
Sign up to save your podcasts
Or


Whenever you encounter a claim by a politician that they are going to “create jobs” or “reduce inflation,” you should be very suspicious.
Most Americans are aware that recent price increases are connected with new government spending, although fewer want to face the music that the solution is cutting said spending – not cutting new checks and subsidies to temporarily relieve some pain for some citizens.
Thomas DiLorenzo, author of The Politically Incorrect Guide to Economics, is not afraid to speak the truth and name names. His assessment of the poorly-named “Inflation Reduction Act” is grim, but we must face economic reality before we can improve it.
While politicians are certainly to blame for the Orwellian naming of bills that accomplish the opposite of what their name suggests, DiLorenzo makes an underappreciated point about the average economist’s complicity in such shenanigans. The economics profession, he writes, “has been turned into the handmaiden of government in order to give a scientistic justification for things the government … wants to do.”
This explains how the White House ends up with “scientific” backing for absurd statements like this:
DiLorenzo – a senior faculty member at the Mises Institute – joined me last Sunday to expose what’s actually in the Inflation Reduction Act, and why it is virtually certain to increase inflation – especially energy costs – as well as production costs of most things we buy.
We also discussed the enduring appeal of socialism among young people, and how DiLorenzo has disabused his students of their misguided ideas over the years through teaching sound economics.
Listen to the podcast or subscribe to read the condensed summary of DiLorenzo’s “politically incorrect guide to economics.”
The Return of Modern Monetary Theory?
Speaking of debunked economic ideas, it’s been a while since we’ve heard anything about so-called Modern Monetary Theory – i.e., the idea that deficits don’t matter because government can always just print more money.
Kellen Jones reports at FEE.org on the ultimate irony: now that MMT has become the default policy of the Biden administration, no one wants to talk about it explicitly anymore. Government spending has come completely unyoked from taxation, and the result has been painful inflation:
“Since the first signs of inflation began to surface in late 2020 and early 2021, there has been a nosedive in the discussion of MMT. According to Nexis Uni, there were around 5,000 mentions of MMT in the news and academic articles et al. between 2019 and the end of 2021. This year, there have only been around 700 mentions. The economic fashion de jure has quickly become the emperor’s new clothes.”
As Sarah Palin might say, “How’s that MMT working out for ya’?”
And speaking of Sarah Palin…
Ranked-Choice Voting Delivers Alaska Congressional Seat to Democrats
A few weeks ago, Ned Foley joined me to offer some suggestions for enhancing democracy, and ranked-choice voting was among his proposals.
Today, Sarah Palin is being blamed for splitting the Republican vote in a state that voted for Trump by more than 10 points over Biden, thus handing a seat in Congress to a Democratic candidate. Republicans are saying that the ranked-choice system is flawed, but others – including Dick Morris – have noted that perhaps they simply need to learn to play by the new rules of the game.
Essential Liberty offers a review of current events through the time-tested principles of limited government & individual freedom. Subscribe for weekly podcasts, edited transcripts, & book summaries.
Abolish the FBI?
In Compact Magazine, Harvey Silverglate has a thought-provoking proposal to replace the FBI with an entirely new agency. This isn’t the first time Silverglate has called for an end to the controversial agency, but his call may be taken more seriously now that Republicans – not Communists or other leftist subversives – are the target of its corrupt dealings. Of course, now it’s hard to find any partisan of the left who still takes a principled stand against the FBI.
Silverglate documents several instances of peak corruption by the FBI, including one agent who was effectively on Boston mobster Whitey Bulger’s payroll. Let’s hope that the ACLU remembers its roots and joins with conservatives to disband the lawless agency.
ICYMI… ENB on Student Loan Debt
If you missed my recent program with Elizabeth Nolan Brown about Biden’s lawless executive order cancelling student loan debt, get the podcast and transcript here:
Read Elizabeth’s daily column, The Reason Roundup, and follow her on Twitter @ENBrown.
Elizabeth Nolan Brown is a senior editor at Reason and the main author of Reason's morning newsletter, the Reason Roundup – an essential part of my daily reading.
This week we take her recent article on the news of Biden’s unilateral action canceling billions of dollars of student loan debt. Elizabeth calls it a fiasco, and she’s hardly alone in this sentiment. Even President Obama’s former economic adviser Jason Furman has called the plan “reckless.”
Essential Liberty offers a review of current events through the time-tested principles of limited government & individual freedom. Subscribe for weekly podcasts, edited transcripts, & book summaries.
Transcript
It has been observed that this executive action was more economically consequential than any other taken by a President in our 240-year history.
What does “executive action” mean? It means no input from Congress, no input from anybody – he just unilaterally did it because he had promised to do it.
The effect on our economy, on our collective morality, on the individuals whose debt is forgiven, and upon the individuals whose debt was not forgiven is profound and uncharted.
Where did President Biden get the congressional power to take the action that he took?
Typically, this would have to be undertaken by Congress – the body with the authority to control federal spending – but Biden invoked this 2003, post-9/11 bill called the Higher Education Relief Opportunities for Students Act, signed by George W. Bush.
It permits the Secretary of Education to waive or modify Federal Student Financial Assistance Program requirements, to help students and their families or academic institutions affected by war, other military operations, or national emergency. It was supposed to help people who were fighting the Bush-era War on Terror, but now Biden is counting the COVID-19 pandemic as a national emergency and is saying that this bill gives him the right to get rid of financial aid or student loan obligations.
Will it hold up in Court, or will it be struck down like the eviction moratorium? In the latter case, Biden knew it was going to be struck down, but it was in effect long enough to make good on his promises to the regressive left.
Opinions are mixed and whether this will hold up or not. My colleague, Damon Root, wrote that his justification stretches the interpretation of a law that was written for totally different circumstances. Biden may be hoping that it will pass muster, or that if it doesn't, it will at least pass legal muster long enough for it to affect the midterm elections. It could stretch out for years in courts, and Biden will still be able to say, “Well, I tried to do this good thing, but other people blocked me.”
What's the economic effect of this forgiveness?
It will wipe out up to $10,000 for some people and up to $20,000 for others making under $125,000 per year.
This could result in millions of people having their student loans wiped out to the tune of hundreds of billions of dollars. The government isn't directly cutting a check, but they won't be getting a lot of the money lent by federal lenders. The biggest worry is that it's going to be inflationary.
It’s also going to give colleges more incentive to raise prices, since people are going to think now, “Well, whatever – if I take out these bigger student loans, then I will probably just get them written off too.” As a result, colleges can just raise their education prices even higher.
What's the effect of this forgiveness on those who didn’t have loans?
There are also a lot of people either didn’t get loans or paid them off quickly through sacrifices. Maybe they chose to go to a less expensive school, or lived at home instead of in the dorms.
There's been a tendency to characterize opposition to forgiveness as selfish, but I don't think that's really what these people are saying. They're just saying that they gave up certain opportunities, like going to the fancy school, living in an expensive city after graduation, or participating in research related to their field instead of working for pay. They've forgone networking opportunities and professional contacts, which means that they've been put at a potentially lifelong career disadvantage relative to people who made different decisions with loans. They're now competing for jobs with these people who have these other advantages because of their student loans. It seem’s like such a smack in the face to these people.
This isn't even going to the poorest people, who couldn't go to college – this is going to people who have gone to college and are making up to $125,000 a year. Someone who's making $125,000 a year can afford a few $100 a month in student loan payments.
Who will be the winners and losers of this action?
Democrats and the Biden administration are going to score political points, because they're essentially buying goodwill by writing off people's debts. The people that are going to be harmed are future students, and our educational system in general. It's creating very bad incentives that will keep perpetuating higher and higher costs, and ultimately make everything more expensive in the long run. We are just going to keep subsidizing it, and creating a vicious feedback loop.
Read Elizabeth’s daily column, The Reason Roundup and follow her on Twitter @ENBrown.
Links & Resources:
The Student Loan Forgiveness Fiasco, by Elizabeth Nolan Brown, Reason Magazine
Will Biden's student loan debt cancellation plan hold up in court? by Damon Root
This week I continued my series on the Restoring the Guardrails of Democracy with Ned Foley – Ebersold Chair in Constitutional Law at The Ohio State University – and the representative of Team Progressive.
See Part 1 of the series here, with Ilya Somin:
In Part 2, we try to make sense of the word “guardrails” in the context of the events following the 2020 election.
What should we make of the fact that a candidate refused to accept defeat, and got several sitting Senators – and countless House members – to go along with his plan to overturn the results of the election?
Is that a problem with Trump, or with our democracy?
Foley says it’s a problem with the system:
“In my judgment, we kind of have a problem or a pathology in our system analogous to the McCarthy-era Red Scare.”
He references Richard Hofstadter’s famous essay on the Paranoid Style in American Politics to warn of the dangers of a charismatic demagogue (like Trump or McCarthy) when combined with an enthusiastic party base that is willing to ignore reality in their crusade against a scapegoat – whether that’s communists in the State Department, or traitors in the “Deep State.”
The question before us is how to increase Americans’ confidence in election results regardless of who wins. How can we get the overwhelming majority to trust the process, even if they don’t like the end result?
Here, Foley cites the Madisonian concept of factions – where ambitions counteract ambitions. A republic, in Madison’s view, shouldn’t require superhuman virtue. After all, men are not angels:
“We have to take human nature as it is and create institutions that will somehow achieve, as closely as possible, the collective public interest – given the natural self interest of each one of us.”
He suggests improving the vote-counting process itself with better chain of custody rules. Even if rumors of voter fraud were exaggerated, the mere perception can be equally dangerous.
Beyond that, Foley wishes to see alternative methods of aggregating disparate voter preferences, besides a simple winner-of-the-most votes.
He explains how ranked-choice voting could make election results reflect the popular will more closely, while also allowing greater diversity than the two parties offer.
These reforms may seem farfetched, but other ideas like getting rid of gerrymandering have widespread support among the population. It’s just parties – always looking to tighten their hold on power – that support drawing districts in a way that guarantees incumbent victories. When 96% of seats in Congress are considered “safe,” something has gone terribly wrong in our democracy. Foley proposes allowing citizens to identify what “district” they want to vote in, within their state, according to criteria other than narrow geography. If a particular criterion obtains a sufficient number of registered voters, it becomes designated as a district. This has a historical basis in states like New Jersey, which used to elect all of their national representatives in a statewide election.
The ultimate reform to the electoral system would be a switch from the electoral college to a popular vote. This would require a Constitutional Amendment, and Foley admits that this is unlikely to happen anytime soon. However, he adds the caveat that a national popular vote should require one candidate to win at least 50% of the vote. If three candidates split the vote such that no one reaches that mark (as happened when Bill Clinton won with 44% of the vote in 1992), then there should be a run-off between the top two vote-getters, in Foley’s view.
Lastly, no conversation about the guardrails of democracy would be complete without some talk of “misinformation.” How should it be treated? Should it be criminally prosecuted? And who decides what counts as misinformation?
Regarding laws that would make speech containing misinformation illegal, Foley says, “there [would have] to be proof, not just that [a statement] was false, but that it was motivated for electoral purposes, with evidence of that.”
Like all good guardrails, we hopefully wouldn’t need to use it, but it could make politicians think twice and self-censor to avoid dealing in blatant dishonesty.
We also discussed the role of social media companies like Twitter in regulating misinformation on their platforms, but you’ll have to listen to the end to find out what we said.
LINKS:
* National Constitution Center’s Restoring the Guardrails of Democracy project
* Team Progressive’s Report
* Follow Professor Edward B. Foley on Twitter
The National Constitution Center is one of the most important nonprofit organizations in the country. Its Executive Director, Jeffrey Rosen is fond of saying that it is the only nonprofit organization funded by Congress (don't get suspicious) for the sole and exclusive purpose of increasing awareness and understanding of our founding document, the Constitution.
The NCC recently undertook a project to understand what’s not working in our democracy, and what guardrails ought to be put in place to make it work better. They solicited suggestions from three teams: one libertarian, one conservative, and one progressive.
I was first joined by Ilya Somin, a law professor at George Mason University, to offer the libertarian perspective. Somin focuses on constitutional and property law, as well as representative governance. He has written numerous books, including Free to Move: Foot Voting, Migration, and Political Freedom (Oxford University Press, 2020), and Democracy and Political Ignorance: Why Smaller Government is Smarter – both of which informed his team’s report (download it here).
Below is a summary of the three main ideas offered by Team Libertarian to ensure that our system of government remains accountable to We the People. While libertarians as a group are not often the most favorable towards capital-D Democracy, insofar as it leads the majority to deprive individuals of their rights, the team (composed of Ilya Somin, Clark Neily and Walter Olson) came up with several suggestions worth heeding.
Proposal #1 - Electoral College Reform
The 2020 election exposed vulnerabilities in the transition of power after the President and his supporters failed to concede defeat, and nearly sought unconstitutional remedies to overturn the results.
Team Libertarian places the blame on the Electoral Count Act of 1887, which makes it ambiguous by which point states must certify their votes. The attempts by Trump partisans to send a different slate of electors may have been illegal even by the standards of the 1887 act, but it was vague. The proposed reform, heading to a vote in Congress, would still allow states to set their own elector policies, but would force them to have the system set in advance of election day.
“Finally,” Ilya notes, “there is what until 2021 was just a formality – the issue of Congress and the Vice President's powers to refuse to recognize particular electoral votes.”
Although Mike Pence ultimately refused to be pressured to overturn the result, Team Libertarian argues that we should not grant anyone discretion over certifying results. “You should need a significant percentage of members of Congress who are willing to start a challenge before you can initiate [the process],” Ilya says.
We may see these changes passed through the Electoral Count Reform Act, although the Democrats likely squandered their opportunity to pass sensible reforms – instead opting to push radical legislation that focused on overcoming “voter suppression,” despite record turnout in the previous election. And so we wait to see whether Congress will find enough common ground to avert the next disaster of a partisan dispute over the results of a national election.
Essential Liberty offers a review of current events through the time-tested principles of limited government & individual freedom. Subscribe for weekly podcasts, edited transcripts, & book summaries.
Proposal #2 - Break Down Barriers to Foot Voting
Perhaps the most explicitly libertarian idea within the report puts a slight twist on the term “democracy,” insofar as it refers to meaningful choice over one’s representation in government. Here, Ilya’s work on migration and free movement particularly influenced their suggestions to make “voting with your feet” easier. Foot voting is a proposed solution to the more general problem of rational voter ignorance (explored in Ilya’s earlier book, Democracy and Political Ignorance). While few voters can afford to take the necessary time to come to an informed decision on all of the complex issues facing our country, many people can and do carefully research which jurisdictions offer them the best governmental services at the best price.
The application of consumer choice and competition to politics often yields far better results than the ballot box, since politicians respond to the entry and exit of taxpayers from a given locale.
Yet there are many barriers to foot voting – namely, restrictive zoning and occupational licensing laws that make it harder for citizens to pack up and move.
“The biggest problem in your state of California is exclusionary zoning, where there are such tight restrictions on the building of new housing that it's often almost impossible to build cheap new housing in response to demand,” Ilya notes.
Even if one state or region wanted to make itself more competitive and appealing to residents of other parts of the country, they would have a hard time building enough homes to accommodate them all.
While most people don’t think of zoning or licensing as issues affecting the health of our representative government, Team Libertarian’s broader definition of small-d “democracy” illustrates why it actually matters a great deal.
Proposal #3 - Bring Back the Jury Trial
Although we didn’t have time to discuss it in great detail, the third plank of Team Libertarian’s proposal was the restoration of jury trials to their rightful place in the criminal justice system. I have covered this topic several times on my show, but it bears repeating that the founders envisioned juries being one of the fundamental ways in which the people assured fair representation and held overzealous prosecutors accountable. Today, most cases end in plea bargains, which rob the defendant of due process while denying citizens their duties of participation in our system of government. In this age of increasing polarization and mistrust, it’s more important than ever that people feel a sense of connection to the levers of power, as well as the responsibility to their fellow citizens to make sure that justice is served.
Ilya and I also discussed the concepts of political polarization as well as misinformation –both of which feed into a sense of separation and division of the body politic. Could jury trials composed of peers help us ease our anxiety about our political enemies and begin to heal the great divide? Perhaps that’s too optimistic, but we can start there and see where it leads.
Between easing foot voting, passing common-sense electoral reforms, and bringing jury trials, we can go a long way towards restoring the guardrails of democracy.
In 1980, Milton Friedman wrote the book Free to Choose, a classic inquiry into the relationship between freedom and economics. It later became a PBS broadcast series hosted by Friedman himself, and is still receiving considerable attention over 40 years later.
In this show, I’m joined by Matt Beienburg to apply Friedman’s “free to choose” mantra to public education.
Beienburg is the Director of Education Policy at the Goldwater Institute, which was influential in persuading the Arizona legislature to universalize a school choice program that could become a model for the rest of the nation.
Here’s what you need to know:
What does the legislation change?
In most places in the U.S., citizens who wish to send their kids anywhere other than the public school in their ZIP code are out of luck. They have to pay twice: once in taxes, and once in tuition.
Beienburg points out that Arizona had been a leader in educational freedom before the recent change in their law, allowing students to attend schools outside of their districts:
“[Arizona] recognizes that a student's zip code should not be the deciding factor of their educational opportunity.” [quotes are Matt Beienburg]
Arizona also allows independently-run public charter schools, which are not influenced by teachers’ unions in the same way as regular public schools.
Finally, Arizona pioneered a so-called Empowerment Scholarship Program, modeled on a proposal from the Goldwater Institute, which credits the money that would have been spent on a pupil in the public schools into a special savings account managed by the parents:
“They can now use that for any educational purpose for that child, whether that's a private school, home education, learning pods or micro schools, tutors or textbooks – basically any resource that you want to use, now you can do that for your students. It breaks this link that has forced students to have to go through the public school system.”
The parents are given control over roughly $7,000 of taxpayer money, which they can spend towards any approved educational activity. That figure is based on what the state currently spends per pupil enrolled in public schools. The unspent funds in the ESA roll over, all the way up through higher education. Essentially, Arizona is returning some of their taxpayers’ money, rather than directly funding private schools or charter schools:
“It's not simply taking public funds and directing it to a private entity. It's returning taxpayer public funds back to those taxpayers, who are then given the ability to use it and direct it as they think best for their children.”
What took so long for a state to implement school choice?
This is such sensible legislation, we might wonder why it took so long to enact it. Who was opposing it? What were the arguments against it? How did the Goldwater Institute overcome those obstacles?
“The opposition really comes down to two words: teachers’ unions.”
A more limited version of the ESA legislation had been on the books in Arizona, but it was only applicable to a few students. When it came to universalizing the policy, the opposition was strong:
“The unions do not want there to be another game in town. They have a monopoly over the system – they dominate school board elections, the policy, and the curriculum, and the sort of political weight that all that carries.”
By taking an incremental approach, however, the Goldwater Institute and other proponents of school choice were able to break down the resistance.
What pushed the legislation across the finish line?
Beienburg credits COVID-19 and the response by public schools to shut down:
“Parents were really beside themselves scrambling for options – many having to suddenly work from home – juggling childcare, education and their own work, and desperate for help. A lot of these families turned to things like micro-schools or pods, and recognized how necessary it is that you have choice.”
The unions may have overplayed their hand in trying to appeal to minorities through excessively progressive curricula.
“The National Education Association, which is the largest union in the country, has gone out of their way these last few years to pass resolutions on left-leaning political, progressive social causes. Yet when you actually provide an option to a lot of these disadvantaged, often minority families to give [their kids] equal footing and an opportunity to get a great education, you see these groups coming in and opposing [the unions].”
Polling data from a Harvard journal indicates that minority parents overwhelmingly support school choice.
Thank you for reading Essential Liberty. This post is public so feel free to share it.
What effect will this have on the quality of education?
The ESA legislation removes the power over educational content from the bureaucracy and grants it to the people, who will vote in the most effective way possible with their dollars. It’s a victory for small-d “democracy.”
When the law goes into effect in 90 days, Beienburg suspects we will see more competition among both public and private schools for the new dollars to be spent on education. “I think this ESA program opens the door to that sort of innovative model,” he says. The ability of parents to choose one option over another provides a greater degree of accountability due to the threat of those dollars going elsewhere.
“If parents are not satisfied with the education that's being offered to them, now they have a choice to go somewhere else.”
Schools peddling woke curriculums based around the 1619 Project and anti-racism agenda might think twice about the corrosive message they are sending, and which is being pushed heavily from Washington D.C.
If Arizona’s legislation catches on, it will empower state and local control over education – much as the founders envisioned – and disempower the federal educational bureaucracy.
Similarly, the legislation will likely change the content in textbooks, which have traded academic rigor for political activism. Increasingly, teachers have turned to online resources outside of textbooks for the most radical content, meaning that the indoctrination is devoid of any transparency or standards-testing by the agencies that regulate textbooks.
The Goldwater Institute has been pioneering academic transparency laws hand in hand with their school choice recommendations.
“As parents become more aware of what's being taught in their public schools, which they saw during COVID, they are increasingly dissatisfied with it,” Beienburg says.
Why should childless taxpayers pay for education?
Education is frequently considered a public good, given that we want an informed and educated electorate. Is this sufficient justification to tax those who never utilize the services offered by education?
Beienburg notes that most state constitutions spell out a role for the government in educating the population:
“The framers of the state constitutions have largely said, ‘We do you believe that this is a good that we want to make sure that our citizens are educated – not only in math and reading, but also just to be good citizens and to have a sense of American Constitutionalism.’”
He notes that taxpayers are already paying for public school tuition and that ESA legislation doesn’t change the amount being spent. It only enhances the quality of the education being offered for the same amount of money.
As a taxpayer would you rather your money be spent wisely, by schools competing for citizens’ tax dollars, or by the defunct monopoly that is the broken public school system?
From the publisher's feed

255 Listeners

39 Listeners

36 Listeners