Benn Steil, Special to the Financial Post Published: Thursday, November 08, 2007
Capital flows have become globalization’s Achilles heel. Over the past 25 years, devastating currency crises have hit countries across Latin America and Asia, as well as countries just beyond the borders of Western Europe — most notably Russia and Turkey. The economics profession has failed to offer anything resembling a coherent and compelling response to currency crises.
International Monetary Fund (IMF) analysts have, over the past two decades, endorsed a wide variety of national exchange-rate and monetary-policy regimes that have subsequently collapsed in failure. They have fingered numerous culprits, from loose fiscal policy and poor bank regulation to bad industrial policy and official corruption. The financial-crisis literature has yielded policy recommendations so exquisitely hedged and widely contradicted as to be practically useless. Anti-globalization economists have turned the problem on its head by absolving governments (except the one in Washington) and instead blaming crises on markets and their institutional supporters, such as the IMF — “dictatorships of international finance,” in the words of the Nobel laureate Joseph Stiglitz.
Is this right? Are markets failing, and will restoring lost sovereignty to governments put an end to financial instability? This is a dangerous misdiagnosis. In fact, capital flows became destabilizing only after countries began asserting “sovereignty” over money — detaching it from gold or anything else considered real wealth. Moreover, even if the march of globalization is not inevitable, the world economy and the international financial system have evolved in such a way that there is no longer a viable model for economic development outside of them.
The right course is not to return to a mythical past of monetary sovereignty, with governments controlling local interest and exchange rates in blissful ignorance of the rest of the world. Governments must let go of the fatal notion that nationhood requires them to make and control the money used in their territory. National currencies and global markets simply do not mix; together they make a deadly brew of currency crises and geopolitical tension, and create ready pretexts for damaging protectionism. In order to globalize safely, countries should abandon monetary nationalism and abolish unwanted currencies, the source of much of today’s instability.
The political mythology associating the creation and control of money with national sovereignty finds its economic counterpart in the metamorphosis of the famous theory of “optimum currency areas” (OCA). Fathered in 1961 by Robert Mundell, a Nobel Prize-winning economist who has long been a prolific advocate of shrinking the number of national currencies, it became over the subsequent decades a quasi-scientific foundation for monetary nationalism. Dr. Mundell, like most macroeconomists of the early 1960s, had a now largely discredited postwar Keynesian mindset that put great faith in the ability of policymakers to fine-tune national demand in the face of what economists call “shocks” to supply and demand. His seminal article, A Theory of Optimum Currency Areas, asks the question, “What is the appropriate domain of the currency area?” Dr. Mundell goes on to argue for flexible exchange rates between regions of the world, each with its own multinational currency, rather than between nations.
The economics profession, however, latched on to Dr. Mundell’s analysis of the merits of flexible exchange rates in dealing with economic shocks affecting different “regions or countries” differently; they saw it as a rationale for treating existing nations as natural currency areas. Monetary nationalism thereby acquired a rational scientific mooring. And from then on, much of the mainstream economics profession came to see deviations from “one nation, one currency” as misguided, at least in the absence of prior political integration.
Why has the problem of serial currency crises become so severe in recent decades? It is only since 1971, when U.S. president Richard Nixon formally untethered the U.S. dollar from gold, that monies flowing around the globe have ceased to be claims on anything real. All the world’s currencies are now pure manifestations of sovereignty conjured by governments. And the vast majority of such monies are unwanted: People are unwilling to hold them as wealth, something that will buy in the future at least what it did in the past. Governments can force their citizens to hold national money by requiring its use in transactions with the state, but foreigners, who are not thus compelled, will choose not to do so. And in a world in which people will only willingly hold U.S. dollars (and a handful of other currencies) in lieu of gold money, the mythology tying money to sovereignty is a costly and sometimes dangerous one. Monetary nationalism is simply incompatible with globalization.
For a large, diversified economy like that of the United States, fluctuating exchange rates are the economic equivalent of a minor toothache. They require fillings from time to time — in the form of corporate financial hedging and active global supply management — but never any major surgery. There are two reasons for this. First, much of what Americans buy from abroad can, when import prices rise, quickly and cheaply be replaced by domestic production, and much of what they sell abroad can, when export prices fall, be diverted to the domestic market. Second, foreigners are happy to hold U.S. dollars as wealth.
But the U.S. dollar’s privileged status as today’s global money is not heaven-bestowed. The dollar is ultimately just another money supported only by faith that others will willingly accept it in the future in return for the same sort of valuable things it bought in the past. This puts a great burden on the institutions of the U.S. government to validate that faith. And those institutions, unfortunately, are failing to shoulder that burden. Reckless U.S. fiscal policy is undermining the dollar’s position, even as the currency’s role as a global money is expanding.
The U.S. current account deficit is running at an enormous 6.6% of GDP — about US$2-billion a day must be imported to sustain it. The current account deficit is partially fuelled by the budget deficit, which will soar in the next decade in the absence of reforms to curtail federal “entitlement” spending on medical care and retirement benefits for a longer-living population. In the absence of long-term fiscal prudence, the United States risks undermining the faith foreigners have placed in its management of the dollar — that is, their belief that the U.S. government can continue to sustain low inflation without having to resort to growth-crushing interest-rate hikes as a means of ensuring continued high capital inflows.
It is widely assumed that the natural alternative to the dollar as a global currency is the euro. Faith in the euro’s endurance, however, is still fragile— undermined by the same fiscal concerns that afflict the dollar, but with the added angst stemming from concerns about the temptations faced by Italy and others to return to monetary nationalism. But there is another alternative, the world’s most enduring form of money: gold.
It must be stressed that a well-managed fiat money system has considerable advantages over a commodity-based one, not least of which that it does not waste valuable resources. There is little to commend in digging up gold in South Africa just to bury it again in Fort Knox. The question is how long such a well-managed fiat system can endure in the United States. The historical record of national monies, going back over 2,500 years, is by and large awful.
At the turn of the 20th century — the height of the gold standard — German philosopher Georg Simmel commented: “Although money with no intrinsic value would be the best means of exchange in an ideal social order, until that point is reached the most satisfactory form of money may be that which is bound to a material substance.” Today, with money no longer bound to any material substance, it is worth asking whether the world even approximates the “ideal social order” that could sustain a fiat dollar as the foundation of the global financial system. There is no way effectively to insure against the unwinding of global imbalances should China, with more than a trillion dollars of reserves, and other countries with dollar-rich central banks come to fear the unbearable lightness of their holdings.
So what about gold? A revived gold standard is out of the question. In the 19th century, governments spent less than 10% of national income in a given year. Today, they routinely spend half or more, and so they would never subordinate spending to the stringent requirements of sustaining a commodity-based monetary system. But private gold banks already exist, allowing account holders to make international payments in the form of shares in actual gold bars. Although clearly a niche business at present, gold banking has grown dramatically in recent years, in tandem with the U.S. dollar’s decline. A new gold-based international monetary system surely sounds far-fetched. But so, in 1900, did a monetary system without gold. Modern technology makes a revival of gold money, through private gold banks, possible even without government support.
Virtually every major argument recently levelled against globalization has been levelled against markets generally (and, in turn, debunked) for hundreds of years. But the argument against capital flows in a world with 150 fluctuating national fiat monies is fundamentally different. It is highly compelling — so much so that even globalization’s staunchest supporters treat capital flows as an exception, a matter to be intellectually quarantined until effective crisis inoculations can be developed. But the notion that capital flows are inherently destabilizing is logically and historically false. The lessons of gold-based globalization in the 19th century simply must be relearned. Just as the prodigious daily capital flows between New York and California, two of the world’s 12 largest economies, are so uneventful that no one even notices them, capital flows between countries sharing a single currency, such as the dollar or the euro, attract not the slightest attention from even the most passionate anti-globalization activists.
The world can do better. Since economic development outside the process of globalization is no longer possible, countries should abandon monetary nationalism. Governments should replace national currencies with the dollar or the euro or, in the case of Asia, collaborate to produce a new multinational currency over a comparably large and economically diversified area.
Europeans used to say that being a country required having a national airline, a stock exchange and a currency. Today, no European country is any worse off without them. A future pan-Asian currency, managed according to the same principle of targeting low and stable inflation, would represent the most promising way for China to fully liberalize its financial and capital markets without fear of damaging yuan speculation. Most of the world’s smaller and poorer countries would clearly be best off unilaterally adopting the dollar or the euro, which would enable their safe and rapid integration into global financial markets.
As for the United States, it needs to perpetuate the sound money policies of former Federal Reserve chairmen Paul Volcker and Alan Greenspan and return to long-term fiscal discipline. This is the only sure way to keep the United States’ foreign creditors, with their massive and growing holdings of dollar debt, feeling wealthy and secure. It is the market that made the dollar into global money —and what the market giveth, the market can taketh away. If the tailors balk and the dollar fails, the market may privatize money on its own.
—- - Benn Steil is director of international economics at the Council of Foreign Relations. This is an excerpt from an extensive article by Mr. Steil in Foreign Affairs last June.
Where I have power over you, I shall seek to renounce it.
Where you have power over me, I shall pray that you renounce it, and so long as it be extant, I shall condemn it.
Where there are those who would try to give me power over you, I shall denounce them and condemn them.
Where there are those who would try to give you power over me, I shall laugh at them and condemn them.
Where you would use force to sustain any putative power relationship over me, I shall condemn you and resist you, and call to my brethren in our struggle against you.
Where a tyrant, a majority, a plurality, or a minority presume to grant you power over me, or over anyone else, I shall condemn it, resist it, renounce it and denounce it.
Where there are those are who are subjugated beneath the boot heel of power, by “democratic” means or otherwise, I shall support their resistance, their condemnation, their denunciation and their renunciation.
I shall make no compromise with evil.
Signed: Michael Jude Gogulski, born free at Phoenix, Arizona, 8 August 1972.
It is a fundamental claim of feminism that women are oppressed. The word “oppression” is a strong word. It repels ant attracts. It is dangerous and dangerously fashionable and endangered. It is much misused, and sometimes not innocently.
The statement that women are oppressed is frequently met with the claim that men are oppressed too. We hear that oppressing is oppressive to those who oppress as well as those they oppress. Some men cite as evidence of their oppression their much-advertised inability to cry. It is tough, we are told, to be masculine. When the stresses and frustrations of being a man are cited as evidence that oppressors are oppressed by their oppressing, the word “oppression” is being stretched to meaninglessness; it is treated as though its scope includes any and all human experience of limitation or suffering, no matter the cause, degree or consequence. Once such usage has been put over on us, then if ever we deny that any person or group is oppressed, we seem to imply that we think they never suffer and have no feelings. We are accused of insensitivity; even of bigotry. For women, such accusation is particularly intimidating, since sensitivity is on eof the few virtues that has been assigned to us. If we are found insensitive, we may fear we have no redeeming traits at all and perhaps are not real women. Thus are we silenced before we begin: the name of our situation drained of meaning and our guilt mechanisms tripped.
But this is nonsense. Human beings can be miserable without being oppressed, and it is perfectly consistent to deny that a person or group is oppressed without denying that they have feelings or that they suffer….
The root of the word “oppression” is the element “press.” The press of the crowd; pressed into military service; to press a pair of pants; printing press; press the button.Presses are used to mold things or flatten them or reduce them in bulk, sometimes to reduce them by squeezing out the gases or liquids in them. Something pressed is something caught between or among forces and barriers which are so related to each other that jointly they restrain, restrict or prevent the thing’s motion or mobility. Mold. Immobilize. Reduce.
The mundane experience of the oppressed provides another clue. One of the most characteristic and ubiquitous features of the world as experienced by oppressed people is the double bind – situations in which options are reduced to a very few and all of them expose one to penalty, censure or deprivation. For example, it is often a requirement upon oppressed people that we smile and be cheerful. If we comply, we signal our docility and our acquiescence in our situation. We need not, then, be taken note of. We acquiesce in being made invisible, in our occupying no space. We participate in our own erasure. On the other hand, anything but the sunniest countenance exposes us to being perceived as mean, bitter, angry or dangerous. This means, at the least, that we may be found “difficult” or unpleasant to work with, which is enough to cost one one’s livelihood; at worst, being seen as mean, bitter, angry or dangerous has been known to result in rape, arrest, beating, and murder. One can only choose to risk one’s preferred form and rate of annihilation.
Another example: It is common in the United States that women, especially younger women, are in a bind where neither sexual activity nor sexual inactivity is all right. If she is heterosexually active, a woman is open to censure and punishment for being loose, unprincipled or a whore. The “punishment” comes in the form of criticism, snide and embarrassing remarks, being treated as an easy lay by men, scorn from her more restrained female friends. She may have to lie to hide her behavior from her parents. She must juggle the risks of unwanted pregnancy and dangerous contraceptives. On the other hand, if she refrains from heterosexual activity, she is fairly constantly harassed by men who try to persuade her into it and pressure her into it and pressure her to “relax” and “let her hair down”; she is threatened with labels like “frigid,” “uptight,” “man-hater,” “bitch,” and “cocktease.” The same parents who would be disapproving of her sexual activity may be worried by her inactivity because it suggests she is not or will not be popular, or is not sexually normal. She may be charged with lesbianism. If a woman is raped, then if she has been heterosexually active she is subject to the presumption that she liked it (since her activity is presumed to show that she likes sex), and if she has not been heterosexually active, she is subject to the presumption that she liked it (since she is supposedly “repressed and frustrated”). Both heterosexual activity and heterosexual nonactivity are likely to be taken as proof that you wanted to be raped, and hence, of course, weren’t really raped at all. You can’t win. You are caught in a bind, caught between systematically related pressures.
Women are caught like this, too, by networks of forces and barriers that expose one to penalty, loss or contempt whether one works outside the home or not, is on welfare or not, bears children or not, raises children or not, marries or not, stays married or not, is heterosexual, lesbian, both or neither. Economic necessity; confinement to racial and/or sexual job ghettos; sexual harassment; sex discrimination; pressures of competing expectations and judgements about women, wives and mothers (in the society at large, in racial and ethnic subcultures and in one’s own mind); dependence (full or partial) on husbands, parents or the state; commitment to political ideas; loyalties to racial or ethnic or other “minority” groups; the demands of the self-respect and responsibilities to others. Each of these factors exists in complex tension with every other, penalizing or prohibiting all of the apparently available options. And nipping at one’s heels, always, is the endless pack of little things. If one dresses one way, one is subject to the assumption that one is advertising one’s sexual availability; if one dresses another way, one appears to “not care about oneself” or to be “unfeminine.” If one uses “strong language,” one invites categorization as a “lady” – one too delicately constituted to cope with robust speech or the realities to which it presumably refers.
The experience of oppressed people is that the living of one’s life is confined and shaped by forces and barriers which are not accidental or occasional and hence avoidable, but are systematically related to each other in such a way as to catch one between and among them and restrict or penalize motion in any direction. It is the experience of being caged in: all avenues, in every direction, are blocked or booby trapped.
Cages. Consider a birdcage. If you look very closely at just one wire in the cage, you cannot see the other wires. If your conception of what is before you is determined by this myopic focus, you could look at that one wire, up and down the length of it, and be unable to see why a bird would not just fly around the wire any time it wanted to go somewhere. Furthermore, even if, one day at a time, you myopically inspected each wire, you still could not see why a bird would gave trouble going past the wires to get anywhere. There is no physical property of any one wire, nothing that the closest scrutiny could discover, that will reveal how a bird could be inhibited or harmed by it except in the most accidental way. It is only when you step back, stop looking at the wires one by one, microscopically, and take a macroscopic view of the whole cage, that you can see why the bird does not go anywhere; and then you will see it in a moment. It will require no great subtlety of mental powers. It is perfectly obvious that the bird is surrounded by a network of systematically related barriers, no one of which would be the least hindrance to its flight, but which, by their relations to each other, are as confining as the solid walls of a dungeon.
It is now possible to grasp one of the reasons why oppression can be hard to see and recognize: one can study the elements of an oppressive structure with great care and some good will without seeing the structure as a whole, and hence without seeing or being able to understand that one is looking at a cage and that there are people there who are caged, whose motion and mobility are restricted, whose lives are shaped and reduced.
The arresting of vision at a microscopic level yields such common confusion as that about the male door-opening ritual. This ritual, which is remarkably widespread across classes and races, puzzles many people, some of whom do and some of whom do not find it offensive. Look at the scene of the two people approaching a door. The male steps slightly ahead and opens the door. The male holds the door open while the female glides through. Then the male goes through. The door closes after them. “Now how,” one innocently asks, “can those crazy womenslibbers say that is oppressive? The guy removed a barrier to the lady’s smooth and unruffled progress.” But each repetition of this ritual has a place in a pattern, in fact in several patterns. One has to shift the level of one’s perception in order to see the whole picture.
The door-opening pretends to be a helpful service, but the helpfulness is false. This can be seen by noting that it will be done whether or not it makes any practical sense. Infirm men and men burdened with packages will open doors for able-bodied women who are free of physical burdens. Men will impose themselves awkwardly and jostle everyone in order to get to the door first. The act is not determined by convenience or grace. Furthermore, these very numerous acts of unneeded or even noisome “help” occur in counter-point to a pattern of men not being helpful in many practical ways in which women might welcome help. What women experience is a world in which gallant princes charming commonly make a fuss about being helpful and providing small services when help and services are of little or no use, but in which there are rarely ingenious and adroit princes at hand when substantial assistance is really wanted either in mundane affairs or in situations of threat, assault or terror. There is no help with the (his) laundry; no help typing a report at 4:00 a.m.; no help in mediating disputes among relatives or children. There is nothing but advice that women should stay indoors after dark, be chaperoned by a man, or when it comes down to it, “lie back and enjoy it.”
The gallant gestures have no practical meaning. Their meaning is symbolic. The door-opening and similar services provided are services which really are needed by people who are for one reason or another incapacitated – unwell, burdened with parcels, etc. So the message is that women are incapable. The detachment of the acts from the concrete realities of what women need and do not need is a vehicle for the message that women’s actual needs and interests are unimportant or irrelevant. Finally, these gestures imitate the behavior of servants toward masters and thus mock women, who are in most respects the servants and caretakers of men. The message of the false helpfulness of male gallantry is female dependence, the invisibility or insignificance of women, and contempt for women.
One cannot see the meanings of these rituals if one’s focus is riveted upon the individual event in all its particularity, including the particularity of the individual man’s present conscious intentions and motives and the individual woman’s conscious perception of the event in the moment. It seems sometimes that people take a deliberately myopic view and fill their eyes with things seen microscopically in order not to see macroscopically. At any rate, whether it is deliberate or not, people can and do fail to see the oppression of women because they fail to see macroscopically and hence fail to see the various elements of the situation as systematically related in larger schemes.
As the cageness of the birdcage is a macroscopic phenomenon, the oppressiveness of the situations in which women live our various and different lives is a macroscopic phenomenon. Neither can be seen from a microscopic perspective. But when you look macroscopically you can see it – a network of forces and barriers which are systematically related and which conspire to the immobilization, reduction and molding of women and the lives we live….
From: Marilyn Frye, The Politics of Reality (Trumansburg, N.Y.,: The Crossing Press, 1983).
youtube.com — Two independent filmmakers are working on a film about the Free State Project, titled A Candid World. Civil disobedience acts, like getting arrested for giving a manicure… pelting Federal buildings with snowballs… overwhelming the Legislature… and HUNDREDS of of libertarians and Ron Paul supporters massing in one place.
Alum, a natural mineral found in Europe and used by the Egyptians more than 4,000 years ago, is a shaving essential for any well-groomed man. Its antiseptic properties calm razor burn and soothe irritations, and help stop bleeding in the event of a nick or cut. The Art of Shaving Alum Block is appropriate for all skin types and can be used as an astringent for oily complexions.
Directions: After shaving, moisten stone with cold water and rub it gently on abrasion or cut. For minor cuts, moisten stone with cold water and hold it over cut for a few seconds until bleeding stops.
Not that there was any doubt that OLED is on its way to larger sizes (hasn’t it been since like 2005?), but Japanese firm Sumitomo Chemical announced its plans to produce 40-inch OLED panels for HDTVs some time in 2009, meaning Sumitomo-based TVs could hit the market in 2009 or 2010. Samsung’s old-skool 40-inch OLED HDTV prototype shown above for scale.
The quotemaster at qotd.org, G. Armour Van Horn (who signs his introductory comments “Van”) has given some hints before of having libertarian leanings. He’s suspicious of government in general, has expressed a past appreciation of Ayn Rand (with the standard disclaimers), and has a fondness for Thomas Jefferson. I’ve never sensed anything radical about him, however. Until this morning.
Today’s mailing was the first hint, the first subtle sign of blasphemy against our secular religion.
Today’s introductory comments begin, “I no longer participate in politics directly…”
Here’s the whole message:
I no longer participate in politics directly, but for months now I’ve been drawn to watching the presidential race with much the same fascination a bystander might evidence at the scene of a multiple-vehicle road accident. Alas, things appear to be getting ugly, I thought a little cynicism from the ages would be in order. Note that one of our contributors, newsman Edward R. Murrow, was born a century ago today.
“The politicians were talking themselves red, white, and blue in the face.”
– Clare Boothe Luce, 1902–1987
“Three groups spend other people’s money: children, thieves, politicians. All three need supervision.”
– Dick Armey
“The politician in my country seeks votes, affection, and respect, in that order…. With few notable exceptions, they are simply men who want to be loved.”
– Edward R. Murrow, 1908–1965
“The trouble with this country is that there are too many politicians who believe, with a conviction based on experience, that you can fool all of the people all of the time.”
– Franklin P. Adams, 1881–1960
“The whole aim of practical politics is to keep the populace alarmed – and hence clamorous to be led to safety – by menacing it with an endless series of hobgoblins, all of them imaginary.”
– Henry Louis Mencken, 1880–1956
“My choice early in life was either to be a piano–player in a whorehouse or a politician. And to tell the truth, there’s hardly any difference.”
Biographical outlines of the life and work of Murray N. Rothbard and F.A. Hayek – listing their major achievements and their accomplishments, awards and honors – are easily available. Rather, I thought I would recount a few of the many fond memories I have of these two men, which might give you a small sense of what they were like and how I felt toward them.
I first met Murray and Joey in the mid-1950s, soon after starting college, through George Reisman, who had been a friend of mine since junior high school. George and I formed part of a group of somewhat strange kids who had little in common with our fellow students. While we shared a wry sense of humor that kept us continually laughing whenever we were together, we each of us had our own private eccentricity, George’s being to read Adam Smith’s Wealth of Nations from cover to cover while still in the ninth grade. George had managed to find his way to Ludwig von Mises’ Thursday evening seminar at New York University and I began joining him when I moved back to New York City from Ithaca in 1956. It was there that I became acquainted with Murray and Joey and this soon flourished into a very close friendship.
From that time until Murray’s death in 1995 their apartment on 88th Street and Broadway was a second New York home for me whenever I visited the city and I felt as comfortable there as at my mother’s apartment in Queens. Nor was I the only regular guest. Among the regulars were George Reisman, Ralph Raico, and Leonard Liggio who, together with Murray and Joey, spent most of our time together doubled over with laughter at our burlesques of the social democratic left and the National Review right.
Murray and Joey’s guests, especially we regulars, were always warmly received and made to feel welcomed no matter how late we stayed, which occasionally was as late as five or six in the morning. Joey was a terribly generous hostess and no matter how often I or other members of our group showed up, she would bring out a tray laden with liquor and mixes.
Since we were all ardent movie fans, we often went to the movie houses on Broadway, especially to the New Yorker, a revival house that served us in the same way as does Turner Classic Movies today. And it seemed that when we weren’t spoofing our enemies or composing parody operas (Murray’s magnum opus was a Randian operetta entitled “Mozart was a Red”) we spent our evenings playing board games (nothing as intellectual as chess, mind you, but those whose boxes were customarily marked “fun for ages 8 to 80”) like Mille Borne, Monopoly, Scrabble, and, if we felt particularly adult, Diplomacy. Our favorite was Risk, which gave rise to Murray’s perennial comment, which we were forever repeating: “Harry him in the Congo!”
We were all keen political buffs, Murray – who read three or four New York newspapers every day – far more than the rest of us, and we spent the time between going to movies and playing games discussing contemporary politics and libertarian theory. We were forever posing theoretical questions that hinged on some incredibly complex issue of responsibility and trying to work out its libertarian implications. “Should I be legally culpable for the destruction of someone’s property if I am ordered to destroy it under threat of your harming my wife?” “Who’s responsible if you throw me through someone’s plate glass window?” And on and on. We spent hours trying to work out the minutiae of libertarian theory, avoiding no hard issues from children’s rights to intellectual property.
And when not debating theoretical issues, we’d end up discussing some topic in history, economics, sociology, or that day’s headlines. It soon became evident to all of us how truly amazing was the depth and breadth of Murray’s knowledge. He appears to have read everything and could cite the relevant bibliography on almost any topic that came up. One of our more erudite games involved the Book Review section of the Sunday New York Times. One of us would read the book title and as brief a description as a quick scan of the review would allow and the others would then have to guess, given the political inclinations of the Book Review’s editorial staff, who had been chosen to review the book. Looking back on those days it is amazing to me how often we guessed correctly.
Everyone familiar with Rothbard’s writings is aware that he wrote a truly prodigious amount. What is not as well known is that he seems to have totally mastered the literature in those fields in which he had an interest. He had a vast library and unlike the books in my own library, all of Murray’s books had been read, and read with care. All one need do is scan a book out of Murray’s library and he will find marginal comments in Murray’s hands scribbled on each page (“Bull____!,” “Ugh!” “Right on!”, etc.) and that almost every line on every page was underlined. One of the great mysteries for all who knew him, at least at the outset, was where on earth he found the time to turn out the dozens of books, hundreds of articles, and literally thousands of letters he wrote and on top of it to read so much. In addition to have written a massive amount he seemed to have read everything that came within his grasp, newspapers, magazines, journals, newsletters, even flyers and advertisers.
I discovered the answer to this conundrum one day when reading an interview with W. Somerset Maugham, who was asked how he could turn out so many novels and short stories when he partied every evening. His reply was that if he devoted only four hours a day to writing, he’d be able to produce three or four pages each day. That meant, he pointed out, that if he were to keep to that schedule regularly, he could produce no less than 1,000 pages a year! I don’t mean to suggest that Murray’s schedule was the same as was Maugham’s, but he certainly devoted a good part of almost every day to reading and writing and even if he spent his evenings in conversation and otherwise enjoying the company of his friends, that left him each afternoon in which to work, which he did religiously. I don’t recall ever going over to his apartment without finding him in the midst of either reading or writing.
Murray composed at the typewriter, footnoting his material in the text itself. During my last year as an undergraduate at City College I agreed to take on the job of typing the second volume of Man, Economy, and State. I must say that it was one of the most pleasurable work experiences I’ve ever had. Not only was I provided with an endless supply of Pepsi-Cola and potato chips, but I got the chance to work under two good-humored and accommodating employers who excused every failing in their employee while at the same time having had the opportunity to read and discuss a first-rate text in economic theory. One of my major subjects as an undergraduate had been economics, but I confess to have learned more economics during the six-month period I spent typing Murray’s manuscript than I did during my whole undergraduate career.
There are few things more irritating than having to defend a proposition against someone who clearly has given almost no thought to the issue but is speaking off the top of his head and Murray, like most of us, had little tolerance for such people. However, when asked to explain a point one didn’t understand or about which one was unclear Murray was extremely patient and uncomplaining and doubtless this must have accounted for why he was regarded as a fine teacher at both Brooklyn Poly and UNLV while still being incapable of suffering fools gladly.
Those of us who knew Murray in the 1950s were aware that he disliked traveling and that he had a phobia about flying. In this, as in so many other ways, Joey’s forbearance was almost superhuman as she slowly enlarged Murray’s world to include places as far away as eastern Europe, Asia, and South America. I remember with absolute clarity receiving a postcard from Murray from Washington, D.C. after his very first flight, on which he’d written in bold letters: “Finally made it!”
Murray’s strong opposition to the Vietnam War and his sympathies with the New Left’s distrust of government led, in November 1970 to his being invited to speak in Los Angeles at what I vaguely recall was billed as a Festival of Light and Freedom, or some such New Age title. Among the other speakers, if my memory serves, were Thomas Szasz, the foremost authority on the relation between psychiatry and law, Tim Leary, the apostle of LSD, Paul Goodman, the author of one of the 1960s most influential books of social criticism and the guru of the New Left, and Nathaniel Brandon, who was then archbishop of the Randian Church. The organizers’ aim, apparently, was to bring together the establishment’s major critics in the hope of creating a grand coalition that would fuse elements of the drug culture, libertarianism, and opposition to the military-industrial complex into a new impregnable alliance. But despite the many cries of “Right On” that punctuated Murray’s speech, it soon became apparent that he and most of the audience were on very different wavelengths and that their attempt to fuse Rothbard with the Grateful Dead were doomed to failure.
Most of those who participated at the Festival were simply incapable of appreciating just how conservative Murray’s approach to social issues was and that neither he nor Joey carried around their own roach clip nor were either ready to join in sharing a plate of hash brownies. Murray might have sympathized with the some of the anti-orthodox elements of the counter-culture but those who knew him were keenly aware of where he stood on love-ins, dropping acid, and turning his back on industrialism in favor of the world of unspoiled nature.
In 1974 the Mt. Pelerin Society held its meetings in Brussels and, via separate routes, Murray and Joey and I arranged to meet there. I had flown to southern France to visit Lee Brozen, who had a summer home there. She and her two boys were planning a leisurely drive to Brussels and I had agreed to accompany them. It was a marvelous trip, made even more pleasant by our decision to use a Michelin restaurant guide to determine our route.
Meanwhile, Murray and Joey had met up with Ralph Raico in Germany and they made their own way by car to Brussels. As is customary, the Mt. Pelerin meetings were held in one of the most expensive hotels in the city as befitted the fact that almost all attendees were either think-tank executives traveling on expense accounts, South American latifundia owners, for whom hundred-dollar bills were small change, or the officers of the Society itself, a self-perpetuating oligarchy who, thanks to its members’ dues, traveled around the world in first-class accommodations.
One of my fondest memories of our stay in Brussels was our first evening there. Following dinner a number of us had found ourselves in Murray and Joey’s hotel room, laughing and joking as we recounted our recent European adventures. Over the course of the evening more and more people kept dropping by, to the point where the Rothbard’s room began to look like the Marx Brothers’ cabin in A Night at the Opera. We had started to sing and, in a fit of bravado, had decided to do the whole Cole Porter canon. Someone, I think it was John O’Sullivan, maintained that he needed something to lubricate his throat if he were to sound his best.
Since Cole Porter clearly had priority, Joey opened the room’s minibar and we all helped ourselves to whatever was available. Needless to say, by the time we left the room the bar was completely empty. Neither Murray or Joey gave a thought to what their hospitality would end up costing but I can imagine the bill turned out to be staggering. I know this because, while staying at the same hotel, I made the mistake of having the hotel do eight or nine days’ worth of laundry and cleaning. I had not had the opportunity to get anything cleaned while traveling from north from the Mediterranean and figured I’d splurge instead of waiting until I got back to New York. There is no way I could have predicted what I would have been charged for a week’s worth of laundering and cleaning. I shall never forget my final bill; while the room’s substantial cost was perfectly predictable, the cleaning bill was $225.00!
F.A. Hayek began his career at the University of Chicago in the fall of 1950 and during his tenure there he was associated with the Committee on Social Thought, an interdisciplinary department headed by the eminent economic historian John Ulrich Nef. Milton Friedman reports, and there seems to be every reason to accept its accuracy, that the Department of Economics was reluctant to hire Hayek because Hayek’s approach to capital theory was at odds with Departmental orthodoxy. Equally important, Hayek’s salary while at Chicago was paid by the Volcker Fund and the Department of Economics, according to Friedman, was opposed to accepting a member appointed from outside the Department.
I first met Frederick Hayek in the fall of 1960, when I entered the Committee on Social Thought to do graduate work with him. I had been preceded the year prior by my close friend Ralph Raico, whom I had met in New York and who was a regular visitor at the home of Murray and Joey Rothbard. When I joined the Committee in 1960 Hayek had been at Chicago for ten years and was to remain for only another two. Although his tenure there was brief, he had a substantial impact both on the Committee on Social Thought and on the reputation of the University as a center for free-market thought.
Hayek was a somewhat formal man, invariably considerate and good-natured. He was immensely erudite and had a thorough knowledge of the literature in economics and social and political philosophy, both historical and contemporary, gained from books and articles in half a dozen languages. Hayek’s primary concerns, by the time he arrived at Chicago, were in the area of social theory, although he continued to remain active as an economist and regularly taught an excellent graduate course in the history of economics prior to Adam Smith.
Hayek always impressed me as self-possessed and unflappable, although he occasionally allowed himself to loosen up, at least two or three times in my presence. Hayek’s office, as were the offices of all members of the Committee on Social Thought, were on the fifth, or top, floor of the Social Sciences Building, an old Gothic structure at the corner of University Avenue and 59th Street. For some reason, probably because it had least seniority among the departments that made up the Social Sciences Division, the Committee was relegated to the eaves of the building and each of its cramped and bleak offices were jammed into its gables. Hayek’s was a particularly small office with room for one desk, a couple of chairs other than his own, a filing cabinet, and a table tucked against the wall directly across from the door.
Study on the Committee was done through tutorials, in which students studying a particular work or author would meet privately with that member of the Committee most conversant with the topic. Most of the time this presented no problem since, given the diversity of topics being studied by each of us, it was usually the case that we met alone with our instructor. In this particular case, however, for some reason there were no less than three of us meeting with Hayek at the same time, three students and only two chairs!
Having arrived last, I was compelled to use the table as a seat, which I tried to mount by turning Hayek’s wastepaper basket upside down to use as a step, all this while Hayek continued to complete the point he was making when I entered his office. It probably comes as no surprise that my attempt proved disastrous. The wastepaper basket overturned and rolled away, I fell to the ground, and the table, unable to sustain the pressure I was placing on it as I grabbed for it, tipped over, knocking one of the other student’s chairs into Hayek’s desk. All and all, the effect was that Hayek’s office looked a shambles but to my great surprise and pleasure Hayek was guffawing to the point where his eyes were tearing. It took several minutes before decorum was reestablished but my dreadful embarrassment was substantially eased by the humor Hayek seems to have found in the incident.
During the many years I knew Hayek I recall only one occasion when I saw him really angry. In occurred soon after the death of Dag Hammarskjöld, then Secretary-General of the United Nations, who was killed in a plane crash in the Congo in September 1961 while attempting to bring some order to the chaotic situation that obtained there. Hammarskjöld, an economist by training, was, like Hayek, particularly interested in business cycles. Indeed, his doctoral dissertation at the University of Uppsala had been on that topic. Unlike Hayek, however, he was a firm adherent of planned economies and of the need for government intervention in the market. Despite the ideological differences that separated them, however, Hayek and he became and remained quite friendly.
Soon after Hammarskjöld’s death, William Buckley, in some comments attacking Hammarskjöld that appeared, I seem to recall, in the pages of National Review had maintained that Hammarskjöld had been a less than honest man and had suggested that he cheated at cards – the phrase “had an ace up his sleeve” comes to mind. This attack on Hammarskjöld’s personal integrity so infuriated Hayek that he wrote a blistering letter to Buckley denouncing his maliciousness and asking that National Review stop sending him future issues of the magazine. Buckley responded to Hayek’s letter, regretting Hayek’s reaction and pointing out that the characterization was only “un jeu de mot,” but it made no difference to Hayek, whom, I believe, remained only on the most formal terms with Buckley for the rest of his life.
I indicated that Hayek was given to a certain level of formality and this was reflected in his appearance. He was extremely distinguished-looking, with an air of courtly elegance about him that, at least in my case, discouraged close familiarity. Whenever we spoke I always I called him Professor, even though the last time I saw him I was in my forties and we had known each other for over twenty years.
Hayek was not an effusive person but I suspect that he genuinely liked me. There were two occasions when he was demonstratively warm. The first occurred at a going-away dinner that was held for him by the Committee on Social Thought on the eve of his departure from Chicago in the spring of 1962. I was chosen to speak on behalf of his graduate students and among the things for which I thanked Hayek was his generosity in lending his name to the New Individualist Review, a publication several of his students on the Committee had started.
I was then the journal’s editor-in-chief and as such it fell upon my shoulders to turn down an article that had been submitted by John Nef, the Committee’s chairman. Nef, who had done excellent work in European economic history and had become one of the leading scholars in his field, had, by this point in his life, almost totally lost touch with reality. I assume that he was allowed to continue on as chairman of the Committee because the position was one in which he could do little if any damage. It was, however, somewhat of a strain on the few students on the Committee who had anything to do with him. In one case I went through a whole tutorial with him in which he referred to me by another student’s name. On leaving his office I realized that I had forgotten my umbrella and once again knocked on his door. This time he greeted me by my correct name although it had been only a matter of a couple of minutes since I left.
The situation with respect to his submission to the New Individualist Review put the editors in an impossible situation. There really were no circumstances that could justify the journal carrying Nef’s crackpot article, which was a plea that the nations of the world choose Jesus Christ to replace Dag Hammarskjöld as Secretary General of the UN. Nef seemed to take it quite well when I told him that the editors did not think that our small student journal was an appropriate home for a piece of this sort, which deserved far wider distribution.
However, he made his feelings abundantly clear at the farewell dinner given for Hayek a month later when he referred to Hayek’s graduate students – that is, the group that edited NIR, as unfeeling calculating machines whose only interest in life revolved around questions of profit and loss and that none of us was worthy of having Hayek as our supervisor. Needless to say, everyone in the room, especially Hayek, was stunned by these comments and Hayek, in his own remarks went out of his way to speak glowingly of us and, to my great pleasure, especially of me.
The second occasion when Hayek showed an unusual amount of warmth towards me was at the 1982 meeting of the Mt. Pelerin Society, which was held in Berlin. Although we had occasionally corresponded I had not seen Hayek for five or six years so it was particularly pleasant to find him active and in good health. We both entered the main reception hall where the meetings were to be held at about the same time but at opposite ends of an enormously large room, and we both appear to have noticed each other at about the same moment. Both of us began to briskly walk towards each other. Hayek appeared genuinely delighted to see me; when we met, he beamed down at me and I was surprised to find that, in shaking hands, he put his other arm around me in what amounted to a half-hug. He went on to tell me how pleased he was to see me again and that he had often thought of me. It was the last time I was to see him and I remember that meeting with great fondness and affection.
In composing these comments, it has occurred to me how terribly lucky I’ve been to have had the opportunity to get to know both Murray and Hayek. They were both truly brilliant men from whom I have profited immensely. Indeed, they – together with three other great men I’ve been fortunate enough to know or study with – have given shape to everything I’ve ever written. I can claim no originality because everything I’ve composed can be traced back to them. One of my regrets is that I did not get to know one of these three, Ludwig von Mises, better than I did. He, together with my old college professor of intellectual history, Hans Kohn, and Sir Isaiah Berlin, under whom I studied at Oxford, are all responsible for how I understand the world. But this is especially true of Murray Rothbard and Frederick Hayek, whom I knew best and whom I loved most.
July 3, 2003
Ronald Hamowy [send him mail] is emeritus professor of history at the University of Alberta. He delivered this talk at the 20th anniversary of the Mises Institute.