Doomer Thomas Malthus on This Day in History

 

Malthus and the Assault on Population 

This Day in History: Economist Thomas Malthus was born on this day in 1766. He is famous for his book An Essay on the Principle of Population where he argued that human population growth would outpace food production, which would lead to societal ruin. However, Malthus was wrong. He failed to anticipate the Industrial Revolution that came after his book and people were able to produce more despite rising populations. Yet, people still cling to this Malthusian way of thinking. Paul Ehrlich in 1968 published The Population Bomb which sold millions of copies. In it he warned: “The battle to feed all of humanity is over. In the 1970s the world will undergo famines — hundreds of millions of people are going to starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate. . . .”

"The predicted famines did not occur in the 1970s or the 1980s. What did occur was a surplus of food. The apocalyptic critics in 1965 should have paid more attention to the statistics of food production. After 1950, worldwide grain production increased steadily. From 1950 through 1975, this increase was in the range of 25% to 40% per capita. In the less developed countries (excluding Communist China), the increase was in the 13% range. Between 1950 and 1980, the world’s supply of arable land grew by more than 20%, and it grew even faster in the less developed countries. From 1967 to 1977, the world’s irrigated acreage grew by more than 25%. The price of seed, fertilizer, pesticides, and farm equipment also dropped in this period, in some cases by as much as half. In the 1980’s, grain farmers all over the world suffered economic losses as a result of overproduction. While these trends may not be permanent, they did create a tremendous public relations problem for the heralded famine-predictors of the counter-culture era (1965-70)."~Gary North=

Where there was famine, it was largely due to government interference. "Zimbabwe was agriculturally rich but, with government interference, was reduced to the brink of mass starvation. Any country faced with massive government interference can be brought to starvation. Blaming poverty on overpopulation not only lets governments off the hook but also encourages the enactment of harmful, inhumane policies."~Walter Williams 

Joseph Schumpeter on This Day in History

 

This Day in History: Austrian political economist Joseph Schumpeter was born on this day in 1883. Schumpeter was one of the most influential economists of the early 20th century, and popularized the idea of "creative destruction."

According to Christopher Freeman, a scholar who devoted much time researching Schumpeter's work: "the central point of his whole life work [is]: that capitalism can only be understood as an evolutionary process of continuous innovation and 'creative destruction'".

According to Schumpeter: "Capitalism ... is by nature a form or method of economic change and not only never is but never can be stationary. ... The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates... The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in... Capitalism requires] the perennial gale of Creative Destruction."

Take for instance the Walmart Effect and now the Amazon Effect. Both companies revolutionized and changed the way people shopped, and they destroyed a lot of businesses along the way. Hence, Creative Destruction.

Schumpeter also predicted that Capitalism would weaken and collapse by devolving into Corporatism and to values hostile to capitalism, especially among intellectuals (intellectuals tend to have a negative outlook of capitalism).

Buy: The Folly of Socialism (40 Chapters) for 99 cents on Amazon

Visit a local listing for this here

See also The History & Mystery of Money & Economics-250 Books on DVDrom

For a list of all of my disks and ebooks (PDF and Amazon) click here

See also Over 300 PDF/Acrobat Books on Socialism, Communism and Economics and 300 Books on DVDrom for Libertarians, Objectivists and Voluntaryists

Capitalist Charles Dickens on This Day in History

 

This Day in History: English writer Charles Dickens was born on this day in 1812. He created some of the world's best-known fictional characters and is regarded by many as the greatest novelist of the Victorian era. His works enjoyed unprecedented popularity during his lifetime and, by the 20th century, critics and scholars had recognized him as a literary genius. His novels and short stories are still widely read today. His stories had a big impact, and the illiterate poor would pay for his stories, opening up literature to a whole new class of people. I recently read Great Expectations and his writing still holds up. He also gave us: Oliver Twist, A Tale of Two Cities, The Old Curiosity Shop, David Copperfield, Bleak House, Hard Times, The Signal-Man and much more. 

Charles Dickens had a disdain for law and lawyers, and this worked his way into some of his writings (Mr. Tulkinghorne and Uriah Heep). In A Tale of Two Cities Dickens wrote that taxes started the French Revolution. Ironically, France still has high taxes.

https://fee.org/articles/dickens-knew-taxes-started-the-french-revolution/

Dickens wrote in 1861 that American presidents no longer had the qualities of the Founding Fathers, “The system, for some reason, does not choose great men but brings to the top unknowns who have little really going for them and little really quality of greatness.”

Dickens complained of a lack of copyright protections in America, though he was actually paid royalties by three American publishers and he earned more royalties from the sale of books in the US, where he had no copyright protection, than in England, where he did.

His Bleak House had an early ode to Public Choice theory (where self-interest is the primary driving force behind all human actions). "The one great principle of the English law is, to make business for itself. There is no other principle distinctly, certainly, and consistently maintained through all its narrow turnings. Viewed by this light it becomes a coherent scheme, and not the monstrous maze the laity are apt to think it. Let them but once clearly perceive that its grand principle is to make business for itself at their expense, and surely they will cease to grumble."

Many like to portray Dickens as a Socialist, but he was a wildly successful capitalist and entrepreneur, a driving force behind the great nineteenth-century innovation of the serialized, commercial novel. 

https://blog.independent.org/2012/01/23/charles-dickens-capitalist/

See also In Defense of Scrooge

https://mises.org/library/defense-scrooge

Charles Dickens and Hans Christian Andersen

https://thebookshelf2015.blogspot.com/2018/09/charles-dickens-and-hans-christian.html

The Mysterious Charles Dickens By Lyndon Orr 1912

https://thebookshelf2015.blogspot.com/2018/07/the-mysterious-charles-dickens-by.html

Charles Dickens and "Great Expectations"

https://thebookshelf2015.blogspot.com/2017/11/charles-dickens-and-great-expectations.html

The 1850's the Greatest Decade in the History of the English Novel by William Phelps

https://thebookshelf2015.blogspot.com/2017/09/the-1850s-greatest-decade-in-history-of.html

A Look at The Victorian Novel, 1906 Article

https://thebookshelf2015.blogspot.com/2017/07/a-look-at-victorian-novel-1906-article.html

See also The Best Victorian Literature, Over 100 Books on DVDrom

Join my Facebook Group

Fascist Thomas Carlyle on this Day in History

This Day in History: Scottish historian, satirical writer, essayist, translator, philosopher, mathematician, and teacher, Thomas Carlyle, died on this day in 1881. Carlyle also gave us the idea of the Great Man: "Universal History, the history of what man has accomplished in this world, is at bottom the History of the Great Men who have worked here. They were the leaders of men, these great ones; the modellers, patterns, and in a wide sense creators, of whatsoever the general mass of men contrived to do or to attain; all things that we see standing accomplished in the world are properly the outer material result, the practical realization and embodiment, of Thoughts that dwelt in the Great Men sent into the world: the soul of the whole world's history, it may justly be considered, were the history of these." 

If you read the above and are thinking of a Randian Great Men, that is not what Carlyle had in mind. 

"He made his appearance in the midst of the age of laissez faire, a time when the UK and the US had already demonstrated the merit of allowing society to take its own course, undirected from the top down. In these times, kings and despots were exercising ever less control and markets ever more. Slavery was on its way out. Women obtained rights equal to men. Class mobility was becoming the norm, as were long lives, universal opportunity, and material progress.

Carlyle would have none of it. He longed for a different age. His literary output was devoted to decrying the rise of equality as a norm and calling for the restoration of a ruling class that would exercise firm and uncontested power for its own sake. In his view, some were meant to rule and others to follow. Society must be organized hierarchically lest his ideal of greatness would never again be realized. He set himself up as the prophet of despotism and the opponent of everything that was then called liberal." ~Jeffrey A. Tucker

As such, Thomas Carlyle can be viewed as the forefather of Fascism. His idea of a Great Man was that of a dictator. 

"Carlyle's distaste for democracy and his belief in charismatic leadership was appealing to Joseph Goebbels, who frequently referenced Carlyle's work in his journal, and read his biography of Frederick the Great to Hitler during his last days in 1945. Many critics in the 20th century identified Carlyle as an influence on fascism and Nazism." Wikipedia

"Great men are almost always bad men." Lord Acton

 

The Sixteenth Amendment on This Day in History

Tom Woods on Taxation

 The Sixteenth Amendment to the United States Constitution was ratified on this day in 1913, authorizing the Federal government to impose and collect an income tax. Before this, the government relied largely on alcohol sales for tax revenue. When they saw how much money they were raking in on income tax, the state went ahead with Prohibition of alcohol. 

"Despite pleas throughout the 1920s by journalist H.L. Mencken and a tiny handful of other sensible people to end Prohibition, Congress gave no hint that it would repeal this folly. Prohibition appeared to be here to stay — until income-tax revenues nose-dived in the early 1930s." ~Justin M. Ptak

That's right. With the great depression tax revenues kept decreasing. However, the government still wanted their money...so they repealed Prohibition in 1933 and started collecting alcohol tax again.

And yes, taxation is still theft:

"All other persons and groups in society (except for acknowledged and sporadic criminals such as thieves and bank robbers) obtain their income voluntarily: either by selling goods and services to the consuming public, or by voluntary gift (e.g., membership in a club or association, bequest, or inheritance). Only the State obtains its revenue by coercion, by threatening dire penalties should the income not be forthcoming. That coercion is known as 'taxation,' although in less regularized epochs it was often known as 'tribute.' Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects." Murray Rothbard

The FDR Myth on This Day in History

FDR was born on this day in 1882

Textbooks galore point out that President Franklin Roosevelt left a permanent stamp on the American economy. But no textbook in print explains how Roosevelt promoted what is probably the greatest economic myth of the twentieth century: the view that capitalism caused the Great Depression.

During the 1932 campaign against Herbert Hoover, Roosevelt repeated in speech after speech his view that free markets had failed America. During that election year, the U.S. economy was in tatters: 25 percent unemployment, a plummeting stock market, and rampant pessimism sapped American morale. To audiences all over the nation, Roosevelt expounded his theory of why capitalism had failed.

The boom of the 1920s had created a maldistribution of wealth, Roosevelt alleged. The rich were getting richer and the poor poorer. "Corporate profit resulting from this period was enormous," Roosevelt argued, but "very little of it went into increased wages; the worker was forgotten."¹

In fact, the poor were getting so poor they could no longer consume enough to support a robust economy, and so naturally it collapsed into depression. The solution, Roosevelt pledged, was New Deal programs for the purpose "of meeting the problem of underconsumption, of adjusting production to consumption, of distributing wealth and products more equitably."² Economists called Roosevelt’s diagnosis the "underconsumption" thesis.

During the campaign Roosevelt often flayed the capitalists, whose power had "become so disproportionate as to dry up purchasing power within any other group. . . . It is a proper concern of the Government to use wise measures of regulation which will bring this purchasing power back to normal."³ In another speech, he said that "if the process of concentration goes on at the same rate, at the end of another century we shall have all American industry controlled by a dozen corporations, and run by perhaps a hundred men. Put plainly, we are steering a steady course toward economic oligarchy, if we are not there already."⁴

The underconsumption thesis was not original with Roosevelt, but he acted on it and did more to popularize it than anyone else. But is it valid? Does the evidence support the view that (1) wealth was becoming increasingly concentrated during the 1920s, and (2) that industrial workers were not able to consume adequately because they were receiving a steadily smaller share of corporate earnings during the 1920s?

The economic statistics collected during the 1920s and 1930s give little support to Roosevelt’s ideas. In 1921 the percentage of national income received by the top 5 percent of the population was 25.5. That share remained stable throughout the decade, and by 1929 the top 5 percent received 26.09 percent of the national income.⁵ Does that microscopic increase really suggest, as Roosevelt charged, that we were "steering a steady course toward economic oligarchy, if we are not there already"?

On the second issue of worker earnings, the evidence directly refutes Roosevelt’s charges. The employee share of corporate income did not decline, but instead steadily increased during the 1920s-from under 70 percent in 1920 to well over 70 percent during the last years of the decade.⁶

As Peter Temin, an economist at MIT, concluded, "The ratio of consumption to national income was not falling in the 1920s. An underconsumption view of the 1920s, therefore, is untenable." As of 1976, Temin observed, "the concept of underconsumption has been abandoned in modern discussions of macroeconomics."⁷ In other words, the economic idea that inspired Roosevelt to launch the New Deal was so discredited it was no longer even discussed by economists just one generation after Roosevelt’s death.

Consumption Boost

But the damage was done. To boost consumption, the New Deal had given some kind of government subsidy to farmers, factory workers, veterans, and even silver miners. The era of big government in America was launched.

Why did Roosevelt err? It is tempting to argue that he manipulated data and words to win votes in the short run with an idea that had no resilience in the long run. And, too, many of his Brain Trusters urged him to promote underconsumptionist thinking.

Another possibility is that Roosevelt popularized underconsumptionist ideas because he never understood free markets in particular or economics in general. He came from a wealthy family, and his mother said they never discussed economic ideas at home. When he went off to school he apparently never studied economics seriously or disciplined his mind to study subjects logically. At Groton, the rector, Endicott Peabody, voted for Hoover in 1932, readily conceding that Roosevelt was "not brilliant." At Harvard, Roosevelt was only a C or C-plus student. He showed little interest in his introductory economics course, which he took in his sophomore year.⁸

Afterward, at Columbia Law School, his professor for a public-utilities course, Jackson E. Reynolds, said, "Franklin Roosevelt was no good as a student. He didn’t appear to have any aptitude for law, and made no effort to overcome that handicap by hard work. . . . He passed both of my courses, but he never received a degree because he flunked. Afterwards in offices downtown he made the same kind of records."⁹

Once Roosevelt was president, many of those who worked with him were startled by his undisciplined mind and economic ignorance. In a secret diary Brain Truster Raymond Moley wrote in May 1936 after a discussion with the president: "I was impressed as never before by the utter lack of logic of the man, the scantiness of his precise knowledge of things that he was talking about, by the gross inaccuracies in his statements. . . ."¹⁰

Moley suggests that both economic ignorance and political calculation shaped Roosevelt’s criticism of free markets. In any case, what we can learn from this historical episode is that bad economic ideas, if not effectively challenged, can sweep an ill-prepared man into the presidency, and permanently change the nation’s economic direction.

Burton Folsom, Jr., is historian in residence at the Center for the American Idea in Houston, Texas, and author of The Myth of the Robber Barons. He is currently working on a history of Franklin Roosevelt and the New Deal.

---

Notes

1. 1. Samuel I. Rosenman, ed., The Public Papers and Addresses of Franklin D. Roosevelt (New York: Random House, 1938), I, p. 650.
2. 2. Ibid., pp. 751-52.
3. 3. Ibid., p. 784.
4. 4. Ibid., p. 751.
5. 5. Bureau of Census, Historical Statistics of the United States (Washington, D.C.: U.S. Department of Commerce, 1975), p. 302.
6. 6. Peter Temin, Did Monetary Forces Cause the Great Depression? (New York: W.W. Norton and Co., 1976), p. 4. See also Thomas B. Silver, Coolidge and the Historians (Durham, N.C.: Carolina Academic Press, 1982), p. 136.
7. 7. Temin, pp. 4, 32.
8. 8. Geoffrey C. Ward, Before the Trumpet: Young Franklin Roosevelt, 1882-1905 (New York: Harper & Row, 1985), pp. 180, 207, and Daniel R. Fusfeld, The Economic Thought of Franklin D. Roosevelt and the Origins of the New Deal (New York: Columbia University Press, 1954), p. 23.
9. 9. Jackson E. Reynolds interview, Columbia Oral History Project, p. 42. I would like to thank Gary Dean Best for calling this interview to my attention.
10. 10. Raymond Moley diary, May 4, 1936, Hoover Institution.

Burton W. Folsom

Burton Folsom, Jr. is a professor of history at Hillsdale College and author (with his wife, Anita) of FDR Goes to War. He is a member of the FEE Faculty Network. 

This article was originally published on FEE.org. Read the original article.

The Wright Brothers and Patents on This Day in History

 

Today in History: The Wright brothers make the 1st sustained motorized aircraft flight at 10:35 AM on this day in 1903 at Kitty Hawk, North Carolina. But how much of what the Wright Brothers did led to the first airplane? 

"It is because of patent-based historiography that people believe that the Wright Brothers invented the airplane, when in fact they made only a tiny contribution of combining wing warping with a rudder. It was Sir George Cayley in Britain and Otto Lilienthal of Germany who did the bulk of the work of inventing the airplane. But it was the Wright Brothers who applied for the patent and quickly used it against Glenn Curtiss who improved wing warping with movable control surfaces." Jeffrey Tucker

The Wright brothers were so litigious with their patent that it stifled plane innovation in America. During this time the French picked up the slack and airplane technology advanced under them. In fact, when the USA entered World War 1 they had to use French planes. Many have since argued against intellectual property rights as they tend to harm new technology, economic activity, and societal wealth.

In 1851, The Economist wrote: “The granting [of] patents ‘inflames cupidity’, excites fraud, stimulates men to run after schemes that may enable them to levy a tax on the public, begets disputes and quarrels betwixt inventors, provokes endless lawsuits . . . The principle of the law from which such consequences flow cannot be just.”