While I acknowledge that certain limitations should, and do, apply to those freedoms commonly held as “fundamental,”[1] there was something about this phone call that I found troubling. The caller was a woman who had signed one of our online petitions (out of respect for her privacy I will not give any more details) and was requesting that her comments be removed. Apparently, her boss was not happy when he found out that she signed this particular petition and had been giving her trouble about it ever since. Now, I do not know anything about where she worked or who her boss was, so it is entirely possible that she was a federal or state employee and, as such, is prohibited by law from expressing political opinions in connection with her employment. However, if she is employed in the private sector, then I have some serious concerns.

It should not be the business of a person’s employer what political beliefs they have or what organizations they associate with outside of business hours. The act of signing a petition as a way to ensure that your voice is heard is one of the most basic ways for a person to get involved in the legislative process. The limitation of this right should not be infringed upon without a clear and substantial reason. To be clear, any infringement in this area should be rare and held to the highest level of scrutiny. Nearly every major corporation donates money to individual politicians and parties in order to gain influence. It is entirely hypocritical, and I would argue illegal, for these same employers to limit the ability of their employees to freely express their own political ideals.

Labor and trade unions are one of the most egregious violators of the principle of freedom of speech and association. Members join these organizations thinking that they will faithfully and vigorously represent their interests to management and in government. However, the vast majority of the dues paid by union members are used to advance leftist political causes and candidates without the consent of the individual members. Additionally, union bosses have recently been fighting for a bill commonly known as “Card Check.” These bosses claim that it would make it easier for workers to unionize and increase their rights in the employment process. However, the truth of the matter is that it would strip away the essential right to the private ballot. Currently, workers vote in secret as to whether or not they want to form a union. “Card Check” would allow union bosses to contact workers and ask them to sign a card that says they want to unionize. This would take away the right of the worker to make his or her own decision in the privacy of the ballot box and open up the process to pressure and intimidation.

Basic First Amendment rights, while not absolute, should not be ceded at the office door or surrendered to the will of the union. Personal determination is one of our most essential rights and should only be limited in the direst of circumstances. Employees should not have to disown their political beliefs simply because their employer may not hold the same beliefs. As long as the employee’s activities remain personal and separate from their role in the company, they should be able to freely express these ideals. Any attempt by a company or trade union to limit this right represents an unconstitutional and illegal infringement on freedom of speech.

If I had to describe the atmosphere in one word, then it would probably be “revolutionary.”  Being a Revolutionary War buff, I am always observing modern American politics through the lens of history to see how the way we do things today is connected to way they were done by the Founding Fathers.  During the earliest days of our Republic, there was a sense that this was a movement of the people.  Meetings that were held to discuss the problems facing the upstart British colonies were often uproarious and full of lively debate.  Sitting on the floor today listening to the speeches of the Congressmen and the cheers of the crowd observing, I could not help but feel a deep connection to the Founding Period.  This was truly the American spirit of liberty in action - the people actively participating in government and standing up to those that would try to silence them.

The common theme that ran through all of the speeches was that by calling the recess before the Republican minority could propose their solutions for the problem of the high price of energy, Speaker Pelosi was trying to shut out dissent to the detriment of the American people.  If the American people don’t get a vacation from the high cost of oil and gas, then why should Congress be allowed to take a five-week vacation without doing something to solve the problem?

Even though Speaker Pelosi may not like it, the simple fact of the matter is that no economically viable alternative to energy currently exists and it is essential that the United States increase its supply of domestic oil and gas.  By allowing drilling in the Outer Continental Shelf (OCS) and ANWR, we can increase domestic supplies and bring energy prices down in the short term.  The plan being proposed by the Republicans in Congress has been called an “all of the above” plan that will allow domestic drilling in the short-term while encouraging long-term development of alternative sources of energy.

Energy is one of the most critical issues the United States is currently facing.  With nearly 75% of the American people favoring offshore drilling, Speaker Pelosi has obviously forgotten the immortal principle enshrined in the Declaration of Independence that declares that “Governments are instituted among Men, deriving their just powers from the consent of the governed.”

Call Speaker Pelosi at (202)224-3121 and tell her that she must bend to the will of the people and allow open debate on real energy solutions.  

Much of the message was the same as the day before as members of Congress not only discussed the need for energy solutions now, but also educated the new visitors to the House about the history that they were witnessing. While one of the speakers was giving the background as to how the protest started, I learned that over 100 Republican Congressmen had signed up to give “5 minute speeches” that are traditionally allowed before the close of recess only to have Speaker Pelosi shut of their microphones and gavel the House into recess before they could utter a word. Talk about suppressing free speech.

One thing that the Representatives did was provide more details about the specific plans that they had for solving the energy crisis. Before the microphones were cut off, the Republicans had intended to talk about HR 6566, the so-called “American Energy Act.” Contrary to what is being said in the media by Speaker Pelosi and others, this bill could best be described as an “all of the above” solution. The bill includes provisions that would allow responsible drilling in the Outer Continental Shelf and ANWR while also providing for the development of nuclear, wind, solar, and hydro-electric power. I think Rep. Louie Gohmert said it best when he told the crowd, “People who tell you that this is just about oil are either being ignorant or dishonest.” Given Speaker Pelosi’s record and the record of the do-nothing Democratic Congress, I think it could be a little of both.

The crowd was much more active today, partly because people are learning more and more about the issue as the days go on. At one point the speeches stopped for about 3 minutes as the entire room, responding to Rep. Gohmert’s speech, erupted into a loud chant of “Vote! Vote! Vote!”

But, the day wasn’t just about the issue at hand. The most heartwarming moment of the day was when an Army soldier, who had been on a tour, walked into the gallery and was immediately led down to the middle of the floor and given a standing ovation by all in attendance.

American democracy is definitely alive and well this week.

Yesterday, we received an email from our informant within MoveOn.org (lefties, you may now begin your witch hunt) alerting us that the group would be protesting against Republican efforts to bring Congress back from vacation to work on a solution to the high cost of fuel.  The protest was scheduled for 4:00pm in front of the Statue of Ulysses S. Grant at the west front of the Capitol.  We started sending out emails, and a strong network of conservative grassroots activists instantly began coordinating a counter-protest.

At 3:45pm we arrived at the sight to figure out where the lefties were going to set up.  As it turned out, they had also alerted the main stream media, who was more than happy to provide their large cameras even though they still refuse to cover the protest going on inside the House chambers.

If you have never been to Grant’s statue, it is a two-tiered statute located in front of the reflecting pool.  In a move that would have made General Grant proud, we sat back with our compatriots and waited until the cameras were on and the MoveOn spokesman began shouting into a bullhorn.  Then, we struck.  All of a sudden, a large group of young conservatives rushed to the top tier of the statue and took the high ground.  This enabled us to be seen above the MoveOn protesters and prevented them from covering up our signs.

True to form, the lefties began freaking out and tried to violate our Constitutional right to freedom of assembly and expression.  It never ceases to amaze me that the left apparently believes that the Constitution applies only to them.  While our group remained peaceful, the lefties took to Gestapo tactics by tearing signs and physically threatening some of our folks.  To be fair, there were a few “diamonds in the rough” with whom I was able to have civil discussions about the issue.

After about 30 minutes, the left packed up and headed home.  With General Grant observing from high above, our intrepid band of conservatives congratulated one another because, once again, we had won the day.

John, at “This Ain’t Hell,” has great pictures and video of the protest.

Apparently my heels have giant spikes in them that could theoretically be turned into a shiv.

Annoying, yes.  But not shocking.

What was shocking this morning as I and some cohorts went to watch, support, and then blog about the proceedings on the House floor where some members are demanding a vote on energy, making speeches long after the House has recessed for August - is that I wasn’t even able to take a pencil and paper in.

I had wanted to take pictures.  That was forbidden.

Cell phones and any other electronics were likewise not allowed.

But I had been asked to attend for the express purpose of telling the world what went on!  With the House formally in recess until September, even C-Span wasn’t covering the events unfold on the floor.  As people walked in an out the gallery and tours were allowed onto the floor by staffers, Congressmen again and again asked that people write down the number of Speaker Pelosi so that they could call her and ask for a vote on energy.

But of course, no one could.  No one had anything so dangerous as a crayon on their person with which to record the historic occasion and jot down some observations.

Luckily, after learning that the general populace is required to leave all writing implements behind (and reading materials!  There is no reading or writing in the gallery.  I would love to see people trying to take the Constitution in) I got an escort through the cloak room to a seat where I could jot notes so that I could accurately relay what our leaders were doing.

Because no one else could.

—Winston Churchill

Recent gas prices have politicians scrambling to demonstrate that they’ll find a solution with yet another case of the common congressional “do something” syndrome. The one economically logical argument that has been forwarded by some members of Congress, and which is supported by the majority of the American people, is to allow drilling in the Arctic National Wildlife Refuge (ANWR) and the Outer Continental Shelf (OCS). Opponents of this solution have blocked it, however, arguing that opening these lands to exploration and drilling won’t affect gas prices for another five to ten years.

I’ve always struggled with the argument that we shouldn’t do anything because it won’t affect gas prices now. I fail to understand the problem with planning ahead. Even if increasing our domestic supply of oil won’t affect prices for five to ten years, I would still prefer that we take action now to reduce the prices that we’ll face in the future.

It turns out, however, that the notion that it will take five to ten years for expanded access to domestic oil reserves to affect prices is utterly absurd. Two professors of economics, Gary Pecquet of Central Michigan University and Dr. R. Morris Coats of Nicholls State University, recently found in their research that opening ANWR to drilling would lower the price of oil. I would expect that the same result would apply to allowing drilling in OCS.

This story gets better, however. Professors Pecquet and Coats submitted a paper describing the results of their research to The Energy Journal, a publication of the International Association for Energy Economics (IAEE). That paper was actually rejected by the journal. Why? Not because the referees disagreed with the results of the research. Instead, the paper was rejected because economists have known the results of the professors’ research since the 1960s, and the journal only publishes “original research that adds significantly to the body of knowledge regarding energy markets and policy.”

In other words, the argument being used by some members of Congress was disproved forty years ago. If Congress really wants to do something about gas prices, then they’ll allow drilling in ANWR and OCS now. Instead, however, it looks like far too many members of our illustrious legislative body are more interested in playing politics with valuable policy.

As I’m sure most of us are aware, The mortgage giants Fannie and Freddie Mac will be getting a government bailout from the Federal Reserve. This precedent of bailing out ailing private companies was established just this year with the Bear Stearns bailout. There will be an additional bailout of the Housing industry itself if the Senate and the House pass their Foreclosure Prevention Act (i.e., Mortgage Bailout, i.e. you lowly worker and I government wage-taker. You be happy I take your money or else…) Why is the Federal Reserve doing this? Isn’t it supposed to be a lender of last resort for banks? Well, that’s what I thought too.

It seems that the Federal Reserve, rather than providing for the stability of the market has become the controller or safeguard of the market. When it was restricted to controlling banks, that was bad enough. Aside from the subprime mortgage issues, why do you think banks were so ready to lend out money and mortgage companies had such money to give out? The Federal Reserve loaned out at such low rates, the housing bubble was unstoppable. Everyone was getting a mortgage.

Now, the financial institutions known as Freddie and Fannie will be bailed out by the Government. Ben Bernanke has said so. And it is he, not you, that is in control of the money supply and apparently where you’re taxpayer, inflated dollars go as well. Chris Dodd when interviewed by Wolf Blitzer said the other day that there was no reason to question the soundness of Freddie and Fannie. Well, in a way he’s right. The Federal Reserve will make sure they are sound, with the help of you and I and the declining, inflating dollar. Don’t take a trip to Europe anytime soon as the value of the euro/dollar exchange rate is going to get much worse if this goes through.

I find it amusing that the Federal Reserve is calling for more stringent loans standards and rules on the mortgage market. They basically have stated among other regulators that lenders would have to make sure that the borrowers were sufficiently able to pay them back. Wow! What a revelation. When I lend money, I generally seek out those who will not pay me back.

That’s finance 101, and everyone knows it. The only reason Fannie and Freddie loaned in such a reckless manner is because they were not held by the Government to the same rules other institutions were held to in conducting loans and there has always been an implicit understanding that the Federal Reserve will guarantee their solvency. The very same institution that set up the fall of these mortgage giants is now blaming them and pointing out solution (oh yeah, and giving them money to help them out). I also heard that Ben Bernanke and his crew of merry mortgage men will write papers for you in school to as well. They’ll finance your research, do it for you, and when you get a bad grade to their slipshod work they’ll pay off your teacher for an “A” with some treasury bonds. Life is beautiful.

I’m not honestly blaming Ben Bernanke here. The world he has stepped into as a Federal Banker is a world do far removed from the Austrian School and a true understanding of the market and money that it is impossible to hold him to the same standards we would hold an Austrian. He and the rest of the banking community are trying their best to keep the system from crashing down around us by temporary fixes to problems which occur from inflationary monetary policy and excessive federal taxation. True Austrian scholars claim that the only solution to a recessionary economy is to cease inflationary policy and let the economy go into free-fall, thus allowing it to heal in the shortest period possible rather than dragging it out over a long period of time with quick-fixes, like the Fannie/Freddie Bailout. In theory this sounds good but in practice I am undecided and lean towards helping the system along and slowly bringing it back to “normal”, or basically scaling the Federal Reserve system back until it essentially no longer exists. I am most fond of Milton Freidman’s plan to simply inflate the money supply according to GDP rate. While Bernanke is not a Freidmanite, he is trying to fix things.

I AM blaming men like Keynes, who helped to create this system in the first place. I have said this before and I will say it again. Keynes rationale for his defective economic and monetary policy were that we were “all dead in the long run”, and that it only mattered if we were successful in the short run. Well, thanks a lot pal. We are living in the long run, and we are having trouble filling our tanks and getting mortgages and trying to break into the job market. If any of you are seniors in college out there, start working NOW to ensure you have a job when you graduate, as it will be extremely difficult to break into a recessionary market.

This is a bad move on the part of the Federal Reserve, and it means that we all have to tighten our belts and it will be harder to make a living out there. But fear not. This is similar to the 1970’s recession (although possibly to a greater extent), and people made it through that. Hopefully in a few years we will all see the return of a prospering economy and be alert enough and intelligent enough to A) help bring back more common sense and a market that is truly free and B) prosper and catch the wave of REAL prosperity so we may personally help any ailing friends, family members or communities. One of the things government taxation does is it takes away the incentive to give. Who wants to help the homeless when an average 40% of salary is scooped up by the government?

I urge you all to learn the language of economics, avoid pitfalls for your own protection such as subprime mortgage debacles and whatever the next risky business venture is, prosper and do well, and never forget the less fortunate. Take care!

Before going to far, we might want to help bring back what they are really called. In today’s all-to-imperfect world, the term “liberal” has come to mean a host of really bad things, and the mere thought of that term has become almost a dirty word among conservatives. An Austrian Economist prefers to be mentioned by the title, “traditional Liberal”, as this means he is interested in the freedom of the individual and limited government. This is not to say a true Austrian or classical economist never factors in the morality of a particular action; on the contrary, many early Austrians considered and advised rulers according to the principles of natural law. The basic idea here is local/individual management of one’s own work and productivity, very similar in fact to the Founding Father’s principle of the “pursuit of happiness.” At the time of the inception of the Constitution, individuals were guaranteed the right by government to direct their own affairs, as long as it did not infringe on the right of another to do the same or threaten the common good/common morality. Of course today, the pursuit of happiness means do whatever you wish. NO, not according the Founders. So just watch out if anyone tries to say the same about the Austrian limited government principles. Remember, freedom is distinct from “license”.

Anyway, back to the Austrians. What is the main tenant or most important part of their philosophy? Well, they view all things in the realm of human choice. The science of human action or human choice is known as praxeology. Of particular interest to Austrian scholars is the study of one particular branch of praxeology, namely, that of cattalactics, or the study of human action in a specifically economic context. This branch of the science answers such questions as why a particular product is valued over another, and what makes people buy certain items while others are left shelved and in the “sale” bins.

At the heart of cattalactics is the study of human valuation, or what people’s value system is. A persons value will always impact their economic decisions. This is a key point to remember and get down before we proceed. A person who values the accumulation of wealth and tries to get as much as he can is no different from a nun in a cloister who forsakes all worldly possessions (economically speaking), because both the investment banker and the nun both value different things and both individuals value system must be taken into account to evaluate the decision. Fiscally, it appears that the investment banker is making the economically correct decision, but not necessarily when we are studying the bare bones of human valuation. He is simply following what he values as is the nun, and both make the correct economic decision. Specifically in the economic realm, Austrians aren’t going to tell you who’s value system is better; just that both are and need to be accounted for. (note: this does not prevent the Austrian himself from acting morally or even making moral judgments upon a particular pattern of behavior. It is simply necessary for him to accept and understand what makes different human actors value different things and factor that into his examination of the economy).

Woah! I used the word “human actor” without defining it. It’s basically a person who acts in the market, according to his value system. Let’s say there is a large surge in people buying i-Pods. (Hope I’m spelling that right and no, I don’t have one yet…although I do value music…) What caused this sudden surge? Well, something changed many human actors values to desire small, portable music players. If we examine the individuals who purchased the i-Pods, we find they all got summer jobs and all had excess money to burn. Rather than save or buy DVD’s or go to the amusement park, they instead used their money according to their value system and bought an i-Pod. Do you get the underlying principle? To understand any economic phenomenon, one must look at the values of people to understand why they do things, and that can only be achieved by noting that all people are what von Mises, one of the foremost Austrian Economists, call rational actors. All men act purposefully, and every human action is geared toward an end. This is key to understanding economics because once you know what a particular demographic group tends toward (what end there are “acting” towards), you can begin to look one, two and even three steps ahead to see how changes in the economy will effect the group and the market as a whole.[1]

What people want or value of course depends on their preference. An example is a person who eats a lot of hamburgers, but really likes or prefers steaks. He is making a decent salary and can afford to eat hamburgers, so he is grudgingly accepts the second choice. What does he do when he gets a pay-raise. “Honey!”, he shouts, “We’re having steaks!!!” He is exited because what he really wanted all along he can now afford, and now goes and buys it. Explaining why a man chooses to eat steaks over hamburgers isn’t all that intriguing, but the reasons why we can come to this conclusion are fascinating. We learn that economics are not all about charts and graphs (Classical or Austrian economists rarely use them, and then only on the micro-economic level. They view macro-economic conglomeration of data to be use-less as it tells you nothing of the individual actors and data can be easily skewed). If we have a grasp of basic economics and this conception of what people value and how this impacts the market, we can begin to see why high gas prices make people stop using cars and further, before people had even stopped using cars we will know what will happen. If one examines US policy towards oil and gas production, one would have seen that tax measures, increased demand in foreign countries and decreased production in the US would all lead to one thing: A rise in gas prices and consumer anxiety over gas. There were 11 million less miles traveled by US drivers in March. Austrian Economics will teach you how to see it, predict it and explain it. It’s just common sense applied to the market.

Now that there is a sense of how the Austrians view individual actors, let’s look at how they view the market they interact in. Austrians are really concerned with making sure the market is free. Free from government interference, preferential treatment of one sector of society over another, and rules and restrictions that hamper the entrepreneurial spirit of the business man. The idea of the free market stems from the idea of human action. As we learned, Mises and other Austrians see all men as human actors. Moreover we know that they act in accordance with their value system, or what is valuable to them. This explains what drives the free Market. Individual human actors take their money or capital and spend it in the way it benefits them. They will hunt out the best product at the best prices according to what they value, according to the principle of self-interest. This works for both consumers of goods and suppliers of goods. The consumer seeks out the lowest price good and the supplier sells at the highest rate that the individual will pay. Factoring in supply of products by sellers and demand on the part of consumers, the two reach a price. If the consumer feels it is too high he will not purchase the good as it is not in his best interest. The supplier likewise will never (unless facing a major liquidity crisis), “sell at a loss”, and can only afford to bring his products to bear on the market if he makes a profit (nothing wrong with that, he receives a recompense for risking his money on new products, hoping people will buy them. The supplier is a true entrepreneur and a “risk-taker”)

Now, some will argue that people acting in this way are somehow selfish. Greedy companies are selling to maximize profits and are only interested in themselves, and consumers are tacky and penny-pinching. That’s not the case. By acting according to self-interest and allowing competition and free trade, prices tend to go down for people. Here’s why: Suppliers in a free market always have to think (out of self-preservation) of how to undersell the other companies to make a profit. The only way to break into a market sometimes is to sell and item cheaper and better. How is this done? The entrepreneur takes an existing product and figures out how to improve upon it and the way it is produced, utilizing new technology and new ideas to make his product somehow better. The consumer recognizes this and sees it is better to buy one product over the other, and will go over to the cheaper and better one. This new product is better by default, as the seller was forced to make it better or else could not break into the market. Factoring in human action and self-interest, we see why competition is a healthy thing.

Now it is of course true that companies will go out of business due to this reason. This means that for one reason or another producer could not bring his products to the market as well as another and he wasn’t using his creative talents to the fullest. This is okay as we can see that he should be working in another sector. If we can’t produce as a farmer, perhaps he should retool and become a mechanic. This is what is called the Market “sorting itself out”, and maximizes productive capacity of all society. True there is some time in between jobs, but the alternative of a free market is far worse.

The Austrian school allows for people to make up their own minds and succeed or fail on their own merits. However, a neo-socialistic state which seeks to control the minor ups and downs which do occur in the free market makes life worse (this can be seen historically by the long Bread Lines in the U.S.S.R.) Keynes as we have said in previous posts believed the market needed to be controlled. Rather than allow people to choose what sector of the market they wanted to support, the government would. If i-Pods somehow stopped selling because a better product came out, the government in a socialist state would ask the question, “what of the i-Pod producer?” We can’t let all these people go without jobs! We’ll buy the i-Pod’s (with taxpayer money), and save the day. Not thinking even one step ahead here, this common fiscal fallacy shows the ineptitude of this type of policy. Macro control of the economy and redistribution of wealth is bad for several reasons. It takes money away from one group and gives it to another. It’s great that i-Pod can keep producing, but what of all the taxes that the citizens across the board had to pay to fund that? The government uses many such “subsidy” programs that benefit a particular sector of the market to the detriment of all the rest of the country. With enough tax measures, this seriously impairs the power of the consumer. He is not free with his money; the government is in a sense investing it for him in places he doesn’t even know exist. Earmarks that benefit certain select groups, corporate welfare to keep business afloat, subsidized housing, state grants from the Federal Treasury, even grants from the Federal Reserve Bank (see column about Fed), all are paid out of the pocket of the citizen.

Accompanied with the taxes on the consumer, businesses suffer from all kinds of terrible regulations. Complying with complicated federal rules and safety measures which rarely make sense (such as OSHA), taxes on profits (to name just a very few), make the incentive to start up a company less appealing and make it less likely that competitors will enter the market and compete, trying to undersell and improve on current products to make a living. This means less improvements on current products and les creative energy spent by entrepreneurs.

The bottom line is that the market makes more sense when it is free. It is true there are ups and downs, but at least they are determined by the majority of the people and not through legislation and taxation of a few elected officials. Macro-control arbitrarily hurts certain sectors and makes the economy dependent on the government and weakens it substantially. Base a market on what people find valuable and let them buy what they wish, not force them to pay for that which they neither need nor want.

There is a long list of Austrian scholars you should get to know. I would recommend three of the great free-market and limited government thinkers that have had a huge economic impact on the Austrian school: Ludwig von Mises, Murray Rothbard and Friedrich Hayek. Rather than give a long list of books, go instead to http://mises.org/, the definitive resource of Austrian literature. They have several FREE online material by each of the above authors as well as many more. Also check out the history of the Austrian School to further get you interested in the pursuit of greater economic understanding.

In light of recent moves by the Federal Reserve and murmurings that the government will take over Freddie Mac and Fannie Mae mortgage conglomerates (that are facing major liquidity problems due to preferential treatment and special rules applying only to them by the Federal Government), we really need to learn the inns and out of the Austrian School. We no longer have a truly free market in America. Regulations on industry and individual consumer activity in the market has led to higher gas prices, mortgage liquidity problems, rising food costs and a host of other economic woes. The ironic thing is that the people who first proposed interventionist government practices thought they would avert what they actually caused. Federal control of the economy so that NO bad outcomes EVER occur sounds wonderful in theory and I wish it were true. But in practice time and time again, the free market and human self-interest pitted against itself in the market has always come out as the best possible system in a flawed world. I urge you as young college students to learn all you can about economics and especially the Austrian school, in order to understand how the market functions and to make sound fiscal choices and avoid financial failure.