Friday, January 25, 2013



By Lawrence W. Reed
Eloquent. Extraordinary. Timeless. Paradigm-shifting. Classic. Half a century after it first appeared, Leonard Read’s “I, Pencil” still evokes such adjectives of praise. Rightfully so, for this little essay opens eyes and minds among people of all ages. Many first-time readers never see the world quite the same again.
Ideas are most powerful when they’re wrapped in a compelling story. Leonard’s main point—economies can hardly be “planned” when not one soul possesses all the know-how and skills to produce a simple pencil—unfolds in the enchanting words of a pencil itself. Leonard could have written “I, Car” or “I, Airplane,” but choosing those more complex items would have muted the message. No one person—repeat, no one, no matter how smart or how many degrees follow his name—could create from scratch a small, everyday pencil, let alone a car or an airplane.
This is a message that humbles the high and mighty. It pricks the inflated egos of those who think they know how to mind everybody else’s business. It explains in plain language why central planning is an exercise in arrogance and futility, or what Nobel laureate and Austrian economist
F. A. Hayek aptly termed “the pretence of knowledge.”
Indeed, a major influence on Read’s thinking in this regard was Hayek’s famous 1945 article, “The Use of Knowledge in Society.” In demolishing the spurious claims of the socialists of the day, Hayek wrote,“This is not a dispute about whether planning is to be done or not. It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.”
Maximilien Robespierre is said to have blessed the horrific French Revolution with this chilling declaration: “On ne saurait pas faire une omelette sans casser des oeufs.” Translation: “One can’t expect to make an omelet without breaking eggs.” A consummate statist who worked tirelessly to plan the lives of others, he would become the architect of the Revolution’s bloodiest phase—the Reign of Terror of 1793–94.
Robespierre and his guillotine broke eggs by the thousands in a vain effort to impose a utopian society with government planners at the top and everybody else at the bottom. That French experience is but one example in a disturbingly familiar pattern. Call them what you will—socialists, interventionists, collectivists, statists—history is littered with their presumptuous plans for rearranging society to fit their vision of the common good, plans that always fail as they kill or impoverish other people in the process. If socialism ever earns a final epitaph, it will be this: Here lies a contrivance engineered by know-it-alls who broke eggs with abandon but never, ever created an omelet.
None of the Robespierres of the world knew how to make a pencil, yet they wanted to remake entire societies. How utterly preposterous, and mournfully tragic! But we will miss a large implication of Leonard Read’s message if we assume it aims only at the tyrants whose names we all know. The lesson of “I, Pencil” is not that error begins when the planners plan big. It begins the moment one tosses humility aside, assumes he knows the unknowable, and employs the force of the State against peaceful individuals. That’s not just a national disease. It can be very local indeed.
In our midst are people who think that if only they had government power on their side, they could pick tomorrow’s winners and losers in the marketplace, set prices or rents where they ought to be, decide which forms of energy should power our homes and cars, and choose which industries should survive and which should die. They should stop for a few moments and learn a little humility from a lowly writing implement.
While “I, Pencil” shoots down the baseless expectations for central planning, it provides a supremely uplifting perspective of the individual. Guided by Adam Smith’s “invisible hand” of prices, property, profits, and incentives, free people accomplish economic miracles of which socialist theoreticians can only dream. As the interests of countless individuals from around the world converge to produce pencils without a single “master mind,” so do they also come together in free markets to feed, clothe, house, educate, and entertain hundreds of millions of people at ever higher levels. With great pride, FEE publishes this new edition of “I, Pencil” to mark the essay’s 50th anniversary. Someday there will be a centennial edition, maybe even a millennial one. This essay is truly one for the ages.
—Lawrence W. Reed, President
Foundation for Economic Education

I, Pencil

By Leonard E. Read
I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.
Writing is both my vocation and my avocation; that’s all I do.
You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery —more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, the wise G. K. Chesterton observed, “We are perishing for want of wonder, not for want of wonders.”
I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that’s too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple.
Simple? Yet, not a single person on the face of this earth knows how to make me. This sounds fantastic, doesn’t it? Especially when it is realized that there are about one and one-half billion of my kind produced in the U.S.A. each year.
Pick me up and look me over. What do you see? Not much meets the eye—there’s some wood, lacquer, the printed labeling, graphite lead, a bit of metal, and an eraser.

Innumerable Antecedents

Just as you cannot trace your family tree back very far, so is it impossible for me to name and explain all my antecedents. But I would like to suggest enough of them to impress upon you the richness and complexity of my background.
My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods. Why, untold thousands of persons had a hand in every cup of coffee the loggers drink!
The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto? These legions are among my antecedents.
Consider the millwork in San Leandro. The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted for the same reason women put rouge on their faces. People prefer that I look pretty, not a pallid white. The slats are waxed and kiln dried again. How many skills went into the making of the tint and the kilns, into supplying the heat, the light and power, the belts, motors, and all the other things a mill requires? Sweepers in the mill among my ancestors? Yes, and included are the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydroplant which supplies the mill’s power!
Don’t overlook the ancestors present and distant who have a hand in transporting sixty carloads of slats across the nation.
Once in the pencil factory—$4,000,000 in machinery and building, all capital accumulated by thrifty and saving parents of mine—each slat is given eight grooves by a complex machine, after which another machine lays leads in every other slat, applies glue, and places another slat atop—a lead sandwich, so to speak. Seven brothers and I are mechanically carved from this “wood-clinched” sandwich.
My “lead” itself—it contains no lead at all—is complex. The graphite is mined in Ceylon [Sri Lanka]. Consider these miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships. Even the lighthouse keepers along the way assisted in my birth—and the harbor pilots.
The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process. Then wetting agents are added such as sulfonated tallow—animal fats chemically reacted with sulfuric acid. After passing through numerous machines, the mixture finally appears as endless extrusions—as from a sausage grinder—cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.
My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are. Why, even the processes by which the lacquer is made a beautiful yellow involve the skills of more persons than one can enumerate!
Observe the labeling. That’s a film formed by applying heat to carbon black mixed with resins. How do you make resins and what, pray, is carbon black?
My bit of metal—the ferrule—is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature. Those black rings on my ferrule are black nickel. What is black nickel and how is it applied? The complete story of why the center of my ferrule has no black nickel on it would take pages to explain.
Then there’s my crowning glory, inelegantly referred to in the trade as “the plug,” the part man uses to erase the errors he makes with me. An ingredient called “factice” is what does the erasing. It is a rubber-like product made by reacting rapeseed oil from the Dutch East Indies [Indonesia] with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives “the plug” its color is cadmium sulfide.

No One Knows

Does anyone wish to challenge my earlier assertion that no single person on the face of this earth knows how to make me?
Actually, millions of human beings have had a hand in my creation, no one of whom even knows more than a very few of the others. Now, you may say that I go too far in relating the picker of a coffee berry in far-off Brazil and food growers elsewhere to my creation; that this is an extreme position. I shall stand by my claim. There isn’t a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how. Neither the miner nor the logger can be dispensed with, any more than can the chemist at the factory or the worker in the oil field—paraffin being a by-product of petroleum.
Here is an astounding fact: Neither the worker in the oil field nor the chemist nor the digger of graphite or clay nor any who mans or makes the ships or trains or trucks nor the one who runs the machine that does the knurling on my bit of metal nor the president of the company performs his singular task because he wants me. Each one wants me less, perhaps, than does a child in the first grade. Indeed, there are some among this vast multitude who never saw a pencil nor would they know how to use one. Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants. I may or may not be among these items.

No Master Mind

There is a fact still more astounding: The absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found. Instead, we find the Invisible Hand at work. This is the mystery to which I earlier referred.
It has been said that “only God can make a tree.” Why do we agree with this? Isn’t it because we realize that we ourselves could not make one? Indeed, can we even describe a tree? We cannot, except in superficial terms. We can say, for instance, that a certain molecular configuration manifests itself as a tree. But what mind is there among men that could even record, let alone direct, the constant changes in molecules that transpire in the life span of a tree? Such a feat is utterly unthinkable!
I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.
The above is what I meant when writing, “If you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing.” For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand— that is, in the absence of governmental or any other coercive master-minding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.
Once government has had a monopoly of a creative activity such, for instance, as the delivery of the mails, most individuals will believe that the mails could not be efficiently delivered by men acting freely. And here is the reason: Each one acknowledges that he himself doesn’t know how to do all the things incident to mail delivery. He also recognizes that no other individual could do it. These assumptions are correct. No individual possesses enough know-how to perform a nation’s mail delivery any more than any individual possesses enough know-how to make a pencil. Now, in the absence of faith in free people—in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity—the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental “masterminding.”

Testimony Galore

If I, Pencil, were the only item that could offer testimony on what men and women can accomplish when free to try, then those with little faith would have a fair case. However, there is testimony galore; it’s all about us and on every hand. Mail delivery is exceedingly simple when compared, for instance, to the making of an automobile or a calculating machine or a grain combine or a milling machine or to tens of thousands of other things. Delivery? Why, in this area where men have been left free to try, they deliver the human voice around the world in less than one second; they deliver an event visually and in motion to any person’s home when it is happening; they deliver 150 passengers from Seattle to Baltimore in less than four hours; they deliver gas from Texas to one’s range or furnace in New York at unbelievably low rates and without subsidy; they deliver each four pounds of oil from the Persian Gulf to our Eastern Seaboard—halfway around the world—for less money than the government charges for delivering a one-ounce letter across the street!
The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.


By Milton Friedman, Nobel Laureate, 1976
Leonard Read’s delightful story, “I, Pencil,” has become a classic, and deservedly so. I know of no other piece of literature that so succinctly, persuasively, and effectively illustrates the meaning of both Adam Smith’s invisible hand—the possibility of cooperation without coercion—and Friedrich Hayek’s emphasis on the importance of dispersed knowledge and the role of the price system in communicating information that “will make the individuals do the desirable things without anyone having to tell them what to do.”
We used Leonard’s story in our television show, “Free to Choose,” and in the accompanying book of the same title to illustrate “the power of the market” (the title of both the first segment of the TV show and of chapter one of the book). We summarized the story and then went on to say:
“None of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil. Some among them never saw a pencil and would not know what it is for. Each saw his work as a way to get the goods and services he wanted—goods and services we produced in order to get the pencil we wanted. Every time we go to the store and buy a pencil, we are exchanging a little bit of our services for the infinitesimal amount of services that each of the thousands contributed toward producing the pencil.
“It is even more astounding that the pencil was ever produced. No one sitting in a central office gave orders to these thousands of people. No military police enforced the orders that were not given. These people live in many lands, speak different languages, practice different religions, may even hate one another—yet none of these differences prevented them from cooperating to produce a pencil. How did it happen? Adam Smith gave us the answer two hundred years ago.”
“I, Pencil” is a typical Leonard Read product: imaginative, simple yet subtle, breathing the love of freedom that imbued everything Leonard wrote or did. As in the rest of his work, he was not trying to tell people what to do or how to conduct themselves. He was simply trying to enhance individuals’ understanding of themselves and of the system they live in.
That was his basic credo and one that he stuck to consistently during his long period of service to the public—not public service in the sense of government service. Whatever the pressure, he stuck to his guns, refusing to compromise his principles. That was why he was so effective in keeping alive, in the early days, and then spreading the basic idea that human freedom required private property, free competition, and severely limited government.
Freedom’s Home Since 1946
The Foundation for Economic Education (FEE), the oldest free-market organization in the United States, was established in 1946 by Leonard E. Read to study and advance the freedom philosophy. FEE’s mission is to offer the most consistent case for the first principles of freedom: the sanctity of private property, individual liberty, the rule of law, the free market, and the moral superiority of individual choice and responsibility over coercion.
The Foundation’s periodicals The Freeman: Ideas on Liberty and Notes from FEE present timeless insights on the positive case for human liberty to thousands of people around the world. Throughout the year FEE’s lecture series, programs, and seminars bring together hundreds of individuals of all ages to explore the foundations of free enterprise and market competition. The Foundation plays a major role in publishing and promoting numerous essential books on the freedom philosophy.
Millions of people a year visit our state-of-the-art website, Cybervisitors can read books and periodicals, listen to speakers, take a virtual tour of the Foundation, purchase books, register for events and programs, and much more. Our popular e-commentary, In Brief, remains an indispensable source of daily information for thousands of people.
The Foundation for Economic Education is a non-political, non-profit, tax-exempt educational foundation and accepts no taxpayer money. FEE is supported solely by contributions from private individuals and foundations.

Read more:

Tuesday, January 22, 2013


J. Craig Green, P.E.
Colorado Water Engineer


You may not realize it, but 2012 was almost as dry as the record drought year Colorado experienced a decade ago. One reason you haven't heard about it is that water users (cities, farmers, water districts, industries, etc.) have spent large amounts of money on conservation, improved efficiency, water storage and other traditional means of drought planning since then. This routine, self-interested water planning - which takes place every year - largely goes unreported unless there is a compelling reason making it newsworthy. Except for some articles, especially in agricultural cities like Greeley, Pueblo and Grand Junction, 2012 did not create the hysteria of 2002.

In 2003, I drafted the following article in response to the 2002 drought - Colorado's driest year in recorded history (based on a century of streamflow records). More specifically, the article was written in response to an unusually large number of bills proposing to change Colorado Water Law submitted to the Colorado General Assembly (Colorado's legislature) after the drought. Too many of these proposals were poorly thought out, driven by the emotion of a record dry year.

The article was never published, but I offer it here to document the reasons why proposed Referendum A in 2003 was such a bad idea, as I expect this kind of proposal will return to Colorado politics following future drought years. If many large reservoirs on the South Platte River downstream of Denver don't fill this winter and spring, we could be in for a second extremely dry year in a row, making the kind of news stories we saw in 2002.

In 2003, I was particularly struck by the flood of proposed water bills in the 2002-03 legislative session, some of which made no sense at all, as I discussed then:


It seems like a political opportunity to address some hot topic commanding the attention of the public-at-large is sometimes so compelling as to encourage abandoning all reason.


The record drought of 2002 and its aftermath seemed to take a toll on sanity. Water projects normally dismissed as grandiose or infeasible were suddenly models of planning wisdom. Water bills for the 2003 legislative session were stacked up like cordwood. You could almost hear the sucking sound from your checkbook as special interests hovered around the state capitol to propose multi-BILLION dollar slush funds for… well, their promoters couldn’t tell us for what.

In fact, that was what was wrong with Referendum A, soundly defeated by the voters in November of 2003. It would have created a two-to-four billion dollar increase in public debt, completely controlled by one person – the governor. Of course, the Colorado Water Conservation Board (CWCB) was to be involved, but who appoints its members? The Governor. As jaded as I sometimes get about voters’ whims, I was pleased to see this gigantic taxpayer rip-off defeated, despite all the drought hysteria under the promise of building water projects. It had nothing to do with building economical, sensible water projects – it was all about pretending to solve water problems, with a complete lack of accountability.

Since 2002, water providers throughout the state have been busy revising their drought projections based on the new realities that 2002 presented them. Water planners for cities continue to figure out what combination of new supplies, better efficiencies and more conservation makes sense in the future. Many water problems have being solved, but the climate is ripe again for legislating promises for cheaper water, which is more often wasted than conserved. Some who realize this try to make water more expensive by law, rather than allow markets set prices based on supply and demand. Politics can be a magnet for hysteria.

Water in Colorado is complicated, but there are some simple facts. Only a small part of Colorado’s water will ever likely be used by cities and industries – most of it will remain in irrigation, which currently accounts for about 85% for all water use in the state. Many farmers and ranchers were hardest hit by the 2002 drought, since their livelihoods depend on a variable, moving resource that hit a modern low that year.

About half the water used in Colorado cities is for growing bluegrass lawns, golf courses and parks. Buffalo grass takes a lot less water, withstands drought better, and would go a long way to reduce summer water demands. Cities such as Denver and Colorado Springs have led the way with their “xeriscape” programs to plant native, drought-tolerant plants and other landscaping features that use less (or no) water. In addition, cities and water districts around the state have found that putting meters on old accounts has significantly reduced water use. Ask any municipal water department manager in the state about the effect of water meters on consumption.

Less than one percent of the water used inside your house is for drinking and cooking, so claims of “thirsty” citizens as we saw in 2002 are usually exaggerated, though many lawns went brown. Denver and other municipalities have already developed financial incentives for installing low flow devices in homes and have implemented new pricing structures to encourage conservation.

Though many people want to restrict water rights sales from farmers to cities, those cities frequently provide a higher market value for water rights that agriculture could not otherwise afford. It makes sense for some farmers and ranchers to sell (or temporarily lease) water to cities, especially in dry years, but this should be done without injuring other water right owners. Colorado’s existing water court system (developed mostly from common law and free markets in water) and most water plans approved by the State Engineer are designed to prevent this injury. They sometimes fail, but the current system works well, and should not be changed to accommodate the short-sighted emotion that so often drives the political process.

Cities and other water providers (including irrigation ditch companies) have a huge incentive to solve their own problems because they answer directly to water customers. Several municipal water providers reported savings from 10 to 30 percent in 2002’s record dry summer, so the last thing they need is the State of Colorado or the feds telling them how to run their water systems. If they still don’t have enough water, they may have to conserve more – just like you conserve money when your checkbook balance is low. As cities’ experience with water meters has shown – artificially cheap (below market) water encourages waste.

The Fish

I don’t know how, but apparently a few humpback chubs and native brown trout have elected some people to represent them. They think more water for fish should be taken away from people with legal rights to that water, because cities do terrible things like irrigate golf courses. They forget cities often help fish by transferring upstream irrigation water rights to downstream cities (increasing streamflows in between), although cities, ranchers and farmers compete with fish elsewhere to reduce streamflows. Rather than buy senior water rights to protect fish (a fair solution), their representatives often ask the legislature and federal agencies to suddenly make old, senior water rights subordinate to their tasty constituents. Since Colorado water rights are property rights, this is like asking the legislature to steal your neighbor's car, which it may do if a large enough mob of voters or lobbyists wants it.

Cries of “save our water” echo at the Colorado/Utah state line as the Colorado River drops an average of about 4.6 million acre feet a year into downstream states. An acre foot is one acre of water (about the size of a football field), one foot deep - about 326,000 gallons. Colorado is entitled to use a lot more water from the Colorado River than it does now, through old (1922 and 1948) interstate agreements called compacts. Southern California’s growing demand (supplied largely from the Colorado River) could jeopardize this right in the future, because Californians are using this water (for free) and we Coloradans aren’t. Interstate water issues are the domain of Congress, not the State, so you can imagine how rational and sane those issues will be in the future. California has 53 congressional districts to Colorado’s 7, so Coloradans have a lot more control over their own city councils and state legislature than Congress. If Colorado water users don’t need or can’t afford to build the facilities they want for future demands, why not sell part of Colorado’s compact entitlement to California? There, I’ve said it. Slap my face and get the tar and feathers. Selling part of Colorado’s claim to water it will likely never use could provide the funds for developing water it can use, without taxing Colorado citizens. But, anything dealing with the feds can be touch-and-go.

Hopefully sanity will return, but as long as citizens keep running to the state capitol for more soggy handouts, I wonder. The Colorado General Assembly will probably be asked to force taxpayers to fund poorly thought out water projects and to change water laws without understanding the consequences. Will its members display the statesmanship necessary to avoid these destructive tendencies as it has in the past? Only time will tell, but I am now warning you against other, more expensive, and even insane, proposals for changing Colorado Water Law in the future such as this one, which didn't collect enough signatures to get on the ballot in 2012:


Please be careful, and don't let uninformed promoters of political dogma destroy a beneficial water law and allocation system that has worked well for 160 years.


Thursday, January 17, 2013


by James Craig Green

Every boondoggle enjoys a passionate, dedicated constituency with
supreme dedication to its continuance, while virtually no one has an
incentive to eliminate or reform it.

Such is the legacy of an Empire past its Zenith.

Definition of "Boondoggle"

"A boondoggle is a project that is considered a useless waste of both time and money, yet is often continued due to extraneous policy motivations."

Boondoggle of "boondoggle"

"yes, it's true. my stewardship of is finally coming to an end. i've succumbed to the thudding dull pressure of economics, the hallmark of our rotten Modern world. everything comes down to money. at least the new owner has plans to do more with it than i ever managed to do (publicly, at any rate) so i wish him well."

Top Ten Spending boondoggles:

“The question is why are they building this building?” asks Laura Peterson of Taxpayers for Common Sense. “There’s been a lot of concern about taking on a giant new construction project at Los Alamos, when the primary justification for the project is gone. From our point of view, that’s some pretty questionable funding.”

Obama's $3 Billion Jet Fighter boondoggle:

"The Bush administration opposed this engine. The Obama administration opposes it. We have recommended for several years now against funding this engine, considering it a waste of money," Defense Secretary Robert Gates told reporters this week. "To argue that we should add another $3 billion in what we regard as waste … frankly, I don't track the logic."

California boondoggles:

"We know from the collapse of the Soviet Union and other failed regimes around the world that centrally planned job creation does not work. Such economies share common traits: broken governance, a pattern of politically molded insider deals, a stratified society where political elites pick winners and losers and a failure to deliver the goods."

“A boondoggle is a project that is considered to waste time and money, yet is often continued due to extraneous policy motivations,” is one definition. Sounds like how California does business.

Thanks For One Boondoggle:

"Oh the WPA may have been a boondoggle, all right. And the money authorized 74 years ago today was definitely deficit spending."

"But oh boy … where would we be without it?"

Super Duper Superconducting Supercollider Super boondoggle:

"Not surprisingly, the large congressional delegation from Texas--including some of Congress's leading fiscal conservatives--is now championing the SSC and vigilantly guarding it from the budget-cutting knife.(14)"

Sen. Phil Gramm, a Republican, explains his support for projects such as the SSC by saying: "If we should vote next week on whether to produce cheese on the moon, I would oppose it. However, if the government institutes the policy, I would see that a Texas contractor builds this celestial cheese plant, that the milk comes from Texas cows, and that the earth distribution center is in Texas."(15)

Big Data Initiative boondoggle:

"Who knew the government was funding so much data-driven research? The White House issued this fact sheet as if to say, "Look how much we're doing already!" But when you start reading about all the separate initiatives and all of the high-performance computing labs and research facilities already in place, it makes your head spin. As a taxpayer, it pains me to see so many examples of apparently duplicative research, staff, and infrastructure."

Federal Infrastructure boondoggle:

"Billions of dollars of infrastructure spending by the Bureau of Reclamation has gone into white elephant projects. Imagining that more federal infrastructure will be a panacea for the economy is a liberal fairy tale, detached from the actual experience of most federal agencies over the last century."

Airport Train Station boondoggle:

But for far less than $267 million, Paolino says the state could have invested in a shuttle service from the airport to the train station in Providence, spending the money—nearly half of it federal funds—on making improvements to the airport itself. “It’s a lot of money—it’s a lot of investment for very little return,” Paolino said. “I don’t see the economic development benefit. I don’t see how jobs are going to be created because it’s put there.”

Sunday, January 13, 2013


by James Craig Green

I cannot overemphasize the importance of Frederic Bastiat's elegant masterpiece THE LAW. Published in 1850 - the year of his death, it was the most powerful critique of Karl Marx's COMMUNIST MANIFESTO, published two years before (1848).

Marx's Manifesto was primarily a critique of European monarchies - which deserved to be criticized - but went much too far down the road of collectivism, which has been, arguably, the most successful political philosophy of the last two centuries. I argue strenuously that this "success" in the minds of too many Americans today came at the cost of freedom and individual rights - the tenets of the founders' American Republic. The intoxicating promises of Marx' utopian vision for the future of Europe were compelling ideas at a time of the radical political reforms which still dominate American universities - and our society - today. Little did he know it would flourish first in Russia - not Western Europe.

Even after the collapse of the Soviet Union - the ultimate expression of Marxism - today's western democracies still cling to the dangerous and destructive ideas of Marx' philosophy. What most Americans don't know is the Soviet Union collapsed economically in the 1920's, to be saved by American industrialists like Armand Hammer.

Today, American government continues to be corrupted by Marxian ideas, including the further expansion of the welfare state (now bankrupting America), a powerful central bank that has destroyed the dollar by a century of inflation, and most importantly - the idea that democratic government is the ultimate, and best, form of government.

It was the rejection of democracy that drove the American founders' ideals. 

A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine. - Thomas Jefferson


I sincerely hope serious students of history, philosophy and government will read both Bastiat's THE LAW and Marx' COMMUNIST MANIFESTO - to contrast their fundamental tenets. Marx' manifesto, of course, was the driving force behind failed socialist states around the world like the Soviet Union, North Korea, Cuba and many South American banana "republics." Today's Communist China would have likely already collapsed were it not for capitalist reforms to limit the damage, including taking back capitalist Hong Kong in 1997, to generate profitable capitalist trade for China. Most western democracies today are mixed economies, as much fascist as socialist. By allowing private property to exist - heavily regulated to provide a productive cash cow - modern democratic states such as the US are still blind to the long term dangers of TRILLIONS of dollars of public debt and the apparent growth of governments which are collapsing everywhere we look - even in US cities like Detroit, Chicago and Washington D.C. The American - and World - economies cannot continue their Soviet-like policies without the most severe long term consequences.

There is NO contradiction between Marxism and Democracy (Marx' COMMUNIST MANIFESTO promoted winning the battle of democracy). BOTH are forms of collectivism - the idea that the individual is subordinate to the will of the mob (politely called the majority). This was the unfortunate legacy of the French Revolution, in which the collective was supreme over the indiviual. This led to the Reign of Terror, the Guillotine and finally, the Emperor Napoleon. This is contrasted to the American Revolution, whose elegant Declaration of Independence, Constitution and the Bill of Rights exalted the rights of individuals above that of lynch mobs, monarchies and yes, democracies - which had always been tried and had always failed.



The primary focus of Bastiat's THE LAW is recognition of John Locke's individual rights of life, liberty and property - the complete opposite of Marx' failed collectivism. The success of the American Revolution was its recognition of INDIVIDUAL rights as being superior to collective rights. Bastiat recognized these individual rights as necessary precursors to these fraudulent "collective rights" depending on plunder, rather than production. As socialist states around the world have repeatedly discovered... without private property, there is soon no wealth to redistribute.

See:  THE LAW online.

Following are excerpts from Bastiat's masterpiece which I hope will motivate you into reading this short book, and other brilliant economic works by Bastiat (Economic Sophisms, Petition of Candlemakers, etc). The best current version of THE LAW of which I am aware is published by LAISSEZ FAIRE BOOKS. If you like this little 5 dollar book as much as I do, why not purchase copies to hand out to your friends?


The Law
Frédéric Bastiat

The law perverted! And the police powers of the state perverted along with it! The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose! The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish!

If this is true, it is a serious fact, and moral duty requires me to call the attention of my fellow-citizens to it.

What, then, is law? It is the collective organization of the individual right to lawful defense.

Each of us has a natural right — from God — to defend his person, his liberty, and his property. These are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two. For what are our faculties but the extension of our individuality? And what is property but an extension of our faculties? If every person has the right to defend even by force — his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right — its reason for existing, its lawfulness — is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force — for the same reason — cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.

Such a perversion of force would be, in both cases, contrary to our premise. Force has been given to us to defend our own individual rights. Who will dare to say that force has been given to us to destroy the equal rights of our brothers? Since no individual acting separately can lawfully use force to destroy the rights of others, does it not logically follow that the same principle also applies to the common force that is nothing more than the organized combination of the individual forces?

If this is true, then nothing can be more evident than this: The law is the organization of the natural right of lawful defense. It is the substitution of a common force for individual forces. And this common force is to do only what the individual forces have a natural and lawful right to do: to protect persons, liberties, and properties; to maintain the right of each, and to cause justice to reign over us all.

A Just and Enduring Government

If a nation were founded on this basis, it seems to me that order would prevail among the people, in thought as well as in deed. It seems to me that such a nation would have the most simple, easy to accept, economical, limited, non-oppressive, just, and enduring government imaginable — whatever its political form might be.

Under such an administration, everyone would understand that he possessed all the privileges as well as all the responsibilities of his existence. No one would have any argument with government, provided that his person was respected, his labor was free, and the fruits of his labor were protected against all unjust attack. When successful, we would not have to thank the state for our success. And, conversely, when unsuccessful, we would no more think of blaming the state for our misfortune than would the farmers blame the state because of hail or frost. The state would be felt only by the invaluable blessings of safety provided by this concept of government.

It can be further stated that, thanks to the non-intervention of the state in private affairs, our wants and their satisfactions would develop themselves in a logical manner. We would not see poor families seeking literary instruction before they have bread. We would not see cities populated at the expense of rural districts, nor rural districts at the expense of cities. We would not see the great displacements of capital, labor, and population that are caused by legislative decisions.

The sources of our existence are made uncertain and precarious by these state-created displacements. And, furthermore, these acts burden the government with increased responsibilities.

The Complete Perversion of the Law

But, unfortunately, law by no means confines itself to its proper functions. And when it has exceeded its proper functions, it has not done so merely in some inconsequential and debatable matters. The law has gone further than this; it has acted in direct opposition to its own purpose. The law has been used to destroy its own objective: It has been applied to annihilating the justice that it was supposed to maintain; to limiting and destroying rights which its real purpose was to respect. The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.

How has this perversion of the law been accomplished? And what have been the results?

Perverted Law Causes Conflict

As long as it is admitted that the law may be diverted from its true purpose — that it may violate property instead of protecting it — then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder. Political questions will always be prejudicial, dominant, and all-absorbing. There will be fighting at the door of the Legislative Palace, and the struggle within will be no less furious. To know this, it is hardly necessary to examine what transpires in the French and English legislatures; merely to understand the issue is to know the answer.

Is there any need to offer proof that this odious perversion of the law is a perpetual source of hatred and discord; that it tends to destroy society itself? If such proof is needed, look at the United States [in 1850]. There is no country in the world where the law is kept more within its proper domain: the protection of every person's liberty and property. As a consequence of this, there appears to be no country in the world where the social order rests on a firmer foundation. But even in the United States, there are two issues — and only two — that have always endangered the public peace: stupid greed and false philanthropy...


Thursday, January 3, 2013


By James Craig Green

Suppose you had a goose that laid golden eggs. The last thing you would do is cook it for dinner. But, apparently this is not obvious to people who don't understand they wouldn't then get any more golden eggs. Simple…or so I thought.

Over the last decade and a half, U.S. Presidents Bush and Obama clearly proved that knowledge of economics is not a requirement to hold the most powerful political office on the planet. Faithfully repeating the mistakes of their predecessors a lifetime ago (Republican Hoover and Democrat Roosevelt), neither Bush nor Obama seemed to understand how increasing government spending and control has always made the economy worse, not better. Sure, it helps some with well-publicized giveaways, but always hurts the economy by trading freedom and incentivized production for sloth and dependency.

Just like the 1930's, both "fearless leaders" encouraged Congress to go along with their grandiose plans of bailouts, make-work jobs, tariffs and increased regulations, promising endless prosperity without effort or accountability. Just like the 1930's, the dangerous narcotic of government spending mesmerized Americans anticipating short-term benefits into thinking what was good for them was good for America. Just like the 1930's, manipulating the money supply, increasing public debt and increased government spending produced the illusion of "solving" a financial crisis. Just like the 1930's, the goose that lays golden eggs (business) was cooked for dinner, as markets were blamed for the whole affair by politicians and media pundits. Government - as apparent "hero" to punish evil, greedy business exploiters - is, once again being used to blame the victims instead of the true aggressors (governments). This is the nature of the government beast...

So, if business is based on voluntary transactions, with both sides consenting before spending their own money (WIN-WIN), how does this compare to government, with almost every dollar forced by threat of jail (WIN-LOSE)? Just about everything is upside down and opposite, for one simple reason – Government eats, breaths and lives aggressive - not defensive -  FORCE. This is the destroyer of production, wealth and the division of labor that so clearly distinguishes business from government. Government is funded by fraud (political spin), extortion (legal threats of jail) and theft by printing money, increasing public debt and raising taxes on its citizens under penalty of law - and jail. The welfare state is a giant fraud - hurting most of those it claims to help, by making today easier, at the expense of an oppressive, hopeless future.


Today, we are barraged with stories of the terrible abuses of "Laissez Faire Capitalism" and the dangers of "not enough regulation" in the financial industry. People who have lost their homes to "unscrupulous mortgage lenders" shed Crocodile tears on camera to reinforce the conventional "wisdom" that markets are to blame for all this mess. This is reinforced by the worst financial collapse since the Great Depression of the 1930's – something most of us did not live through and still don't understand. Since the government did not plan this catastrophe, it is "reasoned," it must be the inherent evils of greed and unrestrained market capitalism that have created the whole mess. This makes great theater on the political stage, but makes no economic sense, just like cooking our golden egg-laying goose.

"Laissez Faire" (hands off) Capitalism hasn't existed in America for more than a Century. It has been replaced by Crony Capitalism, which I will discuss further below. In 1890, the hysterical, politically astute but economically ignorant progressive movement got the idea to punish the "monopoly" that Standard Oil had on the production of petroleum products. This led to antitrust legislation, and it has been "Katy bar the door" on government interventions in the economy ever since. It was ironic, and painfully predictable, that Standard Oil had already lost a huge portion of its dominance due to market competition before the legislation was actually implemented. Thus, the "goose-cookers" who think they can run a complex, diverse economy better than the people who produce and exchange wealth for a living began a long, tortuous road of destructive, anti-competitive policies. It is no accident that most, if not all, of these policies were undertaken in the name of "stimulating competition" or "regulating monopolies." It never dawned on any of them that the best regulation for market-based monopolies is the LACK of government intervention - or subsidy - which usually has the opposite effect of that stated as its intent. It didn't dawn on them they were sacrificing small quasi-monopolies, to the largest, most damaging, most bureaucratic and wasteful monopoly of all (government).

From the antitrust legislation in the late 1800's, to the creation of the Federal Reserve and income tax in 1913, to World War I, to the 1929 stock market crash, to the Great Depression, to World War II, right up until today, the economy has seen one massive government intervention after another. People who blame markets, or greedy capitalists for these events promote ever more power for government, to constrain this "evil" growth of avarice by the private sector.

Government spending in the United States (as a percentage of Gross Domestic Product, or GDP), has grown from 9 percent in 1913, to about 45 percent today. Not only did this direct diversion of productive resources from private to public interests grow exponentially over an entire human lifetime, but new laws promoted by every special interest in the book restricted the freedom of private producers and service providers in each and every one of these years.  Of course, during WWI, government spending peaked at about 23 percent, and in WWII, almost 50 percent, before returning to lower levels after these wars. However, each government intervention in the economy led to more and greater interventions after these events than before.

It is no accident, nor the fault of markets, that today's public debt exceeds 16 TRILLION DOLLARS, in addition to somewhere between 50 and 120 TRILLION DOLLARS of unfunded liabilities. The lower number was provided by David Walker, former Comptroller General of the U.S., and the higher number was provided by the CATO Institute.  American government is worse than bankrupt, which has NOTHING to do with Laissez Faire Capitalism or too-little regulation as frequently claimed by the major media, unions and false crony capitalists pretending to be free marketeers.


So, you ask, what could have caused this calamity, if not the greed and abuses of private business?


Markets create real wealth by producing goods and services for which their customers are willing to pay. Not only is this production encouraged by millions of voluntary transactions each day, mistakes in assessing the market's demand are most often quickly admitted and corrected, because not to do so results in financial loss to those making the mistakes. This selfish profit incentive and aversion to loss which drives markets comes from the nature of productive people, which is to maximize their gains and minimize losses. By rewarding production with profit and punishing losses, markets bring out the best in people, both as buyers and sellers. Although prosecution of crimes such as theft, fraud and extortion are supposed to be applied evenly across the board, some criminals are more equal than others, as George Orwell said in his all-too-real Animal Farm. In short, when these crimes are committed by bureaucrats, politicians and their protected operatives, they not considered crimes at all.

Today, millions of people demand something for nothing, which government is always glad to provide, like manna from heaven. Government advocates mistakenly think you should provide them with everything they want, without providing value-for-value, which can only be provided through the marketplace. They have bought into the greatest – and most destructive – myth of all time: that markets fail, and only government can correct market mistakes. If ever there was a reversal of logic, fairness and responsibility, this is it.

From the antitrust legislation of the 1890's to the creation of the Federal Reserve in 1913, two world wars, Hoover's and Roosevelt's Great Depression, Johnson's Great Society and Nixon's unconstitutional elimination of the gold standard in 1971, American government has grown exponentially in size and influence. The last two presidents, George W. Bush and Barack Obama, have increased the size and power of government more than any presidents since Hoover and Roosevelt in the 1930's. Instead of helping America, this has burdened it with unprecedented public debt, annual Federal deficits exceeding ONE TRILLION dollars per year, and little hope of a soft landing for the vast majority of Americans. As always, the welfare/warfare state benefits the rich at the expense of the poor, despite decades of government programs pretending otherwise. If you want the see the future of America, walk through the downtown streets of Detroit or the poorer sections of Washington D.C. today. Washington, DC, by the way, receives the most money from the federal government, compared to the least contribution from taxes in the fifty states. In other words, the nation's capital is the biggest welfare queen in America. 

Along the way, the federal government has grown by any measure you care to make. In percent of Gross Domestic Product (GDP), U.S. government spending grew from about three percent in the late 1800's, peaking in WWI to 23% and 48% during WWII. Now, for the first time since WW II, it once again approaches 50% of GDP. All government spending is a NET LOSS, not a gain, to the economy. This is why it should be limited to the narrow list of duties outlined in Article 1, Section 8 of the Constitution and others specifically mentioned. Including it in GDP as a benefit, instead of a loss, is one of the three most dangerous and destructive frauds of the last century (the other two were the creation of the Federal Reserve - a PRIVATE banking monopoly - and the Income Tax in 1913, previously ruled by the Supreme Court TWICE as unconstitutional).

America is in decline because of government, not in spite of it.