' large populations).

As Matt Welch, writing in Reason, put it in a slightly different way:

More people have escaped poverty the past 25 years than were alive on the planet in 1800. Their "means of escape" was largely the introduction of at least some "laws of competition" in endeavors that had long been the exclusive domain of authoritarian, monopolistic governments.

To be fair, the Pope comes from Argentina, where cronyism and mercantilism have long been presented (falsely) as free enterprise. In that context, it would be easy to assume that capitalism creates poverty rather than eliminates it. The affluence and abundance of the modern world were never envisioned by the Bible, which incorrectly prophesies that "the poor will be with us always."

As we have seen in the unprecedented progress of the past 200 years, there is no inevitability to poverty.

Recent Articles on Examiner.com: Virginia Politics, Tina Fey, Paranoia, and JFK

Over the past few weeks, I have posted a number of articles as the Charlottesville Libertarian Examiner on Examiner.com, mostly interviews about the upcoming (November 5) Virginia election but also some author interviews and reports on events in Charlottesville and around Virginia.

Topics included (in no particular order) the government shutdown, Robert Sarvis, NSA spying on American citizens, Tina Fey's visit to the University of Virginia, birthers and truthers, John F. Kennedy's legacy as President, political paranoia, drones, Syria, Ken Cuccinelli, gay marriage, liquor laws, civil liberties, Tareq Salahi, the Supreme Court, Calvin Coolidge, the Boston Marathon bombers, E.W. Jackson, marijuana legalization, Terry McAuliffe, Charlottesville city council candidates, religious liberty, Gary Johnson, free markets, and former Republican presidents Dwight D. Eisenhower and Richard M. Nixon.

Here's the list in reverse chronological order:

General Assembly hopeful Laura Delhomme 'thrilled' to share ticket with Sarvis
Former NM Governor Gary Johnson talks about shutdown, surveillance, and Sarvis
JFK was 'cautious, conservative' says UVA political scientist Larry Sabato
Larry Sabato discusses Cuccinelli, McAuliffe, Sarvis in 2013 election
Virginia Film Festival to include documentaries on Kennedy, Nixon, Santorum

Robert Sarvis visits Charlottesville, talks about shutdown, health care, polls
TV star Tina Fey argues for importance of the arts at University of Virginia
Historian Jesse Walker discusses birtherism, trutherism, and AIDS conspiracies
Author Jesse Walker discusses political paranoia and conspiracy theories on 9/11
Congressman Robert Hurt expresses 'grave concerns' over potential Syria war

Congressman Bob Goodlatte 'skeptical' about U.S. military intervention in Syria
Virginia candidates gather in Buena Vista to launch campaign season
Two former Virginia governors assess 2013 gubernatorial campaign
GOP Senate candidate Shak Hill thinks government is 'overreaching'
Virginia LP governor candidate Robert Sarvis will push for liquor-law reform

Heritage Foundation's Matthew Spalding assesses the Calvin Coolidge revival
Attorney General Cuccinelli calls Charlottesville ABC sting operation 'overkill'
Charlottesville civil liberties lawyer assesses 2012-13 Supreme Court term
Libertarians praise Supreme Court's gay marriage ruling in DOMA case
LP gubernatorial hopeful Robert Sarvis aims for marriage equality in Virginia

Six Virginia Libertarian candidates advance to 2013 general election ballot
Journalist Christian Caryl investigates Boston's 'lone-wolf' Tsarnaev brothers
GOP candidate Ken Cuccinelli says no to including Libertarian nominee in debates
Former Congressman Tom Davis comments on IRS scandal with warning for GOP
GOP lieutenant governor candidate E. W. Jackson 'certainly used marijuana'

Seven candidates seek Virginia GOP's nomination for Lieutenant Governor
Gubernatorial candidate Terry McAuliffe hosts campaign kickoff event at PVCC
James Robinson discusses 'why nations fail' at George Mason University
Charlottesville Republicans present two City Council candidates for 2013
Current politics has Nixons but no Eisenhowers, says biographer Jeffrey Frank

Veteran journalist Evan Thomas draws contrast between Obama and Eisenhower
Amity Shlaes discusses significance of Calvin Coolidge at Heritage Foundation
Moving Picture Institute announces first annual Liberty in Film Awards
Breaking: Ex-prosecutor Steve Deaton enters Commonwealth's Attorney race
Virginia governor hopeful Tareq Salahi is 'pro-same-sex marriage,' pro-hemp

Ken Cuccinelli clarifies remarks on marijuana legalization as federalism issue
2013 Charlottesville voters may have historic election for constitutional posts
Rutherford Institute asks local lawmakers to speak out against drones
Governor McDonnell, President Obama proclaim 2013 'Religious Freedom Day'
Steve Forbes makes the moral case for free markets and free people

That list of 40 articles goes back to the second week of January 2013. Whatever else gets published this year will be featured in an end-of-the-year rundown on December 31.

From the Archives: 'The Poverty of Development Economics in Africa'

(This article appeared originally in the New York City Tribune on March 16, 1990, under the headline, "The Poverty of 'Development Economics' in Africa."  It has not previously appeared on the World Wide Web.)

African development specialists complain that Poland and Hungary will get over $500 million in economic aid in 1990 while the entire continent of Africa gets only about two-thirds that amount. There are substantial arguments to justify this imbalance, the most persuasive being that the Poles and Hungarians are eager to transform their deteriorating economic systems into free enterprise zones.

At the same time, it is clear that billions of dollars poured into persistently socialist and increasingly corrupt African governments over the past two or three decades has been money down a rathole. Congress and the President seem to think that American aid should be sent where it will be used most wisely and most profitably.

Certainly, poverty in Africa is one of the most serious problems facing the world today. Pervasive hunger and heavy national debts on that huge continent drain the international economy of resources that could be put to better use elsewhere, creating wealth rather than depleting it. To understand the current sad state of economic development in sub-Saharan Africa, one must go back to the early independence period.


Unfortunately, for both political and economic reasons, African governments adopted statist economic policies whose effect was to stifle growth, not enhance it. As Indian economist Deepak Lal put it in his aptly-titled book, The Poverty of 'Development Economics', “The most serious current distortions in many developing countries are not those flowing from the inevitable imperfections of a market economy but the policy-induced, and thus far from inevitable, distortions created by irrational dirigisme.”

In other words, current poverty in Third World countries and especially in Africa is the result of conscious policy decisions by ruling elites, often aided by development economists trained in the West who quite readily discarded the classical and orthodox economics in the tradition of Adam Smith, David Ricardo, and even John Maynard Keynes in favor of dicier theories and practices.

Perhaps the most trenchant and unconventional critique of orthodox development economics is found in Jane Jacobs' widely-discussed 1984 book, Cities and the Wealth of Nations. In it, Jacobs tackles head-on the field of macroeconomics and the development policies that flow from it, calling the whole field “a shambles.”

Like others who have analyzed the history of development aid, Jacobs notes that the impulse to send aid to underdeveloped countries was electrified by the success of the Marshall Plan in post-war Western Europe. The problem, of course, is that Marshall Plan aid was intended to repair fully developed but war-damaged economies, not transform embryonic economies ex nihilo.

“The healing of organisms,” she says, “including the organisms known as economies – is not at all the same as the metamorphosis of organisms, the conversion of them into something different.” Since the growing development industry of the 1950s and 1960s insisted on calling its projects “mini-Marshall Plans” and the like, disappointment was inevitable. This disappointment came at a high prices, as well.

One estimate is that in the 30 years ending in 1986, the West transferred about $1.6 trillion to the Third World, an amount equal to the total worth of all industrial stock traded on the New York Stock Exchange, and double the value of the entire U.S. agricultural sector.

The failure of the development economists was in their definition of development. They saw poverty as an obstacle to be overcome. They used military rhetoric to define development as a single-minded goal that can be reached by strategies, long-term planning, and setting targets. The unstated assumption was that “economic life can be conquered, mobilized, bullied, as indeed it can be when it is directed toward warfare, but not when it directs itself to development and expansion.”

Moreover, as Michael Novak has often pointed out, development economists are forever seeking the “causes of poverty.” Poverty, across all cultures and for most of human history, is mankind's normal state. What needs to be explored are the causes of wealth. Fortunately, that project was set off on a good start by Adam Smith in 1776.

The key, argues Jacobs, is that by its very nature, “successful economic development has to be open-ended rather than goal-oriented, and has to make itself up expediently and empirically as it goes along.” Jacobs defines economic development “as a process of continually improvising in a context that makes injecting improvisations into everyday life feasible,” amplifying this definition with the concept of “drift”: development entails “unprecedented kinds of work that carry unprecedented problems, [which drift into] improvised solutions, which carry further unprecedented work carrying unprecedented problems ...”

Small-scale economic actors in the Third World can be remarkable flexible in this fashion. Precisely because of the precariousness of their situation (most often in the unprotected, informal sector that exists apart from the officially sanctioned economy), peasants and micro-entrepreneurs respond well to the price mechanism. Deepak Lal argues that “unlike in richer countries, economic agents in poor ones will have few 'reserves' to fall back upon and will thus have to adjust speedily to a change in their economic environment by swiftly altering the terms on which they are willing to exchange economic commodities.” In developed economies, protected by large savings or the safety net of the welfare state, economic actors “can postpone the required price adjustments in a changing economic environment.”

It seems clear from this analysis that the informal sector – which, after all, existed and grew in the pre-modern era in Western countries even during the age of mercantilism – is the most effective engine of economic growth. It alone, unencumbered by the conservatism of bureaucracies and political elites, ready to adjust to changing conditions, willing to risk arrest and prosecution in order to achieve economic success, can create the conditions for growth even in the poorest of countries. Western development aid should thus be focused on assisting the informal, small-business sector and avoid government-to-government transfers that entrench unproductive, statist policies.

Richard Sincere is a Washington-based issues analyst and author of Sowing the Seeds of Free Enterprise: The Politics of U.S. Economic Aid in Africa, published in 1990 by the International Freedom Foundation.

RLC Videos: Peter Schiff and Gary Johnson

The Republican Liberty Caucus (www.rlc.org) held its biennial national convention in Arlington, Virginia, on February 12, coincident with the annual Conservative Political Action Conference (CPAC), which was being held across the Potomac in Washington, D.C., that same weekend.

The day was full of policy discussions and speeches, punctuated by a business session at which new officers were elected to lead the RLC for the next two years.  Dave Nalle of Texas was re-elected as chairman, Aaron Biterman of Virginia was re-elected as vice chairman, Jason Jeff Hellenberg of Florida was re-elected as secretary, and Matt Nye (also of Florida) was elected treasurer, defeating longtime RLC activist Bill Westmiller, who in turn was elected an at-large member of the board of directors.

The evening banquet featured two prominent speakers:  investment analyst and 2010 candidate for the GOP Senate nomination in Connecticut, Peter Schiff, and former New Mexico Governor Gary Johnson, who is a potential candidate for President in 2012.

Schiff is the co-author of How an Economy Grows and Why It Crashes (with Andrew J. Schiff) and of Crash Proof 2.0: How to Profit From the Economic Collapse (with John Downes), as well as author of The Little Book of Bull Moves in Bear Markets: How to Keep Your Portfolio Up When the Market is Down. He is widely credited with predicting the dramatic economic downturn of 2008 when other economists were caught with their pants around their ankles.

Schiff spoke briefly and was well-received by the RLC members, many of whom subscribe to the theories of the Austrian school of economics that are consonant with much of Schiff's analysis.

With apologies for the dim lighting (something customary in hotel banquet rooms at dinnertime), here is the video of Peter Schiff's remarks:

Schiff was followed by Governor Johnson, who the day before had spoken at CPAC and, we learned earlier on Saturday afternoon, had placed third in the CPAC presidential straw poll (with Ron Paul and Mitt Romney placing one and two and virtually tied with Governor Chris Christie of New Jersey, who says he lacks the arrogance to run for President after only one year in office).

The Republican Liberty Caucus also sponsored a straw poll that day, and Johnson took first place in that instance, with more than double the votes received by Texas Congressman Ron Paul (who is still a favorite among libertarian Republicans) and six times the number of votes received by the third-place finisher, former House Speaker Newt Gingrich.

Johnson has been traveling across the country -- including numerous visits to New Hampshire and Iowa -- delivering his message, which is largely autobiographical. He talks about his experience as governor of New Mexico, where the registered voters have a 2 to 1 ratio of Democrats to Republicans, and how he was able to reduce the size and scope of government while vetoing 750 bills, some of which were passed unanimously in the state legislature. Yet only two of his vetoes were overturned. During his eight years in office, he vetoed more bills than all of the other 49 governors put together.

In his remarks, Johnson also pointed out how he had come to believe, during his term as governor, that the criminalization of marijuana is wrong-headed, that it is a waste of money and other resources, and that we need to rethink the drug war. Johnson was one of the few incumbent politicians to come out in favor of legalizing marijuana and he has not backed down from his position despite criticism.

Here is part one of Governor Johnson's dinner speech, which begins after a short introduction by RLC national chairman Dave Nalle:

Here is part two of Gary Johnson's RLC speech:

Early in this segment, Johnson salutes Peter Schiff for his on-target analysis of our economic situation -- more than a polite gesture, the former New Mexico governor shows a great deal of passion about how the federal government needs to cut spending, including in entitlements like Social Security, Medicare, and Medicaid, as well as defense and so-called "discretionary" spending.

Johnson also talks about his opposition to the Iraq War from the outset, and how he thinks the United States should get out of Afghanistan "tomorrow."

More RLC videos will be posted here later.

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Pop One for Me, Please

It's Bubble Wrap Appreciation Day!

Who knew?

It turns out that people have been celebrating the useful (but sometimes annoying) packing material for nine years now, in anticipation (I guess) of the 50th anniversary of the invention of Bubble Wrap in 2010.

According to the Christian Science Monitor -- which used to be available as packing material itself, until it went on-line only last year:

Sealed Air Corporation's Bubble Wrap, like Kleenex, Post-Its, and, well, Snuggies, has come to occupy one the rarest gems of consumer acceptance: adoption of its brand name as the generic term for the product. And because an Indiana radio station decided it nine years ago, today, the last Monday in January, is Bubble Wrap Appreciation Day, a day when folks the world over are encouraged to pause, ponder, and, well, pop little plastic bubbles of air.

CSM points to a web site to aid the celebration: BubbleWrapFun.com, which includes "Fun & Games," a "Gift Shop," and "1001 Uses." And, of course, Bubble Wrap has an official Facebook page.

All that's left is for you to rush to your nearest office supply store, buy a roll of Bubble Wrap, and tease your dog for hours on end.

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Fifth District Republicans Debate

Last Friday evening, six of the seven declared candidates for the Republican nomination for Congress in Virginia's Fifth District came together for a forum sponsored by the Lynchburg and Jefferson Area Tea Parties. The candidates' forum took place at the Lane Auditorium in the Albemarle County Office Building in Charlottesville.

The forum was carried live on the radio on WCHV-AM 1260 and -FM (94.1) and that station's morning host, Joe Thomas, welcomed the audience and introduced the participants, including moderator Robert Tracinski, editor and publisher of The Intellectual Activist.

Keith McGilvery covered the debate for WVIR-TV (NBC29) in Charlottesville:

Within minutes, talk turned to health care, where the candidates thought it had gone wrong, and how they would fix it.

Candidate Michael McPadden says, "I don't see where the federal government has any role in mandating any sort of healthcare reforms, we can do this via free market reforms, there's a number of things we can do."

A number of candidates at the tea party sponsored showdown argued that creating competition is key.

Candidate Ron Ferrin said, "The bottom line is, my philosophy in government is capitalism is the cure and that is exactly what we're talking about to cure health care."

Candidate Feda Morton says, "We do need to be able to have access to insurance across state lines to make competition between the different insurance companies, so people can compete and choose the insurance they want."

Laurence Verga says, "The health care system needs to move from an employer based system with a limited amount of companies buying insurance to an open market system."

Ken Boyd said, "We need to move out there to the people and let them negotiate for their own health care, that's just one step in the right direction."

One candidate made the case that keeping an eye on our borders could help curb costs. Candidate Jim McKelvey says, "again, shut the borders illegal immigration is a huge burden on our health care system, and it needs to stop."

McGilvery noted, as did others, that state Senator Robert Hurt did not participate in the forum alongside his six opponents for the GOP nod. A playful effigy of Hurt, however, was erected on the dais. Surprisingly, Hurt's absence (and the presence of his cardboard image) was only mentioned once or twice by the other candidates, who chose to focus on the issue-oriented questions that were posed to them by moderator Tracinski.

Brian McNeill, a reporter for The Daily Progress, noted a few of the candidates' other responses in a story on GoDanRiver.com:

Each was asked what his or her top priority would be if elected to Congress with a GOP majority.

Ron Ferrin, a businessman from Campbell County, said he would try to erase everything passed so far during the Obama administration

“I would propose the Liberty Recovery Act of 2011 that would repeal everything that Obama was going to induce in his first two years of office,“ he said.

Michael McPadden, a commercial pilot from North Garden, said he would seek to boost economic activity by cutting taxes and reducing government spending. “You want jobs in this country, then you cut taxes,“ he said. “Cut the size and scope of the federal government."

Laurence Verga, a private real estate investor from Ivy, said he would slash a long list of taxes, including corporate and small business taxes, as well as the estate and capital gains taxes.

Verga said the voters deserve better than the “devastation of Tom Perriello” when it comes to the economic problems facing the district. “We can and we will do better,“ he said.

Jim McKelvey, a Franklin County real estate developer, said he would reduce the size of the federal government by 20 percent and bring to the floor of Congress a bill that would implement the so-called FairTax that would eliminate federal income taxes and replace them with a retail sales tax.

The candidates were asked if they disagreed with any actions undertaken during the George W. Bush administration.

Verga said he objected to the Troubled Asset Relief Program bank bailout, the McCain-Feingold limits on campaign finance and the No Child Left Behind education reform.

Feda Kidd Morton, a Fluvanna County biology teacher and GOP activist, said she opposed the bank bailout and also the North American Free Trade Agreement, which was actually signed by Bill Clinton in 1994.

“I go back to NAFTA, definitely. NAFTA is draining our jobs overseas,“ Morton said. “I would take NAFTA off the table and bring our manufacturing jobs and businesses back into this country."

McPadden also looked to earlier administrations for his sources of criticism. “I’d go back to the Carter administration, get rid of the Education Department first,“ he said. “Go back to the Clinton administration, AmeriCorps has got to go. Go back to the Bush administration, TARP funding has got to go. And no funding for ACORN ever."

Albemarle County Supervisor Kenneth C. Boyd told the crowd that he has a decade’s worth of experience reducing government spending and balancing budgets.

“We need someone willing to step up, cut spending and balance the budget,“ he said. “That’s something we’ve done here in Albemarle County."

Boyd said he, too, would take drastic steps to reduce the size of the federal government.

“The federal Department of Education should be done away with,“ Boyd said, saying it is unconstitutional.

The whole discussion lasted about 90 minutes, and I was able to capture virtually all of it on video, which I had to upload to YouTube in small bites. (That is why the Democratic blog, Blue Virginia, has just two segments posted within its report on the event.)

Here is the complete discussion, in eleven parts:

Part I is the introduction by Joe Thomas and Robert Tracinski:

Part II includes the opening statements by the six candidates:

Part III has the answers to Tracinski's first question,"Would you consider opposing a bill for no other reason than that it grants powers to the government that are not specifically authorized by the Constitution?":

Part IV has the answers to the moderator's second question,"What should we do about health care?":

Part V begins a "lightning round," with two questions requiring answers just 30 seconds long. The first question of the two asks what should be the top priority of a Republican-controlled Congress after next November's elections; the second asks, "What legislation or other measure would you reverse ... from the Bush administration?":

Part VI also includes two questions, "What is the most important thing the government should to to get people back to work?..." and "What will you do to defend [the right to work]?":

Part VII continues the fast-track questions, with one on "cap-and-trade" and the EPA's authority to regulate carbon dioxide, and the other on the candidates' favorite or most influential philosopher or thinker:

After a short intermission and the announcement that the audience had 400 people in it, Part VIII returned to questions requiring a 90-second answer. That question focused on what the candidates thought about the Tea Party movement.

Part IX continues with an answer to the question asked in Part VIII; Michael McPadden's response didn't fit into the 10 minutes allotted to a video clip by YouTube:

The question in Part X assumes there is a Republican majority in the 112th Congress and looks back at the 1994 GOP takeover, asking how the candidates would vote if there was a conflict with a Democratic president like the budget showdown in 1995 between Bill Clinton and the House under the leadership of Newt Gingrich.

In Part XI, the final segment, Robert Tracinski asks about "big middle-class entitlements," namely Social Security and Medicare.

A straw poll taken after the candidates' forum gave Mike McPadden a strong lead at 56.2 percent. Full results can be seen at Virginia Fifth District Watchdog.

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Old/New Ideas for Transportation

I was digging through an unlabeled file box the other day, not knowing what I might find, when I uncovered an article I wrote more than thirteen years ago for the now-defunct Arlington Journal. Written in response to a previous article, my piece was identified as "Second Opinion" and headlined: "End the government monopoly on mass transit service."

Since transportation issues are as salient today as they were in 1995, I thought it might be worthwhile to post the text of the article here and solicit comments from readers. Do you think any of these ideas are worth pursuing today? Free-market solutions, I believe, deserve to be given a chance when government-centered programs fail to deliver all they promise.

Here is what I wrote back then, which (IMHO) remains fresh today:

End the government monopoly on mass transit service
Richard E. Sincere, Jr.
(The Arlington Journal, Friday, April 21, 1995)

Some local government officials are moving in the right direction as they discuss the future of Metrobus service (“N.Va. systems threaten Transit giant,” April 11[, 1995]), but most seem too wary to step toward creativity and market-based decision making.

These local government officials deserve credit for their willingness to consider privatization of Metrobus routes as a means to make the system more cost-effective. Unfortunately, it seems that to them “privatization” is still limited to a county- or city-owned bus system to replace Metro or -- at best -- a government-granted monopoly to a private company within single jurisdictions.

Why not consider more and varied alternatives that, when used together, will have the ultimate effect of reducing costs, improving efficiency, increasing mass-transit use age, and alleviating pollution:

Here are some examples:

* Legalize Jitney service. Jitneys are vehicles smaller than buses, such as vans, that operate independently (like taxis) but on a predetermined route (like buses). The operators set their own fares, which they can base on distance traveled or on other face ton. Different jitneys can compete for the same passengers along the same routes, or a fleet of jitneys can divide up territory. Jitneys could operate within and across jurisdictions, feeding into Metrorail or connecting Tysons Corner to Silver Spring.

* Restore the Potomac’s status as a highway. The cities of Washington and Alexandria lie where they are because the Potomac River was once a major transporter of goods and people. A water-taxi service between Old Town Alexandria and Georgetown, with stops at the Washington Marina and in Arlington, could make the Potomac again a significant people mover.

* Turn Interstates 66 and 395 into toll roads, with tolls based on the number of passengers. For instance, instead of the dreaded high-occupancy vehicle lanes, we could charge vehicles a toll based on a sliding scale, such as $2 for lone drivers, $1.50 for two-passenger cars, $1 for three passengers, 75 cents for four passengers, and no charge for more than four. Such a scheme would persuade some people to take Metrorail, some to take the bus, some to car pool, and some to bear the economic price of the toll, depending on their preferences.

* End the government mass transit monopoly. These three examples only touch the surface of creative, market-based solutions that are there for us to consider and to use. The best way to encourage more use of mass transit, however, is to make more types of mass transit available, and to give commuters and travelers more choices than they have today. Allowing private services to compete with Metro on the same routes will be a good first step.

After all, we would never think it proper to grant Giant a monopoly in Fairfax County and Safeway a monopoly in Arlington County, and not let them compete against each other or against 7-Eleven. If consumers can pick a grocery store, why not let them pick a type of mass transit? And why not let entrepreneurs give them what they want?

• Richard E. Sincere Jr. of Arlington chairs the Libertarian Party of Virginia.

The Stimulus Package Shell Game

Brian Riedl of the Heritage Foundation had a terrific article in Friday's Wall Street Journal that explains why "stimulus programs" generated by Congress are ultimately futile exercises.

Such programs do not create wealth; they just move it around. As Riedl puts it:

Government stimulus bills are based on the idea that feeding new money into the economy will increase demand, and thus production. But where does government get this money? Congress doesn't have its own stash. Every dollar it injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It's merely redistributed from one group of people to another.

Of course, advocates of stimulus respond that redistributing money from "savers" to "spenders" will lead to additional spending. That assumes that savers store spare cash in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (where it finances business investment) or deposit it in banks (which quickly lend it to others to spend). The money gets spent whether it is initially consumed or saved.

Governments don't create new purchasing power out of thin air. If Congress funds new spending with taxes, it is redistributing existing income. If the money is borrowed from American investors, those investors will have that much less to invest or to spend in the private economy. If the money is borrowed from foreigners, the balance of payments must still balance. That means reducing net exports through exchange-rate adjustments, thereby leaving net spending on the economy unchanged.

Yet Congress will soon borrow $300 billion from one group of people and then give it to another group of people and tell us we're all wealthier for it.

I'm sure if the lame-duck Congress passes a "stimulus" law, many Americans will be grateful for the "windfall" of a three-figure check just in time to pay for their post-Christmas credit-card bills.

But they won't be any richer for it, now or ever.

User Fees to Fund Transportation

The idea of the superiority of user fees over taxes as a means of funding public services is widely held by libertarians and others who advocate free-market solutions to community problems. To others, however, user fees are an exotic concept and therefore suspect.

Seeing an article in the opinion pages of the Charlottesville Daily Progress this morning that supports user fees as the best means of financing transportation in Virginia came as an intellectually pleasant surprise. Unfortunately, the article -- by Old Dominion University economist James V. Koch -- does not appear on the Daily Progress web site (or at least it's not easy to find, if it is there). Fortunately, the same article appeared on Saturday in the Daily Press of Newport News, and it does appear on that newspaper's web site.

Under the headline, "For road funding, user fees just make sense," Koch writes:

I don't give it a second thought when I'm asked to pay an entrance fee to enter Yellowstone National Park. After all, the park's resources and facilities must be maintained and there is elemental justice attached to this fee because I'm the person using the park, not someone 1,000 miles away. Similarly, I don't object to paying an admission fee to Old Dominion University basketball games, or paying for a spot to park on campus, even though we all know ODU is a publicly assisted institution. Once again, I use the services and receive the benefits, so why shouldn't I bear most of the cost?

Somehow the fundamental justice associated with user fees gets lost when we begin to talk about how to pay for our roads. Many individuals believe they should not have to pay for the extent to which they drive on public roadways even though they know their own use gradually causes our roads to deteriorate and even though they know these same roads may be essential to their keeping their current jobs, or even to drive to church.

I can understand (though not completely agree with) someone who argues, "I don't even own a car, so I shouldn't pay." While I'd argue every citizen benefits from an efficient road system (even bed-ridden individuals rely upon our road system to deliver their food and medicine), one can understand the argument of an individual who doesn't want to pay for things she chooses not to use.

That's why transportation user fees are so attractive (at least relative to the alternatives). If I'm going to pay for something, I'd like it to be an item that I use and value rather than something I care nothing about. Transportation user fees (tolls, gas taxes) can be avoided completely by someone who chooses not to drive, or avoided partially by someone who decides to drive less, use a more fuel-efficient car, carpool, cyber-commute or use public transportation.

Dr. Koch also points out:

...user fees have other benefits. They'll cause us to drive fewer miles. This will moderate highway congestion, reduce highway deaths, and even dampen carbon-dioxide emissions. We'll be stimulated to purchase more fuel-efficient vehicles. Not such a bad combination! Note that increasing the state's income tax or sales tax, or imposing a grab bag of other taxes, to pay for transportation improvements would yield virtually none of these benefits.

He concludes:

...the real question is how we should pay for repairing our potholes and building the new roads we need. User fees easily are the best way to go. They provide us with incentives to change our behavior (and thereby avoid paying so much) even while they raise revenue. True, user fees (especially gas taxes) don't have lots of political sex appeal, but then legitimate, long-term solutions to tough problems seldom do. It would be a mistake to kid ourselves that somehow we will find a painless solution to our transportation challenges that will magically be paid for by "someone else."

A variety of elected officials seem to be pursuing that strategy. Let's get real. There's no free lunch to be found in the transportation arena. Let's increase user fees and stop digging our transportation hole even deeper.

There's little in Professor Koch's article with which I could disagree. The entire piece should be read by every member of the General Assembly who will be participating in the special session on transportation issues later this month.