The plan, unveiled Sunday, is intended to signal the government is prepared to take all necessary steps to prevent the credit market troubles that erupted last year with losses from subprime mortgages from engulfing financial markets.
Yes, what is a government for, if not to save us from the impending disaster that its own policies have produced? Thank heavens for the government!
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies “should such lending prove necessary.” They would pay 2.25 percent for any borrowed funds—the same rate given to commercial banks and big Wall Street firms.
We may take it as a given that “such lending [will] prove necessary”; otherwise, these frantically fashioned keystone-cops high jinks will serve no purpose.
Note, further, however, that lending at 2.25 percent when the rate of inflation is at least twice that great means that the lender is giving away money. The real interest rate on such a loan is negative.
Worse, because the Fed itself is the lender, the loan will take the form of newly created money—that is, the loan will be pure inflation, a hidden tax on all assets denominated in dollar units, including dollar balances themselves.
The Fed said this should help the companies’ ability to “promote the availability of home mortgage credit during a period of stress in financial markets.”
Of course, the government always seeks to promote a noble purpose. And what could be more noble than pulling some leading crony capitalists away from the brink over which their own actions amply warrant their plunging? Our saviors protest, however, that the government’s every action aims only at helping the little guy. It’s music to the ears of the booboisie.
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current line of credit to the two companies and make an equity investment in the companies—if needed.
Ah, equity investment! Now were looking at overt government takeover. For laggard students, let us define socialism: government ownership and control of the major means of production (including production of financial services). In a pinch, we can always resort to socialism—after all, we are doing so only in order to save capitalism!
“Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies,” Paulson said Sunday. “Their support for the housing market is particularly important as we work through the current housing correction.”
Blah, blah, blah.
The Treasury’s plan also seeks a “consultative role” for the Fed in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed’s role would be to weigh in on setting capital requirements for the companies.
But Freddie and Fannie are publicly owned corporations; they are listed on the New York Stock Exchange and regulated by the Office of Federal Housing and Enterprise Oversight. Hence, they must meet capital requirements determined by recognized accounting standards. So, why is the Fed being injected where it is not needed? (I leave the answer to this question to the student as an exercise.)
Sen. Christopher Dodd, chairman of the Senate Banking Committee, on Monday called the Bush administration’s actions Sunday “probably the right steps” and said he will summon Paulson and Fed Chairman Ben Bernanke to a committee hearing Tuesday to answer questions.
“What’s important here as well is to calm people’s fears,” Dodd said in an interview on CBS ‘ “The Early Show.”
Of course, it wouldn’t do for the people to be afraid, even if the government’s financial house of cards is threatening to tumble down and crush them. Next, Dodd will tell us that the only thing we have to fear is fear itself—or has that line been used?
He also drew a distinction between last week’s failure of IndyMac - which engaged in originating riskier mortgages than traditional community and regional banks - and the two mortgage giants.”There’s a big difference between IndyMac and Fannie and Freddie,” Dodd said. “IndyMac engaged in very bad mortgages, luring people into deals they could never afford. That’s not the case with Fannie and Freddie.” Dodd said that while there may be more bank failures, “I’m more optimistic about Fannie and Freddie than I am about these banks.”
If Fannie and Freddie never “engaged in very bad mortgages,” then why has the stock market awakened to the fact that together they hold or insure more than $5 trillion of mortgage paper, a substantial portion of which is more or less worthless. Were those “securities” dropped on them by a monetarist helicopter? Or did these government sponsored companies simply wake up one morning and find themselves up to their eyeballs in these ever-so-iffy promises to pay and say to themselves, “How’d that happen?”
The White House, in a statement, said President Bush directed Paulson to “immediately work with Congress” to get the plan enacted. It also said it believed the steps outlined by Paulson “will help add stability during this period.”
Here’s a general rule for you amateur political economists: whenever the government justifies a policy on the grounds that it must “stabilize” something (e.g., stabilize the Middle East, stabilize Iraq, stabilize Afghanistan, stabilize the commodity markets, stabilize the financial markets, stabilize the macro economy, etc.), immediately conclude that it is up to no good and hold on to your wallet.
Senate Majority Leader Harry Reid, D-Nev., said “Senate Democrats stand ready to work with the administration to quickly and effectively address the situation currently facing these institutions.”
But, of course. Democrats and Republicans in the government belong to the same thieving gang.
House GOP leader John Boehner, R-Ohio, and Republican Whip Roy Blunt, R-Mo., said they “stand ready to work with Secretary Paulson and congressional Democrats to take appropriate steps to ensure the soundness of our mortgage markets.”
But, of course. Democrats and Republicans in the government belong to the same thieving gang.
Democratic presidential contender Barack Obama said the government’s main concern should be “to make sure that home ownership remains attainable and affordable for American families. Second, any measures should protect taxpayers and not bailout the shareholders and management of Fannie Mae and Freddie Mac.”
Evidently, Obama was absent the day the logic class took up the subject of internal consistency.
Republican rival John McCain believes the measures announced Sunday “are consistent with the goal of providing support for a path through the current duress toward steps that include regulatory reform, market discipline and mission focus,” said Douglas Holtz-Eakin, senior policy adviser.
To which the only intelligent reply is, “say what”?
Anyhow, the letter was not nearly as bad as usual. It informed us that the government, acting under authority of the Economic Stimulus Act of 2008, would soon be sending us $1,200. Usually it’s the other way around, and the agency’s letter invites us to send it more of our money than we have already sent. Well, we understand, of course: when the government identifies someone who deserves to get our money more than we deserve to keep it, simple justice requires that we pass it along to KBR (formerly Kellogg Brown & Root), Lockheed Martin, and other widows or orphans. Besides, if we kept the money, we’d probably just end up wasting it, whereas the Department of Defense watches every cent with an eagle eye. Ditto for Health and Human Services. We don’t call those people “public servants” for nothing; they really put their hearts into their jobs.
According to the economists, for what their opinion is worth, the economic stimulus act will dish out about $160 billion, of which approximately $110 billion will go to deserving folks like my wife and me, and the rest will go to deserving businesses that would like to write off more of the expenses they incur for making certain investments. Don’t laugh, now! Just because $160 billion is not likely to keep afloat a sinking supertanker-sized economy with a GDP of more than $14 trillion does not entitle you to classify this sum as chump change. On the road where I live, it’s still a substantial amount of money.
There is, however, a little catch for you younger people: because the government was already running a deficit, its outlays for the stimulus payments must all be covered by borrowing, which means that the public debt will rise by the full amount of the payments. And guess who will be responsible for servicing that additional debt and paying it off when it matures. If you said “we, the U.S. taxpayers, will be responsible,” then give yourself an A in the course. In short, we are getting a check from the government today, but at the same time, we are also being given the privilege of paying that same amount back, with interest, in the future.
I’m not too worried myself; I’m old, and I will probably be dead long before my pro rata share of this obligation hits me very hard. For you younger people, it’s a different matter. As for me, I’m relying on two of my firmest beliefs: (1) dead men don’t wear plaid, and (2) they don’t get letters from the IRS, either. Or, if they do, they are, shall we say, unmoved by them.
Okay, okay, you are saying. Nothing is more humdrum than another exposure of a hypocritical congressman–naturally Fossella specialized in socially conservative positions that appealed to his many Catholic constituents. But such always-gratifying revelations have a larger lesson to teach us: a member of Congress will not be forgiven a personal peccadillo, but he may with complete impunity commit the greatest crimes–grand larceny, mass murder, arson, and every other species of abomination–by authorizing and funding their commission by government agents. Indeed, not only may a member of Congress act as an accessory to great crimes, he is expected to do so, and rewarded lavishly by the public with re-election to office and all the honors and aggrandizements that accompany his entrenchment in that occult and wicked temple known as the Capitol. S
Steal a hundred dollars, go to jail; steal a trillion dollars, go on to fame and fortune as a public servant. Kill one man, go to the gas chamber; kill a million people, go on to well-paid retirement at public expense and big bucks on the lecture circuit. Alert children are learning these lessons, and acting accordingly when they become old enough to run for election to public office.
Not only have Americans split the atom, they have–mirabile dictu–split their moral sense. Countless actions for which any ordinary person would be denounced to the heavens will serve to sustain a lifetime’s political career. Lie, cheat, and steal and your friends will condemn and abandon you, but do the same on a hugely greater scale in your capacity as a public representative and the voters will stand by you to the end.
Just don’t father an out-of-wedlock child. That’s so vile!
The flier explains that the TSA’s invasion of my property was “to protect you and your fellow passengers” and is “required by law,” at which point it cited in a footnote Section 110(b) of the Aviation and Transportation Security Act of 2001. I was underwhelmed by this feeble effort to provide a legal basis for the government’s vandalism and its violation of what is laughingly known as my Constitutionally protected rights.
The flier notes that the TSA “appreciate[s] your understanding and cooperation,” as if I had willingly rendered either to this obnoxious state agency, and it adds that “if you have questions, comments, or concerns, please feel free to contact the TSA Contact Center” at a phone number or an Internet address provided. It so happens that I do have questions, comments, or concerns for the agency, but I am not going to send them to the places indicated on the flier because I have complete confidence that my message would be given even less weight than the most elusive subatomic particle (which, by some cosmic coincidence, is known as the Higgs boson).
Still, I am willing to divulge my questions, comments, or concerns to this blog, to wit: How does the TSA, or the enabling legislation on which it rests its warrantless invasions of persons and property, square itself with the Fourth Amendment of the Constitution of the United States? This part of the Bill of Rights states: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be searched.” The Constitution also declares that it is “the supreme Law of the Land,” which I take to mean, among other things, that it overrides anything to the contrary stipulated by the Aviation and Transportation Security Act of 2001. Forgive me if I have failed to acquire mastery of Constitutional law, but on the face of the matter, the TSA’s actions and its enabling legislation would appear to be in transparent conflict with the Fourth Amendment and the Supremacy Clause.
Fine, you say, that’s all well and good, but it makes no difference to the TSA, which has been given a “job” to do, or to the travellers who wish to use the services of the airlines to go from A to B without having to overthrow the existing government of the United States to do so unmolested. As Dirty Harry Callahan put it, “a man’s got to know his limitations.” Judging by the travellers I see when I use the airlines, the people do know their limitations, and they behave themselves accordingly, like sheep.
As for the Constitution, well, it has demonstrated time and again that it can slink away without causing a ruckus. As the U.S. government’s Dear Leader himself has famously said of the Constitution, which he previously swore to preserve, protect, and defend, “it’s just a goddamned piece of paper.”
Skelton, who is chairman of the House Armed Services Committee, said he was also disturbed by the ties between the military officers and defense firms.”
‘It hurts me to my core to think that there are those from the ranks of our retired officers who have decided to cash in and essentially prostitute themselves on the basis of their previous positions within the Department of Defense,’ he said.”
When members of Congress assume this shocked pose and spout such nonsense to the press, we may rest assured that they do indeed take us for fools. The congressman is hurt to his core, he says, to think that former military officers may be cashing in on their previous military service and their connections with former associates still at the Pentagon. Well, let’s see: this sort of thing has been going on actively for only sixty-five years or so. If Congressman Skelton has not yet become aware of it, especially given his service on the House Armed Services Committee, we may fairly conclude that the man is blind, deaf, and dumb. Come to think of it, reaching that conclusion would be more reassuring than knowing the truth about Skelton and his ilk.
Crossposted at The Beacon.
Along the way, Keynes digressed to discuss why the European governments’ inflation of their money stocks during and after the war portended grave consequences. Although Keynes is not ordinarily cited as a strong anti-inflationist–indeed in important ways, his later views helped to create a well-nigh inevitably inflationary system of government macroeconomic interventionism–I know of no stronger statement against inflation
than the one he expressed on pp. 235-36 of his book. It reads as follows:
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
Crossposted at The Beacon.
The alternative, of course, the modern, sophisticated setup that hardly anybody can imagine doing without, comprises fiat money, legal-tender laws, fractional-reserve banks, a central bank, and a cornucopia of regulations on money, banks, and nearly everything they touch, which is now pretty much everything in existence.
And how cool is that? Why, without this modern monetary regime, we might never have experienced the grandeur of the Great Depression or the thrilling 95 percent shrinkage of the dollar’s purchasing power since the Federal Reserve System’s creation in 1913. We’d have been forced to forgo even the joys of stagflation in the 1970s, because we’d have had no serious inflation to combine with the real stagnation. Christ, Jimmy Carter might never have been elected, and—horror of horrors—we’d have had to endure four more years of newspaper stories about Gerald Ford’s stumbling over his own feet or hitting his head against something.
So, obviously, gold bugs are too old-fashioned for us to abide. Instead, we moderns vastly prefer, in effect, theft bugs, because the inflation that is inherent in the modern politico-monetary (dis)order entails, among other evils, a hidden tax on all those who hold assets denominated in dollars and who fail to anticipate the impending depreciation of the dollar and to rearrange their affairs to compensate for it. Stealing is good, of course, especially if you are a professional thief, as any politician can attest, and being able to pull off a heist without the victim’s even knowing that he’s been fleeced is fabulous, indeed.
As John Maynard Keynes wrote in one of his more insightful moments (The Economic Consequences of the Peace , p. 236), “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
Once again, we may regret that Keynes’s German was so poor. Otherwise, he might have understood better and taken to heart what Ludwig von Mises wrote in his first book, published in 1912, Theorie des Geldes und der Umlaufsmittel (first English translation, The Theory of Money and Credit, 1934). In that event, the world might have been spared an enormous amount of unnecessary grief.
Or maybe not. We often suppose that but for the words or deeds of a particular “great man,” the course of history would have been different. But where there is one fool, there may be another. Without Keynes, someone else’s very similar ideas might have taken hold with equally unfortunate effect. Besides, ideas--good, bad, and indifferent--are always contending for acceptance and for influence over actions. Those who propound pernicious ideas deserve censure, but those who accept bad ideas must also bear a share of the blame for their evil consequences.
Crossposted at The Beacon.
In any event, my little commentary proved to have legs, and it was posted and linked at many other sites, where it sparked a great deal of additional discussion, as well as many e-mail messages sent directly to me. Most of these messages came from scientists in the physical and biological sciences who agreed with my views and often told me stories about their own experiences that confirmed my general statements. Other correspondents wrote to tell me that I was all wet or that I was a fool, as if at this late date I didn't already know. Many such ad hominem dismissals and similarly abusive personal characterizations appeared amid the give-and-take at various blog sites. In venturing onto the blogosphere, one stands to benefit greatly from having a thick skin.
Like those zombies in"The Night of the Living Dead," however, my remarks refuse to die. Their most recent reappearance, poking their ghastly fingers through the boarded-over windows of the House of Science, is at the Peer-to-Peer blog Nature.com. The editor at Nature tells me that this site receives more than 8,000 visits daily, presumably by scientists or persons with a keen interest in science, so perhaps the crème de la crème of the scientific world will now demolish my views once and for all.
Suffice it to say that when I first wrote my little commentary, in response to David Beito's suggestion that, as a contributing editor of Liberty & Power, I ought actually to contribute something, I had no idea how much unhappiness I would add to the already-bloated sum total of misery in the world.
Recently, for example, a fellow contributing editor of the History News Network's Liberty & Power Group Blog―let's call him Mr. X―made a post to call attention to a new blog. He might have done so by stating:
Those interested in science and peer review issues might be interested in a new blog, http://scienceblogs.com/clock/.
But, instead, he wrote:
Those interested in science and peer review issues for more than finding lame reasons to discount work on global warming might be interested in a new blog, http://scienceblogs.com/clock/.
Now, regular readers of Liberty & Power will recall that not long ago, on May 7, I posted a short article at this site under the heading"Peer Review, Publication in Top Journals, Scientific Consensus, and So Forth" and that a lively discussion ensued in which Mr. X and several others debated various issues related to my article, in particular, issues bearing on the subject of human-caused global warming. In that discussion and others at the same site, Mr. X expressed strong claims for his position and suggested in so many words that those who disagreed with his views were, shall we say, personally deficient in some way, although the nature of the deficiency―whether it was intellectual, moral, or ideological―usually remained murky in the midst of exchanges that sometimes grew rather heated.
Well, all right, Mr. X is scarcely the only person with strong feelings about the science of global climate change, its methods, and its findings. But now, when he revisits this topic, he inserts in his post a gratuitous and backhanded characterization of those who disagreed with him earlier as"those interested in science and peer review issues [only] for . . . finding lame reasons to discount work on global warming." Disregard the clumsy sentence construction―after all, it makes little sense to suppose that anyone seeks"lame reasons" to support his views―and consider only the writer's inclusion of an uncalled-for insult in his statement. In 1944, F. A. Hayek dedicated his great anti-socialist tract The Road to Serfdom, evidently with complete sincerity, to"the socialists of all parties." Mr. X, however, feels no obligation to extend the same sort of courtesy to his intellectual opponents (as he habitually takes other contributors to Liberty & Power to be whenever they take issue with any of his views and at times defensively in anticipation that they may take issue).
Of course, my example is so mild and trivial that one might well wonder why I call attention to it, and I admit that it may have struck me in part because Mr. X has had occasion to throw verbal spears at me and my views in the more distant past, as readers of Liberty & Power with extremely good memories may recall. But apart from this latest example, any of us can surely point to a great number of instances in which contributors to Web-site discussions and debates have deliberately made ill-mannered statements rather than equally informative but courteous ones.
Often, I suspect, this nastiness occurs because the medium offers discussants personal distance or anonymity of a sort that other venues do not. If you insult your colleagues at a faculty meeting or in the hallway of your office building, then even if they do not retaliate immediately, they may await an apt occasion to pay you back in kind, perhaps with interest. In face-to-face settings, a certain amount of common courtesy suggests itself as sensible even to the nastiest sorts of people, if only to save themselves grief at pay-back time. On many Web sites, however, comments are allowed from one and all, and many of those who post comments do so while identifying themselves, if at all, only by Internet nicknames or enigmatic icons. The marginal cost of posting an insult for all the world to see is negligible, and the risk of serious personal retribution is virtually nil, especially for persons who have no established reputation to protect in the first place, so nothing impedes a person who is given to making spiteful remarks and dispensing personal insults.
I place an article of some sort on the Web perhaps every two or three weeks, on average, and many of them are later linked to or reposted at other Web sites where comments are invited. Over the years, I have been called nearly every insulting name imaginable by those who post comments on my articles. Perhaps the most popular insult is"idiot," although various synonyms also make a strong showing. The more vulgar writers declare me to be an"a**hole," a"s**thead," and so forth―if you are a man, just think back to your high school locker room for the rest of the inventory. For my views on war and the state, I am often described as a" coward," an"anti-American," or an"America hater"; I am said to lack"guts" and to be the sort of man who would stand by while his wife or daughter was raped or murdered―all this calumny being flung, mind you, by people who know virtually nothing about me.
Perhaps the most remarkable insults are those that dismiss me as a"socialist," a"liberal" (by which the insulter clearly has in mind a contemporary American left-liberal), or a"leftist." Strange to say, others describe me in contrast, often in a style more condescending than blatantly insulting, as a" conservative." Anyone who has the slightest acquaintance with me or my views will understand immediately how far off base both of these classes of ideological insult are―I have been a lifelong opponent of socialism, and I am certainly no conservative―but Internet insulters do not feel constrained to learn anything about a person before they fling an insult at him. The Web seems to attract a host of people who are densely ignorant and do not read or think carefully. They visit Web sites wearing a bandolier of personal affronts, and on the slightest provocation they shoot from the hip, content to let Allah sort out their rhetorical victims.
If a site is open to everybody, then nothing can be done about this nastiness unless someone manages the site and suppresses the viciousness. On sites such as Liberty & Power, where only authorized persons can make original posts, it might be possible to use moral suasion to keep the start-up discussion within civilized bounds. I appreciate, of course, that in certain metropolitan areas of this country an insulting style of discourse is as common as traffic congestion. Many of us, however, hail from elsewhere, and we have acquired the perhaps quaint idea that nastiness does not make a positive contribution to the process of learning from one another. On behalf of these others, I beseech those given to insults: mind your manners. If you do, you may even find that people will pay more attention to what you have to say.
Reports such as this one, which are scarcely uncommon, call to mind the following sequence of events: (1) the American people ratified a national constitution that stipulates, in part,"Congress shall make no law . . . abridging the freedom of speech"; (2) each member of Congress, upon taking office, swears"to preserve, protect, and defend the Constitution"; and (3) Congress makes―or, at least, as in the present case, considers making―a law abridging the freedom of speech."
Perhaps the members of Congress, when they raise their right hands to take the oath of office, keep their left hands behind their backs with their fingers crossed?
I do not pretend to have expertise in climatology or any of the related physical sciences, so nothing I might say about strictly climatological or related physical-scientific matters deserves any weight. However, I have thirty-nine years of professional experience―twenty-six as a university professor, including fifteen at a major research university, and then thirteen as a researcher, writer, and editor―in close contact with scientists of various sorts, including some in the biological and physical sciences and many in the social sciences and demography. I have served as a peer reviewer for more than thirty professional journals and as a reviewer of research proposals for the National Science Foundation, the National Institutes of Health, and a number of large private foundations. I was the principal investigator of a major NSF-funded research project in the field of demography. So, I think I know something about how the system works.
It does not work as outsiders seem to think.
Peer review, on which lay people place great weight, varies from important, where the editors and the referees are competent and responsible, to a complete farce, where they are not. As a rule, not surprisingly, the process operates somewhere in the middle, being more than a joke but less than the nearly flawless system of Olympian scrutiny that outsiders imagine it to be. Any journal editor who desires, for whatever reason, to knock down a submission can easily do so by choosing referees he knows full well will knock it down; likewise, he can easily obtain favorable referee reports. As I have always counseled young people whose work was rejected, seemingly on improper or insufficient grounds, the system is a crap shoot. Personal vendettas, ideological conflicts, professional jealousies, methodological disagreements, sheer self-promotion and a great deal of plain incompetence and irresponsibility are no strangers to the scientific world; indeed, that world is rife with these all-too-human attributes. In no event can peer review ensure that research is correct in its procedures or its conclusions. The history of every science is a chronicle of one mistake after another. In some sciences these mistakes are largely weeded out in the course of time; in others they persist for extended periods; and in some sciences, such as economics, actual scientific retrogression may continue for generations under the misguided belief that it is really progress.
At any given time, consensus may exist about all sorts of matters in a particular science. In retrospect, however, that consensus is often seen to have been mistaken. As recently as the mid-1970s, for example, a scientific consensus existed among climatologists and scientists in related fields that the earth was about the enter a new ice age. Drastic proposals were made, such as exploding hydrogen bombs over the polar icecaps (to melt them) or damming the Bering Strait (to prevent cold Arctic water from entering the Pacific Ocean), to avert this impending disaster. Well-reputed scientists, not just uninformed wackos, made such proposals. How quickly we forget.
Researchers who employ unorthodox methods or theoretical frameworks have great difficulty under modern conditions in getting their findings published in the"best" journals or, at times, in any scientific journal. Scientific innovators or creative eccentrics always strike the great mass of practitioners as nut cases―until it becomes impossible to deny their findings, a time that often comes only after one generation's professional ring-masters have died off. Science is an odd undertaking: everybody strives to make the next breakthrough, yet when someone does, he is often greeted as if he were carrying the ebola virus. Too many people have too much invested in the reigning ideas; for those people an acknowledgment of their own idea's bankruptcy is tantamount to an admission that they have wasted their lives. Often, perhaps to avoid cognitive dissonance, they never admit that their ideas were wrong. Most important, as a rule, in science as elsewhere, to get along, you must go along.
Research worlds, in their upper reaches, are pretty small. Leading researchers know all the major players and what everybody else is doing. They attend the same conferences, belong to the same societies, send their grad students to be postdocs in the other people's labs, review one another's work for the NSF, NIH, or other government funding organizations, and so forth. If you do not belong to this tight fraternity, it will prove very, very difficult for you to gain a hearing for your work, to publish in a"top" journal, to acquire a government grant, to receive an invitation to participate in a scientific-conference panel discussion, or to place your grad students in decent positions. The whole setup is tremendously incestuous; the interconnections are numerous, tight, and close.
In this context, a bright young person needs to display cleverness in applying the prevailing orthodoxy, but it behooves him not to rock the boat by challenging anything fundamental or dear to the hearts of those who constitute the review committees for the NSF, NIH, and other funding organizations. Modern biological and physical science is, overwhelmingly, government-funded science. If your work, for whatever reason, does not appeal to the relevant funding agency's bureaucrats and academic review committees, you can forget about getting any money to carry out your proposal. Recall the human frailties I mentioned previously; they apply just as much in the funding context as in the publication context. Indeed, these two contexts are themselves tightly linked: if you don't get funding, you'll never produce publishable work, and if you don't land good publications, you won't continue to receive funding.
When your research implies a"need" for drastic government action to avert a looming disaster or to allay some dire existing problem, government bureaucrats and legislators (can you say"earmarks"?) are more likely to approve it. If the managers at the NSF, NIH, and other government funding agencies gave great amounts of money to scientists whose research implies that no disaster looms or no dire problem now exists or even that although a problem exists, no currently feasible government policy can do anything to solve it without creating even greater problems in the process, members of Congress would be much less inclined to throw money at the agency, with all the consequences that an appropriations cutback implies for bureaucratic thriving. No one has to explain all these things to the parties involved; they are not idiots, and they understand how the wheels are greased in their tight little worlds.
Finally, we need to develop a much keener sense of what a scientist is qualified to talk about and what he is not qualified to talk about. Climatologists, for example, are qualified to talk about the science of climatology (though subject to all the intrusions upon pure science I have already mentioned). They are not qualified to say, however, that"we must act now" by imposing government"solutions" of some imagined sort. They are not professionally knowledgeable about what risk is better or worse for people to take; only the individuals who bear the risk can make that decision, because it's a matter of personal preference, not a matter of science. Climatologists know nothing about cost/benefit cosiderations; indeed, most mainstream economists themselves are fundamentally misguided about such matters (adopting, for example, procedures and assumptions about the aggregation of individual valuations that lack a genuine scientific basis). Climate scientists are the best qualified people to talk about climate science, but they have no qualifications to talk about public policy, law, or individual values, rates of time preference, and degrees of risk aversion. In talking about desirable government action, they give the impression that they are either fools or charlatans, but they keep talking―worst of all, talking to doomsday-seeking journalists― nevertheless.
In this connection, we might well bear in mind that the United Nations (and its committees and the bureaus it oversees) is no more a scientifc organization than the U.S. Congress (and its committees and the bureaus it oversees). When decisions and pronouncements come forth from these political organizations, it makes sense to treat them as essentially political in origin and purpose. Politicians aren't dumb, either―vicious, yes, but not dumb. One thing they know above everything else is how to stampede masses of people into approving or accepting ill-advised government actions that cost the people dearly in both their standard of living and their liberties in the long run.
The answer is, yes, many economists have done such experiments, in a variety of interesting and cogent forms. Vernon Smith won a Nobel Prize for his leadership of this experimentation program over the past several decades. The experiments, by and large, demonstrate what others have concluded on the basis of economic theory and historical observation: markets work. Indeed, the amazing thing is that in the experiments the markets often converge very quickly to the competitive equilibrium. Whudda thunk?
Naturally the imagery of a mushroom cloud found a place in the article. Americans all understand and many react viscerally to the image of a mushroom cloud. Hardly anything serves more effectively to marshal public fear and thus to cause people to clamor for the protection their government purports to provide.
The rest of the story is described as follows in James Bamford's excellent book A Pretext for War: 9/11, Iraq, and the Abuse of America's Intelligence Agencies (New York: Doubleday, 2004), pp. 324-25.
As if the entire event had been scripted, administration officials had all agreed days earlier to appear on the Sunday talk shows that same morning. Once the cameras clicked on, they made generous use of the allegations contained in the article, now free from worries about releasing classified information. It was a perfect scheme—leak the secrets the night before so you can talk about them the next morning.
In separate appearances on Meet the Press, CNN's Late Edition, Fox News, and CBS's Face the Nation, Dick Cheney, Condoleezza Rice, Colin Powell, and Donald Rumsfeld each played essentially the same role in this made-for-TV farce.
The series of events produced exactly the sort of propaganda coup that the White House Iraq Group [WHIG] had been set up to stage-manage. First OSP [the Pentagon's Office of Special Plans] supplies false or exaggerated intelligence; then members of the WHIG leak it to friendly reporters, complete with prepackaged vivid imagery; finally, when the story breaks, senior officials point to it as proof and parrot the unnamed quotes they or their colleagues previously supplied.
It now seems clear that the administration's allegations of Iraq's growing nuclear threat helped substantially in bringing many in Congress and among the general public to support the"preventive" U.S. attack on Iraq.
As I read Bamford's account of these events, I could not help recalling Karl Kraus's immortal quip:"How is the world ruled and led to war? Diplomats lie to journalists and believe those lies when they see them in print."
To demonstrate these parallels, I took a number of passages from Karp's text and replaced the original persons, places, and dates with those pertinent to the present war, retaining the basic story line. The results appear in "Plus Ça Change . . . A Template for the U.S. War in Iraq," and "In Seeking War, George W. Bush Held True to Form."