Adam Smith & My Supper

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.

Adam Smith, An Inquiry into the Nature & Causes of the Wealth of Nations, Vol 1, 1776

Adam Smith was the father of modern economics and the first proponent of free market, laissez-faire capitalism. He promoted free trade as the world, then experiencing its first massive expansion in wealth as a result of global trade, began to move from mercantilism towards something approaching his vision. So what does that have to do with my supper?

I just had a quite filling repast -- fresh green beans and a bit of diced sweet onion cooked with a slice of bacon, marinated in the bacon fat, then spiced with cayenne pepper, paprika, salt, and black pepper, all washed down with a cup of tea flavored with lime juice and heather honey. Delicious, filling, and . . . only possible because of globalism, capitalism and trade.

The only thing local was the sweet onion. From whence did all else come?

Green beans - shipped fresh from somewhere in Central America

Bacon - probably Virginia

Cayenne Pepper - probably Mexico

Black Pepper - probably India

Paprika - probably south central Europe or perhaps Turkey

Salt - probably Minnesota, with its huge salt mines

Green Tea - China

Lime Juice - Florida

Heather Honey - Scotland

All of the above came in containers made variously of glass, plastic, cardboard and metals from all over the world.

All came to a store near me by transport using fossil fuels.

All of that allowed me to make a meal that probably cost me about $1.25 to make. And the thing of it is, the price could have been far cheaper were not our band of capitalism still stunted by cronyism, protectionism and over regulation.

All of the people involved in bringing the supper to my table tonight did so out of their own enlightened self interest. And I bought all of the things that went into my supper not out of any feeling of benevolence towards the sellers, but out of my own self interest and with trust in the quality of goods from each supplier / producer.

Aren't global trade and capitalism wonderful things? As Ayn Rand once wrote:

Capitalism has been called a system of greed — yet it is the system that raised the standard of living of its poorest citizens to heights no collectivist system has ever begun to equal, and no tribal gang can conceive of.

So tonight, as I enjoy a simple, cheap and fine supper, I wonder what the masses are having in the socialist bastion of Venezuela? Or for that matter, what the deeply misguided and hypocritical Occupy protest veterans are dining on?

For anyone who needs a refresher in capitalism, there is no finer reference than Thomas Sowell's Basic Economics. If you haven't read it, do yourself a favor and purchase a copy.

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This Day In History - 16 June: Lincoln's House Divided, Spain Covets Gibralter & The Horror Of The Victoria Hall Theatre

Art: Biblis, William Bouguereau

1487 – Battle of Stoke Field, the last dying breath of the Wars of the Roses. It was the last battle in which King Henry VII faced an army of Yorkist supporters and Irish mercanaries under the pretender Lambert Simnel.

1779 – Spain declared war on the UK and began a siege of Gibraltar. The seige lasted until 1783 when the UK broke the seige and a peace treaty was thereafter signed. Spain has sought to extend its sovereignty over the island ever since, but the UK politely declined to acquiese - as did the people of Gibralter when asked by referendum in 1967 and 2002.

1836 – The formation of the London Working Men's Association gives rise to the Chartist Movement.

1846 – Pope Pius IX is elected pope, beginning the longest reign in the history of the papacy other than that of St. Peter.

1858 – Abraham Lincoln delivers his House Divided speech in Springfield, Illinois.

"A house divided against itself cannot stand." I believe this government cannot endure, permanently, half slave and half free. I do not expect the Union to be dissolved — I do not expect the house to fall — but I do expect it will cease to be divided.

It will become all one thing or all the other. Either the opponents of slavery will arrest the further spread of it, and place it where the public mind shall rest in the belief that it is in the course of ultimate extinction; or its advocates will push it forward, till it shall become alike lawful in all the States, old as well as new — North as well as South.

1858 – Battle of Morar takes place during the Indian Mutiny. The mutiny itself led to the dissolution of the East India Company and to direct governance of India by the UK. It also was a particularly bloody mutiny. The Indians involved took to the slaughter of British civilians - men, women and children - all of which led to severe and brutal repression by British forces in response.

1883 – The Victoria Hall theatre panic in Sunderland, England kills 183 children from crush asphyxia due to a rush to get treats and an improperly bolted door. The resulting inquiry recommended that public venues be fitted with a minimum number of outward opening emergency exits, which led to the invention of the 'push bar' emergency doors that are with us to this day.

1940 – After the fall of Paris to the Nazis, the as of yet unconquered portions of France organized under Marshal Henri Philippe Pétain who became the Premier of Vichy France, allies of the Nazis.

1948 – The first skyjacking of a commercial plane occurs when four armed Chinese men storm the cockpit of the Miss Macao passenger seaplane and attempt to take over control of the plane. Instead, they caused the plane to crash, killing all aboard except one of the hijackers.

1958 – The newly installed puppet government of Hungary executed Imre Nagy, Pál Maléter and other leaders of the 1956 Hungarian Uprising. The uprising had begun in October 1956 with a protest by college students that soon engulfed the whole country in rebellion against the Stalinist government. The Soviet Union crushed the revolt, sending in its military in November 1956, and then established a new puppet government.

1961 – The ballet star Rudolf Nureyev defected to the West at Le Bourget airport in Paris. Krushchev subsequently signed an order to the KGB for his assassination. It was never carried out, and Nureyev had a long career in the West until his death from AIDS in 1993.

1963 – Cosmonaut Valentina Tereshkova becomes the first woman in space as part of the Soviet's Vostok 6 Mission.

2000 – Israel complied with UN Security Council Resolution 425 and withdrew from Lebanon except the disputed Sheba Farms. Hezbollah, Lebanon's Shia militia controlled by Iran and whose entire legitimacy was predicated on driving Israel out of Lebanon, refuses to disarm despite Israel's withdraw.

Births

1723– Adam Smith, Scottish philosopher and economist (d. 1790). Smith's most famous work is the seminal capitalist treatise, The Wealth of Nations, published in 1776.

1912 – Enoch Powell, British politician (d. 1998). Powell is famous for his "Rivers of Blood Speech" given in 1968. In it, he decried allowing large scale immigration for the social strife it would cause in the UK. The left labeled it racist and used it as a cudgel to, in essence, put the issue of immigration beyond the bounds of acceptable debate. To merely invoke the speech was enough last year to have a Tory candidate for office shown the door.

1941 – Aldrich Ames, American Soviet spy

Deaths

1216 – Pope Innocent III. He had been elected Pope in 1198 and ruled the Church at the height of its power and influence. He was considered to be the most powerful person in Europe at the time.

1977 – Wernher von Braun, German-born rocket scientist (b. 1912). After working for the Nazis during WWII, he was spirited to America where he became the face of Americas space program.

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WSJ & Bill Clinton On Deregulation, Glass-Steagall & The Subprime Crisis

Obama's meme is that our entire fiscal crisis centers not on the subprime crisis, but on deregulation of the financial industry. The facts are otherwise.
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Deregulation occured on Bill Clinton's watch. Former President Clinton, having already weighed in on the responsibility of Democrats in Congress for the Fannie-Freddie subprime crisis, has now weighed in, noting that deregulation and the repeal of Glass-Steagall was not the cause of the current crisis. The editors at the WSJ fill that in with facts and examples, noting that the securities implicated in the current crisis had begun issuance prior to deregulation and merely continued afterwards. Further, the WSJ notes that those organizations that have taken advantage of the deregulation have best weathered the financial storm. This from the WSJ:

A running cliché of the political left and the press corps these days is that our current financial problems all flow from Congress's 1999 decision to repeal the Glass-Steagall Act of 1933 that separated commercial and investment banking. Barack Obama has been selling this line every day. Bill Clinton signed that "deregulation" bill into law, and he knows better.

In BusinessWeek.com, Maria Bartiromo reports that she asked the former President last week whether he regretted signing that legislation. Mr. Clinton's reply: "No, because it wasn't a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure. I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter.

"But I have really thought about this a lot. I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill."

. . . On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence.

"But I can't blame [the Republicans]. This wasn't something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment."

. . . The Gramm-Leach-Bliley Act passed the Senate on a 90-8 vote, including 38 Democrats and such notable Obama supporters as Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle -- oh, and Joe Biden. Mr. Schumer was especially fulsome in his endorsement.

As for the sins of "deregulation" more broadly, this is a political fairy tale. The least regulated of our financial institutions -- hedge funds -- have posed the least systemic risks in the current panic. The big investment banks that got into the most trouble could have made the same mortgage investments before 1999 as they did afterwards. One of their problems was that Lehman Brothers and Bear Stearns weren't diversified enough. They prospered for years through direct lending and high leverage via the likes of asset-backed securities without accepting commercial deposits. But when the panic hit, this meant they lacked an adequate capital cushion to absorb losses.

Meanwhile, commercial banks that had heavier capital requirements were struggling to compete with the Wall Street giants throughout the 1990s. Some of the deposit-taking banks that were allowed to diversify after 1999, such as J.P. Morgan and Bank of America, are now in a stronger position to withstand the current turmoil. They have been able to help stabilize the financial system through acquisitions of Bear Stearns, Washington Mutual, Merrill Lynch and Countrywide Financial.

Mr. Obama's "deregulation" trope may be good politics, but it's bad history and is dangerous if he really believes it. The U.S. is going to need a stable, innovative financial system after this panic ends, and we won't get that if Mr. Obama and his media chorus think the answer is to return to Depression-era rules amid global financial competition. Perhaps the Senator should ask the former President for a briefing.

Read the entire article. Obama's disengenuous musings are actually a necessity. He was heavilly immersed in pushing lenders into the subprime market in his days as a community organizer and then as a lawyer. But I would not be surprised to find that Obama believes what he says. As discussed in the post below, his worldview is much closer to Marx than Adam Smith.

(H/T Hot Air)

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The Socialists Are Coming!!! The Socialists Are Coming!!!

Two things of note occurred in 1776. Adam Smith wrote the seminal treatise of the era on capitalism, "The Wealth of Nations." The basic precepts that he espoused in that book are the foundation of America's wealth today. And 1776, we had the American Revolution. If the famous patriot of that era, Paul Revere, were alive today, he would no doubt be making another midnight ride to warn of the impending existential danger to our nation crossing over the horizon. Today, that threat is internal, from those who wish to dispense with the capitalist system that has made America the wealthiest nation on earth - top to bottom the wealthiest - and put in its place a system of socialism where, as the saying goes, the misery can be shared equally by all. Leading the call today is E.J. Dionne, who sees the economic cycle of capitalism as a reason to dispense with it.
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This from Mr. Dionne, a man sorely in need of a lesson in economic history:

The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.

Since the Reagan years, free-market cliches have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.

You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn't matter. Providing incentives for the investors of capital to "grow the pie" is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is "protectionism."

The old script is in rewrite. "We are in a worldwide crisis now because of excessive deregulation," Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said in an interview.

He noted that in 1999 when Congress replaced the New Deal-era Glass-Steagall Act with a set of looser banking rules, "we let investment banks get into a much wider range of activities without regulation." This helped create the subprime mortgage mess and the cascading calamity in banking.

While Frank is a liberal, the same cannot be said of Ben Bernanke, the chairman of the Federal Reserve. Yet in a speech on Tuesday, Bernanke sounded like a born-again New Dealer in calling for "a more robust framework for the prudential supervision of investment banks and other large securities dealers."

Bernanke said the Fed needed more authority to get inside "the structure and workings of financial markets" because "recent experience has clearly illustrated the importance, for the purpose of promoting financial stability, of having detailed information about money markets and the activities of borrowers and lenders in those markets." Sure sounds like Big Government to me.

This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early '80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What's becoming the Panic of 2008 will mean an end to the latest Capital Rules era.

What's striking is that conservatives who revere capitalism are offering their own criticisms of the way the system is working. Irwin Stelzer, director of the Center for Economic Policy Studies at the Hudson Institute, says the subprime crisis arose in part because lenders quickly sold their mortgages to others and bore no risk if the loans went bad.

"You have to have the person who's writing the risk bearing the risk," he says. "That means a whole host of regulations. There's no way around that."

While some conservatives now worry about the social and economic impact of growing inequalities, Stelzer isn't one of them. But he is highly critical of "the process that produces inequality."

"I don't like three of your friends on a board voting you a zillion dollars," Stelzer, who is also a business consultant, told me. "A cozy boardroom back-scratching operation offends me." He argues that "the preservation of the capitalist system" requires finding new ways of "linking compensation to performance."

Frank takes a similar view, arguing that CEOs "benefit substantially if the risks they take pay off" but "pay no penalty" if their risks lead to losses or even catastrophe -- another sign that capitalism, in its current form, isn't living by its own rules.

Frank also calls for new thinking on the impact of free trade. He argues it can no longer be denied that globalization "is a contributor to the stagnation of wages and it has produced large pools of highly mobile capital." Mobile capital and the threat of moving a plant abroad give employers a huge advantage in negotiations with employees. "If you're dealing with someone and you can pick up and leave and he can't, you have the advantage."

"Free trade has increased wealth, but it's been monopolized by a very small number of people," Frank said. The coming debate will focus not on shutting globalization down but rather on managing its effects with an eye toward the interests of "the most vulnerable people in the country."

In the campaign so far, John McCain has been clinging to the old economic orthodoxy while Barack Obama has proposed a modestly more active role for government. But the economic assumptions are changing faster than the rhetoric of the campaign. "Reality has broken in," says Frank. And none too soon.

Read the entire article. The fact that we are in a place today where such idiocy is can be spoken in polite discourse shows the grave danger to our way of life and the inroads made by the far left into becoming accepted as mainstream in America. The day they take power, you can mark your calendar as the start of the decline of America.

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Adam Smith & The EU's Global Warming Arrogance

The socialists at the EU really are an arrogant bunch. Knowing as they do what is best for Europe without need of consulting their electorate, they of course know what is best for the rest of the world also, including the U.S. For example, the EU partially fund the ABA to conduct its propaganda offensive against the death penalty in the U.S. Does that seem like a gross imposition into our internal affairs?

And indeed, just within the past year we have witnessed the unelected EU President send a letter to the popularly elected Texas governor instructing the governor that the it is a settled issue that the death penalty is not a deterrent and should be eradicated. It must be nice to go through life without having to examine any facts that challenge one’s deeply held belief. Such is the modern left.

The European socialists in Brussels see no problem with their attempt to make an end run around the electorate in Texas – the same people who could easily vote for a candidate who wishes to abolish the death penalty should they desire. But "democracy" has no worth as a concept in Brussels; its only use is as an Orwellian label. The EU is making sure that their own electorate have no say in the creation of the EU socialist super-state that, with the "Reform Treaty" of Lisbon, has just come into being. Indeed, to complain about the lack of democratic vote is to "show contempt for dignity of Parliament." This gives you some flavor of the incredible hubris of the EU.

But all of that pales in comparison to the damage the EU socialists, in their arrogance, are poised to inflict both internally and on the world.

The EU, which has taken global warming out of the realm of science and debate and made it a shibboleth of their constitutional law, is gearing "up to produce its much-heralded strategy on "climate change" – expected on 23 January." According to EU Referendum:

The core of this strategy will be the 20 percent reduction in emissions by 2020 and the 10 percent biofuel quota, the combination of which – with the other measures the commission is considering – will have a profound effect on our economy, our own personal lifestyles and global politics in general.

This is a program that will take billions out of the EU economy while making no contribution to efficiency, only adding to the cost of the production of goods and services. So as the EU shackles the economies of its member provinces with changes to combat global warming, how will the EU remain competitive in the global market?

It was completely predictable to anyone who watches the EU that their first thought would be to transfer their economic costs and use taxation as a type of global social policy to enforce EU beliefs on the global heretics. Thus it is no surprise at all that this today should appear in The Times:

A row has erupted in Brussels over proposals to introduce a carbon tax on goods entering the European Union from countries that fail to take measures to curb carbon dioxide emissions.

The tax would hit powerful emerging market exporters, such as China, which do not comply with the Kyoto treaty on climate change. The proposal is opposed by Peter Mandelson, the EU Trade Commissioner, who fears that it would fall foul of World Trade Organisation rules.

Sources at Mr Mandelson’s office said the proposal was "dead", while a spokesman for Stavros Dimas, the Environment Commissioner, said several drafts of the proposal were being discussed and debated. "It’s at the beginning of the process," he said.

The Trade Commissioner’s spokesman argued that the proposed tax was "too complicated" and would create problems with the United States, which has not signed the Kyoto treaty. . .

Do read the entire article. One does not need a PhD in economics to see that such taxes would have a depressive effect on the world economy and would, if imposed, likely set off a trade war. But such is the arrogance and the insanity to be found amongst our friendly, unelected socialist allies. It’s the Goracle versus Adam Smith. Smith will win in the end, but the Goracle and his EU acolytes can do incredible damage in the short run.

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Interesting News From Around the Web

In multicultural Britain, the Labour Party now wants to rewrite the British anthem, ‘God Save the Queen,’ to make it “more inclusive” and a little less unfriendly to its northern cousins. Specifically, the verse that calls for the “rebellious Scots” to be crushed seems to be problematic.

A fascinating post at Right Truth on the White Man’s Burden in the 21st Century

This is worrisome. Hillary Clinton seems to think Adam Smith no longer has application to our economy.

CAIR and the canard of rampant Islamaphobia at Q&O

CAIR has picked the dhimmi candidate for President. No surprises. Its John Edwards

The ACLU has a real problem with Marines praying on duty. The Marines have some suggestions for the ACLU

Remember the days when a person could figure out how to build a nuclear weapon from open sources in a library . . . . . Cheatseeking Missles has the modern Michael Crichtonesque equivalent.

From the No Good Seed Goes Unpunished category . . .

Christian Arabs are being cleansed from Palestinian controlled areas

Carl in Jerusalem tells us that Israel looking askance at the NIE on Iran’s nuclear weapons program.

Iraq the Model discusses how to eat an elephant in Iraq

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Shopping in a Socialist Paradise

One would think that the world's would-be dictators, socialists and communists who hunger for power would at least have figured out by now that, while instituting the trappings of a police state is one thing, introducing the trappings of a socialist, command directed economy is another thing entirely. One needs to look no further than China and the Soviet Union to figure that one out. The difference between Deng Xiao Ping and Krushev would seem to be that someone gave the former a copy of The Wealth of Nations. Apparently, they are out of Adam Smith down in Venezuela also. Thus, while the darling of the Hollywood left, Hugo Chavez, is off attempting to turn all of Latin America into a Socialist heaven, average Venezualens seem to have more prosaic concerns:

Venezuelan construction worker Gustavo Arteaga has no trouble finding jobs in this OPEC nation’s booming economy, but on a recent Monday morning he skipped work as part of a more complicated search — for milk.

The 37-year-old father-of-two has for months scrambled to find basic products like cooking oil, beef and milk, despite leftist President Hugo Chavez’s social program that promises to provide low-cost groceries to the majority poor.

“It takes a miracle to find milk,” said Arteaga, who spent two hours in line outside a store in the poor Caracas neighborhood of Eucaliptus. “Don’t you see I’m here slaving away to see if I can get even one or two of those (containers)?”

Venezuelan consumers are increasingly facing periodic shortages of basic food products as the economy shows signs of overheating amid record revenues from an oil boom. . . .

A black market has sprung up where informal vendors illegally peddle bags of sugar, beans and precious powdered milk — for as much as double the regulated price. . .

Read the article at Hillbilly Politics where, as she puts it, money can't buy me love, [but in] Venezuela, it can't buy me food, either.

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