Wednesday, October 09, 2013

Thoughts on The Debt Ceiling


Far from promoting fiscal prudence and expenditure restraint, as claimed by its protagonists, the federal debt limit has in fact eroded the integrity of our federal budget, interfered with efficient expenditure scheduling and effective debt management, endangered our defense program, and aggravated the 1957-58 recession.  
Walter W. Heller, Chair, Dept of Economics, Univ of Minnesota
Proceedings of the Annual Conference on Taxation under the Auspices of the National Tax Association, Vol. 51, (1958), pp. 246-257
The "debt ceiling" is a colloquialism for a statutory limit placed by Congress on the borrowing authority of the United States Treasury.  The Treasury may borrow up to the stipulated amount.  Any further borrowing must be authorized by an act of Congress. This constitutes "raising the debt ceiling."

The US Constitution gives authority over the nation's finances to the House of Representatives.  Both borrowing and spending are the responsibility of the House.  Under the law, all debt financed by the Treasury is debt authorized by the Congress.  However, when the Congress authorizes new spending (i.e., new debt), it is not necessarily giving the Treasury authority to borrow.  The Treasury itself, and branches of the gov't themselves, are not accumulating new debt without Congressional authority.  Treasury therefore has an authorized spending limit higher than its authorized borrowing limit.  When Treasury reaches the borrowing limit, a request is made to Congress to raise the limit.


Prior to 1917, the United States did not have a "debt ceiling" per se.  In fact, the US gov't prior to that year did not have a systematic approach to handling gov't bills and debt.  The Treasury Department was in charge of official debt, such as Treasury bonds.  But, debt and bills accumulated by individual departments, such as the Department of Defense, were handled by the individual departments.  Nominally, a department was supposed to draw up a bill for an expense and present it to the House.  The House would approve the bill and the money was allocated through Treasury.  The department would then spend the allocated money.  In reality, it was not uncommon for departments to simply run up expenses for given projects and afterward, submit a bill to the House to be passed to pay for accrued expenses.  Since the department had already spent the money, the Congress had little choice in approving the submitted bills.

To the extent that budgetary bills from the Treasury and the gov't departments were presented in the normal manner, the Congress regulated the amount of debt accumulated by refusing to pass individual debt obligation bills. The Second Liberty Bond Act of 1917 extended certain privileges to the executive branch to take on debt without requesting permission from the Congress, with the stipulation that the amount of debt accrued must stay below a "ceiling" or limit established by Congress.  The law established an aggregate total for gov't bond issues, while authorizing an additional issuance of Liberty Bonds to cover war costs.

At the time the Second Liberty Bond Act was enacted, "debt ceiling" was really "debt ceilings," as the laws established separate limits on debt accrual for bonds, bills, certificates, and notes.

In 1941, the Public Debt Act raised the limit and revamped the borrowing system, rolling up almost all Federal gov't borrowing and establishing it under the Treasury Dept.  At this time, the segregation of debt limits by instrument was abolished and the Treasury was given authority to issue debt as it saw fit, as long as it stayed under the mandated limit.

Passage of the Budget and Impoundment Control Act of 1974 substantially changed the rules by which budgets were written.  As a result, in 1979, the House implemented a parliamentary rule that deemed the debt ceiling raised when a budget was passed.  This was a simple resolution to the absurdity of appropriating money in the budget but providing no way for the money to actually exist.  This rule was repealed by the House in 1995, after the Republicans regained the majority.

Legal Issues

If the Congress does not reauthorize an increase in the debt limit, the US gov't officially has insufficient funds to cover all its bills.  At the time of this writing, the estimate is that about 20% of the total amount due would go unpaid, without an increase in the limit.

The legality of the debt ceiling has been challenged by policy analysts and legal theorists, but it has not been challenged in court.  There are two basic challenges.
  • Congress cannot cede its authority over the finances to the executive branch.
    • Allowing Treasury the latitude to acquire debt without supervision of Congress is an unconstitutional cession of authority.  Congress must approve every new acquisition of debt -- as it did prior to 1917.
  • Congress cannot refuse to pay the country's legally established financial obligations.
    • An argument is made based on the stipulation of section 4 of the 14th Amendment:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
This section, of course, was adopted in the aftermath of the Civil War and was intended to insure that all war debts were honored.  However, the plain wording of it applies to all debt.  If this understanding of the text is valid, then the Congress simply may not refuse to raise the debt ceiling -- because that ceiling applies only to debt incurred for spending already authorized by Congress.

Additionally, as a matter of contract law, can the Congress arbitrarily refuse to honor its debts?  In the 1935 case, Perry v United States, the Supreme Court said no -- emphatically.
In authorizing the Congress to borrow money, the Constitution empowers the Congress to fix the amount to be borrowed and the terms of payment. By virtue of the power to borrow money "on the credit of the United States," the Congress is authorized to pledge that credit as an assurance of payment as stipulated, as the highest assurance the government can give -- its plighted faith. To say that the Congress may withdraw or ignore that pledge is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. This Court has given no sanction to such a conception of the obligations of our government.


If the Congress cannot refuse to raise the debt ceiling, how can it control spending?  By controlling itself.  The spending does not originate in the Treasury, nor does it originate in the Executive Branch.  It originates in the House of Representatives.  The Treasury reportedly pays over 100 million bills a month.  This number, of course, includes all kinds of checks issued to Social Security recipients, veterans, and the like.  The obvious resolution is for Congress to authorize borrowing at the same time it authorizes spending.  If it's going to authorize $1 trillion for the Defense Department, and the projected revenues are only $648 billion, then Congress should authorize $352 billion in debt to cover the shortfall.  Or course, the actual formula for determining the borrowing authorization would be more complex and probably take up 1,000 pages; but the principle is the same.  It's not that Congress should stop spending; it's that Congress should balance its budget by preparing for the shortfall and acknowledging it.

The debt ceiling originated as a convenience method for the Congress to provide Treasury with a flexible means of handling Federal debt.  It has morphed into a means for Congressional minorities to fight out budgetary battles that were lost on the House floor.  If the Representatives cannot play by the rules, change the rules.

Saturday, September 07, 2013

Lesson Lost: Rwanda, Twenty Years After

It's probably too late now, and likely the complacent "it is not our fight" crowd has won the battle, if not the war. After the Euro-American Axis declines to do anything further (oh, there might be some huffing and puffing in the UN, and some dainty sanctions, designed not to harm the profits of our uber-capitalist masters, that will take effect 3 or 5 years from now), the gas canisters will be loosed again and probably again and again in Syria.

Let's review the path advocated by the surrender monkeys. The past is prologue to the present.

The United Nations in Rwanda

On January 12, 1994 Canadian Lieutenant General Roméo Dallaire (United Nations Force Commander in Rwanda) notified Military Adviser to the Secretary-General, Major-General Maurice Baril, of four major weapons caches and plans by the Hutus for extermination of Tutsis. ... Dallaire made immediate plans for UNAMIR troops to seize the arms caches and advised UN Headquarters of his intentions, believing these actions lay within his mission's mandate. The following day, headquarters responded that his outlined actions went beyond the mandate granted to UNAMIR under United Nations Security Council Resolution 872. Instead, he was to notify President Habyarimana of possible Arusha Accords violations and his concerns and report back on measures taken. ...
The UN's mandate forbids intervening in the internal politics of any country unless the crime of genocide is being committed. ... Canada, Ghana, and the Netherlands provided consistent support for the UN mission under the command of Dallaire, although the UN Security Council did not give it an appropriate mandate to intervene. Despite emphatic demands from UNAMIR's commanders in Rwanda before and throughout the genocide, its requests for authorization to end it were refused, and its intervention capacity was reduced.

The United States in the United Nations

Note that the current advocacy of doing nothing in Syria exactly parallels the US gov't's advocacy in 1994, of getting out of Rwanda and doing nothing. In the UN, the United States' golden-tongued representative, Madeleine Albright, was instrumental in preventing the UN mandate from being expanded to end the slaughter.
There were no U.S. troops officially in Rwanda at the onset of the genocide. A National Security Archive report points out five ways in which decisions made by the U.S. government contributed to the slow U.S. and worldwide response to the genocide:

  1. The U.S. lobbied the U.N. for a total withdrawal of U.N. (UNAMIR) forces in Rwanda in April 1994
  2. Secretary of State Warren Christopher did not authorize officials to use the term "genocide" until May 21, and even then, U.S. officials waited another three weeks before using the term in public
  3. Bureaucratic infighting slowed the U.S. response to the genocide in general
  4. The U.S. refused to jam extremist radio broadcasts inciting the killing, citing costs and concern with international law
  5. U.S. officials knew exactly who was leading the genocide, and actually spoke with those leaders to urge an end to the violence but did not follow up with concrete action.

(Rwanda Genocide, Wikipedia)

Twenty years on, we find that the slaughter in Rwanda had no lessons for US foreign policy among most Americans.  We were indifferent to the deaths then, and we are indifferent now.

Friday, August 23, 2013

Security and the Price of Liberty II

I would strongly recommend against anyone trusting their private data to a company with physical ties to the United States.
Ladar Levison, Lavabit LLC
under Section 702, the government may not "intentionally target any U.S. citizen, any other U.S. person, or anyone located within the United States. ... [I]n those cases where NSA seeks to acquire communications about the target that are not to or from the target [NSA procedures document] ... the NSA believes it not only can (1) intercept the communications of the target, but also (2) intercept communications about a target, even if the target isn't a party to the communication."

In my previous commentary on this issue, I listed some tools and options for self-protection against online snooping.  Since I wrote that column, events have moved rapidly and bizarrely.  The limit of the extent to which the gov't is probing our private lives has been pushed out considerably.  I've done more research on the elements of security available to ordinary users.

In August, two American companies that provided encrypted email services, closed their email services.  One, Lavabit, made clear in its announcement that it was closing to avoid having to turn over its data files to the US gov't.
I have been forced to make a difficult decision: to become complicit in crimes against the American people or walk away from nearly ten years of hard work by shutting down Lavabit. After significant soul searching, I have decided to suspend operations. I wish that I could legally share with you the events that led to my decision. I cannot. I feel you deserve to know what’s going on--the first amendment is supposed to guarantee me the freedom to speak out in situations like this. Unfortunately, Congress has passed laws that say otherwise. As things currently stand, I cannot share my experiences over the last six weeks, even though I have twice made the appropriate requests.
Ladar Levison
Owner and Operator, Lavabit LLC

The other service, Silent Circle, announced that it was taking the action proactively, because its management was convinced that the US gov't intended to go after its data files in the same way it went after Lavabit.

Ladies and gentlemen, this is the country we are creating for ourselves.  A country in which we cannot protect our online communications from the gov't.  Period.
If you mean by 'secure' a system to which the U.S. government cannot get access, it is beginning to look as if that might not be possible.
Fred H Cate, director of Indiana University's Center for Applied Cybersecurity Research

Let's clarify.  We're not referring to a search for terrorists.  We are not referring to a carefully controlled, documented and properly warranted search, directed at specific individuals about whom the gov't has reasonable concerns, based on court-verified information.  We're referring to blanket "vacuuming" of information about every American citizen who conducts business on the internet.  Email, search, social networks, Flickr, the whole Gitchagummi.  According to the Wall Street Journal, "The system has the capacity to reach roughly 75% of all U.S. Internet traffic in the hunt for foreign intelligence, including a wide array of communications by foreigners and Americans. In some cases, it retains the written content of emails sent between citizens within the U.S. and also filters domestic phone calls made with Internet technology, ..."

The same article reports that the Blarney intercept program (one of several current programs lumped up as NSA spying) was named as a joking reference to the Shamrock project, an NSA communications intercept that operated for almost 30 years following WWII.  The Shamrock project, which operated with no outside oversight, and accessed American communications without warrants, routinely shared out gathered information to other US gov't agencies.  Its operations were one of the secret spy operations that led to the Church Committee investigations of secret intelligence operations in the mid-70s.

Now, I can easily say, "Well, I am not doing anything online of significance to national security. It's not me they're after. Why should I care?"

Monday, August 05, 2013


I am a data nut.  If I see a statistic, I immediately want to know its origin.  And if I don't see a statistic, but instead see some unverified claim, I immediately want to see the statistics.

43.7% of statistics are made up on the spot. -- Steven Wright

Over the years, I've accumulated a collection of tools and data sources, as well as sources of ideas.  This article just lists the most prominent of these.  I use them, abuse them and often beat heads with the output of my efforts.  Of course, I read many political and/or social justice blogs.  I don't use them as sources of factual information, usually.  From them, I backtrack to the original (e.g., if I read an article based on a dataset from the Census Bureau, I go to the Census Bureau and look at the original data.).  My golden rule is, "trust, but verify." Heh-heh.

I don't list it here, but I do use Excel quite a bit.  By loading something like, say, a UCR into Excel, I can turn it into a table and filter the data quickly; or likewise, by creating a pivot table.  Then, charting the results of the filtering is a snap.

  • Research Tools and Data Sources

  • Blogs and Publications

Sunday, June 09, 2013

Security and the Price of Liberty

Most of us are familiar with some form of Benjamin Franklin's bon mot, "Those who would obtain a little temporary safety at the price of essential liberty, deserve neither."

It's a truism.  But not much thought is given to what it means in the lives of the citizen in the 21st century.

In May and June of 2013, Americans have been privy to the release of some disturbing state secrets:  The Federal government is collecting metadata on billions of phone calls by Verizon customers:  names of caller and callee, telephone numbers, dates, length of call.  The Federal government is collecting from all major Internet service providers complete text as well as metadata for millions of Americans who daily use gMail, Hotmail, Bing and Google, among other services.

Essentially, "All your digital are belong to us," says Barack Obama.

To a certain extent, the news is not shocking, because most sentient beings have heard rumours about this activity for some time.  The extent, and the blatant disregard for citizens' privacy -- those are shocking.

We citizens have only ourselves to thank.  We didn't have any say in the passage of the Patriot Act after the terrorist attacks in 2001.  But we certainly had a say in the continuing re-election of the legislators who passed that legislation and continued to reconfirm and even expand its scope in the subsequent twelve years.  Democrats and Republicans alike have voted carte blanche access to private activities of American citizens at home.  And voters have regularly given their approval of those votes at the polls.

Now that we're in that situation, what can we do about it?

We do have the technical, practical means to block government access to our information.  We have the technology.  We can make it better than it was.

  • Hushmail.  For nearly 15 years, Hushmail has been providing encrypted email delivery and storage.  You get a respectable amount of service for free; for $50 a year you get the additional ability to plug your hushmail account into desktop clients like Outlook and Thunderbird.  The Hushmail servers are in British Columbia, Canada.  For the US gov't to get access to your mail, it has to go through the Canadian gov't.  And it has to present a valid, legal search warrant to Hushmail in order to get the encryption key needed to read your mail. (HM does not store your key, but on presentation of a valid court order, will implement a method to capture your key when you send a mail; and use it to decrypt any mail surrendered pursuant to the court order.)
  • Silent Circle. Silent Circle provides a suite of encrypted services:  phone, text messaging, video chat, and email.  Within the circle, your communications are encrypted end-to-end.  For SC to work, both sender and receiver have to be "within the circle," i.e., members.
  • Tor. The Tor project provides a secure, anonymous network to connect to the internet.  "Tor is a network of virtual tunnels that allows people and groups to improve their privacy and security on the Internet."  The Tor browser connects to web sites through the Tor network, thus completely masking the origin of your web traffic.  
  • Orbot. The Guardian Project provides a set of applications and tools for secure data connections on smart phones.  "Orbot uses Tor to encrypt your Internet traffic and then hides it by bouncing through a series of computers around the world."  The Guardian Project also provides a secure browser, Orweb; and a secure chat tool, Gibberbot; both built around Orbot.
  • CryptoHeaven. CryptoHeaven provides secure email and messaging with encrypted storage online.  CH provides the ability to send encrypted messages to contacts who are not in the CH security realm using a ask-and-response mechanism, a one-time "key" for an encrypted message.  
  • Penango. Penango provides browser plugins for Firefox and Internet Explorer that allow you to encrypt gMail.  Penango also plugs into desktop clients like Zimbra Desktop.
  • WebPG. WebPG provides extensions for Chrome and Firefox to enable the use of GPG or PGP to encrypt/decrypt and sign emails.
  • DuckDuckGo. DuckDuckGo is an anonymized, non-filtering, non-tracking search engine.  It is available as a Chrome or Firefox extension to override the filtering that is automatically done by Google and Bing and similar search sites.

This is a suggestive, not a comprehensive, list of options.  These tools, and others like them, provide American citizens with the the abilities to inhibit and and, in many cases, absolutely block government access to digital activities.  We do not have to acquiesce in these government intrusions.  In the event that you encrypt your email, chat, file storage, phone calls and searches; what is going to happen if the government really, really wants to know about you?  Its agents are going to show up on your porch and demand that you provide them with the keys to decrypt your data.  You have to be prepared for that unlikely but highly scarifying possibility.  If you're going to crumple like a cheap tent in a breeze at the sight of an FBI badge, all your efforts to keep secret your activities will have been useless posturing.

And this is the crux of the biscuit for citizens:  it's your responsibility to defend your liberty on your doorstep as aggressively as a soldier defends her life in a far-away combat zone.  We are in this mess because too many citizens think that liberty is defended by soldiers and the right to vote is just quaint.  We voted into office the people who are implementing these policies; the only way these policies will change is if those people are voted out.  In the interim, hundreds of thousands or even millions of citizens encrypting their data, anonymizing their digital activities and taking those activities off the grid present a huge road block to the data hungry NSA and associated agencies.

So ... What are you going to do?  Suck your thumb and complain about how "you shouldn't have to do this" -- or do it?  Because, in fact, you absolutely have to take charge of your own actions as citizen.  The government is an aggregation of human beings who will go as far as you, the citizen, let them go.  Bureaucrats and legislators alike will test the limits.  Don't kid yourself -- most of you would do the same, in that position.

Sunday, May 19, 2013

Citizens and Liberty

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

This is the text of what may be the most famous, or most popularly known, of the first ten amendments to the US Constitution.  Among a significant portion of American citizens, this amendment is considered the most important.  On it, the claim is made, all the others depend.  If you don't have a "well armed" populace, you can't protect liberty from overweening government.

This claim has no basis in history.  No original supporter of the Constitution endorsed this view -- not at the time of its writing, nor at the time of its ratification, nor at the time of ratification of the first ten amendments, sometimes known as the Bill of Rights.  That does not in itself invalidate the claim.  Times change, as does our understanding of the Constitution and of our rights as citizens.  

What invalidates the claim is its assumption that liberty can only be, or even finally be, defended with weapons.

Liberty is defended by citizens living free.  It is defended by citizens who refuse to yield.
Citizen Job Action
Raoul Wallenberg diplomat issued protective passports and sheltered Jews in buildings designated as Swedish territory saving tens of thousands of lives.
Oskar Schindler businessman saved over 1000 Polish Jews by employing them in his factories and warehouses and hiding their Jewish identities
Martin Luther King minister Marches, jail and magnificent speeches to inspire Americans to do what is right
Rosa Parks secretary, civil rights activist refused to give up her seat on segregated bus
March 7, 1965 protesters "Bloody Sunday" marchers were beaten, gassed and jailed while attempting to march from Selma to Montgomery to register to vote
March 9, 1965 protesters "Turnaround Tuesday" march ended with the KKK beating to death a Unitarian minister from Boston
Ron Kovic Vietnam Vet, bronze star, purple heart, quadriplegic, antiwar protester "I had been beaten by the police and arrested twelve times for protesting the war and I had spent many nights in jail in my wheelchair. I had been called a Communist and a traitor, simply for trying to tell the truth about what had happened in that war, but I refused to be intimidated."
Nancy Wake journalist Courier between Allies and French Resistance during WWII. Her husband, a businessman, was captured by the Gestapo. Although tortured, he refused to reveal her whereabouts and was executed.
Dietrich Boenhoffer minister German anti-Hitler pastor who took part in an assassination plot, imprisoned, tortured and hanged in 1945
Freedom Riders civil rights activists May 1961, attempted to desegregate interstate bus travel, beaten and in one incident, locked inside a burning bus

All these disparate incidents have one common element: citizens who refused to yield.  Citizens.  They did not wait for the guns to arrive, they did not want guns; they did not wait for the troops to arrive; they wanted liberty.  And liberty was "liberty for all," for "injustice anywhere is a threat to justice everywhere."  By securing liberty for others, they secured it for themselves.  They understood that liberty is for those who take the risks, who act.  Liberty is not gained by killing those whom you find disagreeable nor even those who represent a real or imagined threat.  
Violence can never provide the answer. The ultimate weakness of violence is that it is a descending spiral, begetting the very thing it seeks to destroy. Instead of diminishing evil, it multiplies it. Through violence you may murder the liar, but you cannot murder the lie, nor establish the truth.  Through violence you may murder the hater, but you do not murder hate. In fact, violence merely increases hate. So it goes. Returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that.  Hate cannot drive out hate; only love can do that.  -- Martin Luther King, Jr.
In vain, the RTKBA'er fantasizes that crushing a couch cushion and banging down pounders is all that he needs to do -- because he has an arsenal of firearms in his basement.  All he has to do is kill that vague "someone" who "threatens to take away his guns."  And send more money to Glenn Beck, who will tell him who needs killing.  In the meantime, he can catch the game on TV.

"The notion of liberty amuses the people ... When a butcher tells you that his heart bleeds for his country he has, in fact, no uneasy feeling."  -- Samuel Johnson

The RTKBA'er already has agreed to warrantless and secret searches by the FBI.  He's agreed to Federal agents infiltrating and spying on local political activist organizations.  He's agreed to NSA listening posts in every telephone exchange CO.  He's agreed that protesters must be kept blocks away from delicate, sensitive politicians and multimillionaire corporate CEOs who bribe them.  He's agreed to militarized police squads, aka SWAT, that on a regular basis, break into the wrong homes and businesses, beating and even killing innocent citizens and inflicting millions of dollars of uncompensated property damage.  He's agreed to let local, state and Federal prosecutors seize and dispose of citizens' property before trial and often, even before charges.  He's agreed to indefinite imprisonment without trial, even for American citizens.  He's agreed to copyright laws that make it illegal for a shade-tree mechanic to fix the electronics on a car engine.  In fact, there's hardly any aspect of real liberty that the RTKBA'er is not willing to part with, so long as he maintains ownership of his firearms, to kill that deadly "someone" who "threatens to take away his guns."

Keep you doped with religion, and sex and TV,
And you think you're so clever and classless and free.
But you're still fucking peasants,
As far as I can see. -- John Lennon

No liberty without sacrifice.  And by "sacrifice," I mean being prepared to bear the brunt of unlawfully or immorally wielded state power: refusing to yield. Workers at lunch counters; marchers on the bridge to Montgomery; a man in a wheelchair leading a protest march; a female journalist carrying secret messages. These people didn't get up in the morning and say to themselves, "I'm going to do something heroic today, I'm going to defend liberty."  No, they just bore witness to injustice and refused to accept it, refused to yield.  Their actions came out of the moral imperative.

No sensible person is going to show up at a protest march armed with a semiautomatic rifle and engage in a firefight with police and National Guard troops.  But, you can join in and engage with your fellow citizens and put your own body on the line.  You may find yourself gassed, beaten, arrested.  For liberty.  No sensible person is going to pull out a gun and accost a group of police officers kicking and clubbing a suspect handcuffed and lying on the ground.  But, you can pull out your phone and start photographing -- you may find yourself arrested, beaten, your phone confiscated.  In extreme cases, citizens have lost their jobs.  But congratulations.  You've taken on the responsibility of a free citizen.  You refused to yield. 

Welcome to the free world.

Thursday, May 16, 2013

Fun With Economics: Keynes v Hayek

Keynes Hayek: The Clash that Defined Modern EconomicsKeynes Hayek: The Clash that Defined Modern Economics by Nicholas Wapshott

My rating: 5 of 5 stars

I must be among the few to describe as a "page turner" a book comparing the economic theories of John Maynard Keynes and Friedrich August Hayek.  The two economists are stalking horses for the two competing conceptions of modern macroeconomics -- the top-down, fiscal policy theory of Keynes and the bottom-up, monetarist theory of Hayek.  Still, guilty:  this well-written, thoroughly researched book combines history, economics and character study.  The combination results in a readable and fascinating discovery of modern economics, how the characters of men shaped its development; and the politics of its development.  Most satisfyingly, we are left at the end with uncertainty -- neither the advocates of monetarism nor those of fiscal policy having produced wholly satisfying accounts of the national economy.  This is as it should be, since the real world has not provided the empirical answer.

No depth of background nor understanding of economics as a discipline is required to read and enjoy this book.  The focus of the book is on the interplay between character, events and politics, and not on the crunching of numbers.  Even a knowledgeable reader will likely come away from this book with a better understanding of the grounds of the arguments; and especially, how the arguments between monetarists and interventionists were more shaped by the political realities of any given time, than by the empirical evidence that could lead to sound judgement. 

I regret that the texts written by Keynes and Hayek themselves, are so frequently nearly impenetrable.  "Even for a trained economist with the benefit of decades of hindsight, the differences between the two men are often erudite to the point of impenetrability," notes Wapshott at one point.  So it is that, unless we are prepared to undertake a years-long education in "the dismal science," we must submit to the transliteration of their writings by others.  The Pure Theory of Capital may one day grace my shelves, but as a reference only; and will not likely be perused end to end.

The larger, political, divide between the two accounts of economics is clear enough.  In later years, Hayek retreated ever farther from any notion of gov't intervention in the economy. He believed in privatization of "all those [services] from education to transport and communications, including post, telegraph, telephone and broadcasting services, all the so-called 'public utilities,' the various 'social' insurances and, above all, the issue of money." (Hayek,Law, Legislation, And Liberty: A New Statement Of The Liberal Principles Of Justice And Political Economy,v.3, 1979)  In Hayek's vision, the liberal utopia would be a society in which nearly every aspect of life was governed by "quasi-commercial corporations competing for citizens." (Ibid.)  Representative democracy was a "tyranny of the majority" that unnecessarily limited individual liberty and led inevitably to political corruption.

So, the great irony of this debate may be that Keynes, broadly regarded as the "revolutionary" who trampled down classical economics and its monetarist basis, emerges as the "conservative."  "Conventional conservatives have regarded Keynes as a dark and evil influence bent on undermining the free economic system.  In fact, however, he helped save the free system at a time when much more radical changes in it were being seriously advocated." (Herb Stein, 1986)  Keynes saw as his mission the "rehabilitation" of capitalism so that it would continue to outperform alternative, socialist systems.  In that respect, we may conclude that he succeeded.

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