Arkansas State Senate Passes Bill Banning Enforcement of Federal Gun Control Laws
The Arkansas
state Senate voted this week to block federal law enforcement officials
enforcing certain gun laws and regulations, sending a bill to the state
House in the midst of congressional gun-control proposals.
The Senate voted 28-7 to approve the measure, which will then be sent
to the House. Arkansas’ Legislature is overwhelmingly Republican.
“All acts, law, orders, rules, and regulations of the United States
Government, whether past, present, or future, that infringe on the
people’s right to keep and bear arms as guaranteed by the Second
Amendment to the United States Constitution and Arkansas Constitution,
Article 2, [Section] 5, are invalid in this state, shall not be
recognized by this state, are specifically rejected by this state, and
shall be considered null and void and of no effect in this state,”
according to the text of the bill.
The measure will prohibit any law enforcement agencies in Arkansas
from cooperating with federal officials to enforce federal gun laws that
go in conflict with the rights provided in the Arkansas Constitution,
according to Arkansas Online. Some state lawmakers expressed a worry
that President Joe Biden would ramp up gun-control measures.
“It is more important now than ever that we protect our state
rights,” Sen. Trent Garner, a Republican, said of the passage of the
bill. “Once [Democrats in the U.S. Senate] get rid of the filibuster,
guess what happens next? It is called packing the courts,” he claimed,
referring to statements from Democratic lawmakers that the 60-vote
legislative be removed in order to pass their agenda items.
“You would have to be totally blind to death to not see that our
nation is as divided right now as it ever has been and we have elected
officials in office in Washington, D.C., who actually don’t even care
what the Constitution says and decided that they are going to do it
their way no matter what happens and have no respect for the 10th
Amendment,” Republican Sen. Jason Rapert said, according to the news
outlet.
State Sen. Jim Hendren said the bill would put Arkansas’ federal
funding at risk and would place an unnecessary hurdle between Arkansas
law enforcement and federal agents.
Following two mass shootings in Atlanta and Boulder, Colorado, Biden
and top Democrats said that it’s imperative that new restrictions be
passed. Dozens of Democratic House members this week sent a letter to
Biden, saying that he should take executive action to ban “concealable
assault-style firearms” such as the semi-automatic Ruger AR-556 pistol
that was used in the Boulder shooting.
“Concealable assault-style firearms that fire rifle rounds pose an
unreasonable threat to our communities and should be fully regulated
under the National Firearms Act consistent with the intent and history
of the law. The recent tragedy in Boulder, Colorado where 10 people
including a police officer were killed is one in a string of deadly
incidents involving this style of weapon,” Reps. Mike Thompson
(D-Calif.), Joe Neguse (D-Colo.), Val Demings (D-Fla.), and Ed
Perlmutter (D-Colo.) said in a letter to Biden.
White House press secretary Jen Psaki told reporters last week that Biden is looking to issue an executive order on gun control.
Police shut down a Good Friday service at a Polish church in south
London for breaching coronavirus rules and threatened worshippers with a
£200 fine each.
Footage captured officers interrupting a Liturgy
of the Lord's Passion service at Christ the King Polish church in Balham
at around 6pm on Friday.
One police officer was filmed telling parishioners that the gathering was "unfortunately unlawful under the coronavirus regulations"
He added: "You are not allowed to meet inside with this many people under law."
"At
this moment in time you need to go home. Failure to comply with this
direction to leave and go to your home address, ultimately could lead
you to be fined £200 or, if you fail to give your details, to you being
arrested.
"It's Good Friday and I appreciate you would like to worship, but it is unlawful," he said.
The church has criticised the police for interrupting the service,
saying it believes the officers "brutally exceeded their powers by
issuing their warrant for no good reason" because "all government
requirements were met".
It said it had informed the superiors of the Polish Catholic Mission
in England and Wales about the incident and asked the police to explain.
The
Metropolitan Police confirmed an "engagement" took place at the church,
adding they were called to a report of "crowds of people queuing
outside a church in Balham High Road".
Police said they "engaged
with the priest" outside the church and understood the sensitivity of
the situation, and were invited inside to address the congregation. They
said no fines were issued.
"Officers attended and found a large
number of people inside the church. Some people were not wearing masks
and those present were clearly not socially distanced," the police
statement said.
It said officers are concerned about the risk of transmission of the
COVID-19 virus due to large indoor gatherings at which some people are
not socially distanced and not wearing masks.
"As such, officers made the decision that it was not safe for that particular service to continue," the statement added.
The church claims that the latest government guidelines for Lent,
Holy Week and Easter "clearly allow - with all sanitary rules - to be
celebrated in places of worship with the participation of the faithful".
The
latest coronavirus government guidance for England states that communal
worship or prayer can be attended by as many people as the place of
worship can safely accommodate - but worshippers should maintain social
distancing from anyone not from their own household or support bubble.
It
also states that people should leave promptly after prayers and worship
and should not mingle with each other following a service.
A medical team in Russia has successfully completed open heart surgery
while firefighters battled to contain a huge blaze burning in the
hospital’s roof.
The fire broke out shortly after the surgery began, cutting electrical
power to the building and the doctors continued the operation using
headlamps and emergency fans to keep smoke out of the theatre.
More than 120 staff and patients were evacuated during the blaze and no
one was injured.
A Taiwan Crisis May Mark the End of the American
Empire
America is a diplomatic fox, while
Beijing is a hedgehog fixated on the big idea of reunification.
In a famous essay, the philosopher
Isaiah Berlin borrowed a distinction from the ancient Greek poet Archilochus:
“The fox knows many things, but the hedgehog knows one big thing.”
“There exists,” wrote Berlin, “a
great chasm between those, on one side, who relate everything to … a single,
universal, organizing principle in terms of which alone all that they are and
say has significance” — the hedgehogs — “and, on the other side, those who
pursue many ends, often unrelated and even contradictory” — the foxes.
Berlin was talking about writers.
But the same distinction can be drawn in the realm of great-power politics.
Today, there are two superpowers in the world, the U.S. and China. The former
is a fox. American foreign policy is, to borrow Berlin’s terms, “scattered or
diffused, moving on many levels.” China, by contrast, is a hedgehog: it relates
everything to “one unchanging, all-embracing, sometimes self-contradictory and
incomplete, at times fanatical, unitary inner vision.”
Fifty years ago this July, the
arch-fox of American diplomacy, Henry Kissinger, flew to Beijing on a secret
mission that would fundamentally alter the global balance of power. The
strategic backdrop was the administration of Richard Nixon’s struggle to
extricate the U.S. from the Vietnam War with its honor and credibility so
far as possible intact.
The domestic context was dissension
more profound and violent than anything we have seen in the past year. In March
1971, Lieutenant William Calley was found guilty of 22 murders in the My Lai
massacre. In April, half a million people marched through Washington to protest
against the war in Vietnam. In June, the New York Times began publishing the
Pentagon Papers.
Kissinger’s meetings with Zhou
Enlai, the Chinese premier, were perhaps the most momentous of his career. As a
fox, the U.S. national security adviser had multiple objectives. The principal
goal was to secure a public Chinese invitation for his boss, Nixon, to
visit Beijing the following year.
But Kissinger was also seeking
Chinese help in getting America out of Vietnam, as well as hoping to exploit
the Sino-Soviet split in a way that would put pressure on the Soviet Union,
America’s principal Cold War adversary, to slow down the nuclear arms race. In
his opening remarks, Kissinger listed no fewer than six issues for discussion,
including the raging conflict in South Asia that would culminate in the
independence of Bangladesh.
Zhou’s response was that of a
hedgehog. He had just one issue: Taiwan. “If this crucial question is not
solved,” he told Kissinger at the outset, “then the whole question [of
U.S.-China relations] will be difficult to resolve.”
To an extent that is striking to the
modern-day reader of the transcripts of this and the
subsequent meetings, Zhou’s principal goal was to persuade Kissinger to agree
to “recognize the PRC as the sole legitimate government in China” and “Taiwan
Province” as “an inalienable part of Chinese territory which must be restored
to the motherland,” from which the U.S. must “withdraw all its armed forces and
dismantle all its military installations.” (Since the Communists’ triumph
in the Chinese civil war in 1949, the island of Taiwan had been the last
outpost of the nationalist Kuomintang. And since the Korean War, the
U.S. had defended its autonomy.)
With his eyes on so many prizes,
Kissinger was prepared to make the key concessions the Chinese sought. “We are
not advocating a ‘two China’ solution or a ‘one China, one Taiwan’ solution,”
he told Zhou. “As a student of history,” he went on, “one’s prediction would have
to be that the political evolution is likely to be in the direction which [the]
Prime Minister … indicated to me.” Moreover, “We can settle the major part of
the military question within this term of the president if the war in Southeast
Asia [i.e. Vietnam] is ended.”
Asked by Zhou for his view of the
Taiwanese independence movement, Kissinger dismissed it out of hand. No matter
what other issues Kissinger raised — Vietnam, Korea, the Soviets — Zhou steered
the conversation back to Taiwan, “the only question between us two.” Would the
U.S. recognize the People’s Republic as the sole government of China and
normalize diplomatic relations? Yes, after the 1972 election. Would Taiwan be
expelled from the United Nations and its seat on the Security Council given to
Beijing? Again, yes.
Fast forward half a century, and the
same issue — Taiwan — remains Beijing’s No. 1 priority. History did not evolve
in quite the way Kissinger had foreseen. True, Nixon went to China as planned,
Taiwan was booted out of the U.N. and, under President Jimmy Carter, the U.S.
abrogated its 1954 mutual defense treaty with Taiwan. But the pro-Taiwan lobby
in Congress was able to throw Taipei a lifeline in 1979, the Taiwan Relations
Act.
The act states that the U.S. will
consider “any effort to determine the future of Taiwan by other than peaceful
means, including by boycotts or embargoes, a threat to the peace and security
of the Western Pacific area and of grave concern to the United States.” It also
commits the U.S. government to “make available to Taiwan such defense articles
and … services in such quantity as may be necessary to enable Taiwan to
maintain a sufficient self-defense capacity,” as well as to “maintain the
capacity of the United States to resist any resort to force or other forms of
coercion that would jeopardize the security, or the social or economic system,
of the people on Taiwan.”
For the Chinese hedgehog, this
ambiguity — whereby the U.S. does not recognize Taiwan as an independent state
but at the same time underwrites its security and de facto autonomy — remains
an intolerable state of affairs.
Yet the balance of power has been
transformed since 1971 — and much more profoundly than Kissinger could have
foreseen. China 50 years ago was dirt poor: despite its huge population, its
economy was a tiny fraction of U.S. gross domestic product. This year, the
International Monetary Fund projects that, in current dollar terms, Chinese GDP
will be three quarters of U.S. GDP. On a purchasing power parity basis, China
overtook the U.S. in 2017.
Middle
Kingdom, Top Performer
In the same time frame, Taiwan, too,
has prospered. Not only has it emerged as one of Asia’s most advanced
economies, with Taiwan Semiconductor Manufacturing Co. the world’s top chip
manufacturer. Taiwan has also become living proof that an ethnically Chinese
people can thrive under democracy. The authoritarian regime that ran Taipei in
the 1970s is a distant memory. Today, it is a shining example of how a free
society can use technology to empower its citizens — which explains why its
response to the Covid-19 pandemic was by any measure the most successful in the
world (total deaths: 10).
As Harvard University’s Graham
Allison argued in his hugely influential book, “Destined for War: Can America
and China Escape Thucydides's Trap?”, China’s economic rise — which was at
first welcomed by American policymakers — was bound eventually to look like a
threat to the U.S. Conflicts between incumbent powers and rising powers have
been a feature of world politics since 431 BC, when it was the “growth in
power of Athens, and the alarm which this inspired in Sparta” that led to war.
The only surprising thing was that it took President Donald Trump, of all
people, to waken Americans up to the threat posed by the growth in the power of
the People’s Republic.
Trump campaigned against China as a
threat mainly to U.S. manufacturing jobs. Once in the White House, he took his
time before acting, but in 2018 began imposing tariffs on Chinese imports. Yet
he could not prevent his preferred trade war from escalating rapidly into
something more like Cold War II — a contest that was at once technological,
ideological and geopolitical. The foreign policy “blob” picked up the
anti-China ball and ran with it. The public cheered them on, with anti-China
sentiment surging among both Republicans and Democrats.
Trump himself may have been a
hedgehog with a one-track mind: tariffs. But under Secretary of State Mike
Pompeo, U.S. policy soon reverted to its foxy norm. Pompeo threw every
imaginable issue at Beijing, from the reliance of Huawei Technologies Co. on
imported semiconductors, to the suppression of the pro-democracy movement in
Hong Kong, to the murky origins of Covid-19 in Wuhan.
Inevitably, Taiwan was added to the
list, but the increased arms sales and diplomatic contacts were not given top
billing. When Richard Haass, the grand
panjandrum of the Council on Foreign Relations,
argued last year for ending “strategic ambiguity” and wholeheartedly committing
the U.S. to upholding Taiwan’s autonomy, no one in the Trump administration
said, “Great idea!”
Yet when Pompeo met the director of
the Communist Party office of foreign affairs, Yang Jiechi, in Hawaii last
June, guess where the Chinese side began? “There
is only one China in the world and Taiwan is an inalienable part of China. The
one-China principle is the political foundation of China-U.S. relations.”
So successful was Trump in leading
elite and popular opinion to a more anti-China stance that President Joe Biden
had no alternative but to fall in line last year. The somewhat surprising
outcome is that he is now leading an administration that is in many ways more
hawkish than its predecessor.
Trump was no cold warrior. According
to former National Security Adviser John Bolton’s memoir, the
president liked to point to the tip of one of his Sharpies and say, “This is
Taiwan,” then point to the Resolute desk in the Oval Office and say, “This is
China.” “Taiwan is like two feet from China,” Trump told one Republican
senator. “We are 8,000 miles away. If they invade, there isn’t a f***ing thing
we can do about it.”
Unlike others in his national
security team, Trump cared little about human rights issues. On Hong Kong, he
said: “I don’t want to get involved,” and, “We have human-rights problems too.”
When President Xi Jinping informed him about the labor camps for the Muslim
Uighurs of Xinjiang in western China, Trump essentially told him “No problemo.” On the 30th anniversary of the
1989 Tiananmen Square massacre, Trump asked: “Who cares about it? I’m trying to
make a deal.”
The Biden administration, by
contrast, means what it says on such issues. In every statement since taking
over as secretary of state, Antony Blinken has referred to China not only as a
strategic rival but also as violator of human rights. In January, he called China’s
treatment of the Uighurs “an effort to commit genocide” and pledged to continue
Pompeo’s policy of increasing U.S. engagement with Taiwan. In February, he gave Yang an
earful on Hong Kong, Xinjiang, Tibet and even Myanmar, where China backs the
recent military coup. Earlier this month, the administration imposed sanctions on Chinese
officials it holds responsible for sweeping away Hong Kong’s autonomy.
In his last Foreign Affairs magazine
article before joining the administration as its Asia “tsar,” Kurt Campbell argued for “a
conscious effort to deter Chinese adventurism … This means investing in
long-range conventional cruise and ballistic missiles, unmanned carrier-based
strike aircraft and underwater vehicles, guided-missile submarines, and
high-speed strike weapons.” He added that Washington needs to work with other
states to disperse U.S. forces across Southeast Asia and the Indian Ocean and
“to reshore sensitive industries and pursue a ‘managed decoupling’ from China.”
In many respects, the continuity
with the Trump China strategy is startling. The trade war has not been ended,
nor the tech war. Aside from actually meaning the human rights stuff, the only
other big difference between Biden and Trump is the former’s far stronger
emphasis on the importance of allies in this process of deterring China — in
particular, the so-called Quad the U.S. has formed with Australia, India and
Japan. As Blinken said in a keynote speech on March 3,
for the U.S. “to engage China from a position of strength … requires working
with allies and partners … because our combined weight is much harder for China
to ignore.”
This argument took concrete form
last week, when Campbell told the Sydney Morning Herald that
the U.S. was “not going to leave Australia alone on the field” if Beijing continued
its current economic squeeze on
Canberra (retaliation for the Australian government’s call for an independent
inquiry into the origins of the pandemic). National Security Adviser Jake
Sullivan has been singing from much the same hymn-sheet. Biden himself hosted a
virtual summit for the Quad’s heads of state on March 12.
The Chinese approach remains that of
the hedgehog. Several years ago, I was told by one of Xi’s economic advisers
that bringing Taiwan back under the mainland’s control was his president’s most
cherished objective — and the reason he had secured an end to the informal rule
that had confined previous Chinese presidents to two terms. It is for this
reason, above all others, that Xi has presided over a huge expansion of China’s
land, sea and air forces, including the land-based DF‑21D missiles that could
sink American aircraft carriers.
While America’s multitasking foxes
have been adding to their laundry list of grievances, the Chinese hedgehog has
steadily been building its capacity to take over Taiwan. In the words of Tanner Greer, a journalist
who writes knowledgably on Taiwanese security, the People’s Liberation Army
“has parity on just about every system the Taiwanese can field (or buy from us
in the future), and for some systems they simply outclass the Taiwanese
altogether.” More importantly, China has created what’s known as an “Anti
Access/Area Denial bubble” to keep U.S. forces away from Taiwan. As Lonnie Henley of George Washington
University pointed out in congressional testimony
last month, “if we can disable [China’s integrated air defense system], we can
win militarily. If not, we probably cannot.”
As a student of history, to quote
Kissinger, I see a very dangerous situation. The U.S. commitment to Taiwan has
grown verbally stronger even as it has become militarily weaker. When a
commitment is said to be “rock-solid” but in reality has the consistency of
fine sand, there is a danger that both sides miscalculate.
I am not alone in worrying. Admiral
Phil Davidson, the head of U.S. forces in the Indo-Pacific, warned in his
February testimony before Congress that China could invade Taiwan by 2027. Earlier
this month, my Bloomberg Opinion colleague Max Hastings noted that
“Taiwan evokes the sort of sentiment among [the Chinese] people that Cuba did
among Americans 60 years ago.”
Admiral James Stavridis, also a
Bloomberg Opinion columnist, has just published “2034: A Novel of the Next
World War,” in which a surprise Chinese naval encirclement of Taiwan is one of
the opening ploys of World War III. (The U.S. sustains such heavy naval losses
that it is driven to nuke Zhanjiang, which leads in turn to the obliteration of
San Diego and Galveston.) Perhaps the most questionable part of this scenario
is its date, 13 years hence. My Hoover Institution colleague Misha Auslin has
imagined a U.S.-China naval war as soon as 2025.
In an important new study of the Taiwan
question for the Council on Foreign Relations, Robert Blackwill and Philip
Zelikow — veteran students and practitioners of U.S. foreign policy — lay out
the four options they see for U.S. policy, of which their preferred is the
last:
The United States should … rehearse
— at least with Japan and Taiwan — a parallel plan to challenge any Chinese
denial of international access to Taiwan and prepare, including with
pre-positioned U.S. supplies, including war reserve stocks, shipments of
vitally needed supplies to help Taiwan defend itself. … The United States and
its allies would credibly and visibly plan to react to the attack on their
forces by breaking all financial relations with China, freezing or seizing
Chinese assets.
Blackwill and Zelikow are right that
the status quo is unsustainable. But there are three core problems with all
arguments to make deterrence more persuasive. The first is that any steps to
strengthen Taiwan’s defenses will inevitably elicit an angry response from
China, increasing the likelihood that the Cold War turns hot — especially if
Japan is explicitly involved. The second problem is that such steps create a
closing window of opportunity for China to act before the U.S. upgrade of
deterrence is complete. The third is the reluctance of the Taiwanese themselves
to treat their national security with the same seriousness that Israelis take the
survival of their state.
Thursday’s meeting in Alaska between
Blinken, Sullivan, Yang and Chinese Foreign Minister Wang Yi — following hard
on the heels of Blinken’s visits to Japan and South Korea — was never likely to
restart the process of Sino-American strategic dialogue that characterized the
era of “Chimerica” under George W. Bush and Barack Obama. The days of “win-win”
diplomacy are long gone.
During the opening exchanges before
the media, Yang illustrated that hedgehogs not only have one big idea – they
are also very prickly. The U.S. was being “condescending,” he declared, in
remarks that overshot the prescribed two minutes by a factor of eight; it would
do better to address its own “deep-seated” human rights problems, such as
racism (a “long history of killing blacks”), rather than to lecture China.
The question that remains is how
quickly the Biden administration could find itself confronted with a Taiwan
Crisis, whether a light “quarantine,” a full-scale blockade or a surprise
amphibious invasion? If Hastings is right, this would be the Cuban Missile Crisis
of Cold War II, but with the roles reversed, as the contested island is even
further from the U.S. than Cuba is from Russia. If Stavridis is right, Taiwan
would be more like Belgium in 1914 or Poland in 1939.
Bottom But I have another analogy in mind.
Perhaps Taiwan will turn out to be to the American empire what Suez was to the
British Empire in 1956: the moment when the imperial lion is exposed as a paper
tiger. When the Egyptian president Gamal Abdel Nasser nationalized the Suez
Canal, Prime Minister Anthony Eden joined forces with France and Israel to try
to take it back by force. American opposition precipitated a run on the pound
and British humiliation.
I, for one, struggle to see the
Biden administration responding to a Chinese attack on Taiwan with the
combination of military force and financial sanctions envisaged by Blackwill
and Zelikow. Sullivan has written eloquently of the need for a foreign policy
that Middle America can get
behind. Getting torched for Taipei does not seem to fit that bill.
As for Biden himself, would he
really be willing to jeopardize the post-pandemic boom his economic policies
are fueling for the sake of an island Kissinger was once prepared quietly to
trade in pursuit of Cold War detente? Who would be hurt more by the financial
crisis Blackwill and Zelikow imagine in the event of war for Taiwan – China, or
the U.S. itself? One of the two superpowers has a current account deficit of
3.5% of GDP (Q2 2020) and a net international investment position
of nearly minus-$14 trillion, and it’s not China. The surname of the secretary
of state would certainly be an irresistible temptation to headline writers if
the U.S. blinked in what would be the fourth and biggest Taiwan Crisis since
1954.
Yet think what that would mean.
Losing in Vietnam five decades ago turned out not to matter much, other than to
the unfortunate inhabitants of South Vietnam. There was barely any domino
effect in Asia as a whole, aside from the human catastrophe of Cambodia. Yet
losing — or not even fighting for — Taiwan would be seen all over Asia as the
end of American predominance in the region we now call the “Indo-Pacific.” It
would confirm the long-standing hypothesis of China’s return to primacy in Asia
after two centuries of eclipse and “humiliation.” It would mean a breach of the
“first island chain” that Chinese strategists believe encircles them, as well
as handing Beijing control of the microchip Mecca that is TSMC (remember,
semiconductors, not data, are the new oil). It would surely cause a run on the
dollar and U.S. Treasuries. It would be the American Suez.
The fox has had a good run. But the
danger of foxy foreign policy is that you care about so many issues you risk
losing focus. The hedgehog, by contrast, knows one big thing. That big thing
may be that he who rules Taiwan rules the world.
Article by Meir Kohn, Prof. of Economics at Dartmouth, by The Cato Institute
How I Became a Libertarian
The consequences of intervention are rarely what we expect or desire.
I did not become a libertarian because I was persuaded by
philosophical arguments — those of Ayn Rand or F. A. Hayek, for
example. Rather, I became a libertarian because I was persuaded by my
own experiences and observations of reality. There were three important
lessons.
The first lesson was my personal experience of socialism.
The second was what I learned about the consequences of government
intervention from teaching a course on financial intermediaries and
markets. And the third lesson was what I learned about the origin and
evolution of government from my research into the sources of economic
progress in preindustrial Europe and China.
Lesson 1. My Personal Experience of Socialism In my youth, I was a socialist. I know that is not unusual. But I not only talked the talk, I walked the walk.
Growing up in England as a foreign‐born Jew, I did not feel
I belonged. So, as a teenager, I decided to emigrate to Israel. To
further my plan, I joined a Zionist youth movement. The movement
I joined was not only Zionist: it was also socialist. So, to fit in,
I became a socialist. Hey, I was a teenager!
What do I mean by a socialist? I mean someone who believes that the
principal source of human unhappiness is the struggle for money —
“capitalism” — and that the solution is to organize society on
a different principle — “from each according to his ability; to each
according to his needs.” The Israeli kibbutz in the 1960s was such
a society. The youth movement I joined in England sent groups of young
people to Israel to settle on a kibbutz. When I was 18, I joined such
a group going to settle on Kibbutz Amiad.
A kibbutz is a commune of a few hundred adults, plus kids, engaged
primarily in agriculture but also in light industry and tourism. Members
work wherever they are assigned, although preferences are taken into
account. Instead of receiving pay, members receive benefits in kind:
they live in assigned housing, they eat in a communal dining hall, and
their children are raised communally in children’s houses, and can visit
with their parents for a few hours each day. Most property is communal
except for personal items such as clothing and furniture, for which
members receive a small budget. Because cigarettes were free, I soon
began to smoke!
Kibbutz is bottom‐up socialism on the scale of a small community. It
thereby avoids the worst problems of state socialism: a planned economy
and totalitarianism. The kibbutz, as a unit, is part of a market
economy, and membership is voluntary: you can leave at any time. This is
“socialism with a human face” — as good as it gets.
Being a member of a kibbutz taught me two important facts about
socialism. The first is that material equality does not bring happiness.
The differences in our material circumstances were indeed minimal.
Apartments, for example, if not identical, were very similar.
Nonetheless, a member assigned to an apartment that was a little smaller
or a little older than someone else’s would be highly resentful.
Partly, this was because a person’s ability to discern differences grows
as the differences become smaller. But largely it was because what we
received was assigned rather than earned. It turns out that how you get
stuff matters no less than what you get.
The second thing I learned from my experience of socialism was that
incentives matter. On a kibbutz, there is no material incentive for
effort and not much incentive of any kind. There are two kinds of people
who have no problem with this: deadbeats and saints. When a group
joined a kibbutz, the deadbeats and saints tended to stay while the
others eventually left. I left.
In retrospect, I should have known right away, from my first day,
that something was wrong with utopia. On my arrival, I was struck by the
fact that the pantry of the communal kitchen was locked.
Lesson 2. My Teaching — The Effects of Government Intervention
Although I was no longer a socialist, I was certainly not
a libertarian. I believed in a market economy and the importance of
incentives: I had begun to study economics. But economics also taught me
that market outcomes, and society more generally, were often imperfect
and that they could be improved by the judicious use of government
power. I was a progressive.
Progressivism rests on two critical assumptions. The first is that we
know how to improve society: “social science” provides us with
a reliable basis for the necessary social engineering. The second
critical assumption is that government is a suitable instrument for
improving society. My second and third lessons taught me that these two
critical assumptions were unfounded and unrealistic.
For many years, I have taught a course on the economics of the
financial system; I have also written a textbook on the subject.
Government regulation is an important topic in this course. The need for
such regulation seems like a no‐brainer. The financial system is
obviously unstable: look at all those crises, including the stock market
crash of the 1930s and the financial crisis of 2008. Surely we need
government regulation to stabilize the financial system? But looking at
the evidence, I came to believe otherwise. I saw that the history of the
U.S. financial system could be understood as a series of cycles: the
government intervenes in the financial system; the financial system
adapts to the intervention; this adaptation makes the system more
fragile and unstable, eventually resulting in a crisis; the government
responds to the crisis with additional interventions intended to
stabilize the system, and we have begun the next cycle.
The first of these cycles in the United States began almost two
centuries ago, in 1832, when President Andrew Jackson vetoed renewal of
the charter of the Bank of the United States, the sole national bank.
A consequence of this action was that, subsequently, banking in the
United States was regulated solely by the states. The states prohibited
interstate branching and often prohibited branching within a state. As
a result, banking developed in the United States as a system of
thousands of small banks. Since small banks are far more likely to fail
than large ones, the history of American banking was one of frequent
banking crises and panics, culminating in the great banking crisis of
the 1930s.
At the time, many argued (rightly) that the solution to instability
of the banking system was to remove the regulatory obstacles to
consolidation. However, Congress, catering to special interests, came up
with a different solution: deposit insurance. Even President Roosevelt,
not exactly a libertarian, understood that this was a bad idea. He
realized that it would allow banks to engage in risky behavior with no
danger of losing depositors, an example of a problem of insurance known
as “moral hazard.” So began the second cycle.
The moral hazard problem expressed itself in banks cutting their
capital ratios. Before deposit insurance, a typical bank had funded
about 25 percent of its assets with its own capital. This had the effect
of protecting depositors against losses on the bank’s loans.
Consequently, depositors had paid close attention to their bank’s
capital ratio. If it fell too low, they withdrew their deposits.
However, with the creation of deposit insurance, depositors no longer
cared about their banks’ capital ratios. Banks responded by steadily
reducing them, thereby increasing their leverage and thus their return
on equity. The fall in capital ratios also had the effect of making the
banking system far more fragile in the face of a shock.
For decades, however, there was no shock. For unrelated reasons, the
environment remained unusually stable. By the 1970s, capital ratios had
fallen as low as 5 percent. Then, in the late ‘70s, a steep rise in
interest rates caused a rash of bank failures, culminating in the
savings and loan crisis of the early 1980s.
Regulators, rather than admitting that deposit insurance had been
a mistake, responded by doubling down. To address the moral hazard
problem, they instituted capital requirements to force banks to increase
their capital ratios. They also introduced a new form of government
guarantee: the doctrine of “too big to fail.” So began the third cycle.
It was adaptation to the new capital requirements that set up the
financial system for the financial crisis of 2008. Because nonbank
financial institutions were not subject to capital requirements, profits
could be increased significantly by shifting lending from banks to
nonbank lenders. This happened on a massive scale — especially with
mortgage lending — leaving the financial system as a whole with a very
low effective capital ratio and consequently in a very fragile state.
Then, in the 1990s, the federal government began to promote subprime
mortgages, lending to borrowers who would not have otherwise qualified
for a mortgage loan. Since the government implicitly guaranteed most of
these mortgages, lenders considered them safe. As a result, many
financial institutions — banks, securities firms, and others — invested
heavily in these instruments. In 2006, the housing market turned down
and subprime defaults began to mount, leading to a major financial
crisis in 2008.
What is the lesson from all of this? It certainly seems that
government intervention, far from stabilizing the financial system, has
been a major cause of its instability. For example, the crisis of 2008
was not caused by “greed on Wall Street” but rather by incentives
distorted by two centuries of government intervention.
Does this mean that without government intervention the financial
system would have been stable, or at least more stable? To answer this
question, a study by Charles Calomiris and Stephen Haber compared
government intervention and financial system stability across countries.
They found that, indeed, more intervention is associated with greater
instability. Their most interesting comparison is between the United
States and Canada — two economies that are similar in most respects,
except that the Canadian government has intervened very little in its
financial system. The result? Since the presidency of Andrew Jackson,
the United States has experienced 12 major banking crises. In the same
period, Canada has experienced not even one — not in the Great
Depression, not in 2008.
The lesson for progressivism is clear: we don’t understand the
economy and the effects of intervention well enough to be able to
improve things. The economy is a complex system that adapts to
intervention in ways that are inherently unpredictable. The consequences
are rarely what we expect or desire. So, for me, the first pillar of
progressivism crumbled. We don’t know how to make things better through
government intervention.
Lesson 3. My Research — The Nature of GovernmentThe
second pillar of progressivism is the belief that government is
a suitable instrument for doing good. This pillar crumbled for me as
a result of my research.
For some time, I have been developing a theory of economic progress
based on the evidence of preindustrial Europe and preindustrial China.
My theory differs from textbook economics in several ways. In
particular, it suggests a very different understanding of government.
For textbook economics, economic activity means production. However,
looking at the historical evidence, there are two other ways that people
make a living — two other economic activities. The first is commerce,
buying and selling the goods that others produce. The second is
predation, taking by force the goods that others produce or trade.
Economic progress can be understood in terms of the different effects
of commerce and predation. Commerce makes it easier for people to trade
with one another. The resulting expansion of trade leads to increased
productivity, which creates opportunities for further expansion of
trade. Economic progress, therefore, is a self‐perpetuating process.
Why, then, isn’t every nation wealthy? The answer is predation.
Predation slows, stops, and even reverses economic progress. And the
principal source of predation is governments.
Textbook economics has no explicit discussion of what government is
or how it works. It simply assumes that government is a kind of benign
spirit ready and willing to solve our problems — a kind of fairy
godmother. The historical however, suggests otherwise.
Government is an organization created to deploy force, either to
engage in predation (predatory government) or to protect a population
against predation (associational government). In preindustrial Europe,
the governments of kings and princes were predatory governments; think
the Norman conquest of England. The governments of commercial cities
were associational governments. In general, associational governments
were hospitable to economic progress, while predatory governments were
not.
Associational government, however, had a problem: it did not scale up
very well. As the territory and population under an associational
government grew, it became increasingly difficult for the population to
exercise effective control over its government. This enabled the
government to engage in predation: associational government turned into
predatory government. Fortunately, a new form of associational
government emerged, largely by chance, that solved this problem. When
the provinces of the Netherlands won their war of independence from
Spain, they created a national government that was an association of
associational governments — a federal government. This was the model
later adopted by the United States.
What did this different understanding of government mean for my
progressivism? What government does is deploy force. In the good case,
it deploys force to protect its territory against predation. In the bad
case, to which things naturally tend, it deploys force to engage in
predation. Government has existed for millennia; only a century or so
ago did intellectuals — many of them economists — come up with the idea
that government was a suitable instrument for solving society’s
problems. It is a bizarre idea: why should the guys with the guns run
the financial system or provide us with education or health care? The
second pillar of my progressivism crumbled.
Conclusion So, that is how I became
a libertarian. The first step was my personal experience of kibbutz,
where I came to realize that socialism, even on the scale of a small
community, did not further human happiness. The second step was
examining the history of government regulation of the U.S. financial
system. From that, I learned that contrary to the assumption of
progressivism, the government does not know — and cannot know — how to
make things better. Indeed, its interventions generally make things
worse. The third step was my research into the origins and nature of
government. Progressivism assumes that government is a suitable
instrument for improving society — a kind of fairy godmother. History
teaches otherwise: government evolved primarily as an instrument of
predation — more like a wicked witch.
Persuaded by this evidence, I became a libertarian — a libertarian
with a small “l.” That is, I believe in limited government. Government
is necessary to protect us against predation by other governments. But
government is not a suitable instrument for other purposes, such as
regulating economic activity, funding scientific research, or engaging
in social engineering.
