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 George Reisman's Blog on Economics, Politics, Society, and Culture

November 2007  

This blog is a commentary on contemporary business, politics, economics, society, and culture, based on the values of Reason, Rational Self-Interest, and Laissez-Faire Capitalism. Its intellectual foundations are Ayn Rand's philosophy of Objectivism and the theory of the Austrian and British Classical schools of economics as expressed in the writings of Mises, Böhm-Bawerk, Menger, Ricardo, Smith, James and John Stuart Mill, Bastiat, and Hazlitt, and in my own writings.

The contents of the blog are copyright © 2007 by George Reisman. All rights reserved. Permission is hereby granted to reproduce and distribute individual articles below electronically and/or in print, other than as part of a book. (Email notification is requested). All other rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.


Friday, November 30, 2007


In last Wednesday night’s debate among the eight Republican candidates contending for their party’s Presidential nomination, a young woman, via a YouTube video, asked the candidates an important and telling question on the subject of abortion. If abortion were made illegal, she asked, what punishment would the candidates propose for a woman who broke the law and had an abortion?

To a man, the candidates who were opposed to abortion (apparently all of them, with the exception of former New York Mayor Rudolph Giuliani) declared that there would be no punishment whatever for the woman. Only the abortionist, i.e., the physician or whoever else performed the abortion, would be punished.

Now I am not an attorney. Still less have I had any experience working in a prosecutor’s office. However, I have watched innumerable episodes of the television program “Law and Order” and similar shows. “Law and Order,” of course, is the show in which one of the Republican candidates, former United States Senator Fred Thompson, has played the role of district attorney for the last several years.

What I have learned from such shows and from casual reading on the subject is that the law punishes premeditated murder more severely than murder that is not premeditated, and also that it generally punishes the instigator and planner of a murder more severely than the person who is employed to carry out the murder. Accordingly, let us imagine that instead of a woman who has had an abortion and has paid a physician to perform it, we have a woman who has arranged the murder of her husband by means of hiring someone to do it.

I can imagine Senator Thompson, in his role as DA, telling one of his assistants to offer the suspected “hit man” a “deal,” in the form of pleading guilty to a lesser crime than Murder in the First Degree, say “Murder Two” or even “Man One,” in the vernacular of the show. The purpose of the deal, of course, would be to get the hit man to “roll” on the worse offender, in this case, the person—the woman—who employed him.

I now ask, what is different in the case of abortion, if abortion really is murder? Abortions do not occur spontaneously, in an isolated moment of disordered thinking and uncontrollable emotion. They must be planned. A woman who wants an abortion, must generally make an appointment at a medical facility to have it done. Before the abortion takes place, she will probably have to undergo an examination and tests of various kinds to be sure that the procedure does not pose an undue risk to her life or health. Thus, some period of time must elapse before the abortion actually occurs.

Especially in an environment of secrecy and stealth, of kitchen tables and coat hangers, in which abortions would once again have to be performed if they were once again made illegal, there must generally be a more or less considerable lapse of time between a woman’s forming the intent to have an abortion and being able to have it actually performed. This is because in such conditions, an abortionist cannot be found simply by looking in the yellow pages or on the internet. One can be found only through a series of discreet and time-consuming inquiries.

The inescapable conclusion to be drawn from all this is that a woman who has an abortion must not only form an intent to have it but must also maintain that intent for a more or less considerable period of time. What is the name for this if not premeditation?

Accordingly if abortion really is murder, then it is premeditated murder. And by the usual standards of justice, the guilt of the woman, as the instigator and planner of the murder, is greater, not less, than that of the physician or other party employed to carry it out.

But there is more, and it is downright scary. Most or all of the Republican candidates who oppose abortion are in favor of the death penalty for crimes such as premeditated murder. Thus, the logic of their view of abortion implies that they should not only urge the severe punishment of a woman who has an abortion, but capital punishment. Their alleged love of the life of the unborn fetus that is taken in an abortion should, in logic, lead them to urge the death of the woman who orders the taking of that life.

I must say that I am confident that the common sense and personal good will of the anti-abortion candidates would continue to prevent them from advocating any actual punishment of women who would have illegal abortions, let alone capital punishment, despite the fact that that is where the logic of their beliefs would take them. However, the same is by no means necessarily true of all of their followers and of the anti-abortion movement as a whole. In today’s world there seems to be no idea that is too bizarre to find followers once it is identified as a logical implication of a deeply rooted belief.

Hopefully, there will be a larger number of more reasonable people, who will be led to question the premise that abortion is murder. To do that, they will need to question the premise that a fetus, especially, in the early stages of pregnancy, is an actual human being. In reality, when, for example, a fetus must still be measured in mere tenths of an inch, it is simply not a human being. At that point, it is nothing more than a growth in a woman’s womb that has the potential to become a human being. Removing it is not killing a human being but simply stopping—aborting—a process that if left unchecked would result in a human being weeks or months later. Weeks or months later, there would be a human being. But not at the time of the abortion.

Unfortunately, persuading people of this elementary fact of perception can be very difficult. There are far too many people for whom seeing is not believing, but rather, if anything, believing is seeing—that is, people whose mistaken ideas are held so strongly that they override the evidence of the senses. Epistemologically, the notion that a speck in a woman’s womb is a human being is not all that different than the notion, popular elsewhere in the world, that animals carry the souls of one’s ancestors. Both notions represent seeing what just isn’t there, based on a projection from inside one’s mind.

Seeing a human being where there is none and consequently murder where there is none, serves to destroy the lives of women, and of families, who cannot afford the burden of an unwanted extra child, which they are nonetheless forced to accept because the possibility of abortion is denied them. Because of this distorted conception of things, a woman has only to become pregnant, and ownership of her body is immediately claimed by the State. Whatever plans she may have had for her future, such as gaining an education, pursuing a career, or simply enjoying her youth, are forcibly thrown aside, as she is made to live with no more choice in her own destiny than a pregnant animal. She is compelled to defer whatever hopes, dreams, and ambitions she may have had until she has completed what is tantamount to serving a twenty-year sentence in going through an unwanted pregnancy and then raising an unwanted child.

And why? By what right is such devastation inflicted on her life? The answer is that here in the United States, just as in the Middle East, there are large numbers of people who believe that the cloak of religion and their claim to be inspired by the will of God entitles them to practice lunacy, in total disregard of the suffering and harm they cause to others. Their pretended “love” and “goodness” is a sham.


Thursday, November 08, 2007


Hillary Clinton may win the Democratic Party’s nomination and go on from there to be elected President of the United States. If that happens, her husband, William Jefferson Clinton, who was President of the United States from 1993 to 2001 for two full terms, would once again be a principal occupant of the White House.

As Hillary’s spouse, not only exercising the normal substantial influence of one spouse over the other but also being in possession of eight years of actual experience in the Presidency, it would appear that Bill Clinton would thus once again effectively exercise Presidential Powers. Yet this would be in substantive violation of the Twenty-Second Amendment to the United States Constitution, which states that “No person shall be elected to the office of the President more than twice . . . .”

True enough, Bill would not have been elected more than twice, and thus his presence and activities in the White House would not technically be in violation of the Constitution. But the obvious purpose of the Twenty-Second Amendment was to limit the occupation of the Office of President, and the exercise of the powers of that Office, to two terms. Its authors did not contemplate marriage as a route to the powers of the Presidency alternative to election to that Office.

If and to the extent that Mrs. Clinton’s chances of election increase, the couple needs to find a way to guarantee that Mr. Clinton would not in fact be a three or four-term President.


Wednesday, November 07, 2007


1. Is identity theft, about which so many people are concerned, some form of mirage or is it a real phenomenon?

2. If it is a real phenomenon and identities are actually being stolen—as many thousands of victims of identity theft are prepared to swear, and as the banks and credit card companies of these victims also swear—then does it not follow that identities are a form of property? For nothing can be stolen that is not first owned by someone.

3. If identities are a form of property, are they not intellectual property, since they consist entirely of words and symbols, not the physical persons of the people to whom the identities refer?

4.If individuals do have a property right in their own identities, do they not also have a property right in the words and symbols that uniquely identify their products and services? And, by extension, do not voluntary associations of individuals, such as business partnerships and private corporations have a property right in the words and symbols that uniquely identify them and their products and services? Thus, for example, does not General Motors have a property right in its name and logo and in the names and logos of its various individual products and services? In other words, are not brand names and trademarks legitimate forms of intellectual property?

5. Are trademarks and brand names not essential for the operation of free competition, in which better producers benefit from their record of past good work and poorer producers suffer from their record of past poor work?.
I believe that the answers to these questions are all clearly “yes.”

I want to say that I recognize that we live in an age of intellectual disintegration, in which philosophers, lawyers, and judges have proved themselves capable of corrupting practically any concept. As a result, it should not be surprising that there are corruptions of the concept of intellectual property and its application. One that comes readily to mind is Ralph Lauren’s ability, according to John Stossel, to appropriate the word “Polo,” to the point that even organizations of actual polo players cannot use the word without being held guilty of violating an alleged intellectual property right of Lauren’s. The truth, of course, if Stossel is right, is that Lauren’s appropriation of the word “Polo” is a violation of their intellectual property rights.

I’ve deliberately avoided any discussion of patents and copyrights here because my purpose has been simply to establish the legitimacy of the concept of intellectual property as such.

*This article was originally a posting to the Ludwig von Mises Institute’s discussion list.


Monday, November 05, 2007


Calling falling prices per se “deflation” is one of the most serious errors one can make in economics. It’s tantamount to confusing becoming richer with becoming poorer. It leads people to believe that increases in production, which are the foundation of enrichment, but which also operate to make prices fall, are at the same time the source of depression and impoverishment.

To get matters straight, we need to clarify some things.

Prices can fall either because of more supply (i.e., more goods and services being produced and sold) or because of less demand (i.e., less money in existence and/or less overall spending of money in the purchase of goods and services).

A depression is characterized not only by falling prices, but also by a plunge in business profits (which may even become negative in the aggregate) and by a sharply increased difficulty of repaying debt. It is also characterized by mass unemployment.

While a gold standard very definitely can and probably will be accompanied by falling prices, it is not accompanied by plunging profits, a greater difficulty of repaying debt, or mass unemployment. The conjunction of these latter with falling prices is the result of a decrease in the quantity of money and volume of spending. A decrease in the quantity of money and volume of spending is the result not of a gold standard but of the incompleteness of a gold standard. It is the result of a fractional-reserve gold standard, in which gold represents only a portion of the money supply while the rest is based on debt. In such circumstances, the failure of debtors is capable of causing bank failures, which serves to reduce the quantity of money and volume of spending.

Under a full, i.e., 100-percent reserve gold standard, new and additional gold continues to be mined, and at a rate faster than gold is physically lost, e.g., in such things as shipwrecks and the burial of people with gold dental fillings in their mouths. Thus the quantity of money and volume of spending under a full gold standard increases. However, it does so at a modest rate. Prices fall under a full gold standard to the extent that the increase in the production and supply of goods and services other than gold outstrips the increase in the quantity of gold and the spending of gold.

Despite the fall in prices, the increase in the quantity of gold money and spending under a full gold standard serves to increase the economy-wide average rate of profit and interest. It does so for the simple reason that in the nature of the case there tends to be more money and spending in the economy at the time when products are sold than there was at the earlier points in time when money was expended for the means of producing those products. Thus the margin by which sales revenues outstrip costs is correspondingly increased.

Furthermore, despite the accompanying fall in prices caused by the more rapid increase in the production and supply of goods and services other than gold, the increase in the quantity of gold and the volume of spending in terms of gold serves to make the repayment of debt somewhat easier. For example, suppose that sales revenues in the economic system are rising at a two percent rate because of increases in the supply and spending of gold, but that prices are falling at a three percent rate because the supply of goods and services other than gold is increasing five percent per year. The average seller in this case will have five percent more goods to sell at prices that are only three percent less. His sales revenues will rise by two percent. He will be able to earn progressively increasing sales revenues and income despite the fall in his selling prices, because the increase in the supply of goods and services he has available to sell outstrips the fall in his selling prices to the extent of the increase in the quantity of gold money and spending.

The modest elevation of the rate of profit resulting from the increase in the quantity of gold is the opposite of what happens in a depression. So too is the greater ease rather than greater difficulty of repaying debt.

Thus, the truth is that a full gold standard, with its falling prices, is as much the enemy of deflation as it is of inflation.

As for mass unemployment: If there is a deflation, in the correct sense of a decrease in the quantity of money and/or volume of spending, then falling prices, so far from being the cause of deflation/depression are the way out of it. In such circumstances, a fall in wage rates and prices is precisely what’s needed to allow a reduced quantity of money and volume of spending to buy all that a previously larger quantity of money and volume of spending bought. If, for example, as in 1929, there was originally roughly $50 billion in payrolls employing 50 million workers at an average annual wage of $1,000 per year and now, because of deflation, there are only $40 billion of payrolls employing 40 million workers, full employment could be restored if the average wage rate fell from $1,000 to $800 per year. In that case, $40 billion could employ as many workers as $50 billion had done.

Viewing the fall in wage rates and prices that is needed to recover from deflation as itself being deflation and thus preventing the fall in wage rates and prices, as occurred under Hoover and the New Deal, serves only to perpetuate the unemployment and depression.

Confused concepts result in catastrophic consequences.

P.S. For elaboration of the points made in this discussion, see my article "
The Goal of Monetary Reform," The Quarterly Journal of Austrian Economics, Fall 2000, vol. 3, no. 3, pp. 3–18, and my book Capitalism: A Treatise on Economics, pp. 544–46, 557–59, 573–80, 809–20. See also my Daily Article The Anatomy of Deflation,” August 22, 2003.

*This essay was originally a posting to the Ludwig von Mises Institute’s discussion list.

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