Jul 31, 2014, 9:51am EDT
Today would have been the 102nd birthday of the late great Milton Friedman, winner of the 1976 Nobel Prize in Economics and 1988 Presidential Medal of Freedom. Needless to say, we miss him and could use his talents.
Friedman is considered one of the greatest economists of the 20th century, the most influential since World War II, and few would dispute, the greatest advocate ever for private markets in relation to their role of ensuring both our cherished economic and political liberties.
Influenced by Jeremy Bentham and many others of his intellectual stripe like Friedrich A. Hayek, Friedman became a celebrity in his time for his enthusiastic and unfettered discussion of the way the world really works, once taking famed talk show host Donahue to school on the role of government in society: “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government-- in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.”
“The battle for freedom,” Friedman wrote in his 1994 re-introduction to Hayek’s seminal work, The Road to Serfdom, “must be won over and over again.” //
As Friedman explained to Donahue in 1979, government enforcing contracts and preserving the rule of law and private property rights is at the core of prosperity and liberty. “Property rights, Friedman wrote in his memoir Two Lucky People with his wife Rose, “… are the most basic of human rights and an essential foundation for other human rights."
Read’s essay is no brief for anarchy. “I, Pencil” is a plea for humility among economic central planners that is desperately needed by the utopian thinkers of our day, and every era.
Leonard Read’s immortal essay “I, Pencil” has persuaded more people of the wonders of the free market than possibly any other comparable work—so many that the BBC recently posted an article attacking it. However, anyone reading both articles will conclude that Read’s pencil comes out looking sharper.
The mere fact that Read’s article can still elicit rebuttals 60 years after it appeared in the December 1958 issue of FEE’s The Freeman is testimony to its significance. As such a powerful and persuasive essay, it had to be destroyed. //
The ability to transport a product from factory to store shelf is a necessary condition for its sale—and thus, its mass production—but not a sufficient one.
If roads created businesses, then there should be no stretch of asphalt in the country not festooned with stores, shops, or offices. Roads facilitate commerce; they do not necessarily cause it. If the government bears responsibility for all the commerce that flows over its roads, then the federal government smuggled all but the 370,000 pounds of drugs stopped at legal ports of entry last year—and the U.S. Post Office trafficked all but the 40,000 pounds of drugs seized in the mails in 2017. Clearly, this is a reductio ad absurdum whether applied to narcotics or number two pencils.
The creative process begins when an entrepreneur senses the underlying need for a product or service, which is confirmed by someone’s willingness to pay for it. One might call this—to coin a phrase—the “magic of the price system.”
Furthermore, just as no Pencil Czar directs the construction of pencils, no Transportation Czar tells the company whether to transport its cargo by truck, rail, ship, drone, or private courier. The firm chooses the method of shipment that best fits its needs based on price signals. //
The second fallacious assumption is that everyone who supports the free market is an anarchist. The Lockean conception of ordered liberty tasks government with defending the right to life, liberty, and property—a position that Leonard Read and Milton Friedman happened to share. Read wrote in his lesser-known work Government—An Ideal Concept that the State should be confined to “protecting the life and property of all citizens equally, and invoking a common justice under law.” Friedman believed the government had three primary functions: to “provide for military defense of the nation,” “enforce contracts between individuals,” and “protect citizens from crimes against themselves or their property.”
The point of “I, Pencil” is best captured by Read’s successor at the helm of FEE, Lawrence W. Reed. “None of the Robespierres of the world knew how to make a pencil, yet they wanted to remake entire societies,” he wrote. Ambitious bureaucrats, eager to impose their ignorance on economics or politics, lack the information and creativity generated spontaneously by free people. “Leave all creative energies uninhibited,” wrote Leonard Read. “Permit these creative know-hows freely to flow.”
Read’s essay is no brief for anarchy. “I, Pencil” is a plea for humility among economic central planners that is desperately needed by the utopian thinkers of our day, and every era.
All of which leaves Harford without a point to make.
Thankfully, pencils have erasers. //
The second fallacious assumption is that everyone who supports the free market is an anarchist. The Lockean conception of ordered liberty tasks government with defending the right to life, liberty, and property—a position that Leonard Read and Milton Friedman happened to share. Read wrote in his lesser-known work Government—An Ideal Concept that the State should be confined to “protecting the life and property of all citizens equally, and invoking a common justice under law.” Friedman believed the government had three primary functions: to “provide for military defense of the nation,” “enforce contracts between individuals,” and “protect citizens from crimes against themselves or their property.”
The point of “I, Pencil” is best captured by Read’s successor at the helm of FEE, Lawrence W. Reed. “None of the Robespierres of the world knew how to make a pencil, yet they wanted to remake entire societies,” he wrote. Ambitious bureaucrats, eager to impose their ignorance on economics or politics, lack the information and creativity generated spontaneously by free people. “Leave all creative energies uninhibited,” wrote Leonard Read. “Permit these creative know-hows freely to flow.”
Read’s essay is no brief for anarchy. “I, Pencil” is a plea for humility among economic central planners that is desperately needed by the utopian thinkers of our day, and every era.
All of which leaves Harford without a point to make.
Thankfully, pencils have erasers.
China accounts for 70% of global REE mining and 90% of the world’s REE processing/refining. These minerals are essential for weapons systems and electronics. Beijing’s export restrictions on 12 REEs could very well disrupt the global economy and pose a risk to the U.S.’s defense supply chains. This is unsustainable and dangerous—and it has gone on for far too long. Washington must decouple.
Beijing’s practice of weaponizing its REE dominance is straight from the CCP’s unrestricted warfare playbook, a concept first outlined in 1999—combining elements of resource warfare, economic warfare, and lawfare (the CCP’s uses laws and regulations to further its national interests, when and where it sees fit).
China’s announcement to impose export restrictions on resources that it has monopolized aligns with its ongoing demands over recent months, including the demand that the U.S. change its official language regarding Taiwan independence. //
Without a state that is capable of protecting its citizens from foreign and domestic threats, its foremost responsibility, as well as ensuring economic independence, economic prosperity is not possible. National and economic security are essential building blocks.
China’s tightening of export controls should serve as a reminder of the need to decouple. //
But tariffs alone will not break China’s stranglehold on minerals. Achieving this goal will require sustained government intervention—although unfavorable to us small government proponents, it is the best path forward during such a national emergency—and a rollback of environmental and licensing regulations that CCP-backed environmental groups have been fighting for (green warfare). It was the Chinese state’s aggressive subsidization and regulation of its REE industry—coupled with destructive globalist policies—that made this dominance possible.
Unlike its rival, Intel, AMD saw the need for battery efficient chips. It bet better than Intel. It will now be competitively disadvantaged by the United States government becoming Intel’s largest single shareholder.
Apple, too, is a major player in microchip architecture. Using ARM chip architecture, which is very power efficient, Apple engineers and manufactures all its chips for its devices. The Mac uses M-chips. The iPad Pro uses M-chips. Apple’s other devices use A-series chips. Many of Apple’s processing features run faster with less power than Intel’s chips.
But, again, the United States now is the largest shareholder of Intel, which puts every other microchip company at a disadvantage. Why? Because Intel now has subsidy by taxpayers. Instead of having to let the creative destruction of the market place pick apart Intel, which has chronically made bad decisions, the leadership that made those bad decisions has been rewarded.
Uncle Sam insists it will exercise no voting with its stock. But the fine print of the deal shows Uncle Sam is getting common stock with voting rights. Saying it will not vote and not actually voting are two different things. If the situation continues and a Democrat takes back the White House, you will see ESG and DEI explode as Intel seeks to humor its largest shareholder.
This is another step down a dangerous path. Defenders will say the government bailed out Fannie and Freddie. The government bailed out General Motors. The government even bailed out Chrysler. //
The government keeps making companies too big to fail and hiding behind “national security” as the excuse. In fact, that has become the consensus talking point among defenders who will say things like, “I’m uncomfortable with this, but national security…”. It is an excuse and justification, but not reality.
Intel can now ignore most of its other shareholders. Its competitors now face a company subsidized unfairly by taxpayers. Its business decisions get to shift with the whims of political administrations.
This is a terrible decision. Donald Trump has beaten Mamdani to seizing the means of production.
Let's just say that there are some pockets being filled, and they are not yours or mine. Kerry called climate change a gold mine for investors, and he sure has been right.
Walter E. Williams -- “What is the noblest of human motivations? I would say greed.”
In this video, Friedman explains how socialism relies on force to achieve good. But using force corrupts, no matter how pure the intentions.
This is key to understanding why centralized control systems inevitably fail.
Poverty exists everywhere. The difference lies in which system gives people a real chance to rise.
Milton Friedman explains it in 2 minutes—why freer markets consistently deliver better lives for the poor, without government interference.
In less than two minutes, Milton Friedman dismantles the myth that government redistribution drives prosperity.
Spending isn't what matters. Production is.
rhhardin | July 21, 2025 at 6:23 pm
The Fed matches the number of dollars circulating to what the economy can do at once, so that the dollars don’t bid up the price of stuff that’s more than the economy can do at once, or have parts of it fall idle for lack of bidding dollars.
It does this by creating or destroying dollars.
It creates or destroys dollars by selling stuff it has (e.g. bonds) at a greater rate, or buying back stuff with newly created dollars (buying back debt, e.g.).
What regulates this selling or buying back is the target interest rate. They change this target rate in monthly meetings according to leading indicators of inflation. If inflation looks rising, it sells more debt and burns the dollars it gets. You can’t spend debt so that restricts bidding for goods and services. If inflation looks falling, it buys back more debt with newly printed dollars so there can be more bidding on goods and services. In between setting new targets, whether the market short term interest rate is above or below the target tells the fed to buy or sell more to hold the interest rate at the target.
Something gold can’t do for you.
What most people don’t understand, I think, is that money is not wealth. It is to an individual, but not to a country. Money is a ticket in line to say what the economy does next, presumably something for you. The Fed creates and destroys tickets to match what the economy can do at once.
There’s no increase or decrease in wealth, anybody’s wealth.
Maybe that takes some of the sinister magic out of it. //
rhhardin in reply to CommoChief. | July 21, 2025 at 8:36 pm
If productivity goes up 10% as well, then your $100 buys exactly what it did before. LIkewise is money velocity declines by 10%. Stuff changes and the Fed responds to keep the value of the dollar constant. Actually 2% inflation is the target because that adds stability to the economic system against sudden failures. //
Milhouse in reply to CommoChief. | July 22, 2025 at 3:03 am
Chief, the problem with a gold standard is that the gold supply grows at random, at rates that have no connection with the need for an expanded money supply. The gold supply grows and shrinks as new mines are discovered and old ones play out. If you suddenly have a huge influx from newly opened mines, you get inflation; even hyperinflation, as Europe experienced when the gold from the New World started flowing in. And if production has a major spurt, and the gold supply doesn’t increase enough to match it, then you have deflation, which is even worse than inflation; no one wants to invest money in anything, because they’re better off just sticking it in a vault and letting it appreciate on its own.
The idea of the Fed is to control the money supply and make it grow at the same rate as production does, or as close to it as possible. Now at times the Fed has failed to do this, but at least when it’s doing its job properly we can expect good results, whereas with gold it’s always up to pure chance. //
Milhouse in reply to destroycommunism. | July 22, 2025 at 2:57 am
Money doesn’t need to be “backed” by anything. It’s a medium of exchange in itself, and its value comes entirely from the fact that people are willing to accept it in exchange, confident that other people will be equally willing in turn. And they get that confidence from the fact that the IRS guarantees it will accept it, so if worse comes to worst you can use it to pay your taxes, and also from the fact that it’s legal tender, so you can discharge private debts with it whether your creditor likes it or not.
The idea that the government must be willing to sell you gold for dollars, at a fixed price, is obsolete and stupid. It reflects a mindset stuck in the olden days when gold was money and dollars weren’t themselves money but merely represented money. It’s the opposite now; dollars are money, and gold is merely a commodity, exactly like diamonds or wool. //
Milhouse in reply to rhhardin. | July 21, 2025 at 8:30 pm
What most people don’t understand, I think, is that money is not wealth. It is to an individual, but not to a country.
As Smith taught us 250 years ago! The Wealth of Nations should be required reading before anyone comments on economics in any way.
Smith destroyed the “gold equals wealth” myth by pointing out that Spain was flush with gold, but was a very poor country. Beggars had gold plates but nothing to eat off them. Whereas Poland had very little gold, but was a very rich country. Therefore the quantity of gold in a country could not be a measure of its wealth.
The Heritage Foundation's Defense Budget Tool provides a user-friendly method to aid in both the analysis and transparency of the U.S. defense budget and facilitate more informed debate about how the Department of Defense ought to be directing spending.
Until now, individual line items of the defense budgets have only been published on the website of Undersecretary of Defense (Comptroller) each year. This data is published in disparate PDFs and spreadsheets, with no mechanism for viewing all the data at once.
This tool:
- Provides an itemized accounting of the U.S. defense budget for analysis by national security experts.
- Allows a user to create customizable defense budgets that can be saved and shared for future reference.
- Makes defense budget data more accessible to Americans interested in the composition of the U.S. national security budget.
Reagan warned about unchecked government spending.
Billionaire Home Depot co-founder Ken Langone has done a 180 after blasting Trump's sweeping tariffs, explaining, "When you made a mistake, admit it."
Rapid Response 47 @RapidResponse47
·
LANGONE: "I am sold on Trump ... I think he's got a good shot at going down in history as one of our best presidents ever."
CNBC: "That is a real turnaround because you didn't want to vote for him!"
LANGONE: "When you made a mistake, admit it."
🔥🔥🔥
12:16 PM · Jul 15, 2025
They have gone to court, they have gone to the media, and they have gone to Corporate America rather than loosen their own pursestrings with an endowment estimated at over $53 billion.
Harvard and its defenders claim that accessing the money creates massive complications, due to terms and conditions of the donations and the structure of the endowment itself. A new analysis from the Wall Street Journal suggests that the main complication is that a significant amount of that money may be imaginary -- and that may open a Pandora's box on Wall Street:
Rep. Elise Stefanik (R., N.Y.) recently sought an investigation into Harvard’s financial disclosures to bondholders. She might as well have fired a bazooka at the entire private-equity industry. //
So if the SEC investigates Harvard over the valuations, it should also investigate the private-equity firms that provide them, if not the whole private-equity sector. This could be helpful. With a full-court press under way in Washington to get private-market funds, like private equity, into Americans’ 401(k) retirement plans, it’s more urgent than ever that alternative investments reflect market realities, not wishful thinking. //
The act of liquidating assets or selling stakes to raise funds for operating costs would force transparency on the true value of the endowment, and that would have a ripple effect throughout the economy. That itself might give Harvard some leverage with corporate America to kick in some cash as a donation rather than liquidate assets that might impact their own wealth estimates in the long run.
With these comments, Pulte is demonstrating that he, like his boss Donald Trump, subscribes to the standard Yellen-Bernanke inflationist model of monetary policy: the job of the central bank is to forever force down interest rates, churn out more easy money, and devalue the currency.
Pulte claims publicly that this somehow makes homes more affordable. As we’ll see below, though, the Fed’s easy-money policy of recent decades has not made home more affordable. Rather, Fed policy has helped to relentless increase home prices through the Fed’s asset purchases, interest rate policy, and monetary inflation. //
There are many factors that affect mortgage rates, of course, but over the past thirty years—and especially since 2009—falling interest rates have coincided with rising home prices. In fact, falling interest rates slightly precede rising home prices, suggesting a causal relationship.
Under MFN, U.S. drug prices would be tied to the lowest amount paid by any OECD country with at least 60 percent of our GDP per capita. That includes many countries where government-run health systems routinely undervalue breakthrough medicines and decide which treatments patients can access — and when.
That’s not competition. That’s central planning. A market price originates from voluntary exchange, not foreign bureaucrats operating under fixed budgets and political incentives.
We know where that road leads. In countries using arbitrary price-setting benchmarks, patients are routinely denied or delayed access to new medicines. By late 2022, just 34 percent of new drugs launched globally were available in France, 37 percent in Italy, and 52 percent in Germany. Compare that to nearly 75 percent in the United States. Import their pricing models, and we’ll import their rationing — and avoidable suffering. //
Strong trade pressure best confronts these abuses. Other wealthy countries should be required to meet minimum spending targets on new medicines — benchmarked to what the United States invests relative to GDP. Those spending expectations should be written into binding agreements with clear enforcement mechanisms and consequences for noncompliance.
But overseas is not the only issue; we also need to fix what’s distorting prices at home.
Begin with the supply chain middlemen. The three largest pharmacy benefit managers (PBMs) now control more than 80 percent of the prescription drug market, acting as gatekeepers between manufacturers and patients. These entities, which play no role in innovation, dictate which drugs are covered, how much patients pay, and who profits. /
In 2023 alone, the “gross-to-net bubble” — the gap between the list prices of branded drugs and net prices after rebates and other discounts — was $334 billion. In an ideal market, those savings would dramatically lower out-of-pocket costs for patients.
Instead, the system is cloaked in secrecy. Most patients are unaware of the discounts that PBMs negotiate, and they don’t see a dime of those discounts when they pick up their prescriptions. Patient cost-sharing is still based on the inflated, publicly disclosed list price — not the much lower negotiated price. //
We also need to crack down on hospital conglomerates that abuse the federal 340B program. Initially created to support low-income and rural hospitals, 340B has ballooned into a multibillion-dollar loophole.
These hospitals purchase medicines at heavily discounted prices and resell them at a steep markup — up to five times their acquisition cost — with no obligation to deliver additional care or pass savings to patients. Most 340B hospitals provide less charity care than the national average.
That said, the past few days have demonstrated how eager U.S. lawmakers are to abdicate their constitutional responsibilities entirely. House leaders — or, should I say, “leaders” — have reportedly welcomed the release of the “pocket rescission” paper, because it gave them a roadmap to lower federal spending without lawmakers having to vote on spending reductions. You know, the thing that taxpayers pay them to do.
The whole episode makes Nancy Pelosi’s “we have to pass the bill so that you can find out what’s in it” seem trivial by comparison. It also illustrates how Congress has transformed into an episode of The Simpsons, where lawmakers’ posture on reducing spending amounts to “Can’t Someone Else Do It?”
In that sense, the “pocket rescission” strategy would not only constitute a major change in the relationship between the executive and legislative branches. It also would let lawmakers “off the hook” and absolve them for their role in creating an unsustainable federal budget — an absolution they do not deserve.
In September 2007, Hillary proposed giving every American child a $5,000 “baby bond” at birth. The Republican National Committee immediately condemned it as a “budget busting baby fund.” Rudy Giuliani dismissed it as pure “pandering” to voters.
They were right then. What changed?
Trump’s version offers $1,000 per child — originally branded “MAGA Accounts,” now called “Trump Accounts.” With around 4 million births annually, taxpayers face a minimum $4 billion yearly obligation. The same policy framework Republicans spent months attacking has somehow become Republican orthodoxy. //
From a corporate finance perspective, this program creates perverse incentives that benefit wealthy families and financial institutions while providing minimal help to working Americans.
The structure allows families to contribute an additional $5,000 annually to these government-seeded accounts. Wealthy families who can afford maximum contributions receive ongoing tax shelters, while working families get a one-time $1,000 payment they likely can’t afford to supplement.
Meanwhile, Wall Street firms are already positioning to manage these accounts. Billions in new assets under management mean substantial fee income for financial institutions. Taxpayers fund the initial deposits, Wall Street collects the management fees, and wealthy families get tax advantages — a perfect trifecta for everyone except the middle class citizens who foot the bill.
Trump’s version contains another critical flaw that makes it worse than Hillary’s income-restricted proposal: no income limits and minimal citizenship verification. While children must be U.S. citizens, parents only need Social Security numbers.
This creates a massive incentive for illegal border crossings. //
Genuine America First policy should focus on proven strategies: cutting spending so working people aren’t killed by government-caused inflation, reducing regulatory burdens on small businesses, curtailing the skyrocketing costs of health insurance by repealing Obamacare, and eliminating corporate welfare programs that benefit connected elites.
Instead of creating new government programs, Republicans should expand existing vehicles like Education Savings Accounts and Health Savings Accounts that already provide tax advantages without requiring taxpayer funding.
Real pro-family policy means letting families keep more of their own money through tax cuts and other conservative reforms, not redistributing taxpayer dollars through government accounts managed by Wall Street firms.
President Trump and Sen. Cruz are sound conservatives who received bad advice from establishment insiders. But they can still correct course.
The test of conservative leadership isn’t avoiding all mistakes — it’s recognizing bad advice quickly and changing direction.
Or why I hate costly nuclear. //
Poverty has a Lost Life Expectacy(LLE) of the order of tens of billions of years per year. And we reject should-cost nuclear for fear of an occasional release that worst case, Chernobyl, properly handled, will have a public LLE of less than a 1000 years? This makes sense only if we assume a malthusian level of selfishness. But that is precisely where the nuclear establishment is. //
Jack Devanney
May 19
Edited
I rarely compliment the choir, but I do want to give a shout out to the choristers for whom nuclear's main attraction is its low CO2. For them, this was a very tough sermon. It was a call to change focus, metanoeite if you will, from what nuclear can do for the climate to what nuclear can do for the poor, and for all humanity. That's not an easy switch. For one thing, it implies that costly nuclear is not good enough. It's immoral. We must have should-cost nuclear, and that will require a complete rethink about how we regulate nuclear.
I expected something like a 5% subscriber cancellation rate. Instead we lost 7 of 2900. I thought that was impressive.
Here's your reward. If and only if we push nuclear down to its should-cost, not only will nuclear push fossil fuel out of power generation except for a bit of peaking and backup fo r unplanned outages and do so automatically, not only will EV's now be very attractive economically, but now we can talk seriously about synfuels starting with synthetic methane.
We shouldn't be stockpiling bitcoins," Dimon said when asked about how industrial policy is entwined with national security policies during a panel. "We should stockpiling guns, bullets, tanks, planes, drones, you know, rare earths. We know we need to do it. It's not a mystery."
Stock up on bullets, he advised:
"We should be stockpiling bullets," he continued. "Like, you know, the military guys tell you that, you know, if there's a war in the South China Sea, we have missiles for seven days. Okay, come on. I mean, we can't say that with a straight face and think that's okay. So we know what to do. We just got to now go about doing it. Get the people together, roll up our sleeves, you know, have the debates." //
Chelan Jim Mildred's Oldest Son
16 minutes ago
I see someone who changes their spots. His bank was still promoting DEI in February of this year and has been involved with it since 2021.
I believe he sees momentum with Trump's plan. He does not want to be left out and does not want government to harm his business. He wants to be included in the decisions.
His negativity toward BitCoin is also telling. He wants everyone still tied to the current banking system where they could tighten the screws such as was being entertained with the idea of coercing DEI on loan recipients. //
bk
4 hours ago
Here's how what identifies as the Drudge Report now linked to it:
Dimon issues chilling warning: Trump-Era Mismanagement Could Bring Down USA...
'Enemy within'...