Global Warming: Environmentalism’s Threat of Hell on Earth

It is customary for old-fashioned religion to threaten those whose way of life is not to its satisfaction, with the prospect of hell in the afterlife. Substitute for the afterlife, life on earth in centuries to come, and it is possible to see that environmentalism and the rest of the left are now doing essentially the same thing. They hate the American way of life because of its comfort and luxury, which they contemptuously dismiss as “conspicuous consumption.” And to frighten people into abandoning it, they are threatening them with a global-warming version of hell.

This is not yet so open and explicit as to be obvious to everyone. Nevertheless, it is clearly present. It is hinted at in allusions to the possibility of temperature increases beyond the likely range of 3.5 to 8 degrees Fahrenheit projected in the recent United Nations report on global warming. For example, according to The New York Times, “the report says there is a more than a 1-in-10 chance of much greater warming, a risk that many experts say is far too high to ignore.”

Environmentalist threats of hell can be expected to become more blatant and shrill if the movement’s present efforts to frighten the people of the United States into supporting its program of caps and reductions in greenhouse-gas emissions appear to be insufficient. Hell is the environmentalists’ ultimate threat.

So let us assume that it were true that global warming might proceed to such an extent as to cause temperature and/or sea-level increases so great as to be simply intolerable or, indeed, literally to roast and boil the earth. Even so, it would still not follow that industrial civilization should be abandoned or in any way compromised. In that case, all that would be necessary is to seek out a different means of deliberately cooling the earth.

It should be realized that the environmentalists’ policy of reducing greenhouse-gas emissions is itself a policy of cooling the earth. But it is surely among the most stupid and self-destructive such policies imaginable. What it claims is that if we destroy our capacity to produce and operate refrigerators and air conditioners, we shall be better protected from hot weather than if we retain and enlarge that capacity. What it claims is that if we destroy the energy base needed to produce and operate the construction equipment required to build strong, well-made, comfortable houses for hundreds of millions of people, we shall be safer from hurricanes and floods than if we retain and enlarge that energy base. This is the meaning of the claim that retaining and enlarging this capacity will bring highly destructive global warming, while destroying it will avoid such global warming.

In contrast to the policy of the environmentalists, there are rational ways of cooling the earth if that is what should actually be necessary, ways that would take advantage of the vast energy base of the modern world and of the still greater energy base that can be present in the future if it is not aborted by the kind of policies urged by the environmentalists.

Ironically, the core principle of one such method has been put forward by voices within the environmental movement itself, though not at all for this purpose. Years ago, back in the days of the Cold War, many environmentalists raised the specter of a “nuclear winter.” According to them, a large-scale atomic war could be expected to release so much particulate matter into the atmosphere as to block out sunlight and cause weather so severely cold that crops would not be able to grow.

Wikipedia, the encyclopedia of the internet, describes the mechanism as follows:

Large quantities of aerosol particles dispersed into the atmosphere would significantly reduce the amount of sunlight that reached the surface, and could potentially remain in the stratosphere for months or even years. The ash and dust would be carried by the midlatitude west-to-east winds, forming a uniform belt of particles encircling the northern hemisphere from 30° to 60° latitude (as the main targets of most nuclear war scenarios are located almost exclusively in these latitudes). The dust clouds would then block out much of the sun's light, causing surface temperatures to drop drastically.

Certainly, there is no case to be made for an atomic war. But there is a case for considering the possible detonation, on uninhabited land north of 70° latitude, say, of a limited number of hydrogen bombs. The detonation of these bombs would operate in the same manner as described above, but the effect would be a belt of particles starting at a latitude of 70° instead of 30°. The presence of those particles would serve to reduce the amount of sunlight reaching most of the Arctic’s surface. The effect would be to maintain the frigid climate of the region and to prevent the further melting of its ice or, if necessary, to increase the amount of its ice. Moreover, the process could be conducted starting on a relatively small scale, and then proceed slowly. This would allow essential empirical observations to be made and also allow the process to be stopped at any time before it went too far.

This is certainly something that should be seriously considered by everyone who is concerned with global warming and who also desires to preserve modern industrial civilization and retain and increase its amenities. If there really is any possibility of global warming so great as to cause major disturbances, this kind of solution should be studied and perfected. Atomic testing should be resumed for the purpose of empirically testing its feasibility.

If there is any remnant of the left of an earlier era, which still respected science and technology, and championed industrial civilization, it might be expected to offer additional possible solutions for excessive global warming, probably solutions of a kind requiring grandiose construction projects. For example, one might expect to hear from it proposals for ringing North Africa and Australia with desalinization plants powered by atomic energy. The purpose would be to bring massive amounts of fresh water to the Sahara Desert and the deserts of Australia, with the further purpose of making possible the growth of billions of trees to absorb carbon dioxide from the atmosphere. Another possibility would be an alternative proposal simply to pump an amount of sea water into confined areas in those deserts sufficient to provide an outlet for a growing volume of global seawater other than heavily inhabited coastal regions. (I would not be ready to endorse any such costly proposals, but they would be a vast improvement over the left’s only current proposal, which is simply the crippling of industrial civilization.)

Once people begin to put their minds to the problem, it is possible that a variety of effective and relatively low-cost solutions for global warming will be found. The two essential parameters of such a solution would be the recognition of the existence of possibly excessive global warming, on the one side, and unswerving loyalty to the value of the American standard of living and the American way of life, on the other. That is, more fundamentally, unswerving loyalty to the values of individual freedom, continuing economic progress, and the maintenance and further development of industrial civilization and its foundation of man-made power.

Global warming is not a threat. But environmentalism’s destructive response to it is.

In claims to want to act in the name of avoiding the risk of alleged dreadful dangers lying decades and centuries in the future. But its means of avoiding those alleged dangers is to rush ahead today to cripple industrial civilization by means of crippling its essential foundation of man-made power. In so doing, it gives no consideration whatever to the risks of this or to any possible alternatives to this policy. It contents itself with offering to the public what is virtually merely the hope and prayer of the timely discovery of radically new alternative technologies to replace the ones it seeks to destroy. Such pie in the sky is a nothing but a lie, intended to prevent people from recognizing the plunge in their standard of living that will result if the environmentalists’ program is enacted.

As I’ve written before, if the economic progress of the last two hundred years or more is to continue, if its existing benefits are to be maintained and enlarged, the people of the United States, and hopefully of the rest of the world as well, must turn their backs on environmentalism. They must recognize it for the profoundly destructive, misanthropic philosophy that it is.

They must solve any possible problem of global warming on the foundation of industrial civilization, not on a foundation of its ruins.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Global Warming Is Not a Threat But the Environmentalist Response to It Is

The UN’s Intergovernmental Panel on Climate Change recently released the summary of its latest, forthcoming report on global warming. It’s most trumpeted finding is that the existence of global warming is now “unequivocal.”

Although such anecdotal evidence as January’s snowfall in Tucson, Arizona and freezing weather in Southern California and February’s more than 100-inch snowfall in upstate New York might suggest otherwise, global warming may indeed be a fact. It may also be a fact that it is a by-product of industrial civilization (despite, according to The New York Times of November 7, 2006, two ice ages having apparently occurred in the face of carbon levels in the atmosphere 16 times greater than that of today, millions of years before mankind’s appearance on earth).

If global warming and mankind’s responsibility for it really are facts, does anything automatically follow from them? Does it follow that there is a need to limit and/or reduce carbon emissions and the use of the fossil fuels—oil, coal, and natural gas—that gives rise to the emissions? The need for such limitation and/or rollback is the usual assumption.

Nevertheless, the truth is that nothing whatever follows from these facts. Before any implication for action can be present, additional information is required.

One essential piece of information is the comparative valuation attached to retaining industrial civilization versus avoiding global warming. If one values the benefits provided by industrial civilization above the avoidance of the losses alleged to result from global warming, it follows that nothing should be done to stop global warming that destroys or undermines industrial civilization. That is, it follows that global warming should simply be accepted as a byproduct of economic progress and that life should go on as normal in the face of it.

Modern, industrial civilization and its further development are values that we dare not sacrifice if we value our material well-being, our health, and our very lives. It is what has enabled billions more people to survive and to live longer and better. Here in the United States it has enabled the average person to live at a level far surpassing that of kings and emperors of a few generations ago.

The foundation of this civilization has been, and for the foreseeable future will continue to be, the use of fossil fuels.

Of course, there are projections of unlikely but nevertheless possible extreme global warming in the face of which conditions would be intolerable. To deal with such a possibility, it is necessary merely to find a different method of cooling the earth than that of curtailing the use of fossil fuels. Such methods are already at hand, as I will explain in an article that will appear shortly.

In fact, if it comes, global warming, in the projected likely range, will bring major benefits to much of the world. Central Canada and large portions of Siberia will become similar in climate to New England today. So too, perhaps, will portions of Greenland. The disappearance of Arctic ice in summer time, will shorten important shipping routes by thousands of miles. Growing seasons in the North Temperate Zone will be longer. Plant life in general will flourish because of the presence of more carbon dioxide in the atmosphere.

Strangely, these facts are rarely mentioned. Instead, attention is devoted almost exclusively to the negatives associated with global warming, above all to the prospect of rising sea levels, which the report projects to be between 7 and 23 inches by the year 2100, a range, incidentally, that by itself does not entail major coastal flooding. (There are, however, projections of a rise in sea levels of 20 feet or more over the course of the remainder of the present millennium.)

Yes, rising sea levels may cause some islands and coastal areas to become submerged under water and require that large numbers of people settle in other areas. Surely, however, the course of a century, let alone a millennium, should provide ample opportunity for this to occur without any necessary loss of life.

Indeed, a very useful project for the UN’s panel to undertake in preparation for its next report would be a plan by which the portion of the world not threatened with rising sea levels would accept the people who are so threatened. In other words, instead of responding to global warming with government controls, in the form of limitations on the emission of carbon dioxide and other greenhouse gases, an alternative response would be devised that would be a solution in terms of greater freedom of migration.

In addition, the process of adaptation here in the United States would be helped by making all areas determined to be likely victims of coastal flooding in the years ahead ineligible for any form of governmental aid, insurance, or disaster relief that is not already in force. Existing government guarantees should be phased out after a reasonable grace period. Such measures would spur relocation to safer areas in advance of any future flooding.

Emissions Caps Mean Impoverishment

The environmental movement does not value industrial civilization. It fears and hates it. Indeed, it does not value human life, which it regards merely as one of earth’s “biota,” of no greater value than any other life form, such as spotted owls or snail darters. To it, the loss of industrial civilization is of no great consequence. It is a boon.

But to everyone else, it would be an immeasurable catastrophe: the end of further economic progress and the onset of economic retrogression, with no necessary stopping point. Today’s already widespread economic stagnation is the faintest harbinger of the conditions that would follow.

A regime of limitations on the emission of greenhouse gases means that all technological advances requiring an increase in the total consumption of man-made power would be impossible to implement. At the same time, any increase in population would mean a reduction in the amount of man-made power available per capita. (Greater production of atomic power, which produces no emissions of any kind, would be an exception. But it is opposed by the environmentalists even more fiercely than is additional power derived from fossil fuels.)

To gauge the consequences, simply imagine such limits having been imposed a generation or two ago. If that had happened, where would the power have come from to produce and operate all of the new and additional products we take for granted that have appeared over these years? Products such as color television sets and commercial jets, computers and cell phones, CDs and DVDs, lasers and MRIs, satellites and space ships? Indeed, the increase in population that has taken place over this period would have sharply reduced the standard of living, because the latter would have been forced to rest on the foundation of the much lower per capita man-made power of an earlier generation.

Now add to this the effects of successive reductions in the production of man-made power compelled by the imposition of progressively lower ceilings on greenhouse-gas emissions, ceilings as low as 75 or even 40 percent of today’s levels. (These ceilings have been advocated by Britain’s Stern Report and by the United Nations Intergovernmental Panel, respectively.) Inasmuch as these ceilings would be global ceilings, any increase in greenhouse-gas emissions taking place in countries such as China and India would be possible only at the expense of even further reductions in the United States, whose energy consumption is the envy of the world.

All of the rising clamor for energy caps is an invitation to the American people to put themselves in chains. It is an attempt to lure them along a path thousands of times more deadly than any military misadventure, and one from which escape might be impossible.

Already, led by French President Jacques Chirac, forces are gathering to make non-compliance with emissions caps an international crime. Given such developments, it is absolutely vital that the United States never enter into any international treaty in which it agrees to caps on greenhouse-gas emissions.

if the economic progress of the last two hundred years or more is to continue, if its existing benefits are to be maintained and enlarged, the people of the United States, and hopefully of the rest of the world as well, must turn their backs on environmentalism. They must recognize it for the profoundly destructive, misanthropic philosophy that it is. They must solve any possible problem of global warming on the foundation of industrial civilization, not on a foundation of its ruins.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Hugo Chavez: Collectivist Throwback

CARACAS, Venezuela, Feb. 16 — Faced with an accelerating inflation rate and shortages of basic foods like beef, chicken and milk, President Hugo Chávez has threatened to jail grocery store owners and nationalize their businesses if they violate the country’s expanding price controls.

Venezuela’s collectivist dictator Hugo Chavez is surprised by the fact that there are shortages in Venezuela. Despite the fact that the science of economics has been explaining it for over two hundred years, he didn’t know that inflation of the money supply serves to make prices rise. Again, despite the centuries-long teachings of economics, he didn’t know that when the rise in prices is prohibited, the effect of inflation is to increase the quantities of goods that people want to buy, but not the quantities available for sale, and thus results in precisely the situation that is described as a shortage, i.e., people attempting to buy more of a good than is available for sale.

Chavez doesn’t know, and probably doesn’t want to know, that if he wants to end the shortages, all he has to do is abolish the price controls. The rise in prices will serve to reduce the quantities of the various goods demanded to a point within the limit of the supplies available. He doesn’t know and probably doesn’t want to know that if he then wants the rise in prices to stop, all he need do is stop the inflation of the Venezuelan money supply.

Finally, Chavez doesn’t know, and undoubtedly doesn’t want to know, that if he would then want prices actually to fall, and for goods to become more and more affordable by more and more of his countrymen, what he would need to do is make a 180-degree turn in the rest of his policies. What this means is that he would have to replace his policy of socialization/nationalization with privatization, and his policy of ever increasing regulation and controls with economic freedom. These are the polices that would provide the incentives and opportunity to rapidly increase production and thus make goods more and more abundant and thus lower-and-lower-priced and ever more affordable.

But all of this is way too much to expect. Because this is, after all, the same Hugo Chavez who apparently slept through the collapse of the Soviet Union and of socialism almost everywhere in the world but Cuba and North Korea, where it’s still maintained by dictatorship in the face of starvation. As such, he’s a man who gives new meaning to the expression “out of it”—he’s so far out of it, so incredibly ignorant, that one may wonder what century he’s in and what planet he’s on.

What stops the antics of this collectivist throwback from being laughable is the fact that many people are suffering from them and soon will probably suffer a lot more. Large numbers of Venezuelans may even be killed before this buffoon leaves office.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

The Environmentalist Noose Is Tightening

Forty-Five nations joined France in calling for a new environmental body to slow global warming and protect the planet, a body that potentially could have policing powers to punish violators.—AP, Feb. 5, 2007

AP reports that the French effort was “led by French President Jacques Chirac,” after the release of the report on global warming prepared by the United Nations Intergovernmental Panel on Climate Change. The meaning of this “effort” is that Chirac is attempting to make an international crime out of attempts to increase production and raise living standards, to the extent that those attempts entail an increase in the discharge of greenhouse gases.

This, incidentally, is the same Jacques Chirac who recently announced that he did not consider it particularly dangerous for Iran to have a nuclear bomb or two. (New York Times, Feb. 1, 2007). Nuclear bombs in the hands of lunatics are not a problem for M. Chirac. Sane people, pursuing their material self-interest by means of increasing production—that’s a problem for M. Chirac. That’s what he considers dangerous and needing to be stopped.

I am not surprised by this attempt to criminalize productive activity. In fact, I predicted it in Capitalism. I wrote,

[I]t should be realized that the belief in the need for global limits on carbon dioxide and other chemical emissions and thus in the need for international allocation of permissible emissions implies that every country is an international aggressor to the degree that it is economically successful (and thus, of course, that the United States is the world’s leading aggressor). For the consequence of its success is held to be either to push the volume of allegedly dangerous emissions beyond the safe global limit or to impinge upon the ability of other countries to produce, whose populations have more urgent needs. Thus, in casting the production of wealth in the light of a danger to mankind, by virtue of its alleged effects on the environment, and thereby implying the need for global limits on production, the ecology movement attempts to validate the thoroughly vicious proposition, lying at the very core of socialism, that one man’s gain is another’s loss. (p. 101)

In a note referenced at the end of this paragraph, I added,

If the influence of the ecology movement continues to grow, then it is perfectly conceivable that in years to come, the very intention of a country to increase its production could serve as a cause of war, perhaps precipitating the dispatch of a U.N. security force to stop it. Even the mere advocacy of economic freedom within the borders of a country would logically—from the depraved perspective of the ecology movement—be regarded as a threat to mankind. It is, therefore, essential that the United States absolutely refuse to sanction in any way any form of international limitations on “pollution”—that is, on production. (p. 118)

I regret having to say that I can’t take very much satisfaction from having had this foresight. It’s like being marched to a concentration camp and saying, “I tried to tell everyone this is where we’d all end up.”

The momentum of environmentalism is becoming increasingly powerful and it looks like its agenda of limits and rollbacks on greenhouse-gas emissions is going to be imposed, probably after the election of the next president. I think our situation is comparable to that of Germany in 1932. Horrendous changes are coming.

I’ve written an essay of almost 4,000 words in reply to the UN panel’s report and the inferences being drawn from it. It’s a stand against the tide, consisting both of important new material and material drawn from Capitalism. But instead of publishing it as a post on blogs, as I originally planned to do, I’ve employed an agent to try to place two fifteen-hundred-word segments of it in major mainstream publications.

Those segments can’t appear here until they appear in whatever publications accept them, or have been rejected by all of the places to which they’ve been submitted. If one or both of them is accepted, then I’ll have reached an audience of several hundred thousand readers rather than just a few hundred. Unfortunately, the odds of one or both of them actually being accepted are slim. My subjective estimate is that the odds are probably less than my chances of my winning a lottery, and that’s allowing for the fact that I don’t buy lottery tickets.

In any event, here’s the material I took, with some adaptation, from Capitalism. I offer it for the benefit of those who haven’t read it before and as a refresher for those who have.

What Depends on Industrial Civilization and Man-Made Power

As the result of industrial civilization, not only do billions more people survive, but in the advanced countries they do so on a level far exceeding that of kings and emperors in all previous ages—on a level that just a few generations ago would have been regarded as possible only in a world of science fiction. With the turn of a key, the push of a pedal, and the touch of a steering wheel, they drive along highways in wondrous machines at seventy miles an hour. With the flick of a switch, they light a room in the middle of darkness. With the touch of a button, they watch events taking place ten thousand miles away. With the touch of a few other buttons, they talk to other people across town or across the world. They even fly through the air at six hundred miles per hour, forty thousand feet up, watching movies and sipping martinis in air-conditioned comfort as they do so. In the United States, most people can have all this, and spacious homes or apartments, carpeted and fully furnished, with indoor plumbing, central heating, air conditioning, refrigerators, freezers, and gas or electric stoves, and also personal libraries of hundreds of books, compact disks, and DVDs; they can have all this, as well as long life and good health—as the result of working forty hours a week.

The achievement of this marvelous state of affairs has been made possible by the use of ever improved machinery and equipment, which has been the focal point of scientific and technological progress. The use of this ever improved machinery and equipment is what has enabled human beings to accomplish ever greater results with the application of less and less muscular exertion.

Now inseparably connected with the use of ever improved machinery and equipment has been the increasing use of man-made power, which is the distinguishing characteristic of industrial civilization and of the Industrial Revolution, which marked its beginning. To the relatively feeble muscles of draft animals and the still more feeble muscles of human beings, and to the relatively small amounts of useable power available from nature in the form of wind and falling water, industrial civilization has added man-made power. It did so first in the form of steam generated from the combustion of coal, and later in the form of internal combustion based on petroleum, and electric power based on the burning of any fossil fuel or on atomic energy.

This man-made power, and the energy released by its use, is an equally essential basis of all of the economic improvements achieved over the last two hundred years. It is what enables us to use the improved machines and equipment and is indispensable to our ability to produce the improved machines and equipment in the first place. Its application is what enables us human beings to accomplish with our arms and hands, in merely pushing the buttons and pulling the levers of machines, the amazing productive results we do accomplish. To the feeble powers of our arms and hands is added the enormously greater power released by energy in the form of steam, internal combustion, electricity, or radiation. In this way, energy use, the productivity of labor, and the standard of living are inseparably connected, with the two last entirely dependent on the first.

Thus, it is not surprising, for example, that the United States enjoys the world’s highest standard of living. This is a direct result of the fact that the United States has the world’s highest energy consumption per capita. The United States, more than any other country, is the country where intelligent human beings have arranged for motor-driven machinery to accomplish results for them. All further substantial increases in the productivity of labor and standard of living, both here in the United States and across the world, will be equally dependent on man-made power and the growing use of energy it makes possible. Our ability to accomplish more and more with the same limited muscular powers of our limbs will depend entirely on our ability to augment them further and further with the aid of still more such energy. (pp. 77- 78.)

A Free-Market Response to Global Warming

Even if global warming is a fact, the free citizens of an industrial civilization will have no great difficulty in coping with it—that is, of course, if their ability to use energy and to produce is not crippled by the environmental movement and by government controls otherwise inspired. The seeming difficulties of coping with global warming, or any other large-scale change, arise only when the problem is viewed from the perspective of government central planners.

It would be too great a problem for government bureaucrats to handle (as is the production even of an adequate supply of wheat or nails, as the experience of the whole socialist world has so eloquently shown). But it would certainly not be too great a problem for tens and hundreds of millions of free, thinking individuals living under capitalism to solve. It would be solved by means of each individual being free to decide how best to cope with the particular aspects of global warming that affected him.

Individuals would decide, on the basis of profit-and loss calculations, what changes they needed to make in their businesses and in their personal lives, in order best to adjust to the situation. They would decide where it was now relatively more desirable to own land, locate farms and businesses, and live and work, and where it was relatively less desirable, and what new comparative advantages each location had for the production of which goods. Factories, stores, and houses all need replacement sooner or later. In the face of a change in the relative desirability of different locations, the pattern of replacement would be different. Perhaps some replacements would have to be made sooner than otherwise. To be sure, some land values would fall and others would rise. Whatever happened individuals would respond in a way that minimized their losses and maximized their possible gains. The essential thing they would require is the freedom to serve their self-interests by buying land and moving their businesses to the areas rendered relatively more attractive, and the freedom to seek employment and buy or rent housing in those areas.

Given this freedom, the totality of the problem would be overcome. This is because, under capitalism, the actions of the individuals, and the thinking and planning behind those actions, are coordinated and harmonized by the price system (as many former central planners of Eastern Europe and the former Soviet Union have come to learn). As a result, the problem would be solved in exactly the same way that tens and hundreds of millions of free individuals have solved greater problems than global warming, such as redesigning the economic system to deal with the replacement of the horse by the automobile, the settlement of the American West, and the release of the far greater part of the labor of the economic system from agriculture to industry. (pp. 88-89)

This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

THE DECLARATION OF INDEPENDENCE 2007 By Gen LaGreca

Here is a bucket of pearls. Please overlook the fact that the author asks your help in casting them before a herd of swine. They are pearls nonetheless.—GR.


With a new Congress convening, it’s time to recall the ideals of America as expressed by Thomas Jefferson in our Declaration of Independence. The following is a new version of the Declaration, updated to reflect the current usurpations and threats we face. It is an urgent call for our newly elected representatives to fulfill the promise of America envisioned by our Founders and for We, The People, to insist that they do.

When in the course of human events, a people find it necessary to rid themselves of a government that has abandoned the sound principles upon which it was founded and that increasingly threatens their lives and liberties, reason requires them to declare the causes of their discontent.

We hold these truths to be certain and immutable, that all men by their nature possess unalienable rights; that among these are life, liberty, property, and the pursuit of happiness; that to protect these rights governments are instituted among men, deriving their just and limited powers from the consent of the governed; that individuals show respect for each other’s rights by associating with one another through voluntary consent; that an act of force against a person violates his rights; and that it is the sole, legitimate purpose of government to ban the initiation of force in society by retaliating with force against it—through the police and courts to apprehend and punish domestic criminals, the military to defend against foreign invaders, and the civil courts to settle disputes among men—thereby insuring the peace and safety of a free and civilized people.

That whenever a government becomes destructive of these ends, when it becomes the very instrument of coercion it is supposed to protect against, it is the right and duty of the people to alter it and institute new government that will protect their safety and freedom. The history of the present government of the United States—with state and local governments following suit—is one of a dangerous, unchecked growth of powers leading to the ultimate perversion in which it is the government that holds the reins and the citizens that are saddled, bridled, and spurred to do its bidding. To prove this, let facts be submitted to reasonable minds.

The government has violated our right to property and seized our wealth through onerous taxation that totals over 40 percent of the national income, taxing our salaries, investments, homes, businesses, purchases, etc., so that we cannot even buy a toothbrush without paying a tribute.

It has transformed a nation of self-reliant, self-supporting individuals into a swarm of special interest groups—workers, farmers, seniors, unions, corporations, etc.—each clamoring for favors and handouts at the expense of others, so that the young are taxed to support the old, the rich to support the poor, the people in the mountains to support flood victims at the shores; and the louder the demands, the more a group receives.

It has made us dependent on its largess for our vital needs, such as our retirement income and medical care, which no longer depend on our individual choices and actions but on the promises of politicians whose costly, ill-conceived programs are fast approaching bankruptcy.

It has appointed itself as the supreme master who decides for all what foods, medicines, products are safe to use—even mandating how our televisions must be made, our cereal boxes labeled, our toilets flushed—bombarding us with countless agencies that misuse our money, harass us, fine us, and violate our freedom to control our own lives.

It has, in order to gain votes and power bases, usurped the role of private charity, giving food, housing, and other provisions to special groups, removing incentives for them to improve their own lives, and creating an uncharitable, unchosen, and unjust financial burden on others to support them.

It has vilified our industries, seized their profits, hampered free trade, prevented mergers, dictated every detail of employment and operation—controlling pay, hours, benefits, prices, hiring, firing, production, profits—even setting safety standards for swivel chairs in the workplace—thereby violating the rights of employers, employees, and customers to deal with each other on their own terms.

It has created endless ways to cripple businesses, so that if a company is deemed too large, anti-trust laws force it to divide; if it is deemed to pay wages that are too low, labor laws force it to offer more; all at the whim of public officials who create no wealth and live off money extorted from taxpayers, yet issue televised tongue-lashings and punishments to businesspeople for not running their enterprises to better suit the politicians’ favored groups.

It has, for political advantage, doled out subsidies, invoked protective tariffs, created monopolies, bestowed grants and privileges—including paying farmers not to produce any crops—giving unfair advantage to some businesses at the expense of others and creating chaos in the marketplace.

It has failed to protect the people’s rights, but instead protects snail darters, caribou, and the wilderness, in order to pander to aberrant environmentalists who use energy in every aspect of their lives—in their cars, planes, computers, lawn mowers, toasters, microphones—while instigating laws to severely hamper energy production.

It has stifled domestic exploration for oil with onerous regulation, which has made oil scarcer and more expensive and thus enriched foreign oil-producing countries such as Iran, whose revenues support the brainwashing schools, training camps, and militias of ruthless savages who plot to annihilate us.

It has imposed oppressive taxes, yet the huge sums it extracts still cannot quench its thirst for more reckless spending, plunging the country deeper into debt and, if unchecked, into bankruptcy.

It has seized so much power that kickbacks from contractors, bribes from lobbyists, favors exchanged for votes, and other scandals in its ranks are rampant.

It has corrupted the morals of the people, who see that they can vote themselves the taxpayers’ money, so they abandon personal responsibility and self-reliance to clamor for more handouts, perpetuating their own dependence and their representatives’ corruption.

It has created a welfare state not only within our borders, but throughout the world, squandering huge sums on foreign aid that bails out the failing regimes of despotic rulers, feeds the very enemies who arm to destroy us—such as North Korea and many others over the years—and creates a global entitlement mentality that demands a bite of the already ravaged carcass of the American taxpayer.

It has financed and supported the corrupt United Nations, an organization allegedly dedicated to world peace that grants the worst tyrannies equal moral standing with free countries and provides a forum for the bloodiest dictatorships to condemn us.

It has shamefully failed in its constitutional duty to protect us from deadly threats abroad, allowing repeated attacks on us to go unpunished and emboldening our enemies to wreak unprecedented death and destruction on our own soil.

It has left us vulnerable to a ruthless enemy because of its endless appeasement, its perverse desire not to offend anyone, its need for approval from hostile countries, its concern for our decorum over our victory—in short, its moral cowardice in defending America.

These and other usurpations and failings now weigh heavily on us.

By the laws of nature and our Constitution, we declare ourselves a free people with sovereignty over ourselves. We demand an end to the creeping tyranny that strangles us. We demand the dismantling of government in all areas of usurped powers never granted it by the Constitution. We demand that our elected representatives act on the ideals of liberty to reverse our self-destructive course.

We will never forget that we are Americans. We forged a continent not with public aid but with the shining vision of a better life and the self-reliance to attain it. We created wealth, progress, and achievement on an unprecedented scale. No government fed our pioneers, inspected their wagons for safety, certified their chickens, subjected their homes to endless building permits, meddled in their businesses, looted their wealth. No government built the breathtaking skylines of our majestic cities, the proud monuments to free minds and free commerce. The government’s fingerprints are found only on the shattered shells of public housing that wound our cities, a grim reminder of the failed welfare state. The time has come to reclaim our country from the meddlers, do-gooders, and would-be dictators seeking to nourish their craving for power with our lifeblood. We will restore America as the proud haven of liberty. To this we pledge our sacred honor.


If you agree with this declaration, send it to your representatives. Tell them that you intend to support people who offer a return to limited government and the freedoms guaranteed us by the Constitution.

Genevieve (Gen) LaGreca is the author of “Noble Vision” a novel about liberty and a ForeWord magazine Book of the Year Award winner. She may be contacted at glagreca@wingedvictorypress.com.

Copyright © 2007 by Genevieve LaGreca

The State Against Economic Law: the Case of Minimum Wage Legislation

When it comes to matters such as the theory of evolution and stem-cell research, so-called liberals—i.e., socialists who have stolen the name that once meant an advocate of individual freedom—ridicule religious conservatives for their desire to replace science with the dictates of an alleged divine power. Yet when it comes to matters of economic theory and economic policy—for example, minimum-wage legislation—these same liberals themselves invoke the dictates of an alleged divine power. Their divine power, of course, is not the God of traditional religion, but rather a historically much more recent deity: namely, the great god State.

Traditional religionists believe that an omnipotent God came before all natural law and was not bound or limited by any such law, but rather created such natural laws as suited him, as he went along. Just so, today’s liberals believe, at least in the realm of economics, that the State is not bound or limited by any pre-existing natural laws. In the case in hand, the State, today’s liberals believe, is free to decree wage rates above the level that would exist without its interference and no ill-effects, such as unemployment, will arise.

In this matter, the liberals have been as quick to cast aside whatever modest knowledge of economics they may once have had, as the traditionally faithful are quick to cast aside whatever relevant knowledge of physical cause and effect they may once have had. The traditionally faithful revel in the sight of a seeming miracle or even the mere report of a seeming miracle, such as a faith healer commanding the lame to walk, and on that basis abandon their knowledge of cause and effect in the realm of human anatomy and physiology. In the same way, today’s liberals have been reveling in the report of increases in the minimum wage unaccompanied by increases in unemployment, and on that basis have abandoned their knowledge that increases in wage rates reduce the quantity of labor demanded and thus do indeed cause unemployment.

The liberals’ faith healers in this instance are David Card and Alan Krueger, who are the authors of a book called Myth and Measurement: The New Economics of the Minimum Wage (Princeton, N.J.: Princeton University Press, 1995, 422 pp.). Their book is described by its publisher as presenting “a powerful new challenge to the conventional view that higher minimum wages reduce jobs for low-wage workers.… [U]sing data from a series of recent episodes, including the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990-91 increases in the federal minimum wage…they present a battery of evidence showing that increases in the minimum wage lead to increases in pay, but no loss in jobs.”

Denial of the Law of Demand

Card and Krueger and the “liberal” faithful who are eager to embrace their message may not realize it, but when they claim that increases in the minimum wage do not cause unemployment, what they are denying is one of the best established propositions in all of economics, namely, the Law of Demand.

This law states that, other things being equal, the higher is the price of any good or service, the smaller is the quantity of it demanded, i.e., the quantity that buyers purchase, and that, by the same token, the lower is the price of any good or service, the larger is the quantity of it demanded, i.e., the quantity that buyers purchase. Since wages are merely the price of labor services, the Law of Demand implies that all government and labor-union interference that forcibly raises wage rates above the height at which they would otherwise have been reduces the quantity of labor employers seek to employ in comparison with what it would otherwise have been. It thus implies that the government’s or labor unions’ interference causes unemployment.

One major reason for the existence of the Law of Demand is that while people would like to buy more goods and services, their ability to spend is always limited by the funds at their disposal. Lower prices enable the same funds to buy more, while higher prices prevent any given amount of funds from buying as much. In order to overthrow the Law of Demand, one of the things Card and Krueger would need to be able to do would be to show how the division of a given-sized numerator (i.e., the funds people have available to spend) by a larger-sized denominator (i.e., the prices and wages they must pay) does not result in a reduced quotient (i.e., ability to buy goods and labor services). It should be obvious that this is simply impossible and that insofar as the Law of Demand rests on the laws of arithmetic, no statistical data can ever overthrow it. Rather, the statistical data must be interpreted in a way that is logically consistent with the laws of arithmetic and their derivative, the Law of Demand.

It is very easy to provide such an interpretation. This is because, contrary to what Card and Krueger appear to believe, the Law of Demand does not claim that every rise in a price or wage must reduce the quantity of the good or labor service demanded below what it was before the price or wage was increased. That would be true only if all other things remained equal. When all other things do not remain equal, the Law of Demand claims merely that higher prices or wages cause the quantity of a good or labor service demanded to be less than it otherwise would have been.

The economic history of the last 60 years illustrates this. Over this period, prices and wages rose from one year to the next and yet the quantity of practically all goods and labor services demanded also increased from year to year. For example, in the late 1940s, the price of a new house was $10,000; that of a good-quality new automobile, $1,000; that of a meal at a first-class restaurant, less than $5; a high-level executive job paid $15,000 a year; and the federal minimum wage was 75¢ an hour. Since that time, all of these prices and wages have increased many times over. And yet, from year to year, the quantities of practically everything demanded increased rather than decreased.

The explanation, which is perfectly consistent with the Law of Demand, is the continuing increase in the quantity of money in the economic system. In the late 1940s the quantity of money in the United States was well below $100 billion. The total annual spending that such a money supply could support was in the low hundred billions. Since then the money supply has increased to almost $3 trillion, which is capable of supporting total annual spending that is vastly larger.

Minimum-Wage Laws Cause Unemployment Even When More People Work

With such an enormous increase in the funds at their disposal, people are capable of buying larger quantities of goods and labor services even at today’s sharply higher prices and wages. What is still true, however, is that if wages and prices had not risen as much as they have, the quantities of goods and labor services demanded would have increased by even more than they actually have, and thus that more workers would be employed than is in fact the case, with the result that unemployment would be less than it is. To the extent that the minimum-wage law has contributed to wage rates and prices being higher than they otherwise would be, it is responsible for unemployment, despite the fact that more people work today than at any time in the past.

Expenditure Shifting

A supporter of the minimum wage might argue that even though the total of people’s ability to spend is limited at any given time, their ability to spend on any one particular thing or category of things is still capable of being increased—by the simple means of their reducing their spending for other things. This is certainly true. The total wages paid to unskilled workers might increase to some extent at the expense of the wages paid to skilled workers. The total of the wages paid to all workers might increase to some extent at the expense of expenditures for capital goods, such as the materials and machinery bought by business firms.

Nevertheless, an increase in any given price or wage operates to discourage the shifting of funds to purchase the good or service in question. This is because its higher price or wage requires a greater sacrifice in terms of alternative goods or services that must be forgone in order to purchase it. For example, if a worker must be paid $200 per week, all that his employment entails is forgoing the purchase of other goods or services worth $200. But if he must be paid $300 per week, his employment requires the correspondingly greater sacrifice of alternative goods or services worth $300. The growing magnitude of sacrifice of alternative goods and services is a major reason that a rising price or wage results in a falling quantity of the good or service demanded, i.e., it is a further major reason for the existence of the Law of Demand.

Furthermore, what is required to bring about an increase in expenditure on any one good or service or category of goods or services at the expense of expenditure on other goods and services is either a decrease in their supply or a decrease in their price, neither of which is compatible with support for a minimum wage. For example, if the supply of crude oil, or the services of physicians, decreased by 10 percent, the price might easily double, because of the high value that people would attach to each unit of the remaining supply. In this case 1.8 times as much would be spent in buying the good or service—i.e., the doubled price times the remaining 90 percent of the initial quantity. Unfortunately for the supporters of the minimum wage, a case of this kind still implies a significant reduction in quantity demanded and in employment. (And I will soon show that the reduction in employment will turn out to be far greater than thus far indicated.)

As stated, what is also capable of bringing about an increase in the expenditure on a given good or service at the expense of other goods and services is a fall in its price. A fall in the price of a given good or service can often so dramatically improve its ability to compete against other goods and services for the limited supply of funds in the possession of buyers that more ends up being spent on it at a lower price than at a higher price. The automobile and computer industries provide illustrations of this phenomenon.

At the beginning of the 20th Century, automobiles were as expensive relative to the average person’s income as yachts are today. So long as that remained true, the automobile industry had to remain a minor industry. But as the cost of production and price of automobiles came down, a mass market developed in which the increase in quantity demanded far outweighed the decrease in price. The same story was repeated in the last decades of the 20th Century, as the price of personal computers radically declined and their quality greatly increased, with the result that another major new industry came into being.

It should be obvious that cases of this kind are of no help to the supporters of the minimum wage. For, when applied to labor, they rest on wage rates falling, as the means of expanding the quantity of labor demanded. The imposition of a minimum wage or of an increase in an existing minimum wage, works in the diametrically opposite direction. It reduces the ability of low-skilled workers to compete and thus forces them into unemployment.

Low-Skilled Workers Compete by Means of Low Wages

The relationship between the wage rates of the low-skilled and their ability to compete with more-highly-skilled workers needs elaboration. Lower wage rates are the means by which less-skilled workers compensate for their lack of skill and are enabled to compete with more-skilled workers. Imagine, for example, the case of two bricklayers, one of whom is able to lay twice as many bricks per hour as the other. Is there any way in which the less capable bricklayer can successfully compete against the more capable bricklayer? Yes there is. All he needs to do is be free to work at less than half the wage rate of the more capable bricklayer. In that case, the cost per brick laid is actually less using him than the more capable bricklayer.

But what is the effect of a minimum wage that sets the wage of the less capable bricklayer at more than half that of the more capable bricklayer? The effect is to prevent him from competing. It is to render his services more costly than those of his more-capable competitor and thus to force him into unemployment.

The essentials of this case are present in all instances in which some workers have less to offer employers in the way of skills and ability than other workers. For example, workers who cannot speak the native language are necessarily at a disadvantage compared with those who can. In a free market, they can overcome that disadvantage by means of being able to offer to work at sufficiently lower wage rates. Similarly, workers who do not know how to read, or cannot read very well, are necessarily at a disadvantage compared with those who can read or can read better. If they are to be employed, they need to be able to overcome these disadvantages through the offer of working for sufficiently lower wage rates.

Minimum-wage laws prevent all such workers, workers with disadvantages in skills and abilities, from competing. They condemn such workers to unemployment and thus deprive them of the opportunity to improve their skills and abilities by gaining work experience. In this way, despite all protestations of their supporters to the contrary, minimum-wage laws are the enemy of the disadvantaged.

Minimum-Wage Laws Also Cause Unemployment Indirectly

The extent of the harm minimum-wage laws cause is considerably greater than has thus far been explained. Its measure includes even those instances in which an increase in the minimum wage is accompanied for the most part by an increase in the funds expended in paying it and very little by any immediate unemployment on the part of those receiving it. Indeed, even if, contrary to economic law, it were somehow the case that a rise in the minimum wage were accompanied by such a shifting of funds from elsewhere, that exactly the same number of workers were employed at the now higher wage as were previously employed at the lower wage, it would still end up causing substantial additional unemployment among the low-skilled in comparison with what their unemployment would have been otherwise.

This becomes clear when it is realized that to the extent that funds are withdrawn from spending elsewhere in the economic system, namely, from spending on capital goods and the wages of more-skilled labor, corresponding unemployment is created in those areas. That unemployment could be overcome if wage rates in the rest of the economic system were free to fall. But under a regime of minimum-wage legislation combined with pro-union legislation, in which labor unions impose minimum wages of their own for the various grades of more-skilled labor, that fall in wage rates will be prevented. The result is simply that unemployment is created elsewhere in the economic system. (It should be realized that the influence of labor unions on wage rates extends far beyond the ranks of unionized labor. It extends to all non-union firms that want to remain non-union. Because in order to remain non-union, they must match the unions’ wage scales.)

The more-skilled workers who become unemployed as the result of funds being shifted from the demand for their services to the payment of a higher minimum wage, will be able to become reemployed in other lines of work. Thus, for example, computer programmers, say, who become unemployed will be able to find other employment where their superior skills and abilities enable them to outcompete workers who have up to now been performing these jobs. These jobs, perhaps, may be those of mid-level managers, technical writers, salesmen for high-tech products, and the like.

The workers displaced from these lines must in turn now find alternative employment. To the extent that their skills and abilities are greater than those of the workers with whom they compete, they will succeed in finding employment. Thus they may end up working as bookkeepers, clerks, and the like. But now the less-skilled workers whom they outcompete will be unemployed and in need of finding other work.

What is present is a process of labor being shifted down into occupations of progressively lower levels of skill and ability. The process ends in the increase in the supply of labor in the occupations at the bottom of the various levels of skill and ability.

The larger number of workers now competing for jobs at the bottom could potentially all be employed in those jobs. But that would require a fall in wage rates to increase the quantity of their labor demanded. That fall in wage rates, of course, is precisely what the existence of the minimum-wage law prevents.

In the absence of the fall in wage rates, the workers who become unemployed are once again the comparatively less skilled. But in this case, which is that of the less-skilled workers in occupations already requiring only the lowest levels of skill, the workers who become unemployed are the lowest-skilled in the economic system.

Thus even if, however unlikely, the imposition of a minimum wage began in conditions in which it did not directly and immediately create any unemployment whatever, because of the shifting of funds from elsewhere to pay it, it would end up creating unemployment among the least skilled members of the economic system.

What is present in this analysis is merely an application of Henry Hazlitt’s one-sentence summary of his great classic Economics In One Lesson: Namely, that “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

That lesson was apparently never learned by Card and Krueger and their supporters. Judging the short-run effects of an increase in the minimum wage in a given state, such as New Jersey or California, on the unemployment rate of low-skilled workers in that particular state, which is what Card and Krueger did, does not begin to address the effects of raising the minimum wage. To do that, one must consider the effects, long-run as well as short-run, on the whole economic system. When one does this, one sees that the minimum wage does indeed cause unemployment among the least–skilled, most-disadvantaged members of the economic system.

Overcoming Poverty Requires Repealing Minimum-Wage Laws Throughout the Economic System

The preceding analysis has an important implication concerning how people who are genuinely concerned with improving conditions for those who are least well off might go about actually achieving that goal. Namely, instead of imposing and raising minimum wages at the bottom of the economic ladder, repeal them throughout the economic system. To whatever extent the ability of labor unions to impose above-market wage rates for skilled and semi-skilled labor could be reduced, to whatever extent licensing-law restrictions on the number of people allowed to practice in the various professions could be relaxed, the number of workers employed in all these lines would be increased. The consequence would be that the number of workers forced to compete at the bottom of the labor market would be correspondingly decreased and their wages increased.

Throughout the economic system, human ability would be better employed. Overall production would be greater and thus prices on the whole would be lower. The poorest members of the economic system would earn more and pay less. Not forcibly imposed minimum wages of any kind but the abolition of such forcible impositions is the means to overcome poverty. Repeal minimum-wage legislation, pro-union legislation, and licensing legislation. That is what will help to eliminate poverty.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

The New York Times Pushes the Doctrine of Class Warfare

My last post showed how The New York Times promotes the Green party line. The one before that showed how it has supported the Red party line. Like a traffic light, The New York Times alternates between Red and Green. (There is actually little fundamental difference between the two. The Reds want to abolish the individual’s pursuit of happiness on the grounds that it results in exploitation, monopolies, and depressions. The Greens want to abolish it on the grounds that it results in acid rain, destruction of the ozone layer, and global warming.)

Today we are back to Red, with two transparent attempts of The Times to promote the doctrine of class warfare.

In a January 8, 2007 article titled “Working Harder for the Man,” Times columnist Bob Herbert writes:

[T]he top five Wall Street firms (Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley) were expected to award an estimated $36 billion to $44 billion worth of bonuses to their 173,000
employees, an average of between $208,000 and $254,000, “with the bulk of the gains accruing to the top 1,000 or so highest-paid managers.” … There are 93 million production and nonsupervisory workers (exclusive of farmworkers) in the U.S. Their combined real annual earnings from 2000 to 2006 rose by $15.4 billion, which is less than half of the combined bonuses awarded by the five Wall Street firms for just one year.

As if to answer the question of whether his intention is to provoke a riot or revolution inspired by the notion of class warfare, Mr. Herbert concludes his article with these words:

There’s a reason why the power elite get bent out of shape at the merest mention of a class conflict in the U.S. The fear is that the cringing majority that has taken it on the chin for so long will wise up and begin to fight back.

I provide an exhaustive critique of Marxism and the doctrine of class warfare in my book Capitalism. Here I will observe only that the activities of businessmen and capitalists are the driving force of virtually all increases in real wages. It is their savings that pay the wages of workers and buy the capital goods with which they work and on which the wage earners’ productivity depends. It is the innovations of the businessmen and capitalists that underlie both continuing capital accumulation and the continuing rise in the productivity and real wages of the workers. To the extent that real wages fail to rise, the explanation is to be found in the frustration of the activities of businessmen and capitalists by misguided government policies that undermine capital accumulation and the rise in the productivity of labor.

In this brief space, I only want to concentrate on challenging Mr. Herbert’s assertions alleging a gross disparity between the earnings of a comparative handful of Wall Streeters and the great mass of wage earners.

As soon as I saw that Mr. Herbert was comparing the alleged meager growth in real earnings of wage earners with the alleged very substantial current monetary earnings of the Wall Streeters, a warning flag went up in my mind, simply because such a thing is not a legitimate comparison. It’s comparable to comparing one entity’s net gain with another entity’s gross revenues, e.g., Toyota’s net profit with General Motors’ sales revenues.

To compare apples with apples, I was immediately curious to know what the growth in wage earners’ monetary earnings had been between 2000 and 2006. To find the answer, I turned to the Survey of Current Business, which is the leading source of statistics on national income, wages, and profits, and gross domestic product. Page D 15 of the January 2007 issue of that publication reports total annual compensation of employees as $7524.4 billion as of the 3rd quarter of 2006, which is the most recent quarter for which data have been published.

At the same time, page 197 of the August 2005 issue of the Survey of Current Business reports total compensation of employees as $5837.4 billion as of the 3rd quarter of 2000. Subtracting this number from the total compensation of employees in 2006 gives a difference of $1687.0 billion. If this, apples-to-apples number is compared with the alleged $36 billion to $44 billion of Wall Street bonuses, it is 38 to 47 times larger, not half as large.

But what about the growth in wage earners’ real earnings, their earnings adjusted for the rise in prices? Might that not turn out to be a mere $15.4 billion, as alleged by Mr. Herbert? The answer is no, far from it.

To calculate the change in real earnings, it’s necessary to allow for the rise in prices between 2000 and 2006. According to the Bureau of Labor Statistics, which is the source of the data, the Consumer Price Index for Urban Wage Earners and Clerical Workers stood at 168.9 for 2000 and at 196.8 as of November of 2006, the most recent month for which data are available. This is an increase of 17 percent. If this rise in prices is applied to the employee compensation of $5837.4 billion in 2000, that number is raised to $6801.7 billion. The difference between this inflation-adjusted figure and 2006’s total employee compensation of $7524.4 billion is $722.7 billion. This is the rise in real total employee compensation over the period. This number is more than 47 times larger than the number alleged by Mr. Herbert. It also ranges from more than 16 to more than 20 times the Wall Street bonuses alleged by Mr. Herbert.

Mr. Herbert needs to explain how he arrived at his numbers. Until he provides a reasonable explanation, I leave it to the reader to judge his honesty and to decide whether or not and to what extent the culture of The New York Times has changed since the days of Jayson Blair, The Times' reporter who simply fabricated claims.

*****************

I turn now to The Times’ second attempt to promote the doctrine of class warfare. This occurs in an article which appeared on the same day titled “[Bush] Tax Cuts Offer Most for Very Rich, Study Says.” (“Bush” is in brackets because it appeared only in the title of the print edition of the article.)

The article opens in a way that easily suggests that while tax rates at the very top are being dramatically reduced, they are actually being increased for middle-class taxpayers.

WASHINGTON, Jan. 7 — Families earning more than $1 million a year saw their federal tax rates drop more sharply than any group in the country as a result of President Bush’s tax cuts, according to a new Congressional study.

The study, by the nonpartisan Congressional Budget Office, also shows that tax rates for middle-income earners edged up in 2004, the most recent year for which data was available, while rates for people at the very top continued to decline.

If one reads the article very carefully, from beginning to end, one learns that what is actually being complained about is merely the fact that the tax rate of the top 1 percent of taxpayers was reduced by a larger number of percentage points than the tax rate of middle-income tax payers. One also learns that the rise in the tax rate on the middle class, so prominently featured by The Times, was a very minor one that took place in the course of a four-year sustained decline in tax rates on the middle class amounting to more than 40 percent. In the article’s own words:

Families in the middle fifth of annual earnings, who had average incomes of $56,200 in 2004, saw their average effective tax rate edge down to 2.9 percent in 2004 from 5 percent in 2000.… (My italics.)

It may have escaped The Times’ reporter, and his editor, but 2.9 percent is less than 60 percent of 5 percent, which implies a reduction in middle-class tax rates of more than 40 percent. This is a decrease, relatively speaking, compared to what the rate was in 2000, a huge decrease. It is not an increase. This decrease deserves to be featured, not presented as the very opposite of itself.

The article goes on to complain that

Households in the top 1 percent of earnings, which had an average income of $1.25 million, saw their effective individual tax rates drop to 19.6 percent in 2004 from 24.2 percent in 2000. The rate cut was twice as deep as for middle-income families.…

What is allegedly unfair here is that while the tax rate of the top 1 percent falls by 4.6 percentage points from 24.2 percent to 19.6 percent, the tax rate on the middle income tax payers falls only by 2.1 percentage points from 5 percent to 2.9 percent. Not only does The Times’ reporter, and his editor, choose to ignore the very substantial, more than 40 percent reduction in middle-class tax rates from 2000 to 2004, but also to completely ignore the fact that relatively speaking the reduction in rates on the top 1 percent was far less than the reduction on the middle class. A tax rate that is still 19.6 percent is approximately 81 percent of a tax rate of 24.2 percent. Thus, relatively speaking, while the income tax rate on the middle class fell by more than 40 percent, it fell by less than 20 percent on the top 1 percent of taxpayers.

Apparently, the only thing that would satisfy The Times (and the authors of the “nonpartisan” Congressional Budget Office study) would be if the tax rate on both groups were reduced by the same number of percentage points. In that case, the middle income tax payers would pay a tax rate of only .4 percent, while the top 1 percent paid 19.6 percent.

Such logic implies that the elimination of the income tax can simply never be fair, unless by some magical means it could be accompanied by the ex nihilo creation of a correspondingly large subsidy for everyone else. Thus if the income tax paid by the middle class were .4 percent, while the tax rate on the top 1 percent of taxpayers were 19.6 percent, fairness would allegedly require that reduction of the 19.6 percent rate to zero be accompanied by the subtraction of 19.6 percentage points from .4 percent. This, of course, would mean the creation of a negative income tax rate of 19.2 percent for the middle class. That is the logic of The New York Times.

The Times and its reporters and editors regard the doctrine of egalitarianism as an axiomatic truth and insinuate it at every turn in all aspects of the newspaper. With respect to egalitarianism and all that goes with it, there is no distinction between news column and editorial at The New York Times. Apart from such features as classified advertising, the entire paper is one huge, day-in and day-out editorial for egalitarianism, collectivism, and Marxism.

When one reads The New York Times, one should know what one is getting. It is not unvarnished news, but the news as seen through the lens of a distinct philosophical and political doctrine, a doctrine that is hostile to the freedom, prosperity, and happiness of the individual, and thus to the foundations of the United States.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

The New York Times Pushes the Green Party Line

The New York Times must have a guilty conscience about the continuous distortions of the news that appear in its pages. Evidence of this guilt is provided everyday in The Times’ claim that its “news and editorial departments do not coordinate coverage and maintain a strict separation in staff and management.”

That claim is necessary only because The Times has become sensitive about the matter. And with good reason. Because even though there may not be formal meetings, strategy sessions, and the like to coordinate its news reporting with its leftist editorial slant, that leftist slant nevertheless very definitely does permeate its reporting.

Perhaps it’s the result simply of the fact that The Times’ editorial writers and its reporters were all educated in the same kind of universities, all promoting the same leftist ideas in economics, politics, history, and the various branches of philosophy. Whatever the explanation, the paper’s editorial writers and reporters consistently come at things from the same perspective and, with only occasional exceptions, end up pushing the same party line.

A good example of this appears in today’s (January 6, 2007) edition. On the first page of the business section, there is an article titled “The Land of Rising Conservation.” The article is a pure puff piece for environmentalism/conservationism. Its theme is that Japan is the model country of energy conservation, pointing the way for the United States on the basis of the use of the latest technology. Indeed, the subtitle of the article, in the print edition, is “Japan Offers a Lesson in Using Technology to Lessen Energy Consumption.” A leading illustration of this technology is an alleged futuristic “home fuel cell, a machine as large and quiet as a filing cabinet that…turns hydrogen into electricity and cold water into hot—at a fraction of regular utility costs.”

The article compares Japan with the United States in terms of annual energy consumption per home and trumpets the fact that in Japan’s it is less than half of that in the United States. It also declares that while Japan’s “population and economy are each about 40 percent as large as that of the United States, yet in 2004 it consumed less than a quarter as much energy as America did, according to the International Energy Agency, which is based in Paris.”

The article credits Japan’s superiority in “energy efficiency” to the “guiding hand of government,” which has forced “households and companies to conserve by raising the cost of gasoline and electricity far above global levels. Taxes and price controls make a gallon of gasoline in Japan currently cost about $5.20, twice America’s more market-based prices.” The same relationship apparently applies to energy prices in general. An advisor to the Japanese Parliament is favorably quoted as saying, “Japan has taught itself how to survive with energy prices that are twice as high as everywhere else.” The sharply higher energy prices, the article explains, are the source of tax revenues, which “[t]he government in turn has used…to help Japan seize the lead in renewable energies like solar power, and more recently home fuel cells.”

Despite The Times’ and its reporter’s obvious enthusiasm for the Japanese government’s energy policies, a careful, critical reading of the article results in a very different kind of appraisal. (Unfortunately, such a reading is not likely to be performed by many of The Times’ readers.)

It turns out that that futuristic home fuel cell, that allegedly operates “at a fraction of regular utility costs,” requires a government “subsidy of about $51,000” per unit. This is what makes possible its purchase “for about $9,000, far below production cost.” (I hope I will be forgiven for failing to see the intelligence of a policy that makes people pay twice the price for energy in order to provide funds to make possible the production of electricity at a sharply higher cost.)

But there is more. It also turns out such technological advances are only part of the story. There is also a major “human interest”/cultural angle that contributes to Japan’s "superiority" in “energy efficiency.” This centers on a Mr. Kimura and his family. (He owns the futuristic home fuel cell that a Times’ photograph shows standing in front of his house.) Without any apparent awareness of the significance of the information being revealed and certainly without any embarrassment about it, The Times’ reporter writes this about the subject of his human interest.

Mr. Kimura says he, his wife, and two teenage children all take turns bathing in the same water, a common practice here. Afterward, the still-warm water is sucked through a rubber tube into the nearby washing machine to clean clothes. Wet laundry is hung outside to dry or under a heat lamp in the bathroom. The different approach is also apparent in the layout of Mr. Kimura’s home, which at 1,188 square feet is about the average size of a house in Japan but only about half as big as the average American one. The rooms are also small, making them easier to heat or cool. The largest is the living room, which is about the size of an American bedroom.

During winter, the entire family, including the miniature dachshund, gathers here, which is often the only room heated. Like most Japanese homes, Mr. Kimura’s does not have central heating. The hallways, stairwell and bathrooms are left cold. The three bedrooms have wall-mounted heaters, which are used only when the rooms are occupied, and switched off at night.

The living room is kept toasty by hot water running through pipes under the floor. Mr. Kimura says such ambient heat saves money. He says the energy bill for his home is about 20,000 yen ($168) a month. Central heating alone would easily double or triple his energy bill, he says.

“Central heating is just too extravagant,” says Mr. Kimura, who is solidly middle class.

The government has tried to foster a culture of conservation with regular campaigns like this winter’s Warm Biz, a call to businesspeople to don sweaters and long johns under their gray suits so that office thermostats could be set lower.

So there you have it: the Green party line presenting poverty as technologically advanced, as the wave of the future, and as morally virtuous. We can supposedly all look forward to the day when we will be as advanced as the Japanese and energy will cost us twice as much as it now does. When we too will be unable to afford central heating and will have to live in houses half their present size. When we will have to gather our entire family into the one heated room in the house. When we will have to follow one another into the same bathwater, and then use that bathwater to wash our clothes, which we will have to dry outdoors, as our great-grandparents did. When we will have to wear long underwear and sweaters to keep warm indoors. What a glorious, green future! What green slime The Times pours on the readers of its alleged news reports.


This article is copyright © 2007, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Where The New York Times Is Coming From

Below are the headlines of four obituaries that have run in The New York Times. The first is that of the recent obituary of the Anti-Communist Augusto Pinochet. The next three are those of the obituaries of the Communist mass murderers Mao, Stalin, and Lenin. Please be sure to note how many are described as having ruled by terror.

December 11, 2006, Augusto Pinochet, Dictator Who Ruled by Terror in Chile, Dies at 91

September 10, 1976, Friday, . . . Mao Tse-tung Dies in Peking at 82; Leader of Red China's Revolution

March 6, 1953, Friday, Stalin Rose From Czarist Oppression to Transform Russia Into Mighty Socialist State; RUTHLESS IN MOVING TO GOALS

January 24, 1924, Thursday, ENORMOUS CROWDS VIEW LENIN'S BODY AS IT LIES IN STATE; Wait Hours in Snow and Zero Temperature Outside Moscow Nobles' Club. COFFIN CARRIED FIVE MILES Members of Council of Commissars Stagger Under Load, Refusing Gun Caisson. LENIN CALLED A CHRISTIAN Archbishop Summons Synod to Declare Founder of Bolshevism Member of Church. ENORMOUS CROWDS VIEW LENIN'S BODY

In these headlines we find utter condemnation of a dictator who was relatively mild as dictators go, but who was Anti-Communist; his leading characteristic was allegedly rule by “Terror.”

In contrast, in the case of Communist mass murderers we find non-judgmental tolerance in the headlines, along with a studious refusal to mention the incalculably greater terrors they caused. More than that, we find positive esteem and enthusiasm in the headlines for the Communist mass murderers. Thus Mao was the “Leader of Red China’s Revolution”; Stalin allegedly transformed “Russia Into Mighty Socialist State”; and Lenin’s funeral was described as a phenomenon of near worshipful enthusiasm: “…COFFIN CARRIED FIVE MILES Members of Council of Commissars Stagger Under Load, Refusing Gun Caisson…”

It is patterns such as this that lead some people to think that the reporting of The New York Times is colored by its politics and that the color of its politics is red.


This article is copyright © 2006, by George Reisman. Permission is hereby granted to reproduce and distribute it electronically and in print, other than as part of a book and provided that mention of the author’s web site www.capitalism.net is included. (Email notification is requested.) All other rights reserved. George Reisman is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.