Walter Williams on Greed

Walter Williams writes:

What human motivation gets the most wonderful things done? It's really a silly question, because the answer is so simple. It turns out that it's human greed that gets the most wonderful things done. When I say greed, I am not talking about fraud, theft, dishonesty, lobbying for special privileges from government or other forms of despicable behavior. I'm talking about people trying to get as much as they can for themselves...

Free market capitalism is relatively new in human history. Prior to the rise of capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving one's fellow man. Capitalists seek to discover what people want and then produce it as efficiently as possible. Free market capitalism is ruthless in its profit and loss discipline. This explains much of the hostility toward free market capitalism; some of it is held by businessmen...

Free market capitalism has other enemies — mostly among the intellectual elite and political tyrants. These are people who believe that they have superior wisdom to the masses and that God has ordained them to forcibly impose that wisdom on the rest of us. Of course, they have what they consider to be good reasons for restricting liberty, but every tyrant who has ever lived has had what he considered good reason for restricting liberty. A tyrant's agenda calls for the attenuation or the elimination of the market and what is implied by it — voluntary exchange. Tyrants do not trust that people acting voluntarily will do what the tyrant thinks they should do. They want to replace the market with economic planning and regulation.

read the entire essay

Legal Plunder

See also Walter Williams' latest essay.

Walter Williams Interview

Daily Bell: How did you become interested in free-market thinking instead of socialism?

Walter Williams: Well, I think that free-market thinking is just an extension of having a respect for basic principals of individual liberty. Individual liberty means that I can negotiate, I can engage in peaceful voluntary exchange with anybody I wish to whether they are Americans or whether they are from Europe, Mexico, Africa or anywhere in the world. So, my free market ideas come from individual liberty...

Daily Bell: How have you seen economics change during your career?

Walter Williams: You know economics, as a theory, does not change anymore than the law of gravity changes. The law of gravity is the same as when Newton wrote about it. So, economic theory is one thing but economic systems are another thing. I think for Americans and for the world in general, the most tragic economic change that the world has come to accept is that one person has the right to live at the expense of another person, which I think is despicable. That is, people all around the world – in Europe, the US or other countries – believe that it's OK for the government to take the property of one citizen and give it to another citizen of whom it does not belong. If a person did that identical thing privately, we would call it theft and we would condemn them. But people ask the government to do these kinds of things. It is way out of tune, at least in the United States, with the values of the founders of our country; they did not share the values that people share today.

Daily Bell: Would you characterize yourself as conservative, libertarian or neither?

Walter Williams: If you had to push me, I would say more libertarian. I would call myself a Jeffersonian liberal. As a matter of fact, the people that call themselves liberal today are for the most part fascists. I think libertarians need to take back the meaning of the word "liberal" because liberal means free. For people that call themselves liberal today, personal freedom is the last thing in their mind...

Daily Bell: What is the difference between a conservative and neo conservative if any?

Walter Williams: (Laughing) I don't know. But conservatives and liberals – and I include neo-cons with them – are all people who believe it's all right for government to take the property of one person and give it to another. That is liberals and conservatives prove H.L. Mencken's definition of an election. H.L. Mencken was a political satirist for the Baltimore Sun and when somebody asked him the definition of an election, he said: "An election is an advance auction on the sale of stolen property." Liberals believe in taking yours and my money and giving it to poor people and poor cities. Conservatives believe in taking yours and my money and giving it to farmers, banks and airline companies. They both agree on taking our money but they disagree on what to use it for...

Daily Bell: What is your opinion of America? Is it like Rome in the empire days?

Walter Williams: Yes. People say, "Well what can we do, what can be done?" And I say, "Well, how are Americans any different from other great empires of the past?" Rome? England? Spain? Portugal? France? They all went down the tubes for precisely the same thing. Bread and circuses! In 1892, if someone had suggested during Queen Victoria's Jubilee that England would become a 3rd-world nation and be challenged on the high seas by a 6th-rate nation such as Argentina, you would have been put into an insane asylum. But it went down the tubes for precisely what we are doing in our country now – what we have been doing for the past 30 or 40 or 50 years. Bread and circuses and big government spending...

Daily Bell: Do you think the bailouts in the West help at all?

Walter Williams: No. It didn't help at all. Read what happened during the Great Depression and the New Deal in 1938. Roosevelt's Secretary Treasurer said, "Mr. President we have spent more money than we have ever spent in the past and it's not doing any good. Unemployment is just as bad as it was and all we've accomplished is we've gotten into more debt and spent more money." That is the same thing Treasurer Secretary Geithner can say today to President Obama, "We have spent more money, but unemployment is the same; in fact it's higher than when he took over the office."...

Daily Bell: Do you oppose central banking? Would you like to see a return in America and the world to a form of free-banking as enunciated by George Selgin, George White, Antal Fekete, et. al.?

Walter Williams: Yes, I would. I believe that the monopoly over money maintained by the Federal Reserve and the legal tender laws have not been very good for our country; that is, a central bank allows the government to steal from its citizens with impunity. I have often suggested to people that if they ever find themselves in court facing a charge of counterfeiting, they should tell the judge they were engaging in monetary policy.

Daily Bell: Would you like to see the Fed abolished? Would you like to return to a gold or gold and silver standard?

Walter Williams: Well I am not sure we can go back. The very fact that we went for a long time in our history without a central bank, from the time of Andrew Jackson and the Second National Bank until the Federal Reserve Bank, and had prosperity in our country during that period shows that the Fed is not absolutely necessary. The justification for its creation was to end bank failures and have stability in price levels. However, if you do a before and after study, there were a greater number of bank failures after the Federal Reserve bank was established than before it came into being. And price stability was greater before its enactment as well. In terms of its stated mission, it's a total failure.

Daily Bell: What is the most important problem facing America right now?

Walter Williams: I think the growth of government. The amount of money we spend on Medicare, Social Security, Prescription Drugs, etc., eats up the entire federal revenues and the rest of government is dependent on borrowing. This is a serious problem. We are spending too much. From 1787 until 1920, the federal government spent just 3% of the GDP except during wartime. Today it's close to 30% of the GDP. We are in serious trouble because of it.

source

Walter Williams on Recessions and Stimulus

Walter Williams writes:

Let's think about President Obama's failed economic stimulus program. Before getting to the nitty-gritty of why stimulus packages fail, let's look at the failed stimulus program of Obama's hero, Franklin Delano Roosevelt. FDR's Treasury Secretary, Henry Morgenthau, wrote in his diary: "We have tried spending money. We are spending more than we have ever spent before and it does not work. … We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!"...

The Great Depression did not end until after WWII... "The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes. Ironically, our work shows that the recovery would have been very rapid had the government not intervened." Professors Cole and Ohanian argue that FDR's economic policies added at least seven years to the depression.

Where do the trillion-plus dollars come from that Congress and Obama are spending in an effort to stimulate the economy? How about Santa Claus, or maybe the Tooth Fairy? If you said, "Come on, Williams, you're being silly! The only way government can spend a dollar is to tax or borrow it," go to the head of the class. In the case of a tax, one should ask what would that taxpayer have done with the dollar had it not been taxed away. He would have spent it on something that would have created a job for someone. If the government hadn't borrowed the dollar, it might have been invested in some project that would have created a job. When government taxes, borrows and spends, it shifts unemployment from one sector to another. Of course, the sector that benefits tends to be a political favorite of the shifter.

Between 1787 and 1930, our nation has seen both mild and severe economic downturns, sometimes called panics, that have ranged from one to seven years. During that interval, no one considered it to be the business of the federal government to try to get the economy out of a depression because there was no constitutional authority to do so. It took Hoover, FDR and a frightened and derelict U.S. Supreme Court to turn what might have been a three- or four-year sharp downturn into a 15-year meltdown.

source

Walter Williams on the Stimulus and Constitution

Americans have long ago abandoned respect for the constitutional limitations placed on the federal government. Our elected representatives represent that disrespect. After all I'd ask Higgs: Isn't it unreasonable to expect a politician to do what he considers to be political suicide, namely conduct himself according to the letter and spirit of the Constitution?
While Americans, through ignorance or purpose, show contempt for our Constitution, I doubt whether they are indifferent between a growing or stagnating economy. Dr. Higgs tells us some of the economic history of the U.S. In 1893, there was a depression; we got out of it without a stimulus package. There was a major recession of 1920-21; though sharp, it quickly reversed itself into what has been call the "Roaring Twenties." In 1929, there was an economic downturn, most notably featured by the stock market collapse, after which came massive government intervention — you might call it the nation's first stimulus package.

President Hoover and Congress responded to what might have been a two- or three-year sharp downturn with many of the policies President Obama and Congress are urging today. They raised tariffs, propped up wage rates, bailed out farmers, banks and other businesses, and financed state relief efforts. When Roosevelt came to office, he became even more interventionist than Hoover and presided over protracted depression where the economy didn't fully recover until 1946...

A more fundamental question is: Should Washington be guided by the Constitution? In explaining the Constitution, James Madison, the acknowledged father of the Constitution, wrote in Federalist Paper 45: "The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce." Has the Constitution been amended to permit Congress to tax, spend and regulate as it pleases or have Americans said, "To hell with the Constitution"?

read the entire essay

Socialism is Evil

Walter Williams on Socialism

It employs evil means, coercion or taking the property of one person, to accomplish good ends, helping one's fellow man. Helping one's fellow man in need, by reaching into one's own pockets, is a laudable and praiseworthy goal. Doing the same through coercion and reaching into another's pockets has no redeeming features and is worthy of condemnation...

I don't believe any moral case can be made for the forcible use of one person to serve the purposes of another. But that conclusion is not nearly as important as the fact that so many of my fellow Americans give wide support to using people. I would like to think it is because they haven't considered that more than $2 trillion of the over $3 trillion federal budget represents Americans using one another. Of course, they might consider it compensatory justice. For example, one American might think, "Farmers get Congress to use me to serve the needs of some farmers. I'm going to get Congress to use someone else to serve my needs by subsidizing my child's college education."

The bottom line is that we've become a nation of thieves, a value rejected by our founders. James Madison, the father of our Constitution, was horrified when Congress appropriated $15,000 to help French refugees. He said, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." Tragically, today's Americans would run Madison out of town on a rail.

read the essay

Free Trade is Good

Foreign Trade Angst
Walter Williams

The United States is the world's largest recipient of foreign direct investment. According the Economic Report of the President, in 2004, foreigners owned $5.5 trillion in U.S. assets and had $2.3 trillion in sales. They produced $515 billion of goods and services, accounting for 5.7 percent of total U.S. private output, and employed 5.1 million workers, or 4.7 percent of the U.S. workforce in 2004. According to the Congressional Research Service, in 2006 alone, foreign investors spent $184 billion investing in U.S. businesses and real estate, the highest amount foreign investors have spent since 2000. My question to Clinton, Obama and the anti-trade lobby is, would Americans be better off if there were no foreign investment in our country?

According to the Bureau of Labor Statistics, between 1996 and 2006, about 15 million jobs were lost and 17 million created each year. That's an annual net creation of 2 million jobs. Roughly 3 percent of the jobs lost were a result of foreign competition. Most were lost because of technology, domestic competition and changes in consumer tastes...

There's great angst over the loss of manufacturing jobs. The number of U.S. manufacturing jobs has fallen, and it's mainly a result of technological innovation, and it's a worldwide phenomenon. Daniel W. Drezner, professor of political science at the University of Chicago, in "The Outsourcing Bogeyman" (Foreign Affairs, May/June 2004), notes that U.S. manufacturing employment between 1995 and 2002 fell by 11 percent. Globally, manufacturing job loss averaged 11 percent. China lost 15 percent of its manufacturing jobs, 4.5 million manufacturing jobs compared with the loss of 3.1 million in the U.S. Job loss is the trend among the top 10 manufacturing countries who produce 75 percent of the world's manufacturing output (the U.S., Japan, Germany, China, Britain, France, Italy, Korea, Canada and Mexico).

But guess what -- globally, manufacturing output rose by 30 percent during the same period. According to research by the Federal Reserve Bank of St. Louis, U.S. manufacturing output increased by 100 percent between 1987 and today. Technological progress and innovation is the primary cause for the decrease inmanufacturing jobs. Should we save manufacturing jobs by outlawing labor-saving equipment and technology?

read the entire essay

Recommend Reading: Walter Williams

Stimulus Package Nonsense
by Walter Williams

Baltimore's political satirist, the late H.L. Mencken, explained this strategy, saying, "The whole aim of practical politics is to keep the populace alarmed, and hence clamorous to be led to safety, by menacing it with an endless series of hobgoblins, all of them imaginary."

The imaginary hobgoblin this time is the threat of an oncoming recession, even though it is by no means clear that the U.S. economy is in a recession. To head off a recession, politicians, including President Bush, are calling for a stimulus package...

There are three ways government can get the money for a stimulus package. It can tax, borrow or inflate the currency by printing money. If government taxes to hand out money, one person is stimulated at the expense of another who pays the tax, who is unstimulated and has less money to spend. If government borrows the money, it's the same story. This time the unstimulated person is the lender who has less money to spend. If government prints money, creditors, and then everyone else, are unstimulated...

The call for stimulus packages represents the triumph of political arrogance over common sense.

read the entire essay

More common sense and insight from Walter Williams

Recommended Reading: Walter Williams essay

The Intellectual Defense of Liberty

By Walter E. Williams

All too often defenders of free-market capitalism base their defense on the demonstration that free markets allocate resources more efficiently and hence lead to greater wealth than socialism and other forms of statism. While that is true, as Professor Milton Friedman frequently pointed out, economic efficiency and greater wealth should be seen and praised as simply a side benefit of free markets. The intellectual defense should focus on its moral superiority. Even if free markets were not more efficient and not engines for growth, they are morally superior to other forms of human organization because they are rooted in voluntary peaceable relationships rather than force and coercion. They respect the sanctity of the individual…

Therefore, acts such as murder, rape, and theft, whether done privately or collectively, are unjust because they violate private property. There is broad consensus that collective or government-sponsored murder and rape are unjust; however, government-sponsored theft is another matter. Theft, being defined as forcibly taking the rightful property of one for the benefit of another, has wide support in many societies that make the pretense of valuing personal liberty. That theft, euphemistically called income redistribution or transfers, is often defended by lofty phrases such as: assisting the poor, the elderly, distressed business, college students, and other deserving segments of society. But as F. A. Hayek often admonished, “[F]reedom can be preserved only if it is treated as a supreme principle which must not be sacrificed for any particular advantage. . . .”…

…In other words, the rise of capitalism enabled the gradual extension of civilization to greater and greater numbers of people. More of them had more time available to read and become educated in the liberal arts and gain more knowledge about the world around them. The greater wealth allowed them the opportunity to attend to the arts, afford recreation, contemplate more fulfilling and interesting activities, and engage in other cultural enrichment that was formerly within the purview of only the wealthy…

For individual freedom to be viable, it must be a part of the shared values of a society and there must be an institutional framework to preserve it against encroachments by majoritarian or government will...

…As is often the case, political liberty is used to stifle economic liberty, which in turn reduces political liberty.

read the entire essay

Recommended Reading: Walter Williams' Column

the latest column from Walter Williams

Economic Thinking

"Historical costs, sometimes called sunk costs, are irrelevant to decision-making because they are costs that have already been incurred....
The only costs relevant to decision-making are what economists call marginal or incremental cost; that's the change in costs as a result of doing something. That cost should be compared to the expected benefit..."

read the entire column

Recommended Reading: Walter Williams' column

the latest column from Walter Williams

Economists on the Loose

"Free markets are simply millions upon millions of individual decision-makers, engaged in peaceable, voluntary exchange pursuing what they see in their best interests. People who denounce the free market and voluntary exchange, and are for control and coercion, believe they have more intelligence and superior wisdom to the masses. What's more, they believe they've been ordained to forcibly impose that wisdom on the rest of us. Of course, they have what they consider good reasons for doing so, but every tyrant that has ever existed has had what he believed were good reasons for restricting the liberty of others."

read the entire column

Recommended Reading: Walter Williams' Column

the latest column from Walter Williams

Do People Care?

"If Professor Alchian's vision of how the world works is correct, what are its implications? A major implication is that one's destiny, for the most part, is in his hands. In other words, how you make it in this world, for the most part, depends more on what you do as opposed to whether people like or dislike you. In order to produce a successful life, one must find ways to please his fellow man. That is, find out what goods and services his fellow man values, and is willing to pay for, and then acquire the necessary skills and education to provide it. Whether your fellow man cares about you or not is largely irrelevant."

click here for entire column

Recommended Reading: Walter Williams' column

the latest column from Walter Williams

Straight Thinking 101

Just about the most difficult lesson for first-year economics students, and sometimes graduate students, is that economic theory, and for that matter any scientific theory, is positive or non-normative. You might ask, "What's this business about positive and normative?" It's easy. Positive statements deal with what was, what is or what will be. Normative, or subjective, statements deal with what's good or bad, or what ought to be or should be. Confusing the two leads to considerable mischief.

click here for entire column